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With election over, here comes the hard part

Ethiopia’s Ahmed provides blueprint for Buhari

LOLADE AKINMURELE

igeria’s President Muhammadu Buhari secured a second term in office last Wednesday, defeating his main challenger, Atiku

Abubakar, by a margin many had predicted to be slim but turned out quite significant. Beyond the rejection of the election results by Atiku, which is unlikely to change much, Buhari gets a second chance to fix an

economy caught in the middle of weak growth and rising unemployment. He also gets a chance to leave a lasting legacy. In his first four-year term, Buhari Continues on page 46

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UBA sets foothold in €280bn EuropeAfrica market with UK launch ... Nigerian economy will have better days ahead, says Dangote CALEB OJEWALE

ith the launch of its United Kingdom subsidiary, United Bank for Africa (UBA) Plc has set its foothold in the financial hub of European-African trade worth EUR280 billion in 2017, according to BusinessDay analysis of European Commission data. UBA has been granted a wholesale licence in the UK, which it plans to use in facilitating transactions between businesses in Africa and across the globe through the London financial hub. Investors at the event held in Continues on page 46

Inside Understanding the economy of Nigeria’s 36 states – Jigawa & Kaduna L-R: Patrick Gutmann, CEO, UBA UK; Kennedy Uzoka, GMD/CEO, UBA plc; Aliko Dangote, president, Dangote Group; Tony O. Elumelu, group chairman, UBA plc; Benedict Oramah, president, Afreximbank, and Victor Osadolor, CEO, UBA Africa, at the launch of UBA UK in London.

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Lagos yet to find investors for Lekki Int’l Airport 10 years after ... part of proposed site now a dumpsite JOSHUA BASSEY

orethanonedecadeafterit was proposed and investment prospectus pushed into the global market in search of investment partners, it appears foreign and local investors are yet to be convinced that the $450 million Lekki International Airport in Lagos is worth staking their funds. Lagos, Nigeria’s economic hub and commercial capital, operates one federally-owned international airport which currently attracts average annual air-passenger traffic of about 9 million from the total average of 15 million travellers across the 31 airports in the country. There is the general thinking within the aviation industry that the numbers are not attractive enough to spur investors’ interest in the development of a new airport in Lagos given the capital-intensive nature of such a project. This, among other socio-political factors, might be working against the proposed Lekki International Airport, industry experts believe. The airport was proposed as a Public Private Partnership (PPP) between the state government and would-be investor in which the government would provide the land and other complementary infrastructure while the private partner would construct the airport on a Design, Build, Finance, Operate and Manage (DBFOM) basis under a competitive tender process and in accordance with international best practices. It was gathered at the weekend that

part of the proposed site of the airport, measuring 3,000 hectares along the Lekki-Epe corridor, is being turned into a dumpsite. There has been a contention between the host community of the proposed airport and the Lagos State government, which was resolved about two years ago, in the hope that it would galvanise investors’ interest in the multi-million dollar project. But this has done little or nothing as investors remain aloof and seem not ready to touch the airport project even with a long spoon. “We haven’t found an investor for the airport. We’re still searching,” an official of the Lagos State Ministry of Commerce and Industry, who craved anonymity, confided in BusinessDay on Friday. This is in spite of several trade exhibitions and foreign trips in search of would-be investors embarked upon by officials of the ministry and other relevant state government agencies in the last 10 years. Olayinka Oladunjoye, state commissioner for Commerce, Industry and Cooperatives, whose ministry has been promoting the airport, would not speak on the project. When contacted via the telephone, Oladunjoye said she was in a meeting. In a later reply to a text message sent to her cell phone on the current state of the project, however, Oladunjoye referred BusinessDay to another official of the ministry, who was also not available to speak on the matter. Situated about 10km from Lekki Free Trade Zone (LFTZ), the airport

Continues on page 46

Relief in sight for 4.6m electricity consumers as NERC decides on permitted MAPs this week HARRISON EDEH, Abuja

he Nigerian Electricity Regulatory Commission (NERC) is expected to give directive on imminent rollout of meters to electricity consumers by permitted Meter Asset Providers this week, indicating a possible relief to about 4.6 million unmetered Nigerians. The Nigerian power sector has been riddled with lots of challenges post privatisation, with lack of metering of consumers a major source of worry, adding to the liquidity concerns confronting the sector. NERC took the initiative through a regulatory framework called Meter Asset Provider Regulations (MAPR) to ensure Nigerian electricity consumers are metered adequately to address key problems of the Discos regarding revenue collection, which they consistently allege hinders investment in key infrastructure in the sector. Nathan Shatti, commissioner in charge of finance and management services in NERC, whose office coordinates the MAP programme, told BusinessDay that the commission would meet with MAPS providers and Discos and issue permit which would enable certified MAPS to commence operations. “As at now, the reports from the MAPS are being finalised, and the commission is going to sit this week to finalise and decide on those who have met the requirements before we give out the permit for them to commence operations,” Shatti said.

He said once the commission gives out the permit, those permitted are expected to commence mobilisation at least by April, and Nigerians should be able to see new meters rolled out in their names. He further clarified that the MAP meter rollout should not interfere with metering of electricity consumers by Discos who had already sealed contractual agreements with firms to distribute meters. ”As you know, the regulation came into effect in March 2018. In fact, it was effective on April 3, 2018. In the regulation, we stated 120 days time limit, after which the Discos would come for the procurement process,” Shatti said. “Unfortunately, the delays we had, such as tender and procurement delays for potential MAPs, made us extend the time to July 1, and then we had another 120 days for the potential MAPs. The 120 days ended on October 31, 2018. As at January, there are still issues with the MAPs, but we are addressing them as we should,” he said. Shatti said the good thing was that “as at today, all the requirements from the Discos, as spelt out by the regulations, have been submitted to NERC”. “We have an in-house team that is reviewing all the submissions. The report would be presented any moment from now by the committee, and we shall now look at Disco by Disco, if they have fairly and objectively done what is required of them,” he said.

•Continues online at www.businessday.ng

L-R: Folake Ani-Mumuney, group head, marketing and corporate communications, First Bank of Nigeria (FBN); UK Eke, GMD, FBN Holdings; Oba Otudeko, group chairman, FBN Holdings; Ibukun Awosika, chairman, FBN, and Adesola Adedotun, GMD, FBN, at the 125th anniversary flag hosting/press conference of the bank in Lagos, at the weekend. Pic by Pius Okeosisi

Buhari’s second term: Analysts see same policies, but faster implementation MICHEAL ANI

igerians and the global business community should expect no change of policies from a re-elected President Muhammadu Buhari, analysts at two leading investment bank and asset management firms said in their independent projections. The analysts, however, voted for a faster pace of policy implementation. The outlook for the economy over the next four years would be positive but modest as President Buhari’s victory signals policy stability, said research analysts at United Capital, an investment banking and asset management firm. Buhari, 76, was last Wednesday announced winner of the February 23, 2019 presidential election by the Independent National Electoral Commission (INEC). Nigeria’s incumbent president and candidate of the All Progressives Congress (APC), Buhari defeated his main challenger, former Vice President Atiku Abubakar of the People’s Democratic Party (PDP), with 56 percent to 41 percent of total valid votes cast. Atiku has, however, rejected the result, describing the election as a “sham” and debasement of democracy and vowing to challenge the result in court.

“The Buhari administration will continue to invest in infrastructure, sustain its welfare scheme, reinforce the drive to substitute imports with local production, and retain its intervention programmes across the agric, power and the SMEs space by building on its Economic Recovery and Growth Plan (ERGP),” United Capital analysts said. “As such, we expect the budget to remain large, broadly financed by borrowings. However, the role of the private sector may be limited by the absence of far-reaching liberal policies. This may keep investment low and output growth soft,” they said. Analysts at Lagos-based FBNQuest said in a February 28 note to clients that they expect “more of the same policies, although hopefully at a faster pace of implementation”. Buhari was sworn into office in May 2015 after defeating then President Goodluck Jonathan to emerge president of Africa’s most populous country. While Buhari spent about six months to form a cabinet to kick-start his government, it took him one year later to craft brilliant policy ideas that formed part of the government’s Economic and Recovery Growth Plan. The aftermath of this delay was an acute dollar shortage, spiralling inflation and a devaluation of the naira that stemmed from a

2014 crash in global oil prices and agitations in the Niger Delta region that pushed the country into its first recession in 27 years – a crisis most analysts say Africa’s largest economy could have averted if it had effectively implemented the right policies instead of the delay. “The leopard is not expected to change its spots. A Buhari administration tends to over-centralise decision-making and has a policy stance that is caricatured as ‘pro-poor’. It is not anti-business, rather at times wary of it,” FBNQuest analysts wrote. The country exited recession in the second quarter of 2017 after expanding 0.72 percent, thanks to a pick-up in oil prices and the calmness seen in the Niger Delta region. “Unlike in 2015, President Buhari should be able to move fairly quickly to forming a new government since most likely candidates for posts have been vetted,” the analysts said. Apart from a delay in constituting a cabinet to pilot affairs, there was also a seven-month delay in the signing of the 2018 budget due to a standoff between the Bukola Sarakiled legislature and the executive. The budget currently holds the record of being Nigeria’s most delayed ever.

•Continues online at www.businessday.ng

Depleting excess crude account leaves economy vulnerable to oil shocks ISAAC ANYAOGU

n three weeks between November and December, Nigeria’s excess crude revenue account went from having a balance of $2.319 billion to $637 million, a drawdown of about 73 percent, which leaves the economy more vulnerable to shocks from a volatile oil market. The Excess Crude Account (ECA) was created to retain excess revenues from the prevailing crude oil price at the international market. Income generated above the approved crude oil benchmark price in the annual

budget is saved in the account as some sort of buffer. Established in 2004, the ECA demonstrates how to normalise an aberration. Without constitutional backing, the ECA was created to protect Nigeria’s planned budgets against shortfalls caused by the volatility of crude oil prices. In this way, it would insulate the economy from external shocks. Analysts say the continued withdrawal from the ECA limits its ability to act as buffer if crude prices suddenly plateau. “It will also seriously impact the government’s ability to fund critical

infrastructure,” said Chuks Nwani, an energy lawyer. Recall that it was the $1 billion funding from the ECA in 2013 that was the seed capital used to establish the Nigerian Sovereign Investment Authority (NSIA). Money from the second SWF has been used to fund construction of the second Niger Bridge and to buy military hardware to fight Boko Haram insurgents. Isah-Dutse, permanent secretary, Federal Ministry of Finance, said the money was withdrawn to settle the

Continues on page 46

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Nigeria’s longest green corporate bond debuts with 160% subscription ONYINYE NWACHUKWU, Abuja

ith InfraCredit guarantees, and the United Capital plc as the lead issuing house and financial adviser, North South Power (NSP) Company Limited has issued its first N8.5 billion 15-year 15.60 percent Series 1 Guaranteed Fixed Rate Senior Green Infrastructure Bonds, due 2034 under a N50 billion Debt Issuance Programme. The Series 1 Green Bonds is the first certified green

AXA Mansard restates commitment to its customers

XA Mansard Insurance plc, a member of the AXA Group and global leader in insurance and asset management, has restated its commitment to service excellence. In line with one of the company’s goals for 2019 -“Customer First,” the company and all its employees are committed to fulfilling its promise to all its customers and to ensuring world-class service standards at every point of contact. Speaking with Kola Oni, group head of strategy/marketing at AXA Mansard Insurance plc, he stated, “It is in the company’s DNA to consistently provide exceptional service that leaves memorable experiences in the minds of our customers. We promise to make our customers our partners, not just premium payers. All our employees understand our brand’s promise to our clients and are sufficiently equipped and willing to deliver on this promise at all times.” He further noted, “In an attempt to serve our customers better, the company has a number of initiatives geared towards the continuous improvement of services. One such initiative is the AXA First Responder service which provides on-the spot assistance to customers at accident scenes, including immediate claims settlement for smaller sums.” AXA Mansard Insurance is a member of the AXA Group, the worldwide leader in insurance and asset management with 166,000 employees serving 105 million clients in 62 countries.

… United Capital appointed lead issuing house, InfraCredit serves as guarantor bond and the longest tenured -15-year-corporate bond issued in the Nigeria debt capital markets by a corporate. The Series 1 Green Bonds was oversubscribed by 60 percent with firm commitments from 12 institutional investors including nine pension funds, and priced at 70bps spread to the comparable 15-year sovereign benchmark bond (FGN 2034) using the closing yield on the reference date (February 4, 2019) adopted for the

book building. BusinessDay understands that the proceeds will fund the overhaul of a 150mw hydropower turbine and replacement of the company’s current short-term (naira and dollar denominated) bank facilities with long-term local currency debt, thereby eliminating the currency and tenor mismatch in the company’s funding structure. With InfraCredit’s guarantee, the Series 1 Green Bonds was accorded an ‘AAA’

credit rating by Agusto & Co. and Global Credit Ratings Co. having being guaranteed by Infrastructure Credit Guarantee Company Limited and certified by TUV NORD CERT, an approved verifier under the Climates Bonds Standard, in conformance with the International Capital Market Association’s Green Bond Principles, Nigerian Federal Ministry of Environment’s Nigerian Green Bond Guidelines, and the Green Bonds Issuance Rules

of the Nigeria. Commenting at the MoU signing in Abuja, United Capital plc’s Group CEO, Peter Ashade, said, “United Capital is always exploring ways to provide innovative investment banking solutions to our clients. We congratulate our client, North South Power on a successful transaction of the Corporate Green Infrastructure Bond as we work together in achieving a common goal.” The development of

the “Green Bond Framework” and the pre-issuance verifications were obtained through technical assistance support from the African Local Currency Bond Fund, an initiative of KfW Development Bank. NSP currently generates, on the average, 8 percent of Nigeria’s power and aims to be the leading power company in sub-Saharan Africa by safely providing affordable, reliable, and sustainable power to its customer base.

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General T.Y. Danjuma and the other generals with nine lives (4) Bashorun J.K Randle

• Continued from last week

n his very brief appearance, former Chief of Naval Staff, Admiral Jubril Ayinla insisted that he had never shown interest in participating in any coup nor seeking political appointment as Military Governor or whatever. Even after he was passed over when his junior, Vice-Admiral Mike Okhai Akhigbe was appointed as Chief of Naval Staff he was persuaded to remain in the force as the head of the Defence Academy reporting directly to the President, General Sani Abacha before becoming Minister for Commerce and Industries and eventually Chief of Naval Staff (from 1998 to 1999). He made no secret of his longstanding relationship with Abacha going back to their days as youngsters in Kano/Jigawa. His final shot was that Abacha could not have stolen the kind of money he was alleged to have stolen. Then came the bombshell: “Abacha was planning to release Bashorun M.K.O. Abiola on Wednesday but he died the day before – on Tuesday 7th July 1998.” What was fascinating was that the last three people to see Abacha before he died were General Jeremiah Timbut Useni (the then Minister of the Federal Capital Territory), Dr. Sadiq Suleiman Wali (his Chief Physician),

Major Hamza Al-Mustapha (Abacha’s Chief Security Officer) – according to Major Al-Mustapha. He omitted both Air Commodore Samson Omeruah the Minister of Sports and Lt. General T.Y. Danjuma. According to the film, it was Abacha who had served under Danjuma who had been eager to give his old boss an oil block. He even sent General Jerry Useni as an emissary to General Danjuma to persuade the latter to apply. It took considerable pressure to get Danjuma to succumb. It turned out to be a goldmine and much more! Indeed, T.Y. inadvertently gave the game away when he sold part of his interest to Sinopec (Chinese oil company) and pocketed a hefty U.S. $1.5billion. “I have far too much money. After making gifts to my family, I am going to devote the rest to charity.” He has been as good as his word. According to Max Chuck Black, what galvanized his determination to make the film after several false starts was a chance meeting in Hong Kong with Donald Malvern who was the Consul at the American Consulate in Ibadan when the counter coup of July 29, 1966 took place. It turned out that the Premier’s Lodge where the then Head of State General Johnson Aguiyi Ironsi and his host Brigadier Adekunle Fajuyi were captured, was under surveillance by the Americans. It was from the old grainy photographs and recordings of gun shots that by skilful employment of digitalisation and computerisation he was able to recreate an unassailable record of the historic events – from the disarming of the soldiers guarding the Premier’s Lodge and the conversation that took place between troops led by Major T.Y. Danjuma and Ironsi/Fajuyi and the subsequent bundling of Ironsi/Fajuyi into a military vehicle for execution on the outskirts of Ibadan (on Iwo road). Some of the faces captured apart

from Danjuma, Ironsi and Fajuyi were Captain Sani Bello (aide-de-camp to Ironsi); Jerry Useni; Sani Abacha; Dickson and Walbe. It was the same technology that enabled the Turkish Government to record the hacking to death of Jamal Khashoggi within the Embassy of Saudi Arabia in Istanbul. Some of the other captivating segments of the film were the speech delivered by General Murtala Muhammed delivered at the Extraordinary Meeting of OAU on 11th January, 1976 in Addis Abbaba, Ethiopia: “Mr. Chairman, when I contemplate the evils of apartheid, my heart bleeds and I am sure the heart of every true blooded African bleeds. . . Rather than join hands with the forces fighting for self-determination and against racism and apartheid, the United States policy makers clearly decided that it was in the best interests of their country to maintain white supremacy and minority regimes in Africa... Africa has come of age. It’s no longer under the orbit of any extra continental power. It should no longer take orders from any country, however powerful. The fortunes of Africa are in our hands to make or to mar. For too long have we been kicked around: for too long have we been treated like adolescents who cannot discern their interests and act accordingly. For too long has it been presumed that the African needs outside ‘experts’ to tell him who are his friends and who are his enemies. The time has come when we should make it clear that we can decide for ourselves; that we know our own interests and how to protect those interests; that we are capable of resolving African problems without presumptuous lessons in ideological dangers which, more often than not, have no relevance for us, nor for the problem at hand.” General Murtala Mohammed was

‘

In exasperation, his retort to the offer was: “How many times do you want me to be Head of State/ President?”

assassinated a little over a month after making this speech. This was in addition to taking on his traducers who alleged that he owned fifty-five houses in Kano in addition to other accusations relating to the Central Bank in Benin. General Murtala not only refuted the allegations he gave free rein to his accuser Dr. Obarogie Ohonbamu, a law teacher at the University of Lagos to publish his allegations in the press without fear beyond civil redress for defamation. Other gripping highlights revolved around Brigadier Ibrahim Bako who was the ring leader of the 1983 coup that toppled President Alhaji Shehu Shagari. He is portrayed as a victim of friendly fire while approaching the official residence of the President although another version insists that he was actually shot by one of the soldiers guarding Shagari. In any case, following the elimination of Bako, the mantle of leadership fell on Brigadier Ibrahim Babangida. The rest is history. Just one bullet changed the course of history. Some of the amazing episodes captured in the film were Chief Duro Onabule (the former press secretary of President Ibrahim Babangida denouncing General Olusegun Obasanjo: “Obasanjo is an ingrate. Whatever might be late General Sani Abacha’s faults, at least, he did not execute Obasanjo for treason rightly or mistakenly. Abacha merits that credit till today. If they changed positions, Obasanjo would have executed General Abacha if mistakenly as Obasanjo executed Colonel Waya in 1976, in defiance of the deadlock at Supreme Military Council.”

Note: the rest of this article continues in the online edition of Business Day @ https://businessday.ng Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

State governments: No choice but to change their ways

Gregory Kronsten

he proposals for an increase in the national minimum wage offer the perfect opportunity for some commentary on state government finances. Although the Senate is yet to give its approval, the proposals are to lift the minimum of N18,000 per month to N30,000 for the federal government, and to N27,000 for state governments and the private sector. An earlier push by governors to cap the increase for states to N22,700 tells us that their capacity to pay is limited. Our preferred data source is the CBN, and a look at its series for 2017 shows why the governors are worried. Aggregate spending on personnel amounted to N942bn, and internally generated revenue (IGR) to N765bn. The gap may not seem that wide in aggregate. However, the number of better managed states is relatively small, and no fewer than 28 of the 37 states (including the federal capital territory) earned less in IGR than they paid out

on personnel. Most likely, the true picture is worse since in 2017 more than half the states were said to be in arrears on their salary and pension payments. So we return to what we already know: that state government finances are in a mess. Admittedly, 2017 was not a great year for oil revenues and therefore for monthly statutory allocations from the Federation Account Allocation Committee (FAAC). Which leaves the majority of states dependent upon the monthly payout, relieved at the pick-up in the oil price in recent weeks and yet not in a position to meet the minimum wage proposals (whenever they take effect). There are possible political and managerial exits from the financial mess. The formulae for revenue distribution between the three tiers of government could be adjusted, subject to constitutional change. We could be persuaded by the merits of an argument that the states should receive more than the current 50 per cent share of the VAT Pool, compared with 15 per cent for the FGN and 35 per cent for the local governments. However, such adjustments would remove the incentive for state governments to overhaul the management of their finances. Their challenge is to increase the size of the cake by their own efforts. Thankfully we no longer hear calls for the creation of new states. (They were made from time to time by the previous Senate president.) Since we struggle to see how some states can become viable units, there is a case for mergers. Some states have begun to launch shared

initiatives and projects, so this is not as farfetched an idea as it might seem. Rather than enter this political minefield, we will focus on the managerial solution.The FGN could give a helping hand by raising the 5 per cent standard rate of VAT. The states earned N474bn from the Pool in 2017. A doubling of the rate would, taken in conjunction with IGR and allowing for some leakages from non-payment, have allowed the states to meet their personnel payments in full in 2017 and pay a large chunk of aggregate overheads of N714bn. We have seen suggestions that a rise in VAT could be accompanied by a reduction in companies’ income tax, from which the FGN would be the loser. Not surprisingly, the idea is not popular in Abuja, where a hike in VAT in isolation has been resisted. A higher rate for luxury goods is considered acceptable but not a more general increase. This would give the FGN additional firepower for its capital spending plans, ease the pressure on state government finances and bring Nigeria closer into line with its fellow members of the Economic Community of West African States. Alongside this putative helping hand from the FGN, the managerial solution to the mess has several components, none of which are new. On the revenue side, the sharp fluctuations in IGR for most states tell us that they rely on one-off inflows rather than a secure revenue stream from regular levies such as land taxes and service fees. The collection of revenue can be enhanced by the use of tech-

nology for online payment and transfer. Lagos State anticipates a fourfold rise in receipts from consumption taxes as a result. Another route is asset sales, which Kaduna State has launched. Turning to the expenditure side, there are sizeable efficiency gains to be had. None of them are new: the removal of ghost workers and pensioners, the replacement of cash with electronic transactions wherever possible, a greater monitoring of expenses, a firmer management of contracts for public works and services, and the creation of an efficiency unit similar to the body within the federal ministry of finance. If we returned to an oil price of US$100/b for, say, three years, the mess would be largely cleared by far higher FAAC payouts. This is possible although not our expectation. Equally, we could sink to US$40/b for three years, and the majority of states would find themselves in an even greater mess. Which brings us back to the managerial solution. States governments that are not minded to change their ways should recall that the Buhari administration has already given them five separate debt relief packages, the two largest of which are one-offs (the conversion of eligible bank borrowings into FGN long bonds and the Paris Club refunds). The packages reduced the mess but were a long way from eliminating it, and the larger ones are not repeatable. Gregory Kronsten is the Head, Macroeconomic & Fixed Income Research FBNQuest

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comment All the rage over selling the NNPC Patrick Atuanya

he Nigerian National Petroleum Corporation (NNPC) is adjudged to have the poorest transparency record out of 44 national and international energy companies, according to Transparency International and Revenue Watch Institute. Former Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi in 2014 alleged that up to $20 billion in oil revenues were ‘missing’, from the NNPC. A 146 – page report by Nuhu Ribadu the former head of the Economic and Financial Crimes Commission (EFCC) covering the year 2002 to 2012, released in 2013 concluded that oil majors Shell, Total and Eni made bumper profits from undercutting Nigeria on gas prices, under the nose of NNPC to the tune of approximately $29 billion. Various reports and audits also show NNPC has short-changed the Nigerian treasury of billions dollars over the last 20 years by selling crude oil and gas to itself below market rates. The Nigerian Extractive Industry Transparency Initiative (NEITI) in its audit of the petroleum industry from 2009 – 2011 found that the NNPC failed

to remit $4.84 billion dividend payments over a two year period from the Nigeria Liquefied Natural Gas NLNG to the Federation Account. Allegations first surfaced in 1980 of N2.8 billion missing from NNPC (equivalent to roughly $3.1 billion then or $8.5 billion in today’s dollars). In more recent times, in a one year period between February 2017 and February 2018 NNPC spent over N746.79billion on fuel subsidies or what it euphemistically calls underrecovery (because it cannot get its 4 refineries to work after billions of dollars on turn-around maintenance) , and in the process short-changed the Nigerian Treasury including the Federal, States and Local Governments. Nigeria’s oil sector is largely in recession, because NNPC as a regulator and operator has often been late in meeting cash call obligations to Joint Venture (JV) partners. Meanwhile, Nigeria’s oil and gas reserves are stagnant or dwindling, while oil production is on a decline. Huge gas reserves estimated at 182 trillion cubic feet (TCF) that could help feed power generation for energy starved Nigeria, largely remain undeveloped 20 plus years after being discovered due to NNPCs inability to either fund the capex needed to develop the fields or let go of the fields for private oil firms to develop. It is clear from the above that the NNPC has failed the country, but how do you solve a problem like the NNPC which still has formidable vested interests willing to sink all reform efforts directed at its path? Perhaps a look at some global state

owned oil companies that have managed to operate more like private for profit companies, with more openness and less opacity, and in the process separated their operations from the balance sheet of their host countries, could provide a template for Nigeria. Brazilian State oil company Petrobras was created in 1953, however it first sold shares to the public in December 1957 and is listed on the Ibovespa or Brazilian stock market. The Brazilian government directly owns 54 percent of Petrobras’ common shares with voting rights, while the Brazilian Development Bank and Brazil’s Sovereign Wealth Fund each control 5 percent, bringing the State’s direct and indirect ownership to 64 percent. The non state controlled shares are traded on BM&F Bovespa, where they are part of the Ibovespa index. In September 2010, the company raised as much as $70 billion in the world’s largest share sale to help finance its $224 billion investment plan to develop newly discovered oil fields. Petrobras produced 2.63 MM boed in 2018. In Malaysia Petronas is the state oil and gas company that was founded in 1974, and initially wholly owned by the Government of Malaysia. Petronas has since listed at least 3 of its subsidiaries in the Bursa Malaysia or Kuala Lumpur Stock exchange. Total production volume for Petronas was 2.32 million barrels of oil equivalent per day in 2018, while sales of liquefied natural gas (LNG) was 30.7 million tonnes. Full year profits for 2017 was $11 billion or 45.5 billion ringgit, and

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It would do the country a lot of good to have a very transparent privately run and listed NNPC with the government still having controlling shares

Petronas paid $4.35 billion (17.4 billion ringgit) in taxes and $4 billion (16 billion ringgit) in dividends to the government in 2017, which is expected to more than double to 54 billion ringgit ($13 billion) in 2019. Other oil companies closely identified with the State but now listed on stock exchanges include Statoil of Norway, and Gazprom of Russia. Saudi Arabia also plans a mother of all IPOs for its state oil Company Aramco. Saudi officials hope they will raise $100 billion by selling about 5 percent in the company, valuing Aramco at $2 trillion. The IPO is the cornerstone of Prince Mohammed bin Salman’s economic program to transform Saudi Arabia, dubbed Vision 2030. One thing clear from the above narrative is that serious countries are looking hard at an industry (oil and gas) that is in terminal decline as we near peak oil and rolling out major reforms to wring as much from the sector before its eventual demise. Nigeria, when compared with all the countries mentioned, has the lowest oil production per capita, but seems the least prepared or concerned about reforming its oil sector. In that sense the recent controversy coming out of the 2019 elections about selling the NNPC is largely unnecessary and political. It would do the country a lot of good to have a very transparent privately run and listed NNPC with the government still having controlling shares. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Jimi Agbaje’s ‘Big Idea’: A growing vision Justin Mbu

imi Agbaje, the PDP gubernatorial candidate for Lagos State recently declared his desire to make Lagos State the second largest economy in Africa by 2029, anchored on building a state focused on its people and human capital development. This vision is premised on repositioning Lagos globally over the next ten years by focusing relentlessly on the development of the knowledge, skills and health of the people of Lagos, which based on what has been seen in other very successful economies, will equip Lagosians and future generations for a lifetime of prosperity. Education is so critical to any nation’s success as it becomes an anchor for economic, social and political development. Whilst a fresh debate is brewing actively about Jimi Agbaje spending up to 50% of the state’s resources in creating an education/ knowledge economy, everyone seems to be missing a second aspect of his visionary plan, which he described as having a CAN-DO attitude, if we are going to carry it through. In reading his BIG IDEA document, I was quite impressed by his emotional call to Lagosians to join his Freedom train with a strong conviction that nothing is impossible to do. Lagosians should not let the fear of possible failure stop them from embarking on what is going to be larger, bigger, better than anything proposed in this country. This is also the spirit he is seeking from Lagosians, who are letting the loss of their freedom over the years, manifest itself in this fear of the monster in Lagos that cannot be challenged and is making everyone so afraid.

Agbaje is now also being audacious by not only seeking to create this knowledge and education driven economy but plans to do so by piggy backing this vision on an intention to invest massively in infrastructure, which is craftily locked into his education economy strategy. He claims we just do not have a choice but to build wider, longer and layered roads if we are going to ease our traffic problems. What is even more exciting is his plan tobuild underground transportation systems based on the ‘ground breaking’ work that Elon Musk’s company – The BORING company is now able to do in boring huge holes underground to create new transportation infrastructure at a fraction of current costs. Building underground saves the battle for right of way, minimizing potential disturbance to urban dwelling and eliminating disruptions to communities. That’s a BIG IDEA. It is clearly the Awolowo model of visioning. Talking about Chief Obafemi Awolowo, I ask that we cast our mind back to the vision that inspired Chief Obafemi Awolowo when54 years ago, he built the 25 storey Cocoa House in Ibadan, which at that time was the tallest building in tropical Africa funded 100% from the proceeds of cocoa. This same visionary leader built the first television broadcast station on the African continent also in Ibadan in 1959, 60 years ago, even ahead of France! Lagos can only be saved by a fresh, honest and legitimate visionary leader and not an operations manager chosen to be just that – an ‘operations’ manager, who naively admits that he is privileged to be a puppet to govern the current fifth largest economy in Africa. Agbaje will surely get funding to actualise his vision based on the quiet assurances from those still too timid to step out and say so publicly. First of all, he will get greater value for the money invested in executing these projects. He will definitely win the hearts of the private

sector partners and funding agencies, who will trust him implicitly with their money. They will trust how he will spend, they will trust how he will engage, they know he will give value for money and they know Jimi Agbaje will not steal. They will trust his leadership. He will also raise money from just plugging the huge holes that exist in Lagos state’s Treasury and captured in the wider financial economy of the state. Agbaje mentions the revenue fromthe Lagos State Chapter of the National Union of Road Transport workers estimated to be in excess of N200billion annually and asks where itis shown in the books of the state. This is income, if captured, begins to make the funding of his education driven economy look even that more possible. There is the Alpha-Beta company, which by the admission of its Managing Director receives at least 10% of tax revenues of Lagos State every month, serving as a conduit pipe for massive money laundering scheme, tax evasion and other vices and has become an avenue for the official corruption of government officials. To the extent that for over ten years, this revenue was drained from the Lagos system and even signed into Law specifically for this private company (since removed from our statutes thankfully), shows how Lagos can truly fund Agbaje’s vision as it becomes additional revenue in its books. Agbaje says he will implement the Freedom of Information Act to show transparency in his financial governance and bring to every one’s notice, once and for all, how much Lagos truly earns as a state. Agbaje says his government will only seek to facilitate and not participate in the businesses of the various entrepreneurs, corporates and legitimate businessmen who seek ways to support the State’s vision. His Government will have no business in business, and it will also not partake

in someone else’s business. With Agbaje’s plan to zone Lagos into economic zones, this must be great news to enterprise. Whilst, I could challenge the zoning allocation, it is clear that the concept is welcome and I am sure, his urban planners, when embedded in government might have different economic zones. For now, he proposes five zones. Namely Lagos mainland, Island, VI and Ikoyi, which should become the ICT, financial and professional services hub – the traditional livewire of Lagos. Ikeja, Ikorodu and its environs will continue to focus on industrial services. Badagry and environs will focus on engineering technology, agriculture and its value chain industry, Lekki Peninsular and Epe corridor for the emerging Upstream extractive industry, fishing and free trade zone and finally Apapa and its environs for cabotage, maritime and shipping. This urban matrix concept will provide the foundation for the creation of self-contained and enhanced communities with assets that will facilitate residence, schools, primary and secondary healthcare, security and police formations, social interaction parks, entertainment venues, sports venues and of course commerce and industry. This proposed urban planning concept will reduce the need for movement of people from residential to industrial areas, with the resulting benefits in the areas of traffic flow, productivity and quality of life in each community. I must give credit to Agbaje’s vision and the ingenious way he has made the creation of an education economy an anchor to drive the rest of the economy. Those who do not understand must read his BIG IDEA Manifesto, which can be found on http://jimiagbaje.com/bigidea. You will understand why he says his vision just got bigger. Mbu is a legal practitioner, based in Lagos

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That there may be light

he 2019 presidential elections, barring contrary ruling by the courts, is won and lost. On Saturday March 9 too, the gubernatorial and state Houses of Assembly elections will be conducted and it will be time to draw the curtains on politics and begin to prepare for governance. One key area that must receive immediate attention of the government is the power sector. More than five years after the privatisation of the sector, there has been no noticeable improvement in the power situation in the country and almost all analysts of the sector are in agreement that the privatisation of the sector is yet to translate to power for consumers. Last time out, the minister of power, works and housing, Babatunde Fashola, sought to absolve government of blame saying since the sector has been privatised and so it is no longer the responsibility of the government to supply electricity. While this is technically true, the honourable minister knows it is not the entire truth and he was only playing politics with the issue. Despite the privatisation of the sector, the government has refused to let go, bugging the sector down with over-regula-

tion and tariff caps that discourage investments and continues to keep Nigerians in darkness. There is nowhere in the world where you ask a company to sell its product below cost price without appropriate subsidy to make up the cost and provide profit for the producer. The same government that now wants us to believe it is not responsible for power outages is still the same government that has put an arbitrary cap on tariffs, forcing the Discos to sell electricity below the cost price of producing it, making power generation and distribution much more expensive than what is being charged. We believe the government took this route for populist and political reasons; not to be seen to be increasing or allowing the Discos increase power tariffs, especially close to election time. Now that the elections are over, it is the right time to allow proper costing of power and the review of electricity tariffs to reflect the cost of production of electricity. The cost reflective is good for Nigeria on several fronts. The obvious advantage is that it will enhance power delivery as it will enable distribution companies (discos) pay the generation companies (gencos) for power generated. Gencos too will be able to pay gas suppliers to enable them

generate more power. Besides it will also enable both the discos and gencos to make more investments in their networks and in power generation. Gas suppliers also will be able to invest in more gas production. Similarly, it will enable the Transmission Company of Nigeria (TCN) to strengthen their weak transmission lines so that they can be able to evacuate more power. We understand the misgivings of many Nigerians and especially the labour unions who are arguing that there should be an improvement in power supply before the tariff increases take effect. In fact, in a normal market economy, that should be the order. Payments are made for services delivered and not promises. However, the unique problem with the power sector is that without a cost reflective tariff plan, it is difficult to secure funding with which the needed investments that will guarantee regular power supply can be made. The banks are generally not willing to fund projects without a clear cut recovery price. The situation in the power sector mirrors the situation in the oil and gas sector where several dozen licences have been issued for the construction of refineries since 2003 and yet no refinery has been built. The simple reason was that banks – who were the major

financiers of the projects – refused to finance the building of refineries without a proper pricing of petrol and diesel. Nigerians, on their part, refused to allow for the removal of subsidy and for petrol to be sold at market price. The effect was that for more than 20 years after the return of civil democratic governance and the determination of the government to make Nigeria self-sufficient in refined petrol, the country still continues to import almost all its refined petrol spending billions of dollars in the process. What is more, billions of dollars – monies that could have built several refineries many times over – have been spent on subsidising of petrol. Nigerians must not allow the same thing to happen again with the electricity sector. The need for regular power supply cannot be over-emphasised. The multiplier effect on the economy – job creation, businesses and improvement in the quality of life of the people – are too obvious to ignore. With the privatisation of the distribution and generation companies, a progressive tariff plan that adequately reflects the cost of generation of electricity is required to get banks and other investors to finance the massive investments in generation and transmission of electricity that Nigerians demand.

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Modi’s dangerous moment

Too manyLemon challengers Squeezing

America’s porous wall between church and state

India and Pakistan should stop playing with fire With an election looming, Narendra Modi is under pressure to act tough

HE ARMIES of India and Pakistan often exchange fire across the front line in the disputed state of Kashmir. When tensions rise, one side will subject the other to a blistering artillery barrage. On occasion, the two have sent soldiers on forays into one another’s territory. But since the feuding neighbours tested nuclear weapons in the late 1990s, neither had dared send fighter jets across the frontier— until this week. After a terrorist group based in Pakistan launched an attack in the Indian-controlled part of Kashmir that killed 40 soldiers, India responded by bombing what it said was a terrorist training camp in the Pakistani state of Khyber Pakhtunkhwa. Pakistan retaliated by sending jets of its own to bomb Indian targets. In the ensuing air battle, both sides claim to have shot down the other’s aircraft, and Pakistan captured an Indian pilot. A miscalculation now could spell calamity. The fighting is already the fiercest between the two countries since India battled to expel Pakistani intruders from high in the Himalayas in 1999. The initial Indian air raid struck not Pakistan’s bit of Kashmir, but well within Pakistan proper and just 100km from the capital, Islamabad. That, in effect, constituted a change in the rules of engagement between the two (see article). India and Pakistan are so often at odds that there is a tendency to shrug off their spats, but not since their most recent, full-blown war in 1971 has the risk of escalation been so high. The intention of Narendra Modi, India’s prime minister, in ordering the original air strike was simple. Pakistan has long backed terrorists who mount grisly attacks in India, most notably in Mumbai in 2008, when jihadists who arrived by boat from Pakistan killed some 165 people. Although Pakistan’s army promised then to shut down such extremist groups, it has not. By responding more forcefully than usual to the latest outrage,

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Mr Modi understandably wanted to signal that he was not willing to allow Pakistan to keep sponsoring terrorism. In the long run, stability depends on Pakistan ending its indefensible support for terrorism. Its prime minister, Imran Khan, is urging dialogue and, in a promising gesture, was due to release India’s pilot—presumably with the approval of the army chief, who calls the shots on matters of security. But in the short run Mr Modi shares the responsibility to stop a disastrous escalation. Because he faces an election in April, he faces the hardest and most consequential calculations. They could come to define his premiership. Mr Modi has always presented himself as a bold and resolute military leader, who does not shrink from confronting Pakistan’s provocations. He has taken to repeating a catchphrase from the film “Uri”, which portrays a commando raid he ordered against Pakistan in 2016 in response to a previous terrorist attack as a moment of chin-jutting grit. The alltoo-plausible fear is that his own tendency to swagger, along with domestic political pressures, will spur him further down the spiral towards war. The ambiguity of Mr Modi’s beliefs only deepens the danger. He campaigned at the election in 2014 as a moderniser, who would

bring jobs and prosperity to India. But, his critics charge, all his talk of development and reform is simply the figleaf for a lifelong commitment to a divisive Hindunationalist agenda. Over the past five years Mr Modi has lived up neither to the hype nor to the dire warnings. The economy has grown strongly under his leadership, by around 7% a year. He has brought about reforms his predecessors had promised but never delivered, such as a nationwide goods-and-services tax (GST). But unemployment has actually risen during Mr Modi’s tenure, according to leaked data that his government has been accused of trying to suppress (see article). The GST was needlessly complex and costly to administer. Other pressing reforms have fallen by the wayside. India’s banks are still largely in state hands, still prone to lend to the well-connected. And as the election has drawn closer, Mr Modi has resorted to politically expedient policies that are likely to harm the economy. His government hounded the boss of the central bank out of office for keeping interest rates high, appointing a replacement who promptly cut them. And it has unveiled draft rules that would protect domestic e-commerce firms from competition from retailers such as Amazon. By the same token, Mr Modi has not sparked the outright com-

munal conflagration his critics, The Economist included, fretted about before he became prime minister. But his government has often displayed hostility to India’s Muslim minority and sympathy for those who see Hinduism—the religion of 80% of Indians—as under threat from internal and external foes. He has appointed a bigoted Hindu prelate, Yogi Adityanath, as chief minister of India’s most populous state, Uttar Pradesh. A member of his cabinet presented garlands of flowers to a group of Hindu men who had been convicted of lynching a Muslim for selling beef (cows are sacred to Hindus). And Mr Modi himself has suspended the elected government of Jammu & Kashmir, India’s only Muslim-majority state, and used force to suppress protests there against the central government, leading to horrific civilian casualties. As reprehensible as all this is, the Hindu zealots who staff Mr Modi’s electoral machine complain that he has not done enough to advance the Hindu cause (see article). And public dissatisfaction with his economic reforms has helped boost Congress, the main opposition party, making the election more competitive than had been expected. The temptation to fire up voters using heated brinkmanship with Pakistan will be huge. Mr Modi has made a career of playing with fire. He first rose to prominence as chief minister of Gujarat when the state was racked by anti-Muslim pogroms in 2002. Although there is no evidence he orchestrated the violence, he has shown no compunction about capitalising on the popularity it won him in Hindu-nationalist circles. With a difficult election ahead, he may think he can pull off the same trick again by playing the tough guy with Pakistan, but without actually getting into a fight. However, the price of miscalculation does not bear thinking about. Western governments are pushing for a diplomatic settlement at the UN. If Mr Modi really is a patriot, he will now step back.

A Supreme Court case could make the holes bigger

N 1947, when the Supreme Court first interpreted the constitution’s bar on laws “respecting an establishment of religion”, the justices consulted Thomas Jefferson. The First Amendment erects “a wall of separation between church and state,” the third president had written in 1802. This means, the court said a century and a half later, that the government may neither “prefer one religion over another”, take part in the “affairs of any religious organisations” nor impose taxes to support “religious activities or institutions.” Justice Hugo Black explained in a 5-4 decision why this wall did not stand in the way of a New

Jersey law covering the bus fares of Catholic-school students. In dissent, Justice Robert Jackson called the majority opinion “utterly discordant”. The ruling, for him, brought to mind “Julia who, according to Byron’s reports, ‘whispering I will ne’er consent,’— consented.’” The battle over the church-state line is no less divisive—and even more muddled—70 years on. Prayer in school was tossed out in the 1960s. Stand-alone nativity scenes inside government buildings were struck down in the 1980s. But other Biblical verses, crosses and menorahs in the public square have won the court’s blessing. On one day in 2005, the Supreme Court upheld a Ten Commandments monument near a capitol building while rejecting another outside a courthouse. When the justices last ruled on the matter in 2014, they found no trouble with a town board launching its meetings with Christian prayers. As long as the government does not relentlessly “denigrate” or “proselytise” dissenters, Justice Anthony Kennedy wrote— again, for a 5-4 majority—it respects Continues on page 15

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Hard men v pragmatists

What to make of the attempted resignation of Iran’s

Continued from page 14

A hidden power struggle is brought into the open

UHAMMAD JAVAD ZARIF, Iran’s longserving foreign minister and architect of its nuclear deal with America and the West, apologised for his shortcomings and resigned, by way of an Instagram post, on February 25th. Within hours, Iran’s two rival camps—one still seeking engagement with the West, the other thirsting for confrontation—were at each other’s throats. The elected government of President Hassan Rouhani pressed Mr Zarif (pictured) to stay. Unelected authorities backed by the Islamic Revolutionary Guard Corps, spearhead of the hardliners, celebrated his demise. Rarely has the power struggle inside Iran been more exposed. Mr Rouhani rejected the resignation as “against Iran’s national interests”. With #ZarifStay trending on Twitter, most members of parliament called on him to stick around. Several ambassadors threatened to follow Mr Zarif out. By contrast, agencies tied to the Guards rushed to confirm his departure. One of their loudest television mouthpieces, Vahid Yaminpour, hailed his “ejection from an aircraft in free fall”. Allies of the Guards also predicted that Bijan Zanganeh, the oil minister who has sought to conciliate the West, would go next. Hardliners even called for the ouster of President Rouhani himself. Iran’s supreme leader, Ayatollah

Ali Khamenei, who has the final say, has tried to keep mum. But Mr Zarif’s public protest testifies to his frustration with the power of the hardliners. They have blocked his efforts to keep Iran off the international blacklist of countries sponsoring terrorism by ratifying the terms of the Financial Action Task Force, an outfit based in Paris that seeks to curb money-laundering and the financing of terrorism. When the president of Syria, Bashar al-Assad, made his first visit, unannounced, to Tehran since the start of Syria’s civil war in 2011, Mr Zarif was excluded from the proceedings. Qassem Suleimani, the head of the Guards’ foreign legion, managed them instead. Back in the Obama era, the Rouhani-Zarif team rubbed along well with the Americans. The deal to rein

in Iran’s nuclear ambitions, signed in 2015, enabled most sanctions against Iran to be lifted. But the victory of President Donald Trump in 2016 and his decision to pull America out of the deal last year knocked the pragmatist tandem askew. Sanctions on banking and oil exports have been reimposed. Unemployment and inflation have soared. Iran’s currency has plummeted in value, along with Mr Rouhani’s popularity. Unrest is rising. “The Revolutionary Guards and Khamenei’s conservatives want a more radical government,” says Pejman Abdolmohammadi, an IranianItalian academic at the University of Trento in Italy. The Guards have long made life trying for Mr Rouhani. Their intelligence units have forced out some

of his ministers, even accusing them of ties to Mossad, Israel’s spy service. “They are trying to block everything, control everything,” says Kaveh Madani, a senior Iranian official who fled to America last year. They have increasingly indulged their habit of arresting dual nationals on flimsy grounds. They have put one of Mr Zarif’s fellow negotiators in jail on espionage charges despite objections from Mr Rouhani’s own security men. This month a brother of Mr Rouhani was put on trial for alleged corruption. “If they could, they would mount a coup,” says a Rouhani aide. A presidential election is not due until 2021, but talk of an early poll is growing. Some Guards would be happy to see the nuclear deal, to which Mr Rouhani’s circle still clings, formally revoked. They do not shrink from the prospect of rising confrontation with Saudi Arabia and the United Arab Emirates over Yemen or over disputed islands in the Strait of Hormuz. Nor do they mind American economic sanctions, because these help protect their vast business interests from international competition. And they seem positively to revel in the diplomatic isolation from the West that Mr Zarif has spent the past five years trying to end. For now Mr Rouhani appears to have persuaded Mr Zarif to stay on. But the two men may have to tailor Iran’s foreign policy more to the liking of the Guards.

More haste, less speed

Britain and the EU must extend Article 50

And not just until June, unless they want to end up in the same situation three months from now

NDER ENOUGH heat, atoms start to fly apart. Such is the state of Britain’s political parties as Brexit day approaches. Theresa May, the Conservative prime minister, has long insisted that Britain will leave the European Union on March 29th, deal or no deal. This week she conceded that Parliament would be allowed to request more time after all. Meanwhile Jeremy Corbyn, who has been resisting calls from Labour members to back a second referendum, said it was now the party’s policy to support one. The about-turns show the extent to which both leaders have lost control of their own Brexit policies, and their parties (see article). Their change of direction is welcome. Labour’s reluctant backing of a second vote has many strings attached, but Mr Corbyn has at last conceded the principle that the public should have the right to approve or reject any deal. And Mrs May’s volte face makes it highly unlikely that Britain will crash out of the EU without a deal in a month’s time. Yet no one should get too excited. This week’s developments do not get rid of the cliff edge towards which Britain is heading—they only push it back, and not very far. Mrs May said that the Article 50 talks could be extended only to the end of June at the latest. That would

buy just another three months. The prime minister seems determined to persist with her tactic of pretending to renegotiate her deal with the EU, running down the clock in the hope that MPs will feel forced to approve the deal as time runs out and the cliff edge draws nearer. This strategy has a poor record. Mrs May originally planned to present her deal to MPs in December, but pulled it when it became clear they would reject it. In January, when time was already tight, they defeated it by a record margin of 230 votes. The deal was supposed to return to the Commons this week for another attempt but the prime minister backed down again, fearing a second rout. She now says MPs will get to vote on her deal by March

America’s porous wall between...

12th, just 17 days before exit day. They may yet cave in; some hardline Brexiteers are already hinting that they might rather leave on time with Mrs May’s deal than delay Britain’s departure, at the risk of ending up with another referendum. But other MPs, far from feeling more cowed as Brexit day looms, seem to be growing in rebellious confidence. The prime minister has kicked the can down the road so many times. How many believe her when she now says that the end of June will be the final deadline? As Mrs May’s strategy remains unchanged even as her credibility collapses further, the risk is that Britain’s poisonous Brexit impasse simply continues for another three months. That is why the EU should try to

push Britain towards delaying Brexit for longer, perhaps until the end of the year. An extension is useful only if Britain uses it to build a Brexit strategy that can command the support of a stable majority of MPs and the public. And that is more likely the more time it has. Holding yet another election might be another way to break the deadlock in Parliament (though polls suggest it might just prolong it). This newspaper has argued that a referendum on Mrs May’s negotiated deal would be a better way to achieve such agreement. Either of these radical courses would take longer than three months to succeed. A long extension would carry risks. Some Tories are itching to topple Mrs May; if they did, her replacement might turn out to be even harder to deal with. And if Britain remained in the EU beyond the end of June then it might be legally obliged to take part in this spring’s European Parliament elections, which it is not currently scheduled to do. Yet even as legalistic an institution as the EU ought to be able to find a way around snags such as this, if the prize is a better Brexit outcome for all parties. When, as seems likely, Mrs May asks for more time two weeks from now, the EU should press her to accept a long extension. And Mrs May should welcome its offer.

America’s church-state balance. On February 27th a new flashpoint came before the court in the guise of an old memorial to first-world-war soldiers. Since 1925 Bladensburg in Maryland has been home to a 40-foot Latin cross honouring 49 men from Prince George’s County who died in the fighting. Upon its rededication in 1985, the Peace Cross’s reach was extended to veterans of all wars. For Rachel Laser, president of Americans United for Separation of Church and State, it is “remarkable” that the cross, which stands at the intersection of two big motorways on public ground, “is thought to be anything but a clear violation of the establishment clause.” The memorial is a sectarian symbol, she says, and denies “equal dignity” to non-Christian soldiers who died. When the Fourth Circuit Court of Appeals ruled against the cross in 2017 it invoked a precedent set in Lemon v Kurtzman, a 1971 ruling that states could not pay the salaries of teachers at private Catholic schools in Pennsylvania. Justice Antonin Scalia once likened Lemon to a “ghoul in a late night horror movie” that just won’t die. At the Sumpreme Court hearing Justices Neil Gorsuch and Brett Kavanaugh both professed a desire to drive a stake through its heart. Whether or not Lemon gets the squeeze, the oral arguments added credence to the widespread hunch that the Supreme Court will save the Peace Cross. The question is how bold the justices will be. Late in the hearing, inklings of possible compromise came from Justices Elena Kagan and Stephen Breyer. In 2005, Justice Breyer had found it “determinative” that 40 years passed before anyone raised an objection to a Ten Commandments display in Texas. His vote saved that monument. Likewise, the historical context of the Peace Cross counts, he said. What message would it send, he asked, if people “see crosses all over the country being knocked down?” Justice Kagan said she, too, finds “something quite different” about the “historic moment in time” when the cross was built. Perhaps the justices could let the Maryland memorial stand while saying “no more” to future crosses on public land?

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Monday 04 March 2019 In Association With

Under the umbrella

China is waging a nationwide campaign against gang crime It is often an excuse to crush political threats to the Communist Party

N THEIR EFFORTS to eradicate criminal gangs, Chinese officials deploy a colourful vocabulary. Beijing is festooned with red banners urging citizens to “resolutely root out black and evil forces”. (In other countries this might be a job for police officers or exorcists.) Other banners mix metaphors. “Dig deep and thoroughly investigate the protective umbrellas” of such menaces, says one. In January 2018 China’s leader, Xi Jinping, launched a threeyear campaign against organised crime. State media brim with reports of success. The authorities in Zhanjiang, a city in the southern province of Guangdong, claim to have dealt an effective blow to “vehicle tyrants” (taxi-business mafias), “sand tyrants” (gangs that control the sand-mining industry), “sea tyrants” (those involved in the seafood business) and “basket tyrants” (those engaged in the basket trade). So far more than 10,000 alleged gangsters have been brought to trial across the country. State media say police have smashed 6,000 gangs, with the help of citizens who are offered lavish rewards for leads (disguised

recipients are pictured). Campaigns against hei shehui, or “black society”, as organised crime is often called, are common in China. But officials have been at pains to point out that this one is different. Previous such efforts have been called dahei, or “smashing black”. This one is called saohei, or “sweeping [aside] black”. The metaphorical shift is intended to suggest a more comprehensive effort: one that is aimed not only at the mob, but also at their official protectors and the grassroots political structures they have infiltrated. Official descriptions of crimes being targeted paint more

than simply a picture of gangsters terrorising ordinary citizens. They describe a menace to the Communist Party itself. Top of the list are “black and evil forces that threaten political security, especially the safety of the [political] system and of political authority, and that infiltrate the political arena.” A cartoon released by police in Zhaoqing, another city in Guangdong, gives an example. It shows what appears to be a Buddhist leader, judging by the decor and the kowtowing of his followers. He talks of establishing an “ideal country where we can do what we want”.

Next he is shown leading protesters outside a government building. In the final scene he counts piles of banknotes. “The goal of an independent kingdom is getting ever closer,” he chortles, before police burst in. Other examples given by state media relate to political control in the countryside. They include clans that “lord over” rural areas (many villages are inhabited mainly by people of one surname) and the often-related issue of gangs that rig the vote in grassroots elections (their efforts sometimes proving more effective than the party’s). Perhaps not surprisingly, the gangs that help developers and officials to evict people from their homes are not mentioned as targets of the campaign. Rather, it is black and evil forces that “whip up unrest” during demolitions that are to be crushed. In other words, as the police are likely to interpret this, activists who try to organise resistance to the bulldozing of their communities. Also in the cross-hairs are the forces of evil that organise people to go in groups to submit petitions at government offices. Petitioning higher authorities for redress of local injustices is an ancient tradition in China that has continued

under Communist rule. The party, however, is fearful of people with grievances gathering in public. The saohei campaign appears to offer the police an excuse to round up organisers and treat them as gangsters instead of merely bundling them off to detention centres to await deportation to their home towns. In January bosses at an industrial park in the coastal province of Fujian met to discuss two main topics: progress with saohei and how to control petitioners in order to prevent “sudden incidents” during the Chinese newyear holiday. In Tibet and the neighbouring region of Xinjiang, officials are using the saohei campaign to bolster their relentless efforts to crush unrest. Tibetans have been told to inform on dark and evil forces that “link up with the Dalai [Lama] clique”, that advocate the Dalai Lama’s “middle way” of compromise with China, that lurk in monasteries and use religion to stir up opposition to the party, or that encourage campaigning for the protection of the Tibetan language (see article). In Xinjiang officials say the main purpose of the saohei effort is to fight gangs related to the “three evil forces” of terrorism, extremism and separatism.

A last roll of the dice?

Omar al-Bashir declares a state of emergency in Sudan An embattled president woos generals at the expense of Islamists

N FEBRUARY 22ND millions of Sudanese gathered with bated breath in front of their television screens. It had been two months since tens of thousands of protesters, angry at rising food prices, began demanding an end to the 30-year rule of President Omar al-Bashir. Earlier in the day Sudan’s security chief had briefed journalists that Mr Bashir would step down as head of the ruling party. Amid mounting excitement, rumours swept the country that he would announce his intention to resign as president next year rather than stand for another five-year term. Would he bow out even sooner? No such luck. Mr Bashir began by sounding conciliatory. “The demands of our people for better living conditions are lawful,” he said, calling for a national dialogue. He told parliament to postpone the constitutional amendments that would have let him seek another term. But then, suddenly, his tone changed sharply as he declared a one-year state of emergency. His government, he said, had been dissolved. There was no sign that he would step down. This allows Mr Bashir to suspend the constitution. Security forces may raid premises without warrants and seize property. Decrees issued three days later ban unlicensed gatherings

lining the Islamists Mr Bashir may hope to be rewarded with cash to ease Sudan’s economic crisis. But violence may well increase. The opposition has furiously rejected the president’s call for dialogue. Demonstrations following the declaration of emergency were the angriest in weeks. On February 24th a medical school in Khartoum was ransacked by security forces. Female students were reportedly whipped.

and protests, as well as the trading or hoarding of fuel and other subsidised goods. So in practice little has changed, since several of Sudan’s 18 states were already under emergency law and the security forces have long enjoyed immunity from prosecution. They have killed at least 50 people since the start of the crisis. Mr Bashir is still far from secure. Diplomats and politicians in Khartoum, the capital, think he may yet be ousted. His latest move may have been prompted more by discord in ruling circles than by protests on

the streets. But the balance of power may have altered. Since grabbing the reins in a coup in 1989 he has governed in alliance with Islamists, many of whom now reject him. By dissolving the government he has boosted the army, perhaps pre-empting a military attempt to overthrow him. His new cabinet is dominated by technocrats and generals. All 18 state governors have been replaced by military or security men. “He’s sending a message to the Islamists that he is no longer their

champion,” says Ahmed Soliman of Chatham House, a think-tank in London. He may, as a result, be edging away from the Islamists of Qatar and Turkey, with their ties to the Muslim Brotherhood, and instead be leaning back towards the rival regional club led by Egypt, Saudi Arabia and the United Arab Emirates, which all loathe the Brothers. To appeal to young Sudanese, especially women, Mr Bashir has offered to review draconian laws prohibiting “immoral” clothing, among other sins. By side-

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Reverse stock split leads to selloff in C&I Leasing shares

Pg. 23

C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

AGRI-BUSINESS

Union Dicon suffers set back in dream to become largest cassava producer SEGUN ADAMS

nion Dicon, a Lagos-based wholesale processor of Crude Salt, notified the Nigerian Stock Exchange (NSE), last week, that its venture with private equity firm, CBO Capital, to expand into agribusiness, has not yielded the desired results. According to the Salt Producer, the Certificate of Ownership of the land in Edo State for its Cassava production has been revoked over the non-payment of ground rent, a development it claimed was not made known to the Board by the past management led by CBO Capital. In addition, it revealed that the $100 million Alape Staple Crop Processing Zone had not been achieved by the time CBO Capital left the Management of Union Dicon in 2017. CBO Capital Partners had joined the Management of Union Dicon in 2014 after 41,000,000 shares representing 15 percent of the Consumer goods company was listed in favour of CBO Capital, with Chuka Mordi and Bex Nwawudu, both of

CBO partners, announced as Managing and Deputy Managing Directors of Union Dicon. The hope was to steer Union Dicon in the implementation of its transformation strategy to become a fully integrated Agro Industrial National champion. In pursuit of the agenda, Management of Union Dicon in April of 2016 notified the exchange that it had signed terms to add 2,000 Hectares to its land portfolio in addition to its earlier agreement for the acquisition of 15,000 Hectares of land in Edo State. The investment was expected to make Union Dicon the largest Cassava producer in Nigeria as well as facilitate the company’s goal ‘’to become cash-flow positive before the end of 2016.’’ Similarly, the consumer goods company partnered with the Delta state government on cassava cultivation which was hoped to help the state diversify away from oil dependence and help stem the economic challenges afflicting the state. In June of 2016, the Salt Maker signed heads of agreement with PNG Gas in Delta state to supply gas to proposed starch processing plant in Umutu in Delta state

and announced that it was in final stages of a negotiation to acquire the second largest rice farm in Nigeria. Around the same time, Union Dicon Salt announced that it would be replacing Cargill, a US-based agroindustrial giant, as the core investor in the $100m Alape Staple Crop Processing Zone in Kogi State to cultivate Cassava on 30,000 hectares of

land in Kogi State. The Federal Ministry of Agriculture and Rural Development (FMARD) expressed support, with Chief Audu Ogbeh, then Honourable Minister of Agriculture, articulating his enthusiasm about a Nigerian company taking over the very important project and ‘’championing the indigenous development of agribusiness’’

Union Dicon, chaired by Retired Lt. General T.Y Danjuma, has in recent times struggled despite the great prospects in the business. Since 2012 at least, it has not posted any revenues with negative shareholder funds as a regular feature in the company’s financials. For period to 30 September 2018, Union Dicon did not post any turnover

and top line items remained missing. Other Operating income grew 20 percent to N38.07 million in the 9 month period of 2018 compared to corresponding period of 2017. Administrative expense increased 15 percent to N111.65 million in the same period as Union Dicon made a loss of N73.58 million in 9 month of 2018.

DEALS

Naspers spins off MultiChoice in hope of unleashing value for Investors … MultiChoice was opened with an initial valuation of $3bn, below analyst’s earlier expectation of $5-6bn IFEANYI JOHN

ive months after announcing plans to spin off its payTV business unit to unleash hidden value for shareholders, Naspers finally listed MultiChoice Group on the Johannesburg Stock Exchange last Wednesday, with the stock opening trading at R95 thus putting the company’s initial valuation at about 42 billion ($3 billion). The stock jumped as high as R112 during intraday trading on Wednesday before easing downwards to around R98 on Friday. Analysts had earlier forecasted in September

that they expected the company to be valued around $5-6 billion, twice the value the company opened at on Wednesday. However, the company was unable to reach this target valuation in a deal that saw Naspers transfer ownership of the company to existing shareholders, raising zero cash for the company from the deal. According to Bloomberg Intelligence analyst John Davies, “MultiChoice’s valuation could eventually settle at about $5 billion to $6 billion. The shares may be volatile in the meantime, however, as Naspers shareholders who automatically receive MultiChoice stock take time

to decide whether or not they want a pure AfricaTV play”. MultiChoice, which Reuters described as a “de facto TV monopoly in Africa”, last year contributed around 18 percent of Naspers’ total sales of $20.1 billion. MultiChoice has a presence in around 13.5 million households in Africa and generates around 6 billion rand ($403 million) in annual trading profit. Despite letting go of a profit machine, the deal still makes sense for Naspers shareholders. This is because since striking gold with an early-stage investment in Chinese tech giant Tencent Holdings Ltd. in 2001, the company has

sought to redefine itself as a global internet business rather than a South African TV and newspaper provider. However, its 31 percent stake in Tencent has proven a curse as well as a blessing, with the market valuing the shareholding at more than Naspers “as a whole” meaning businesses like MultiChoice have been worth nothing to investors. The value of Naspers shareholdings in Tencent as at Friday was worth around $126 billion compared to the market capitalization of Naspers which traded around $95 billion, leaving a discount of around $31 billion. Through the

spinoff, investors have now closed the discount from $31 billion to $28 billion through the IPO which values MultiChoice around $3 billion. Although the spin-off has done little to close

the discount, Naspers has also stated that it is considering other options aimed at closing the discount, including ensuring that its e-commerce businesses swing into profit soon.

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

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Monday 04 March 2019

COMPANIES & MARKETS Special publication on the Companies and Allied Matters Bill Following the passage of the CAM Bill by both legislative houses, Business Day has collaborated with leading legal firm, Udo Udoma and Belo-Osagie on a 12-part series highlighting key changes that the CAM Bill will introduce. The proposed series will focus on select areas of change in detail, and will be set out in easily digestible excerpts.

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Dangote cement struggles to reflect strong fundamentals as stock stagnates angote Cement is struggling to reflect its strong fundamentals as investors rotation from stocks to bonds in the aftermath of Nigerian elections. Though, the Nigerian equities market on Friday rebounded marginally, halting a 3-day bearish run which led to a whooping loss of N368.99 billion, it hasn’t been able to mask what was a poor week for listed companies. The Nigerian All share Index (ASI) on Friday was up marginally by 0.33 percent, gaining N4 billion in market value. This is rather insignificant compared to a loss of N196 billion in the previous trading day after the ASI witnessed a dip by 1.62 percent, biggest fall in a week.

higher prices, as some record a growth by almost 10 percent in market cap, day after financial release. Moreso, we have witnessed companies with like Nigeria breweries fall almost 10 percent in market value due to negative reactions by investors to poor result, day after financial release. However, this has not been so with Dangote Cement despite the cement maker almost doubled profit after tax (PAT) in 2018. Net profits of the Africa’s largest cement manufacturer rose 91 percent to N390.33bn from N204.25bn in 2017, making the company’s directors propose a dividend of N16 per share. Increase in the profit was driven by sales growth, increased operating profit, lower finance costs and high income tax credit

Stocks like C&I Leasing (9.98%), Cornerstone Insurance (8.70%), Fidelity Bank (6.82%), UCAP (5.35%) and Total (5.26%) led the top 5 gainers chart. Meanwhile, Dangote Cement, the largest company on the exchange by market capitalisation gained marginally 0.67 percent to close at N196.60 as against 1.45 percent gain in the previous trading session. Since the earnings season begun, companies’ stocks with good performance have seen investors compensate them with

to the firm. On Thursday however, building sell-pressure on the exchange reversed the stock performance to just a 1.45 percent gain after all. Trends witnessed in the fixed income space have further shown a buy pressure on the federal government 5-year, 7-year and 10-year instruments, respectively. Last week, the Debt Management Office conducted auctions on three February 2019 Federal Government of Nigeria (FGN) Bonds which saw a sustained

David Ibidapo

trend of oversubscription at FGN Bond Auctions for the year. The three FGN Bonds, for five, seven and ten-year tenors, were offered at a total value of N150 billion. But the instruments were bid in excess of N84.35 billion with a total subscription level of 156 percent, even as the ten-year bond unsurprisingly attracted more investor bids compared with the other two largely due to its long-term outlook. Figures obtained from the DMO show that the clearing rates on February 2019 FGN Bonds were 14.52 percent, 14.79 percent and 14.93 percent According to a report by Reuters, yields on Nigeria’s most liquid 10-year bond fell 40 basis point to 13.9 percent on Thursday as uncertainty eases for foreign investors following the conclusion of national elections. Yields on the benchmark 2028 paper, which is most traded, have been falling with investors locking in attractive rates. The bond dropped to 14.3 percent in the previous day’s trade, its lowest in six months, from 14.5 percent the day before and 14.75 percent the day before Saturday’s election. “The signal from DMO is they are going to be issuing government instruments at lower rates,” Gbolahan Ologunro, an analyst at Lagos-based CSL Stockbrokers Limited, told BusinessDay. “You will expect that by March the rates would also be declared lower for each of those tenors.” With Brent crude oil hovering around an average of $62 per barrel, slowdown in inflation rate and almost clear political risk and uncertainty, “the federal government bonds have become attractive to foreign investors,” according to Ologunro. Analysts however anticipate a moderation in the Nigerian yield curve in the short to medium term.

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Business Event

L-R: Omongiade Ehighebolo, communications and government affairs director, GSK; Fidelis Ayebae, president, Pharmaceutical Manufacturers Group of Manufacturers Association of Nigeria (PMG-MAN); Bhushan Akshikar, managing director, GSK Pharma Nigeria Limited; Arit Onwusah, regulatory manager, GSK Consumer Nigeria Ltd, during a courtesy visit by GSK to the new President of PMG-MAN in Lagos.

L-R: Tobi Tiyamiyu, group head, business and strategy, Integrated Indigo Limited; Bolaji Abimbola, managing director/CEO, Integrated Indigo Limited; Samir Panich, executive director, African Agro Limited, and Temitope Mustapha, business development executive, Integrated Indigo Limited, receiving the Award for the West Africa’s Best In Class Public Relations and Communications Services Company of the Year 2019 in Lagos, recently.

MARKETS

Reverse stock split leads to selloff in C&I Leasing shares … Company has lost almost one third of its value since finalizing the capital restructuring process … Analyst’s say the stock is now a bargain after selloff IFEANYI JOHN

hen the board of C&I Leasing decided late last year to do a capital restructuring which will shore up the price of the stock by reducing the number of outstanding shares, the goal was ensure that “the company to have enough unissued shares to accommodate future plans to raise capital through the equity capital market” according to the company. However, the outcome of the reverse stock split as it is called in finance parlance, has been disastrous for the company. The stock opened at N9.04 in mid-January after the Nigerian Stock Exchange lifted the suspension on the stock allowing the stock to trade freely in the market after the restructuring process was complete, the stock price took a severe hit. Investors rushed to sell shares thinking they had struck gold as the stock which traded at N1.78 before the

restructuring was suddenly trading at 5 times its value at the end of the restructuring process. They rushed to sell to collect profits without realizing that the number of shares they owned had now been adjusted lower to reflect zero change in the value of their shareholdings despite the higher price per share in the company. The resultant effect is that the stock price has now declined around 27 percent since the suspension was lifted as at Friday. The main problem was investors’ honest misunderstanding of the capital restructuring process that had happened. In finance, a reverse stock split or reverse split is a process by which shares of corporate stock are effectively merged to form a smaller number of proportionally more valuable shares. This activity does nothing to the core business as the changes in the balance sheet are merely accounting gimmicks to enable the company to have more un-issued share capital. “The reverse split which

brought total number of outstanding shares from 1.88 billion shares to around 370 million shares translates to a total market capitalization of about N2.4 billion as against the N12.4 billion currently stated on market information sources including Bloomberg. The overstatement in value is due to the use of the old number of outstanding shares which was 1.88 billion shares instead of the new number of outstanding shares. This mistake is bound to overstate C&I Leasing as an overvalued stock which it is not,” according to an investment note sent to Clients by EUA Intelligence. It now appears that the market may need to rework their mistake soon rather than later. EUA analysts say the stock is set for a strong rebound as the company is expected to report earnings per share around N3.7 per share for full year 2018, putting trailing PE ratio at around 1.7, making C&I Leasing among the cheapest stocks in the market today.

L-R: Gbolahan Motajo, deputy director, research, statistics and strategy, NAICOM; Razak Salami, deputy director, commissioner office, NAICOM; Esaie Diei, CEO, EFInA; Thompson Barineka, director, inspectorate, NAICOM, and Michael J. McCord, CEO, Microinsurance Centre in Milliman USA, at the EFInA and NAICOM (National Insurance Commission) Microinsurance training in Abuja.

L-R Busayo Hassan, client engagement manager, Big and Bold Communications Limited; Jide Adeyemi, CE0/ chief brand strategist, Big and Bold Communications Limited; Ikechi Odigbo, president, Advertising Agencies Association of Nigeria (AAAN) and Ehis Okunbor, group head, retail marketing operations, Big and Bold Communications Limited, during the induction of Big and Bold Communications Limited as a full member of Advertising Agencies Association of Nigeria (AAAN), at the Association Secretariat in Lagos.

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Monday 04 March 2019

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Interview

What really is TraderMoni? The TraderMoni scheme of the Federal Government has generated a significant amount of buzz and national conversation: from those who laud its impact, and those who view it as politically motivated. TraderMoni is one of three microcredit products of the Government Enterprise and Empowerment Programme (GEEP). In this interview Chief Operating Officer of GEEP, Uzoma Nwagba explains to DIPO OLADEHINDE how GEEP was a direct response to the challenge of access to funds for micro-enterprises, and financial inclusion.

hat is this GEEP program really about? GEEP is a microcredit programme that provides much-needed capital to traders, artisans, farmers, petty traders. It is one of the social intervention progammes of the Federal Government, and comprises of three products: MarketMoni, FarmerMoni, and TraderMoni. GEEP was initiated in 2016 by the Federal Government, with an understanding that there are over 30 million Nigerians at the base of the pyramid who are in active commercial activity but never have an opportunity to access credit. In 2017, only 0.04% (i.e. less than 1 percent) of bank loans went to this micro segment. These hardworking Nigerians are not “interesting” to the traditional lenders: they have little to no financial track record, they have no collateral, some barely have formal identities. However, they are actively trading and in dire need of capital. They are sellers of the food stuff you cook, the beverages you drink, the airtime you use, and kiosk items you buy. And there are tens of millions of them, across the 36 states and the FCT. GEEP is an opportunity to properly identify and capture these Nigerians, provide them with capital, and in the process onboard them into the formal financial system of bank accounts and mobile wallets – in a way that they can be sustainable recipients of credit. Our goal is to advance financial inclusion from its current mythical state into actualization. By the end of 2018, we would have disbursed a minimum of 2 million loans across GEEP. GEEP grants interest-free loans of between N10,000 to N300,000 in a graduating scale of N10,000; N20,000; N50,000; N100,000; and N300;000. Traders either start at N10,000 (TraderMoni), or N50,000 (MarketMoni), or N300,000 (FarmerMoni). It all depends on the scale of your current trade, and preparedness to meet the criteria at each level. When you take a loan and pay back, you automatically qualify for the next higher amount. Each new loan requires simply dialling a USSD code. Disbursements happen in minutes. The N10, 000 ($27) TraderMoni component of the GEEP scheme has come under huge criticism for the loan value: some Nigerians do not think it is barely anything to help a trader. Was there intelligence that suggested otherwise for

which the TraderMoni team settled on N10, 000 as the first level? Recall that these loans go from N10,000 to N300,000. You start at N10,000 if you are a petty trader – and you quickly graduate to N300,000 by simply repaying your loans. More importantly, you would be surprised to know that the GEEP programme did not start with N10,000 loans. We started with N50,000 loans. In the process of executing a programme N50,000 and above, we found something quite startling: the vast majority, I mean up to 90%, of our targets did not have inventories of more than N10,000. You would more than double their capacity with a N10,000 loan. We would have missed the scope and scale of this if we had not spent the last 2 years on the field, giving loans, learning more. I highly encourage us not to colour the Nigerian reality with our middle-class lenses, as nothing could be further from the truth. Think of the lady who hawks fruits, the Mai Shai who serves tea at the bus stop, the ice cream man on the bicycle, the old woman who sells grains and pepper. N10,000 is a fortune for majority of hardworking Nigerians, and they have been neglected for way too long. Besides the fact that this population not only needs small

‘

Our goal is to advance financial inclusion from its current mythical state into actualization. GEEP grants interest-free loans of between N10,000 to N300,000 in a graduating scale of N10,000; N20,000; N50,000; N100,000; and N300;000. Traders either start at N10,000 (TraderMoni), or N50,000 (MarketMoni), or N300,000

amount for a start, they also do not have the traditional bells and whistles – BVNs, KYCs, bank accounts, collaterals – which are the requirements of traditional lending. So we had to create a product specifically for them, driven by agents on the field, equipped with tablet computers, and disbursed through mobile wallets which only require the trader to have a mobile phone. We believe this can be truly transformative to this sector, and to the lending ecosystem. The results are showing. In the past 2 years, we have given over 1.5 million loans across the three programs, 1.2 million of which are TraderMoni beneficiaries. The loans are driven strictly by scale of demand. Where is the money coming from and how sustainable is the program given the time value of money (for which interests are usually charged), and Nigeria’s unique political system where continuity is always an issue? GEEP is funded by the Federal Government, in a managed fund executed by BOI. The programme aims to achieve two goals. The first is access to finance (getting money into people’s hands). The second is financial inclusion (getting the people into the formal financial sector of operating mobile wallets or bank accounts, which allows them to build a financial habit and history for themselves). From Day-1 of GEEP, we instituted the BVN as a non-negotiable requirement. The first application of the BVN was to serve as a unique identifier which checkmates fraud. However, the second application of BVN is even more powerful: for the first time, we have an effective (digital) collateral. People who took the MarketMoni loans, our first GEEP product, accept agreements that the Bank of Industry had the right to block their BVNs if they were in severe default. A blocked BVN means the candidate is unable to operate any of their bank accounts or perform any financial transactions until they fulfil their debt obligation. Obviously, we had to balance this carefully with the overarching goal of financial inclusion. This means that you don’t want to have people included into the financial system, only to block them out of it soon after. So, first we establish the usage and habit of finance and accountability by giving the loans. Next, we communicate aggressively on repayment and defaults, warning severe defaulters of an imminent blocking of their BVN. And then, we select

program. Everybody who has a TraderMoni, MarketMoni or FarmerMoni loan is enumerated at their point of trade. What this means is that one of our over 4,000 agents across the country, walks up to them and registers them on a tablet device. I am talking full registration of biodata, GPS location of the trader’s point of trade, information on what the trader does or sells, pictures of them and their trade, address, phone number, BVN (where applicable) which is validated against the national BVN database, background and risk profiles where accessible. We have a sophisticated digital base that connects these tablets of our over 4,000 agents across the country to central systems at BOI, as well as third-party connections to banks and mobile wallets for disbursements and repayment. Similar connections happen for tracking and monitoring of the loan and repayments. The most surprising thing you would find out about the programme is how obsessive we are with its operation. Some members of my team joke that we are a technology company that happens to give loans. With more experience and learning, we will continue to innovate and set the standards. And, yes, this is all possible in a government programme.

cohorts of defaulters who inevitably get the BVN blocking. We do this while aggressively learning and improving the process. The journey is still an evolving one, but we are absolutely committed to more and more innovation around the collateral problem that has excluded this group from credit for decades. With the advent of technology and innovation – we must think outside the box, seeking for digital collaterals that are effective. You would not believe that the regulation that allows for what we have just done has been in existence since the 1970s. However, without the right advancement in technology (e.g. BVN which means you can finally take action on all accounts belonging to an individual in the entire financial

system), there would be no way to execute that regulation. Thankfully, the future is now, and it is our goal to continue to push the boundaries on what is possible. For the TraderMoni scheme (for petty traders at the very bottom of the pyramid), we are taking a slightly different approach of not requiring BVNs or bank accounts as our targets are significantly less educated or sophisticated. We need to first solve their problem of access and reduce the barriers to that. So, we use what they have: their mobile phones. It is only on the second loan that the BVN and bank account requirements kicks on, and therefore the digital collateral. As a result, we make a conscious effort with their first TraderMoni loan to make the carrot more attractive than the stick. That is, we make it very simple to get the next higher loan (N15,000) once the first loan (N10, 000). You literally receive a disbursement in

minutes when you dial a USSD code after paying your first loan. We are using TraderMoni to test this model and we are studying the effect because it’s also an opportunity to build knowledge for the ecosystem. What the government learns from this program will be used to drive even private sector lending. Given such a large-scale programme with a target market that has limited education, how are you able to deliver the numbers you report? The operation of the program does not mirror its target demographics. What I mean is: the more illiterate or unsophisticated our beneficiaries are, the more sophisticated our operation has to be. All the complexity has to be absorbed by us and taken out of the trader’s experience. We have a highly technology-driven

What sort of impact does the GEEP program hope to make, how is it being measured/tracked today? Tremendous impact. For most of our beneficiaries, it starts out like a dream. An agent walks up to you in your market association, at your kiosk, sometimes on the street while you hawk. They speak about a government benefit, and interest-free loan to enable your trade. You are not asked for a collateral, and you are not asked to vote for anyone. They would capture details of you on their tablet, you would get an SMS in days on your qualification, and you would get a disbursement shortly after. Even playing this back to myself now, it sounds crazy, too good to be true. But this is exactly what happens. So you can imagine traders’ skepticism at first, which our agents have to overcome, until disbursements start happening. For most of our over 1.5 million beneficiaries today, this is the first time they have successfully accessed credit in their entire lives. I interact with traders, from Bauchi to Yenegoa, who tell me they have been doing the same trade in the same spot for 30 years, and this is their first time ever experiencing something like this. They are able to invest in their trade, or deal with issues

that have been historically disruptive to their trade. They keep their businesses alive, enabling them to pay back in tiny instalments over six months. They are empowered. Most of this is silent; you don’t hear it buzzed around. But this has been the reality of GEEP, every single day, since May 2016. When a lot of people hear about the GEEP programme (either TraderMoni, MarketMoni, FarmerMoni), they think about how transformative it is for the beneficiaries, but in a lot of ways it’s also life-changing for those of us implementing the programme. Nothing would have prepared us for this scope and scale of impact. Nothing could have connected us better to the realities of the everyday Nigerian. We literally spend the day with them in the markets, get in their heads, support their trade. For some beneficiaries, like tomato sellers in Mile 12 market, TraderMoni represents negotiating power with their suppliers. The traders can now pool more funds together, sometimes up to 15 people pooling N150,000 using TraderMoni, and negotiating for bulk-buying of tomatoes in baskets, bringing their individual costs down by 40% for the same quantities they sell. For others, like the keke riders or cart pushers in the North, it is investing in more petrol and maintenance upfront, enabling much less interruptions during the day to enable them earn more. For the tailor or plank seller on MarketMoni, it is inputs, or light machinery (like a sewing machine or electric saw). For the farmer, we are talking stock feed or fertilizer. The stories are so diverse, and so beautiful. What weaves this all together is a common thread

of industrious low-income Nigerians in productive commerce that require credit, and now this requirement has gone from a wish to a reality. Even when genuine, transparency and accountability have often been the bane of most government intervention projects. How is GEEP any different? The GEEP programme has a strict governance structure which emanates from the Federal Government through the office of the Vice President. The money is placed in the Bank of Industry (BOI) which has been asked to execute the program. There are signed agreements between the Federal Government and BOI on how the funds will be used, and how the usage must be reported. In the process of our data capture, we also go the full length to ensure that we are compliant with the data points required, and that there are no “ghost” beneficiaries. The project works with a number of private-sector partners whose job it is to enumerate candidates for the loans. We use the private sector to greatly minimize any political interpretation or undertone. After the verification, disbursement and repayment management is done by BOI. Every beneficiary is essentially a loan obligor to BOI. The Federal Government made an explicit decision to run the program through BOI and to ensure direct engagement with every single beneficiary. This is the reason we have over 4,000 agents wake up every morning and go to the field to have a personal interaction with the traders, capture their informa-

tion, and sync the data back to the BOI so we can verify and make payments. So we end up with a system where we can tell you everybody who has benefited from the project, their exact location, their picture with the trade, the specific loan amount, when they are scheduled to pay back, how much paid so far, and so on. We also went through several series of scrutiny from the National Assembly before the program budget was approved – and our reporting of the programme has also been held to the highest of standards. There have been rumors in the news about the GEEP initiatives, especially TraderMoni, being a Vote-Buying scheme of the federal government; how do you respond to that? First the GEEP program started in 2016, so this is our fourth year of operation. Our first loan registration was in May 2016. Since then we have been running the GEEP program nonstop across the country. Also we must note that it is the direct field learnings while implementing MarketMoni that led to the introduction of the TraderMoni which started as a mobile-based loan product and kicked off in September 2017. The point is that GEEP program did not start in election season. Very far from it. As at November 2017, over a year ago, even before the country cared who was running for office or not, we had disbursed over 300,000 loans. Moreover, for those who still push the vote-buying narrative, I always ask: is GEEP (either Mar-

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Monday 04 March 2019

Interview What really is TraderMoni? ketMoni, FarmerMoni, or TraderMoni) a wrong programme? In other words, is it impacting millions of Nigerians or not? If it is, then why would there be a wrong time to do the right thing? If a pepper seller sees credit she needs, shouldn’t she access it while it is available? Think about this even more deeply, the vote-buying narrative could even be another patronizing expression of our middle-class privilege and we must always check this. As a middle-class entrepreneur, or business mogul, you can walk into BOI today to borrow funds to grow your business. You walk out with your dignity intact, and possibly with a loan. Sometimes these loans run into tens of millions of Naira, and billons of Naira. Yet, nobody accuses you of being vote-bought, even when you are borrowing the money of a government institution or project. On what basis therefore do we assume that those at the bottom of the pyramid are also not intelligent economic actors who can make rational decisions to better their lives? These are human beings with goals, aspirations, and dignity like you and I. They are not genetically predisposed to bad decisions, or so vulnerable that they would just be bought. Nothing could be further from the truth. If they have a better life, our job is done. Since I resumed this job four years ago, until now, I have never set my eyes on a Permanent Voters Card (PVC) of any beneficiary. Not one. I would know. There is no such. As a matter of fact, some of the states with our largest beneficiaries are not even states that politically align with the party in power. As long as you are a Nigerian petty trader, you are eligible! Still on rumors, some TraderMoni beneficiaries have complained of getting less than the N10,000 promised; and reports have suggested the deducted sums were taken out by Iya-Lojas and other value chain players. How is the GEEP team responding to this? We are aware of those instances and are taking the necessary actions. With a programme of this scale, targeting a segment of the population that is highly uneducated, we know that some people would try to exploit the process and take advantage of unsuspecting beneficiaries. We have even seen instances of people who do not work for the programme, walking into a market with mobile phone tablets and posing as TraderMoni agents. They charge N200 per person who comes to have their data and picture “captured,” whereas this is all just a show. This is one of those issues where our first reaction has to been to over-communicate, to make it clear to the public and our beneficiaries that TraderMoni is FREE! We do this above the line (mass media), but also below the line (individually to each candidate via SMS and automated voice call in local languages). They should never pay to get registered,

and certainly never pay to access the funds from their mobile wallet. We also prosecute and make a public show of any of our agents who engage in any fraudulent activity, and we will be doing much more of this – including blocking their BVNs. As we continue to do more and more of these, we know that, at a point, the public would become our own police. They will report, apprehend, and even prosecute anyone caught in sharp practices. This is already happening. We have a responsibility to stay ahead of the fraud by not only dealing decisively with it but by also spreading information. If there is one thing I would like to get out of this interview, it is that the readers should report ANY suspected exploitation of Nigerians trying to access this loan. Sometimes it is the market leaders who need to be reported. One of the goals of the GEEP program is to promote financial inclusion; how does the program achieve this? It’s quite simple. Financial inclusion is about getting people to use financial services as a habit. By so doing they are building documented histories and track records that will allow them access more financial services: take more loans, buy pension or insurance, save towards their goals and other financial services. However, this requires significant behavioral change, even on the part of the people who would be obvious beneficiaries. They need to stop putting money under their beds. They need to learn to pool resources and increase their purchasing power. They need to open mobile wallets and bank accounts, and use them. They need to have a radical shift in their mindset, and

build trust in the financial system to enable them raise their profile. You cannot wish financial inclusion into existence at all. It is a very difficult effort that combines behavioral science with finance, technology, education, while make it all so simple that a grandma can rely on it. GEEP removes the first critical barrier, which is the barrier of engagement. We give you a strong reason to want to try. You can only get our loans by opening a bank account or operating a mobile wallet. You can only repay via the bank or vouchers, no cash. You can only access the next one on your mobile phone. We combine this with increasing investment in communication and education. You cannot achieve financial inclusion via marketing campaigns or market storms, asking people to open bank accounts. You have to give them a strong incentive to do so, and to continue to operate the account. GEEP has been able to achieve this. I call it the convening power of capital. We are quite pleased with the results so far. Over half of our 1.5 million beneficiaries are firsttime operators of bank accounts or mobile wallets. And we see them use those tools even after the loans, and this encourages us. We are committed to targeting everybody who is not financially included. We admit it is going to be a long journey to bring the over 23 million Nigerians and micro-enterprises that are financially excluded or under-included. However, we are also conscious it is an ecosystem so we don’t need to interact with everybody; if it works well for different cohorts of people, it will become contagious. Tell us about your background and how the GEEP

journey started for you. My background has been in finance and technology, although my first degree was in Electrical Engineering, from Howard University in Washington DC. I started my career working at Goldman Sachs in New York, and then proceeded to Microsoft in Redmond Washington, leading technological projects and operations in the mobile division of the company. I proceeded from there to do an MBA at the Harvard Business School. I have always had a passion for driving projects at a national scale, and doing something that will have an impact on people who don’t have the opportunities that I have had. I feel it is the only way I could remotely appreciate the privileges I have been given by God and people who went before me. In Nigeria, our biggest social challenge is poverty. I am a strong believer that the most effective way to fight poverty is to accelerate enterprise. At some point, this could all be private sector and industry-driven; but until then, we must be deliberate about achieving what you call “fiscal cushions” on the way there, otherwise the country will implode before our very eyes. For a country as large as Nigeria, the government cannot just be a bystander or umpire – at least not at the beginning. It must be an enabler, sometimes an executor. It must take the risks, push the boundaries, catalyze the ecosystems, until the sector is significantly de-risked and private sector is able to own and drive it completely. So, when my mentor and boss, Okechukwu Enelamah, was nominated as a Minister, it only made sense that I follow him and use the opportunity to try and make an impact in this regard.

GEEP was the ripest project to achieve this goal, and the execution was under his Ministry. But I must tell you that, having been to some of the most remote parts of this country, almost clocking 30 states, nothing could have prepared me for this experience and given me a true understanding of Nigeria. At 31yrs, what do you say to people who think you are quite young to be playing a lead role on such a massive project? How has the journey been, and what drives you? I consider it a rare privilege to be doing work this important. In a geriatric society like ours, age typically takes precedence over capacity or intellect. I remain grateful to the visionaries who have defied the odds and taken a big bet on me. These people include the Vice President himself, Prof. Yemi Osinbajo; the Minister for Trade and Investment, Okechukwu Enelamah; and the Executive Director at BOI, Mrs. Toyin Adeniji with whom I have worked very closely with over the past 2 years. They see what most other people don’t see: that the future of Nigeria’s leadership is in our young, and that there is a growing tribe of us with some of the best of education, experience, and capacity to serve. I never wake up any day thinking I am too young to manage an operation of this scale, or that we can’t make it truly transformative. As a matter of fact, I think youth and energy are major advantages. I apply myself totally, and demand the same of the team. We bring the best of technology, innovation, new thinking, to something as stereotypically archaic as government. Imagine driving a government project without a single piece of paper or unnecessary intermediaries in the process. I am talking unique identification, everything interconnected by technology and systems, no forms, no godfathers. We hop on flights on short notice, go to the most remote parts of Nigeria and spend days and weeks there. It is a truly immersive experience where youth can only be an advantage, if not even a requirement. And there is strategic thinking, leveraging on one’s networks including more senior mentors and leadership, while still having the nimbleness to go down market and find the most driven of our young and putting them to work. Nigeria is not where it should be as a nation, and it is our goal to reverse the trajectory in whatever little our hands find to do. I always tell people that the fact that things got bad does not mean they cannot get worse. So being put in a position of leadership where I have the opportunity to make a meaningful contribution to something like credit or financial inclusion, I walk around with a big burden: a burden to prove that you can find and trust young people to do something truly transformative on the path of development. This is what keeps me going, such that we can have many more youth given the opportunity that I have.

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Attention shifts to local raw materials, machines as election fever dies down …Manufacturing Expo beckons

Odinaka Anudu

s the 2019 presidential election fever dies down, manufacturers are shifting their focus away from politics and looking ahead on how to source more raw materials locally and get machinery needed in their factories. Manufacturers expect to raise local input sourcing from 57 percent to more than 65 percent in the next one year, but they expect stable policies that will enable them cope with the pressure of doing business in the country. Following their resolve to expand their operations, manufacturers have put together the 2019 Nigeria Manufacturing & Equipment Expo (NME) in Lagos, which will provide an opportunity for over 3,700 key players and equipment distributors to evaluate the latest equipment, machine tools, technologies, spare parts and raw materials that will be on display by over 120 leading local and international suppliers from France, Italy, Germany, Canada, Indonesia, South Africa, India and Nigeria.

L-R: Joseph Out-Oru, event manager, Clarion Events West Africa; Masur Ahmed, president, Manufacturers Association of Nigeria (MAN), and Segun Ajayi-Kadiri, director general, during the press conference to announce the 2019 Nigeria Manufacturing & Pic by Olawale Amoo Equipment Expo (NME) in Lagos.

The expo will be the 4th Edition of the Nigeria Manufacturing Expo (NME) and the 5th Edition of the Nigerian Raw Materials Expo (NIRAM) of the Raw Materials Research and Development Council (RMRDC). The two events will be collocated with the Multimodal West Africa to enable players in the industry understand viable transport and logistics available in the country. Multimodal West Africa is the largest transport and

logistics. “The event is targeted at small and medium enterprises (SMEs) and intending entrepreneurs to equip them with information on new processes and ways of boosting their production output, improving product quality, reducing cost and manufacturing for new markets,” Masur Ahmed, president, Manufacturers Association of Nigeria (MAN), said at a pre-event press conference in Lagos last Thursday.

“I have no doubt that, as in the past, the expo will impact greatly on the Nigerian economy. This has been attested to by past participants across various sectors of the economy,” he said. He explained that the NME exhibition was unique as it ran side by side with a conference on Manufacturing Partnership for African Development (mPAD), where over 100 chief executives would congregate to proffer solutions to challenges affecting the manu-

facturing sector. “It also creates opportunities for free training, access to finance, retooling and networking across major sub-sectors of the industry,” Ahmed said. “I have no doubt that this edition would be better as the co-location with the Nigerian Raw Materials Expo would afford exhibitors and visitors the opportunity to be exposed to the entire manufacturing value chain,” he added. Segun Ajayi-Kadiri, di-

rector general, MAN, said the event was aimed at deepening the contributions of the manufacturing sector to the gross domestic product (GDP) while improving the value chain. Joseph Otu-Oru, project manager, Clarion Events, said the event was significant as it would facilitate knowledge transfer and improve local raw materials sourcing. “In the last edition, we saw several foreign companies interested in sourcing local raw materials,” he said. During a visit to BusinessDay corporate head office in Lagos recently, Otu-Oru had disclosed that big firms such as Dangote Group, Sona Group, Procter &Gamble, among others, as well as those from Italy, South Africa and other countries would attend the event. “Our biggest achievement so far is that we have solved the problem of bringing local raw materials to manufacturers,” he had said. “In the last three years, manufacturers have sourced more raw materials locally,” he had added. Apart from manufacturers, policy makers and government officials will grace the event.

How Nigeria can earn billions in FX from non-oil export products …Yesufu’s perspective Gbemi Faminu

igeria is regarded as the giant of Africa for three major reasons: population, wealth/economy and political influence. In recent times, the country’s reputation has dwindled owing to an unreasonably new low in economy. Before independence in 1960, and even a few years after, the Nigerian economy was rich and grew because there were a number of products providing foreign exchange for the economy. These were days of agriculture and export of raw materials such as cocoa, rubber, oil palm, and cassava. Also,

policies were favourable as smuggling was almost nonexistent. However, the discovery of crude oil in the mid-1950s propelled the country away from agriculture. Since the emergence of oil till date, the Nigerian economy is still heavily reliant on the export of minerals for its foreign exchange earnings. While the revenue got from oil has been significant, it has created numerous problems in the economy considering the volatility of the oil price and the emergence of other oil producing countries. In 2016, the country experienced economic recession due to the fall in oil prices, which it is yet to fully recover from. Considering

the country’s snail-paced economic growth and recovery from recession, it has become necessary to carry out economic diversification that will enable the country earn more from exports. Bala Yesusfu, director, corporate and government affairs, Cadbury West Africa, in his book entitled ‘Export Architecture Roadmap: The Nigerian and Global Perspectives’ shows the untapped potential in the export space, especially for Nigeria, a country filled with natural resources. In his book, Yesufu explains in-depth what goes on in the export world, what it requires to become an exporter and eventually the benefits accrued to export-

ing countries. In his analysis, he outlines diverse possible items that can make Nigeria increase its revenue fast. He believes that for the government to achieve its economic development goals and reduce dependence on the volatile oil market, exportation of nonoil products is key. Being a Nigerian himself, the author writes from the view of one who has experienced the good, the bad and the ugly of the country’s economy and is therefore passionate to restore the country’s glory as the giant of Africa, which he believes exportation will pave way for. The 17-chapter book delivers a strong perspective on issues relating to export

and possible solutions to overcoming the challenges thereof. Frank Aigbogun, publisher, BusinessDay Media Limited, who was the book reviewer during the book launch last year, described the book as a bible for those in the export space, stating that it was a timely antidote to the economy’s plight. “The Book, written to deepen our knowledge on the critical export business, did not only come at the right time, but it serves as a Bible to economic managers, industrialists and potential export managers who see potential in export business,” Aigbogun said. “The book also details how exporting firms can

deal with competition as well as international treaties relevant to an exporter. It explains why corporate governance is key to attracting investors to exporting firms, and why adherence to international standards is a no-brainer.” Yesufu mentions in his book, the currency swap idea, which according to him, is pulling weight in businesses, especially in the international space, listing the possible benefits this will provide for exporting countries. Without doubt, the author foresees a brighter future and maps out ideas that will serve as routes to achieving economic prosperity and development in Nigeria.

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Why manufacturing needs policy changes in Buhari’s second term ODINAKA ANUDU

resident Muhammadu Buhari has won a second tenure. But as victory memes gradually die down, key issues stare him in the face as he sets the stage for his second term. Notable among these are die-hard manufacturing sector issues that seem to have defied solutions. Manufacturers say though a few positives were felt in Buhari’s first tenure, a lot more ground needs to be covered, especially as regards policy-making and implementation. A lot of manufacturers are asking whether Buhari’s second tenure will leverage funds for the sector. Nigerian commercial banks are improving in lending to manufacturers, but they are still not doing enough as their rates seem very high. Of course, they only bear a partial blame since Nigeria’s monetary policy rate (MPR), which is a benchmark interest rate in the country, has remained 14 percent for almost two years. Cost of borrowing is a function of MPR, overhead cost, personnel cost and other costs borne by banks, experts say. In the first half of 2018, average interest rate charged to Nigerian manufacturers stood at 22.9 percent, representing 0.25 percentage point higher than 22.65 percent recorded in the same half of 2017, according to the Manufacturers Association of Nigeria (MAN). “Access to and cost of funds remain a big issue for many domestic investors,” Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said in the 2019 Economic Outlook. “There are still pockets of issues with access to funds,” he said. Yusuf said with commercial bank lending rate at between 20 to 35 percent, the private sector, especially the SMEs, cannot access funds capital for their businesses. In the last quarter of 2018, credit to the manufacturing sector was N2.3 trillion. This looks big and encouraging, but it may not be even enough for 40 large enterprises such as Dangote Group, Flour Mills of Nigeria and Chagoury, among others. “Again, this money may

likely have been accessed by the big firms, leaving out the medium and small-scale manufacturers,” one senior manager in a manufacturing company in Ikeja said. Manufacturers say they want the Bank of Industry and Bank of Agriculture recapitalised to enable them lend more single-digit loans to manufacturers. Secondly, Buhari needs to enunciate a policy that encourages local sourcing of raw materials. The backward integration programmes done by manufacturers are mostly self-supported. Some raw materials needed by factories need beneficiation while others are still on the ground. Because of high amount of money needed for exploration of such inputs, manufacturers prefer to look outwardly. Moreover, issues like non-availability and low quality are already not helping matters. According to data from MAN, utilisation of local raw materials by manufacturers in Nigeria stood at 56.6 percent in the first half of 2018. MAN says this may be attributed to general sluggishness of the economy and a renewed ability for importation of raw-materials considering the tranquillity in the foreign exchange market. Hence manufacturers are gradually returning to importation of inputs, which squeezes the foreign exchange and reduces jobs.

More so, the issue of taxes remains a major challenge which manufacturers expect Buhari to solve with pronouncements. Tax experts told BusinessDay that the number of taxes payable by businesses across the country is now 54 as against 37 in 2014. To solve this challenge, Vivian Chigozie-Nmonwu, tax expert and lead partner at Vi-M Professional Solution, said these taxes need to be amalgamated into one or a few, since the whole tax cycle is a multiple chain of taxes on the same income stream. Again, the Apapa debacle remains a clog in the wheel of progress for manufacturers. Firms bringing in raw materials from Apapa ports and those exporting commodities abroad have seen their costs swell on rising dwell time, which results in high demurrage charges. Only 10 percent of cargoes are cleared within the set timeline of 48 hours now while the majority of cargoes take between five and 14 days to clear, according to a maritime report conducted by the Lagos Chamber of Commerce and Industry (LCCI).The report notes that some cargoes take as many as 20 days to be cleared at the ports. Manufacturers say there is a need to develop other ports across the country to decongest Apapa and Tin Can ports. Furthermore, smuggling is still aggressively on and

government needs to stand up against it. Smugglers are largely responsible for the death of over 500 textile mills of the 1980s in the country. Today, there is no longer any full-fledged textile firm. Textile manufacturers are now rug manufacturers and cotton farmers, including fashion designers, which is abnormal. India’s textile industry is estimated at $108 billion, contributing five per cent to Gross Domestic Product (GDP) and 14 per cent to overall Index of Industrial Production (IIP), according to India Brand Equity Foundation. The industry attracted Foreign Direct Investment (FDI) valued at $2.41 billion between April 2000 and December 2016, creating 100 million direct and indirect jobs with over 350 textile mills working. According to Nigeria’s Textile Manufacturers Association, about 85 percent of the $1.4 billion worth of textiles that flood the country’s market is smuggled, mainly from neighbouring countries. “We cannot compete with the level of smuggling and counterfeiting going on now,” said Grace Adereti, president of the Nigerian Textile Manufacturers Association (NTMA) in Lagos at a Made-in-Nigeria stakeholders’ meeting in Lagos in 2017. “We used to have about

127 textile firms in Nigeria, but that has come down to two or three now,” she added. Nothing can be discussed without reference to high energy cost borne by manufacturers. Forty percent of manufacturing expenditure goes to alternative energy. Manufacturers have spent N212.85 billion on alternative energy sources between the second half of 2016 and the first half of 2018. This is over 100 percent higher than what was incurred in the previous four halves. Manufacturers told BusinessDay that logistics costs have risen by 50 to 100 percent in the last two years, owing to poor state of roads and lack of a good transport system. “Manufacturers in Nigeria currently self-generate as much as 13,000MW through alternative sources of energy in order to stay afloat,” Frank Jacobs, immediate past president of MAN, said at a special interactive forum on Eligible Customer Regulation of the Nigeria Electricity Regulatory Commission (NERC) in June 2018. “In fact, cost of alternative electricity generation alone constitutes about 40 percent of our production cost. With such high costs, made-inNigeria products will hardly be competitive,” he said. Manufacturers want Buhari to support MAN Development Company, which is a private initiative aimed at providing cheap power to industrial clusters. There is also the issue of implementation of executive orders pronounced by Buhari himself. For instance, ministries, departments and agencies of government are not in tune with Executive Order 004, which mandates them to give preference to locally produced goods in award of contracts. Pharmaceuticals told Real Sector Watch in 2018 that there was no big contract that year. Due to poor patronage and other related isssues, the pharmaceutical sector is struggling with major players unable to sustain production pre-2015 years. Already Swiss Pharma has been bought by an investor after experiencing early struggles, while Evans Medicals has gone under. Incidentally, these two drug makers got the WHO prequalification, which ordinarily should raise the level of their competitiveness.

Monday 04 March 2019

Sugar production rises 101% as companies expand plantations

u ga r p ro d u c t i o n rose from 14,918 metric tonnes (MT) in 2017 to 30,000MT in 2018, according to the National Sugar Development Council (NSDC). This is as Dangote Sugar, Flour Mills and BUA expand local sugarcane plantations to get raw sugar. Most sugar makers import raw sugar and refine it locally, industry players say. Sugar import fell from $459.36 million in 2017 to $337.31 million in 2018. Consumption also fell from 1.301 million MT to 1.246 million MT in 2018. “There are a lot of improvements in the sugar value chain,” Masur Ahmed, president, Manufacturers Association of Nigeria (MAN), said at a press conference in Lagos last week. “Three companies are already developing significant sugarcanes as their raw material,” he added. Industry players, however, say there is slow progress in the sugar value chain, owing to poor monitoring of the backward integration policy, which has resulted in some local companies flouting the agreement by importing more of the products, rather than making the desired local investments as earlier agreed with government. “Certain companies have not been quite diligent in adhering to the rules,” Sadiq Usman, head- corporate business development, Flour Mills, said in a telephone interview with BusinessDay recently. “Also, documentation, planting issues, weak infrastructures and land rights are still big problems for us and these factors have continued to slow the pace of our development in boosting sugar production,” Usman said. He said that Flour Mills – Nigeria’s second largest maker of the sweetener— lost 75 percent of its sugarcane plantation owing to floods that ravaged their farmlands in 2018. “Last year, the floods wiped away a significant proportion of our sugarcane production. It affected close to 2,000 hectares of the 3,000 hectares we planted and now we are replanting again.”

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FG boosts financial inclusion with TraderMoni

ith over 23 million Nigerians financially excluded, the introduction of TraderMoni by the Federal Government in conjunction with Bank of Industry could not have come at a better time. According to a 2018 World Bank report, 6% of Nigerian adults use a mobile money account; this is small compared to 21% in sub-Saharan Africa overall. Yet “roughly seven in 10 adults have a mobile phone, including 35 million unbanked adults, among them 20 million women. This offers a tremendous opportunity to expand mobile money if the necessary infrastructure, including the number of agents, is put in place,” the report states. With the GEEP loans, this narrative is changing—it is building agent networks, empowering the mobile banking space, as well as putting mobile money in hands that hitherto only dealt with raw cash. Behind the success of the disbursement of the loans are growing mobile technology companies working to ensure financial inclusion among Nigerians even in the remotest places. Managed by the Bank of Industry, the GEEP products— TraderMoni, FarmerMoni and MarketMoni—are aimed at improving financial inclusion, and increasing access to affordable credit. Tradermoni is targeted at individual petty traders with loans starting at N10,000; MarketMoni, for traders who access loans from N50,000 through their trading/market associations while FarmerMoni, focuses on farmers/farming collectives to access loans up to N300,000. So far, working with over 4,000 enumeration agents across Nigeria, TraderMoni has

TraderMoni agent in Oyo state

registered more than 4million petty traders in 2,600 markets across the 774 LGAs in Nigeria. Of those registered, about 1.2 million have received the first level N10,000 TraderMoni loans, and about 1m new mobile wallet accounts have been created. Chief Mrs. Mufliat Adewunmi, Iyaloja of Ojuwoye Market was very appreciative of TraderMoni when it was launched in Lagos. “We are happy about TraderMoni because it is a thing we have been expecting. The government should assist the masses especially the traders. We thank Trader Moni, then we thank the Federal Government that bring this program to us. It will help a lot, especially we traders because we all know what we have been facing in the bank.” Similarly, Imo Anasonye, the Director General, Abia Chapter of National Association of Small and Medium Scale Industrial-

ists, commended the Federal Government for remembering poor Nigerians in its plan to assist them with soft loans through TraderMoni. He noted with delight the continuity of this present administration in empowering traders at different levels. He said, “Last year, the government implemented the first leg of the programme called the MarketMoni where it disbursed loans from N50, 000 to N100, 000 per beneficiary. Now, the government has come up with the TraderMoni which is like season two of that engagement programme. I commend the government for coming up with such initiative.” TraderMoni beneficiaries have praised the Federal Government for making the process transparent, easy and fast. A tricycle operator in Uyo who identifies himself as Willy Willy who was at first skeptical

about TraderMoni shared his experience. “The registration was very easy. They took my picture and my details. It’s just like going to the modern bank. It didn’t waste any time. I got the money on my phone. I have been looking for a loan from banks to service my tricycle but it didn’t come. I will use this N10,000 to make my tricycle roadworthy so my passengers can enjoy a smooth ride. As I am operating the tricycle, I will be paying the money back. I will be faithful in paying the money so I can get more money.” Another TraderMoni beneficiary, Rabiu Muhammed, a zobo drink seller in Kano praised the government for the loan. Without having to leave his station in the market and risk losing sales, he said that the TraderMoni agent captured his details under ten minutes and within a few days, he received the credit alert on his phone. He promised

to use the money to buy more ingredients to allow him make and sell more zobo. He said the money he makes from his business is what he uses to support his family. Through TraderMoni and the other GEEP products, millions of Nigerians are beginning to access credit for the expansion of their businesses irrespective of their financial and social backgrounds. According to Mrs Toyin Adeniji, Executive Director, Bank of Industry, “The goal of TraderMoni is to take financial inclusion down to the grassroots. The President Muhammadu Buhariled administration recognised the contribution of petty traders to economic development and identified the fact that some of them may not have what the commercial banks may require to give loans, hence, his support for this initiative to help them grow their businesses.” Research has shown that access to financial services and financial inclusion is a way to reduce poverty; when banking deposits increase, more credit is made available which in turns drives consumption and investment, leading to economic growth through the proliferation of jobs. If Nigeria will move ahead, it is Nigerians—in the marketplace, media, entertainment, agriculture, ICT, everywhere—that will push the country, not oil. With ambitious initiatives such as TraderMoni from the Federal Government, Nigeria is making tangible gains in driving financial inclusion. These gains signal huge possibilities for the future—where these formerly unbanked Nigerians can also begin to use the technologies as payment platforms, to increase business interactions and to improve the economy.

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INSIGHT

Minimum wage, impending fiscal crisis, and the need for reforms Dr Ogho Okiti

n January 22nd, the National Council of State, the country’s highest advisory council, comprising all former Presidents and Heads of State and former Chief justices of the Federation, advised that a minimum wage of N27, 000 be set for workers in the country. Two days after, the President sent a bill to the National Assembly for consideration. This is a culmination of a 2-year process that will alter the minimum wage of N18, 000 set in 2011. The request for a new minimum wage started in 2016 when labour leaders in a press briefing, called for a review of minimum wage to N56, 000. In November 2017, the Federal government responded to the agitations by the Nigeria Labour Congress (NLC), Trade union Congress (TUC), and the United Labour Congress (ULC) for a new minimum wage, set up a 30 member tripartite committee, comprising representatives of the Federal and State governments, organised labour and the employers of labour, chaired by Ama Pepple, former head of service of the Federation. In November 2018, the committee submitted its report to President Muhammadu Buhari, recommending N30, 000 as the national minimum wage. With the bill now in the National Assembly, the end is near for Nigeria’s new minimum wage. As in the previous case of 2011, the National Assembly is expected to pass into the law the new minimum wage as contained in the bill sent to it by the President. In February 2011, the Senate approved the N18, 000 proposed by President Goodluck Jonathan and increased the minimum wage from N7, 500 to N18, 000. However, if the bill process had been smooth, the entire process had been very tedious and tortures. Indeed, foreigners will be forgiven for thinking that the current process of altering Nigeria’s minimum wage was the first, given that all the lessons of previous cases have been lost. However, since 1981, Nigeria has adopted new minimum wages five times – 1981, 1989 /90, 1999, 2001, and 2011 (See Figure 1). A comprehensive bill was first passed in the National Assembly in 2000 (National Minimum Wage Act 2000, May 2000), and followed by that of 2011. What is a common feature though, and Nigerians have experienced again in the

last year is that minimum wage changes in Nigeria have often followed serious and sustained agitations by organised labour. In all, there are at least four weaknesses in the process by which the country’s minimum wage is altered. First is that the change in minimum wage is often preceded by sustained agitation by the labour, showing that there is no established principles for which the minimum wage can be altered. Second, because of the agitation and the elaborate set up before the changes are made, the process comes with huge financial and opportunity costs. For instance, the 2019 planned change involved agitations by labour, planned strikes, the cost of setting up the tripartite committee etc. Third, Nigeria’s minimum wage consistently lags behind inflation, reflecting nega-

tive real wage growth, especially in the public service. Also, though real wage growth is slow in the private sector as well, especially at the level of workers with minimum skills, there is a significant disparity between wages in the public sector and large sections of the private sector. Finally, the process and the shocks that follow the introduction of a new minimum wage expose the vulnerabilities in the States. Nigeria’s minimum wage and states finances States and their representatives are often the most aggressive against changes to the minimum wage, and for good reasons. In a very insightful presentation by David Nabena of the Nigeria Governors’ Forum (NGF) in August 2018, he showed that the new minimum wage in 2011 led

to shocks to States debts the following year. It was compounded by decline in oil prices in 2011. Overall States debt rose by 57% in 2012, and tripled between 2010 and 2017, as debts rose fromN1 trillion in 2010 to N4.5 trillion in 2017. The effect of the 2019 new minimum wage is expected to be similar to that of 2011. The irony will also not be lost on the governors. Just as it was in 2011, the 2019 revision is coming at the back of weak global oil prices. Indeed, the increase in minimum wage will be a culmination of the fiscal crisis that escalated in the States since the significant decline in oil prices in 2015. Between 2015 and 2018, the States have been preoccupied with servicing basic obligations such as salaries and pensions, with limited funds for infrastructure.

During the period also, many States have become major debtors, with unsustainable debt stock and debt servicing. They have largely survived though bailouts from the Federal government, restructured bank loans and budget support facility. In anticipation of the 2019 planned revision to the minimum wage, the Secretariat of the Nigeria Governors’ Forum (NGF) carried out impact analysis using 6 representative States – Ondo, Plateau, Edo, Bauchi, Ebonyi and Kaduna, based on actual revenues and expenditures figures as at 2017. They looked at three scenarios – 25% increase of minimum wage to N22, 500, 33.3% increase to N24, 000, and 66.7% increase to N30, 000. The conclusions are grim. They found that personnel costs will rise up to 65% of total revenue for minimum wage of N30, 000, while in some cases, over 90% of allocation from the federal government will be required. They also found that 4 out of the 6 States in the study that recorded deficits in 2017 would require higher level of deficits financing and pile up more debts. In addition, while the focus is always on the wage floor ceiling, increasing the minimum wage also has implications for wage growth in the States, as they are obliged to increase wages for all sections of the payroll. One of the most striking conclusions of the analysis by the secretariat of the Governors’ Forum is that none of the States in the study can rely on Internally Generated Revenue (IGR) for the payment of salaries in the State. This reinforces the notion that, for most States, the Federal Account Allocation Committee (FAAC) is a form of social transfer rather than for economic development through expenditure on infrastructure. Nigeria’s staircase function mentality Figure 1 above showing the changes to Nigeria’s minimum wage has some interesting properties. It shows that changes to Nigeria’s minimum wage are usually steep, with significant increases at every point. It also shows that changes to Nigeria’s minimum wage is few and far in between. Between 1981 when the first minimum was introduced, there have only been four changes, with an average of about 8 years for each change. It also means that the changes are significant. For instance, if the N27, 000 presented by the President is adopted, the minimum wage will

rise by 50%. These features are what makes Nigeria’s minimum wage data movement resemble that of a staircase. There are other data with similar features, and they include that of the exchange rate, electricity and fuel prices. Mathematicians describe such movement step or staircase functions. The common feature of all these variables is that the government controls them, and the government determines when they change. While in some other countries, this is also a constant, there is a mechanism in place for frequent adjustment of these prices in response to changing economic conditions. In Nigeria, authorities wait endlessly until it becomes economically indefensible to leave rates and prices at that level. Eventually, we have staircase type movement / function. While the minimum wage will always be a finite number, the damage to economic policy and budgetary planning in the States, follows from the poor policy and legal environment on how the minimum wage changes. While most countries now have laws for low pay and minimum wages, they also have mechanisms in place for adjusting the minimum wage in a way that avoids shocks to the system. It’s the law, stupid New Zealand unveiled the first national minimum wage in 1894 by the industrial conciliation and arbitration Act. In 1986, Victoria, Australia, amended the factorial and shops act to create a wages board, replaced in 2005 by the Australian fair play commission under the work place relations’ committee Act 2005, and then by the fair work with Australia in 2010. In June 2018, South Africa introduced minimum wage for the first time. The country joined many other countries with legal applications for a floor wage. The minimum wage that started this year is 20 rand ($1.58) per hour or 3500 rands ($277) per month for 40-hour weekly job. In the US, the minimum wage law is under the Fair Labour Standards Act (FLSA). Both the federal and State governments can enact minimum wage laws, in which the higher wage is the applicable one, and with exemptions that include for young workers, students and those living with disabilities. In the US, as it is in Nigeria, the national minimum wage does not increase automatically, as Congress must pass a bill which the President signs into law before it is applicable. The last minimum wage in the country was set in 2009, but it is virtually irrelevant since States also have the powers to pass minimum wage laws. In Europe, especially in the UK and Germany, there is frequent adjustment to the minimum

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Between 2011, since the last minimum wage was agreed at N18, 000, the rate of inflation has averaged about 10% annually. The increase in the general price of goods by about 10% annually leaves the real wage of the minimum wage at about N8, 000 today, at the level of the minimum wage reached in 2001

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Monday 04 March 2019

wage, compared to the US. In both the UK and Germany, unlike the US and Nigeria, they rely on established commissions to set changes in the minimum wage. What is common in all the applications and processes for adjusting the minimum wage is flexibility in the process that allows for changes in responses to changing economic conditions. This is a significant weakness in Nigeria’s bills. In both the 2001 and 2011 Act for the revision of the minimum, the law was specific to that single change and not to the adjustment process. That is the reason why the President has to send a new bill to the Senate for another revision. But in passing the 2011 bill that raised the minimum wage from N7, 500 to N18, 000, the law makers, led by then also by the Deputy Senate President Ike Ikweremadu, had sought to institute the mechanism for seamless transition from one minimum wage to another. Two points were particularly raised during the passing of the bill. One, raised by the then Senate Leader Taslim Folarin, as quoted in the Vanguard February 27th 2011, was that “there is need to alter the Nigerian constitution by delisting of the subject of minimum wage from the exclusive legislative list of concurrent list to enable both the Federal and State governments free hand in negotiating wage increase matters separately with their workers, which will further strengthen our fiscal federalism”, thus pushing for the US model. The other point, made by Senator Smart Adeyemi was that there “should be a bill to review the minimum wage annually because of the rate of inflation is an annual increase”. While these two points are important, and provides very strong indication that the lawmakers understand the tediousness associated with minimum wage increases in Nigeria, they do not sufficiently address the scale of the problems with the process, the inherent weaknesses, and the costs of changes to the mini-

mum wage increases. Indeed, the labour movement had argued in the past that agreements reached with the Federal “were sometimes distorted at implementation or not implemented at all”. For instance, in the 2000 minimum wage agreement reached with the government, workers wages was expected to rise further by 25% and 15% in 2001 and 2002 respectively. Instead, the government increased wages by 12½% and 15% in 2003 and 2007, respectively. In 2011, the Act stipulated that the minimum wage will be reviewed every five years, but critically, did not specify whose responsibility it is and how the process should be completed. Resistance is Futile From the perspective of workers and the labour unions, legislation on minimum wage would improve their standard of living, reduce poverty, and inequality. They also believe that a satisfied worker would be more efficient at work, and output would increase. But the process, often tedious and tortures, leaves workers frustrated and diminishes productiv-

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ity, as workers fight to maintain real wages. Between 2011, since the last minimum wage was agreed at N18, 000, the rate of inflation has averaged about 10% annually. The increase in the general price of goods by about 10% annually leaves the real wage of the minimum wage at about N8, 000 today, at the level of the minimum wage reached in 2001. While there is the prospect that the new minimum wage will also cover the real wage losses of those at the bottom, frequent adjustment along the pattern of inflation would have maintained the real minimum at the same level over the years. For instance, in the UK, the Low Pay Commission advises

The largely irrelevance of the agency is summarised by the mere membership status of the chairman of the commission, Richard Egbule, in the Technical Advisory Committee on the implementation set up by the President December 2018. The committee, led by Bismark Rewane, one of Nigeria’s leading economist, is to work out the challenges around labours’ demands and deliberate sustainable sources of funding for the new minimum wage, as well as plans for implementation.

the government every October about the future of national minimum wage. In 2015, setting a wage floor was a key agenda in the demands of the Social Democrats (SPD) to enter a coalition with Merkel; this led to the establishment of a minimum wage commission, Mindestlohnkommission. Many will be forgiven to realise that Nigeria has a similar agency that is largely obscured, with unclear mandate in relation to the setting and revision of Nigeria’s minimum wages. The National Salaries, Incomes, and Wages Commission (NSIWC) was established by Act 99 of 1993. Its mandate and functions include advising the Federal and State governments on national income policy, recommend levels of income growth, provide guidelines for increasing wages, conduct research on wage structure, keep surveillance on changes in prices, propose measures of for the regulation of prices and wages and examine the salary structures in the public and private sectors and recommend general wage framework.

we know is that this will exert pressure on State government finances. Amongst all employers of labour, the States are like to be the hardest hit I have argued here that the direction of the debate on minimum wage is not founded on sound economic principles, but on the emotions of those who pay the piper. In fact, the demand of N30, 000 by the NLC reduces to N1000/day and is insufficient per se given the economic realities. We have recently learned that South Africa would pay the equivalent of N126, 480 as minimum wage in 2018. Another rather interest aspect of the matter should be the insufficiency of the minimum wage act to reflect the flexibility in work environment and changes in the future of work. Work environment is not as rigid as it used to be; more and more people are engaged in freelance employment, contract jobs, commission based employment, part-time employments. The Act, as it excludes these groups, creates room for labour exploitation.

Conclusion In the next few weeks, Nigeria will have a new minimum wage, expected to be N27, 000. There are known and unknowns. What

Okiti is an economist and President Time Economics Ltd.

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Linkage Assurance financially strong to deliver quality services – Braie tells brokers

L-R: Anthony Saiki, head oil and gas, Linkage Assurance Plc; Fatai Adegbenro, executive secretary, Nigerian Council of Registered Insurance Brokers; Bola Onigbogi, deputy president, NCRIB; Sola Tinubu, president, NCRIB; Daniel Braie, managing director/CEO, Linkage Assurance Plc; Joyce Ojemudia, general manager, Marketing, Linkage Assurance Plc; and Okanlawon Adelagun, executive director, Technical, Linkage Assurance Plc during the February Edition of the Members Evening of the NCRIB held in Lagos

Why healthcare providers need professional indemnity Stories by Modestus Anaesoronye

52-year old man, Jo n a t h a n w a s brought in unconscious into a private hospital in Egbeda area of Lagos recently, after he collapsed while climbing the stairs in his house. Four hours later, he died with an allegation that the hospital did not give him immediate attention because his family could not provide the money needed as deposit to enable the hospital admit him. Now an angry mob led by the deceased’s family members was said to have stormed the hospital claiming damages for the death of their relative from the hospital. The owner of the hospital who was not around at the time of the incident agreed that the staff on duty could have done what they did because of their past

experience. The doctor and owner of the hospital said “most times, people bring in unconscious patients into the hospital and will never show up again, and in the end, the hospital would be left to its fate. “They have brought unconscious patients with mental problems and after we have resuscitated such people, we discover that they were just picked from the streets and brought to us. At the end we were left with deranged patients who do not even know their address or where they came from and so we now became careful who to admit.” Though the doctor (owner of the hospital) knows that it was circumstantial, he however accepted it was an error by his staff on duty at the time of the incident. He accepted to make compensation to the deceased family and also cost of burial. If the doctor and staff on duty had ‘professional indemnity insurance’, the

compensation and cost of burial would have been taken care of by the insurance companies. If you provide a professional service or give advice as a health or medical professional, then you need professional Indemnity Insurance cover. In Nigeria, the National Health Insurance Scheme– (NHIS of 1999) requires every healthcare professional to have insurance that will protect their patients in case of accidents or fatalities (death) resulting from professional negligence. This type of insurance provides compensation to patients and their relatives in the event of involuntary murder, disability, shock and injury suffered by patients as a result of the negligence of Health Care Providers. The penalty for non-compliance with this law is a possible revocation of license by the National Health Insurance Council, a record of conviction, and sealing-off of the premises.

What is professional indemnity insurance? Professional Indemnity Insurance protects you from claims if your client holds you responsible for errors, or the failure of your work to perform as promised in your contract. Who is a professional? Anyone who gives to another person advice and/or services of a skillful character according to an established discipline might be regarded as a ‘Professional’. That means persons other than those in ‘traditional’ professions, such as doctors and lawyers, engineers, surveyors , insurance brokers , accountants, are now considered to be professionals i.e. computer consultants, advertising agents, and fund managers. Why does a professional need a professional indemnity policy? A professional will hold himself or herself out as having a special skill, which can be relied upon by another.

nderwriting firm, Linkage Assurance Plc is financially strong and able to deliver qualitative insurance services that will meet the expectation of customers, Daniel Braie, managing director/CEO of the company said in Lagos. Braie who addressed the insurance brokerage fraternity at their February 2019 Members Evening said the Board and Management of Linkage Assurance Plc is excited to present to the group a competitive brand to partner with. Linkage Assurance Plc played host to the Members Evening held at the Nigerian Council of Regsitered Insurance Brokers (NCRIB) Secretariat in Alagomeji Yaba, Lagos. Braie told the brokers led by its President Sola Tinubu that Linkage Assurance Plc has strengthened its internal structures to deliver quality and efficient services. “We have strengthened our internal structures to ensure that claims are handled with speed, because we realise that this is the main reason we are in business, and we will ensure it is sustained” According to Braie, the human capital structure of the company has also been beefed up with the recent appointment of the Executive Director, Technical, among others who are already adding value to our operations and systems, for the benefit of our esteemed customers, he said. “We have also increased our capacity to do more volume businesses as evi-

denced by the increase in our reinsurance treaty across all classes of insurance”. The company’s total assets stood at N23.31 billion at the end of 2017, moving up by 15 percent from N20.33 billion in the previous year. Linkage has developed array of retail products targeted at deepening penetration and increase revenue. These include the Linkage Third Party Plus, which is a budget friendly motor insurance that provides not only the compulsory Third party protection but an additional Own damage protection to the tune of N250, 000, and is only available in the company”. Other products launched by the Company are the Linkage SME Comprehensive, Citadel Shield (which provides compensation as a result of injuries from accident for pupils and students in recognized academic establishments); Linkage Events Xclusive Insurance, Linkage Shop Insurance, Purple Motor Plan (comprehensive motor cover exclusively for women), and the Linkage Estate Insurance. Linkage has also deployed its online portal to make its products and services available to customers especially the digital savvy customers and enterprises. Linkage Assurance Plc was incorporated on 26th March, 1991 and was licensed to cover and transact non-life insurance businesses on 7th October, 1993.

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2019 election: Insurers seek peace, good governance to promote growth and development Stories by Modestus Anaesoronye

s the 2019 general elections, which returned President Mohammadu Buhari of All Progressive Congress (APC) as the next president, and the upcoming governorship and state house of assembly holding this weekend take their toll on the economy, insurance practitioners have called for peace and good governance. They believe that these are necessary drivers needed to keep the country on the part of growth and development. Sola Tinubu, president of the Nigerian Council of Registered Insurance Brokers (NCRIB) made the call during the Council’s February Members Evening hosted by Linkage Assurance Plc.

Tinubu said the pursuit of peace and good governance for sustainable development should be addressed frontally. “Without this, business environment may continually remain in jeopardy. While congratulating Nigerian’s for exercising

their rights to vote during the elections, he called on the relevant authorities to address the dangers that may work against the success of the remaining part of the elections. The Brokers Evening he said provides an opportunity to join many

meaningful Nigerians to congratulate everyone that voted during the last elections, “this is our civic responsibility as citizens of Nigeria and I hope, that at the end of the day we will all have the desired peace and progress in the Country, he stated.

JLT & Allianz partner on corporate reputation cover for SMEs

LT Specialty and Allianz Global Corporate & Specialty (AGCS) have partnered on the launch of a new corporate reputation insurance product targeted at small and medium-sized enterprises (SMEs) in the UK. Reputation Protect Plus provides coverage against the loss of net operating profit from a reputational crisis combined with a crisis response service. As the first UK broker to offer the product, JLT is focusing on UK SMEs and midcorps within the entertainment, hospitality, food, beverage, travel, communication & technology, education and healthcare sector Companies in these sectors tend to rely heavily on consumer trust, which can be undermined quickly and become vulnerable to reputational damage, particularly if they haven’t budgeted for crisis communication and reputational risk solutions. The coverage will also offer clients comprehensive reputation analysis to identify potential risks to their business and help to develop response and prevention strategies. This will be overseen by media analysis institution MediaTenor International

Stanbic IBTC Pensions, two other group members receive ISO certifications

AG, and clients will be able to choose from several communication agencies to support them during an incident, including Brunswick, Kekst CNC and Hill+Knowlton. JLT and AGCS explained that Reputation Protect Plus will provide protection for up to 180 days of falling net operating profits from when the reputational harm is first discovered, including the cost of an external expert required to prepare and present the quantity of the financial loss. “Reputation is a matter of trust – and if that trust is undermined, then customers will vote with their feet, tweets and wallets very

quickly,” said Edel Ryan, Partner for JLT Specialty. “While the best-known scandals inevitably involve highstreet brands, all businesses are equally at risk.” “While the financial loss cover under the JLT exclusive policy wording with Allianz is a game changer, we also set out to deliver a proactive risk management strategy for the board to deal effectively with a reputational crisis,” she continued. Susan Crabtree, Regional Head of Product Development Financial Lines at Allianz Global Corporate & Specialty, also commented: “In the era of social media

and fake news, perception is reality and reputations can be shredded in hours with an immediate knock-on effect on a company’s bottom line.” “A crisis can also lead to aggressive competitors seeking to capitalise on your troubles,” she added. “A dangerous mix that can erode short- and long-term income.” AGCS noted that almost a quarter (24%) of a company’s value is estimated to lie in its brand, with studies suggesting that a company can lose close to 30% of its equity value following a reputational crisis. “Nevertheless, many companies are still inadequately protected against the consequences of a reputational crisis,” remarked Stefania Davi-Greer, regional unit London head of Financial Lines, AGCS. “This is all the more alarming because the triggers for reputation risks have multiplied in the social media age.” “With the new Allianz Reputation Protect Plus product, AGCS offers a comprehensive insurance solution that combines the support of professional crisis communication consultants with the coverage of financial damage resulting from a reputation crisis,” she said.

tanbic IBTC Asset Management Limited, Stanbic IBTC Trustees Limited, and Stanbic IBTC Pension Managers Limited, members of Stanbic IBTC Holdings PLC, have received the ISO 9001:2015 Certifications, the latest certification in the series, a highly regarded Quality Management System certification globally. Lawrence Ogudu, lead auditor, DQS Management Nigeria Limited, a leading global certification body for quality management systems and organisational health, while presenting the awards in Lagos, affirmed that Stanbic IBTC Asset Management Limited, Stanbic IBTC Trustees Limited, and Stanbic IBTC Pension Managers Limited all met the requirements of the ISO 9001:2015 Certification. The requirements, amongst others, entail demonstration of the ability to consistently provide products and services that meet customer and applicable statutory and regulatory requirements. It also involves the enhancement of customer satisfaction through the effective application of the system, including processes for improvement of the system and the assurance of conformity to customer and applicable statutory and regulatory obligations. According to Ogudu, the certification is simply a message to customers and prospects that the businesses have the capacity, are committed and sincere in their product and service delivery. The certification, amongst its many benefits, will enable the three businesses to serve their customers at the right level of quality and ensure zero variability in the delivery of services across the various digital and non-digital touch points, all of which enhances customer experience and relationships with the businesses. Eric Fajemisin, chief executive, Stanbic IBTC Pension Managers Limited who spoke on behalf of the subsidiaries, commended the teams for making the certifications possible, even as he stressed that the requirements of the system would be continually reviewed and developed for higher performance.

Stanbic IBTC said it was pleased with the ISO 9001:2015 Certifications. According to the financial institution, it is a clear demonstration of the Stanbic IBTC Group’s drive to improve service delivery in all aspects of its businesses. The group assured it will continue to build on its existing strengths, including its membership of the Standard Bank Group, Africa’s biggest financial institution, to improve on its service delivery across all segments, customer touch points and channels of operations. The certification, Stanbic IBTC said, will help to benchmark performance by identifying areas that require fixing and improvement. The critical objective is to deliver quality and reliable services through improved internal management and operational processes. “We have long recognized that improvements in our performance, which a robust quality management system assures, are directly connected to quality service and customer satisfaction,” the company added. The Stanbic IBTC Group’s goal is to achieve end-to-end digitization covering front-end and back-end processes, it said, adding that better process integration will help deliver great customer experiences, improve operational efficiency and cost optimization for the entire organization. Stanbic IBTC Holdings PLC, a member of Standard Bank Group, a full service financial services group with a clear focus on three main business pillars - Corporate and Investment Banking, Personal and Business Banking and Wealth Management. Standard Bank Group is the largest African financial institution by assets and earnings. It is rooted in Africa with strategic representation in 20 countries on the African continent. Standard Bank has been in operation for 155 years and is focused on building first-class, onthe-ground banks in chosen countries in Africa and connecting other selected emerging markets to Africa and to each other, applying sector expertise, particularly in natural resources, power and infrastructure.

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Nigerian cement sector valuation more attractive than frontier, emerging market peers BALA AUGIE

he relatively attractive valuation of cement makers in Afr i c a’s l a r g e s t economy means they will benefit the most from investor’s interest. Nigerian cement sector has a price to earnings (P/E) ratio of 12.50 times, this compares with Turkey’s P/E ratio of 36.90 times, India, (31.31 times); South Africa (S/A), (29.20 times), and Mexico, (12.90 times). Analysts at Afrinvest Securities Ltd have issued a Buy rating on Lafarge Africa and Dangote Cement, while valuation of Cement Company of Northern Nigeria (CCNN) is currently under review due to the recent merger with Kalambiana cement. The investment house added that it expects Lafarge Africa’s latest debt restructuring and cost con-

tainment strategies to support profitability in 2019, while for Dangote Cement it expects cost efficiency and smooth Pan African operations. The three major producers of the building materials are intensifying strategies to take advantage of the huge infrastructure deficits and demand for housing. President Muhammadu Buhari has presented a budget of N8.90 trillion for 2018, while federal government has raised Eurobonds to fund capital projects across the country. Dangote Cement, controlled by Africa’s richest man, Aliko Dangote, said last year it’s looking to raise $500 million from a Eurobond sale and will also issue 300 billion naira in localcurrency bonds to refinance debt and boost expansion. Meanwhile, Lafarge Africa is seeking to raise about N100 billion through equity or debt on top of a rights

issue of about N130 billion the last quarter of 2017 in order to reduce debt in its balance sheet. The proportion of debt in the capital structure of the company is high as debt to equity ratio or leverage ratio, stood at 191.52 percent as at September 2018, higher than the 163.24 percent the previous year. Total debt in the balance sheet hit N254.18 billion as at September 2018. Lafarge Africa has an interest coverage ratio of 0.54 times for September 2018, as operating income of N19.13 billion got swallowed by finance cost of N34.925 billion, resulting in a loss after tax of N10.37 billion in the period under review. Dangote Cement has been taking advantage of the Nigerian rapid housing and infrastructure demand across Africa to underpin earnings and increase its share of the market. The largest producer of the building material in the country has an excellent

energy mix as it continues to spend less in generating each unit of revenue. For instance, cost of sales ratio fell to 42.53 percent in December 2018 from 43.60 percent as at December 2017. CCNN implemented a merger with Kalambaina cement that saw its capacity hit 2 million metrics tonnes. Both companies are owned by BUA Cement Limited, the country’s third largest producer of the building material with a capacity of 8 million metric tonnes. Analysts at Afrinvest Securities Ltd said that after the merger, CCNN’s shares outstanding had risen to 13.10 million from 1.30 million shares, which investors priced at 9.50 times. “We believe the new merger will result in improved efficiency for CCNN,” said Analysts at Afrinvest Securities Ltd. Talking about efficiency, the company switched energy mix from the use of LPFO to a cheap source of energy, coal. The strategy

paid as cost of sales ratio fell to 55.90 percent in September 2018 as against 61.57 percent as at September 2017. Of the three largest producers of the building materials, CCNN has the strongest margin growth based on third quarter results. Its gross profit moved to 44.18 percent in September 2018 from 38.12 percent the previous year. Net margin increased to 20.50 percent in September 2018 from 14.90 percent the previous year. CCNN’s shares closed at N19.95 as of 2:00 pm in Lagos, while market capitalization of N262.21 billion. It has a P/E ratio of 4.83 times earnings. Cement makers are feeling the pinch of an economic lethargy, as lack of supportive policy fame work to drive mortgage activities, low consumer purchasing power, delay in the passage of the budget, have left the country playing catch up game with other sub Saharan peers despite its huge population that crave for consumption . Nigeria, where the cement sector, which accounted for 0.80 percent of (N576.60 billion) of real GDP as at full year 2018, has seen growth moderate to an average of -1.0 percent in the past three years compared to 16.90 percent the preceding decade, according to a recent report by Afrinvest Securities Ltd. Dangote Cement’s share price closed at N196.60 as of 2:00 pm Lagos time while it market capitalization was N3.35 trillion. Its shares trade at price to earnings of 8.60 times, signalling an opportunity for investors to buy the company stocks. Lafarge Africa’s shares closed at N12.90 as of 2:00 pm Lagos time, while market capitalization stood at N118.8 billion.

P.E

SHORT TAKES N649.19 billion The Federal Account Allocation Committee (FAAC) disbursed the sum of N649.19 billion to the three tiers of government in January 2019 from the revenue generated in December 2018.

1.91 mbpd In the fourth quarter of 2018, average daily oil production stood at 1.91 million barrels per day (mbpd). This was lower than the 1.95 mbpd recorded in the same quarter of 2017, and 1.94 mbpd in Q3 2018.

2.35% Real GDP growth in the manufacturing sector was recorded at 2.35% in the fourth quarter of 2018, which is higher than the 0.14% recorded in similar quarter of 2017, and 1.92% recorded in the preceding quarter.

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

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

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‘

The reverse split which brought total number of outstanding shares from 1.88 billion shares to around 370 million shares translates to a total market capitalization of about N2.4 billion as against the N12.4 billion currently stated on market information

plans to raise capital through the equity capital market” according to the company. However, the outcome of the reverse stock split as it is called in finance parlance, has been disastrous for the company. The stock opened at N9.04 in mid-January after the Nigerian Stock Exchange lifted the suspension on the stock allowing the stock to trade freely in the market after the restructuring process was

complete, the stock price took a severe hit. Investors rushed to sell shares thinking they had struck gold as the stock which traded at N1.78 before the restructuring was suddenly trading at 5 times its value at the end of the restructuring process. They rushed to sell to collect profits without realizing that the number of shares they owned had now been adjusted lower to reflect zero change in the

value of their shareholdings despite the higher price per share in the company. The resultant effect is that the stock price has now declined around 27 percent since the suspension was lifted as at Friday. The main problem was investors’ honest misunderstanding of the capital restructuring process that had happened. In finance, a reverse stock split or reverse split is a process by which shares

of corporate stock are effectively merged to form a smaller number of proportionally more valuable shares. This activity does nothing to the core business as the changes in the balance sheet are merely accounting gimmicks to enable the company to have more un-issued share capital. “ The reverse split which brought total number of outstanding shares from 1.88 billion shares to around 370 million shares translates to a total market capitalization of about N2.4 billion as against the N12.4 billion currently stated on market information sources including Bloomberg. The overstatement in value is due to the use of the old number of outstanding shares which was 1.88 billion shares instead of the new number of outstanding shares. This mistake is bound to overstate C&I Leasing as an overvalued stock which it is not,” according to an investment note sent to Clients by EUA Intelligence. It now appears that the market may need to rework their mistake soon rather than later. EUA analysts say the stock is set for a strong rebound as the company is expected to report earnings per share around N3.7 per share for full year 2018, putting trailing PE ratio at around 1.7, making C&I Leasing among the cheapest stocks in the market today.

‘

Dangote Cement to pay more money in dividends this year than it earned in profits in FY2017 …company declares intent to pay around N267 billion as dividends after profit hits N390.3 billion …shareholder’s equity approaches N1 trillion mark

s Dangote Cement celebrates its best ever financial year after declaring record revenue and profit after tax (PAT) for full year 2018 at about N901.2 billion and N390.3 billion respectively, shareholders of the company have the most to celebrate as they are set to receive a windfall profit through record dividends estimated around N272 billion. The total amount of dividends to be paid out by the company after approval by shareholders will exceed the total profit after tax earned in full year 2017 which was around N204.2 billion. “It is almost as if investors have literally struck a mine in Dangote Cement. For a N900 billion company to keep growing at the pace it has is nothing short of spectacular!” said Maju Eldad, lecturer in Economics Department at Federal University of Kashere, Gombe.

Dangote delivered earnings growth of around 91 percent as PAT climbed to N390.3 billion from N204.2 billion. However, most of the growth in profit is thanks to a tax credit from the government. Dangote was finally awarded pioneer status, enabling

the company collect up to N89.5 billion in tax credit for the year 2018. However, analysts expect the tax credit to a one-off and the company will resume paying taxes this year. A stellar financial performance helped the company grow its

shareholder’s equity from N781 billion to N986 billion, as the company nears a record networth of N1 trillion. “We expect that book value (shareholder’s equity) will now cross N1 trillion at some point this year, either in Q1 or Q2 but

its more likely to do so in Q1. The company is expected to generate more than N55 billion in PAT during the first three months of 2019 which should get it over N1 trillion in equity capitalization.” Dangote Cement has solidified its position as the most capitalized company in Nigeria after posting almost N1 trillion in Shareholder’s equity. Dangote Cement with N986 billion is shareholder’s value is more than N100 billion ahead of the second most capitalized company, Zenith Bank who reported N815 billion in total equity. Analysts are forecasting that the stock will rally significantly after the price to earnings ratio dropped from 20 to 8.3 after profit almost doubled from last year. At its peak, Dangote Cement traded at N290 per share in February 2018. The stock closed at N195 as at Thursday last week.

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Beverly Naya: Not just an actress ….but a phenomenal entrepreneur ODINAKA ANUDU

a n y Ni g e r i a n s know Beverly Naya as a beautiful actress who features in highprofile movies. No doubt, Beverly is a multiple award-winning actress who has featured in several blockbuster movies such as Tinsel, Chief Daddy, andt Wedding Party (1&2), among many others. She is indubitably one of the most sought-after in the entertainment industry today and has received several awards and nominations for her talent. In 2016, she was nominated for the African Magic Viewers’ Choice Award (AMVCA) in the Best Supporting Actress category for her performance in the highly acclaimed show, Before 30, and in 2018 she won the Best Actress award at the Toronto International Film Festival for her role in Demon Inside. She also stars in Mo Abudu’s latest film, Chief Daddy. But all these are only one part of her life story. Beverly won the Forbes 30 under 30 Awards in Africa in 2018. She has now ventured into film-making and agriculture. Two years ago, the 29-year-old Britishborn Nigerian actress founded Be Naya Limited to serve as a platform for film production, beauty and other related businesses. Under Be Naya Limited, Beverly has recently produced a documentary entitled Skin, which focuses on colourism and how it affects the society. Colourism affects both women and men in African countries, but it has taken hold of beauty standards associated with women’s ability to find success and marriage. The number of women across African countries using bleaching products have gone up, with 77 percent of Nigerian women, 52 percent of Senegalese women, and 25 percent of Malian women using lightening products. She was raised in London, England, and studied Film-making at Roehampton University. An only child of her Delta Stateborn parents, Beverly moved back to Nigeria in 2011 to pursue an acting career. Eight year after, she does not regret that decision. “I think it has been, for the most part, beneficial,” she says about her relocation to Nigeria to take up an acting career. She admits that resilience, determination and hard work are key attributes that have got her to where she is today. Beverly has always been a relentless entrepreneur. She knew long ago that she would not rely on an acting career alone as a means of survival. “I have always had that entrepreneurial spirit. I have always known I wanted to do more than just acting at some point in time,” she says. “I registered a company called Be Naya two years ago. The reason

why I did this was for my entrepreneurial ventures. Right now there is the agriculture, and production company outfit. There are others in the pipeline, including beauty” In the agriculture sector, Beverly has founded a company called Naya Garri. Her vision for this segment of business is diametrically opposed to what is common in the Nigerian society today. “It is something I started for the grassroots. In Nigeria, we have to know the needs of the people— what they are lacking to be able to make an impact . I just feel like everyone is focusing on what the elite need. Many people think of opening up restaurants here and there, but not enough are focusing on what the grassroots ( low income earners) need. Food is expensive these days. So, for me, coming up with a necessity that’s affordable, I think it’ll go along way in impacting lives. It’s to this end I came up with Naya Garri, and what it means is a bowl of garri with sugar in it, and a spoon and groundnut,” she explains. “I have a farm and a factory that do everything. It was founded less than a year ago.” On her documentary, Skin, she says it is something she wanted to do in 2014/2015. “I came up with a campaign called Fifty Shades of Black. The campaign was focused on bringing more unity to the black race, so that there is no segregation or hierarchy either. All black is beautiful.” She points out that she started the campaign because she was bullied as a child, not necessarily because of her skin colour but for other related reasons. “It really damaged my self-confidence as a child. As I got older, I found my confidence again. It took me a long time to overcome that. People would compliment or tease me and I would question them. Because I was bullied, I wanted to start a campaign against bullying . But the more research I did on colourism, the more I understood that colourism is actually a form of bullying,” she explains. She tells Start-Up Digest that her team finished her documentary in first quarter of last year and will premiere it in Lagos within the shortest possible time. “Firstly, we have got to have a premiere in Lagos,” she says. “The plan is to take it to various secondary schools around Nigeria, talk to young people about self love, self discovery, self esteem and teach them to love themselves as they are. From there, we will leapfrog across Africa and around the world.” The documentary will be distributed in different platforms. What motivated Beverly to start thinking of these businesses? She responds that it is the energy and the desire working inside her that pushed her. “I think I have a lot of energy within me to restrict myself to just

Beverly Naya

acting,” she says. “I know what God placed within me and my goal is to express and share this with the world, making my society better. I feel that if we spend more time understanding God’s will for our lives, we can achieve everything under the sun. For me, it is about desire to actualise the gifts I know I have within me,” she notes. She plans to invest in beauty as part of Be Naya’s expansion target. “I am a naturalist; I have got natural hair and a lot of people know me for that reason. So, I am coming up with something that will be really interesting. That’s another business under Be Naya as well,” she discloses. Unlike some of her colleagues in the film industry, Beverly has built a good brand, which has helped her grow financially. She believes that acting is not as lucrative as most people in the society believe. “There are some actors who are willing to shoot 10 to 15 films in a month. It becomes lucrative that way. But if you are the other type of actors who prefer to do four to six films in year, it is not as lucrative,” she elucidates. She says that one big way out is for actors to diversify and build brands. “It is always important to diversify and find other lucrative ways of making money,” she advises. “I think it is also very important to build a brand. When you build a brand, you are able to collaborate with other brands and that’s where the money is. When you build a

brand, you can make money.” She notes that the Nollywood is a growing industry but is not doing as well as it should. “Producers don’t necessarily pay actors their worth at this moment,” Beverly says. “This doesn’t mean you don’t get a project that pays you a lot of money. But on the average, each film does not pay a huge sum of money as many people assume.” She urges actors and actresses not to put unnecessary pressure on themselves in trying to keep up with other people’s expectations of them. Many of Beverly’s fans would be shocked to know that she is closer to God than they thought. In the course of the interview, she mentions ‘God’ many times. “I am very close to Him. Basically, I decided around August/ September late year that I needed to be closer to God,” she says. “I just felt within me that I needed to get close to God. I was trying to figure things out on my own, but with God leading me, things are now falling into place. It is important to put God first in everything. This does not mean that prior to that I wasn’t a Christian. I was, but I wasn’t putting God first in everything.” Nollywood films are often seen as shallow. Producing quality movies, on the other hand, requires huge amount of money. But Beverly says there are many highly successful entrepreneurs that are ready to invest in quality films. “All you need to do is to sell your

business to them. For example, my documentary was sponsored by Amstel Malta. You can even get a brand involved. That’s one avenue. I think it is also it is important to ensure you know how to make your money. I think there are times people in Nollywood have super high budgets but are not thinking of how to get their money back. It is really important to ensure that if you are investing in a project, you know how you are getting your money back.” She is inspired by Opray Winfrey and Mo Abudu for their huge impact on the society where they live. “I love what Abudu has achieved in a short space of time, considering the fact that she was once a TV presenter but now a global icon. Winfrey is a huge inspiration to many young people and she is selfless,” she states. She intends to motivate the younger ones through her documentary- skin, public speaking and mentorship. “I am of the opinion that if you know who you are, you can achieve anything you want,” she says. “Every decision we make in life is as a result of how much we know ourselves. I know bad decisions are made in life because we don’t know ourselves and haven’t fully discovered our potentials. So it is very important for us to teach young people about knowing themselves, about patience, about spending time alone, about stillness.” She wants the younger ones to believe in themselves, ignore the naysaysayers, ignore the negativity and the people that may tell them that they are not good enough. She also wants the government to pay attention to the movie industry. “I feel that Nollywood as an industry employs a large number of people and also has done amazing things for the economy. It has also put Nigera on the map, but for some reason, the government is not focusing on the industry. I feel that if the government supports Nollywood the way the US government supported Hollywood, we can go far. There is huge potential in that industry and the only thing hindering us is resources .”

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Start-Up Digest

Meet Samuel Oluwatobi, entrepreneur adding value to Nigeria’s automobile market Gbemi Faminu

amuel Babalola Oluwatobi is the CEO of Autobabs & Properties, a firm that buys and sells cars. It also helps deliver cars to distant destinations while rendering general automobile services. Samuel holds a bachelor’s degree in Agriculture from the Federal University of Agriculture Abeokuta. He started this business because he had always been interested in everything that had to do with automobiles and its mechanisms. And whenever the opportunity presented itself, he always got involved in fixing and learning about automobiles. His passion led him to set up his business in August 2014 while he was in his 500 level. “Going out there, seeking jobs, was not in my plans because that is more like an ‘Ultimate search’ these days, and doing illegal jobs (or runs like most people call it) was totally out of it. So I had my ideas mapped out and I con-

Samuel Oluwatobi

ceived Autobabs,” he says. He started his business in partnership with two friends and contributed N450,000, which he got from loans and personal

savings. He believes that ideas and knowledge are major capital needed for a business. Ev a l u a t i n g h i s b u s i n e s s growth, the entrepreneur says

that although it is a tough business, hard work and consistency were enough to raise his status. He notes that he has been able to register his business officially and record ground- breaking achievements which have motivated him to press forward. Samuel says that he attends trainings that are related to automobiles and business. He says that to be in the business, one needs to devote oneself to learn the basics. “You need to know how to operate cars. Having a mechanical skill is an advantage. You also need vehicle precision and driving skills,” he explains. Apart from his business partners, Samuel has two assistants who he pays on commission basis. Speaking on the challenges of his business, he reveals that import duties have negative impact on his business. He further says that convincing clients is another problem, adding that it is not always easy to import some of the parts he needs. He urges the government to make import duties favourable for business while

developing indigenous vehicle manufacturing industry. He says local industries will reduce high rate of dependence on foreign materials. Samuel keeps his customers and grows his clientele by providing affordable, valuable, quality service, developing friendly relationships with them, which extend beyond business. This, he says, ensures customer satisfaction. Speaking on his business expansion plans, the entrepreneur mentions that he is working on building his full-time transport and logistics firm. He plans to partner with other automobile companies to actualise this dream. The young entrepreneur also wants to develop his own automobile assembly plant in Nigeria and is eyeing large scale agriculture. Samuel says he is inspired by God and writers like Robert Kiyosaki and Myles Munroe. His life values are hard work, consistency and self-development. He advises other entrepreneurs to build their people network, be courageous, take risks and dare to be different.

Faith Tonibor: Baker, event manager, beauty entrepreneur Investing in fruit juice production David Ibidapo

any entrepreneurs are driven by a passion to solve societal problems. For Faith Tonibor, chief operating officer, Bliss Signature, the need for perfection and beauty is her major driving force, fuelled by her passion to have signature on every good work within and beyond her locality. The nature of her business includes beauty lounge, event management and planning, with services in cake-making, snacks, decorations and sales of hair extensions. It also includes services in areas such as wigs and hair styling, make up and ‘gele’, including delivery services. The dedication of Faith Tonibor to solving societal problems motivated her to go through the pain of forgoing personal expenditure to make her business a reality, even in the face of poor access to credit from banks. “My initial start-up capital was well above N100,000, and this was achieved through personal savings, in addition to what I was able to gather while I was employed. This was a gradual process though,” she says. Thrilled by her progress so far, she explains, “By the grace of God, we have never experienced a better yesterday.” She further looks forward to improving beyond current levels, both in terms of customer base

and the number of employees. “With current rising population in the country, we have enough market we can tap into. We beautify their lives and make beautiful reserves,” she says. On where raw materials are sourced, she explains,” We source our raw materials from selected outlets in Lagos like Bakers World Limited, Blue Ribbon, and Tradefare in Lagos, among others.” Faith says poor power supply in the country is the major challenge facing her business, stating that it hampers her expectations. “We, most times, resolve to operating on generators, with lots of money spent on purchase of fuel and maintenance, even before any sales has been made or done,” She laments. She adds that logistics is also a major hurdle to cross. “We face the problem of getting

Faith Tonibor

goods across to our customers in time,” she tells Start-Up-Digest. She reiterates the need for the government to create conducive business environment for micro businesses like hers to thrive. “The government can invest more in the mode of transportation so as to reduce congestion on roads and also monitor and increase funding. These will alleviate some of the challenges faced while sourcing capital,” she notes. On her future expansion plans, she explains, “In the long run, we plan to establish an institution with qualified instructors to give adequate teaching to every of our students.” “Student will not just learn but will also be certified in various field of study.” In her concluding remarks, she says, “One thing I will like to tell other start-ups is to be focused. By this, I mean whatever you start, ensure you finish it without being distracted.” “Also they should learn to start small but have big plans and visions while they finally give room to learning every day.” She also has few words for the government. “As young entrepreneurs , we urge governments at all levels to create platforms for partnerships for entrepreneurs. Government should create more avenues for businesses like ours to partner with relevant government bodies, increase support and funding for new and innovative businesses like ours,” she notes.

ruit juice is made from orange, pine apple, guava, mango, as well as additives such as sodium benzoate, sweeteners, and citric acid, among others. The Nigerian market for fruit juice is expected to increase by more than 20 percent this year due to rising preference among consumers for natural fruit juices and high population growth rate. Raw materials needed for the production of fruit juices are abundant in supply in Nigeria and can be gotten all year round. Each year, millions of tonnes of fruits are harvested in Nigeria but a good number of them go down the drain as wastages, due to poor market access and poor storage facilities, among others. This implies that raw material would not be a problem to potential investors. Most of the fruits in the country are farmed in the middle belt region of the country, with traders buying and conveying it to various parts of the country. The rule set by Nigerian authorities is that a fruit juice should contain 40 percent of natural fruit juice. This means that if you are producing a pineapple juice, ensure it contains 40 percent of natural pineapple. The Manufacturers Association of Nigeria (MAN) estimates that Nigeria imports N165 billion worth of fruit juice every year. Apart from production site

and generating plant, someone with N3 to N10 million can start a small-scale fruit juice company, depending on the litres that will be produced, according to feasibility studies. Machinery needed to start includes juice extractor, homogeniser, pasteuriser, hydrolyser, filling machine and holding tank. One big bang about fruit juice is that if you cannot set up a production plant, you can get involved in the value chain by supplying oranges, pineapples, guava and other fruit to companies like Chi Limited, and Coca-Cola, among others. Growing oranges, guava and pineapples is the best bet in this case, say experts. Nigeria is currently the ninth producer of citrus fruits in the world with 3.4 million tonnes, according to the Food and Agricultural Organisation (FAO) in its report.

Monday 04 March 2019

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How communications start-up provoked social change in Kwara ODINAKA ANUDU

n Nigeria, start-ups that engineer social change are rarely commended or even acknowledged. Many Nigerians may not know that it was a start-up communications agency, Hook Creative Agency, that introduced ‘O to ge’ message that changed people’s perception about politics in Kwara State. ‘O to ge’ is a Yoruba expression which means ‘enough is enough’. It is a shorter, sharper, more direct and impactful expression that sits beautifully with the people, addresses the person of the usurper, his class and the issue at hand. Like a wild fire, it became the buzzword and the most important line in Kwara politics. Experts believe the expression might have led to the dethronement of Bukola Saraki, Nigeria’s Senate president, who seems to have lost the power dynasty bequeathed to him by his father. Saraki is not returning to the Senate as he was defeated by Ibrahim Yahaya Oloriegbe in the February 23 election. The defeat is no longer news, but what is, perhaps, of interest in the entire saga, is the unseen hands in ‘O to ge’ that sacked the dynasty and how the campaign was conceived to achieve the unthinkable, which it did. This agency proved that in an ideal society, campaign of calumny, lousy talks, abuse and namecalling do not win elections. Against the backdrop of riotous campaigns and mudslinging, experts believe that “you don’t change a government with hate and malice but with tact and intelligence. Only sincere electioneering ideas win election.” Unseating a sitting president or an incumbent elected state official always seems a herculean task. The power of incumbency and chicanery of sorts make the task a lot more complicated, coupled with the fact the chal-

Abdulrahaman AbdulRazaq

lenger, more often than not, is hardly organised or strategic in approach. Even with shoestring budget, the start-up was able to pass on the highly strategic ‘O to ge’ like the Obama ‘Change’ campaign. In Kwara, the incumbent was presumed to have the upper hand in the competition for the political soul of Kwara. The political hegemony of the state has always resided with one family. The late Saraki patriarch, Olusola Saraki, was the state’s

king maker and a Senator of the Federal Republic of Nigeria. He presided over the hallowed chamber twice 1979 – 83 (though aborted). His son, Bukola Saraki, was a two-term governor of Kwara State between 2003 and 2011. “For about 35 years, the Saraki’s words were decrees and laws that must be obeyed. They controlled the state in fiefdom style. Like feudal lords the elder and the younger Saraki at their different times, arrogate and allocate instrument of state and

power as they would,” a Kwara incitizen, who travelled from Lagos to Kwara to exercise his civic right, said. While lamenting that Kwarans had be complacent in the past, he noted that progressive minds in the state were fed up and tired with the system and the ‘O to ge’ concept spoke their mind and addressed the situation. The brief for the strategic communication, according to those in the know, was followed by a detailed research and reputation audits to uncover the missing links and fix the yawning communications gap. The image and environmental audits yielded a harvest of disillusionment, sense of servitude and bondage, a source familiar with the business said. Therefore, the campaign was premised on the basis that for the last 34 years has been unsavoury with one family deciding the fate of all. “We want this no more, enough is enough” was the message. To achieve optimal effect and secure immediate buy-in by the vast rural community, the communication consultants distilled ‘O to ge’. Speaking on the ‘O to ge’ narrative, Bolaji Okusaga, CEO, Precise Communications & Design, disclosed that he had the privilege of working closely with Hook Creative Agency guys who came up with what he calls an ‘ingenious slogan’. “They are young men who did a thorough research on the squalor and abject poverty which is the lot of the people of Kwara State,” Okusaga said. “As some form of copy testing late last year, I was sure the guys were on point what with revelation that there is a primary school with only one teacher for all the students from primary one to six who teaches the students in Nupe language; with poor old women walking up to five kilometres just to earn a political gift of N500; with people dying from stampede over the sharing of a bag of rice -

enough was enough.” The buzzword, therefore, encapsulates the entire Kwara political and socio-economic scenario, the people’s feelings and where they are headed. Being the product of a broad-based research with samples cutting across the state, it resonated and became instant success as it reflected the people concerned. The three words became the idea for the desired social change. Hence, it recorded unprecedented acceptance by the majority of the 3.4 million Kwarans. They now own it, and run with it. “So after almost half a century, the Saraki hegemony has suddenly come to an end,” Okusaga said. “Let every hegemony, be they in APC or PDP, beware your days are numbered,” he warned. According to sources, Abdulrahaman AbdulRazaq, the APC governorship candidate in March 9 election contracted Hook Creative Agency as communication consultant at its Lekki, Lagos, for his election campaign. However, the work’s sheer brilliance and currency in style, tone and design endeared it to the party structure in the state. The materials were adopted for the senatorial contests in the state and it recorded its first casualty in the incumbent Senate president, bringing an end to the Saraki political dynasty in Kwara. The governorship election slated for March 9th will be another defining moment in Kwara to confirm the ‘O to ge’ ideas for social change campaign efficacy as the electorate prepare to file out in their numbers to elect their governor and fill other relevant elective offices in the state. Meanwhile, the concept is being adopted in other states like Ogun. Like the Arab spring, and Nigeria’s ‘MKO is our man o’ and Obama’s ‘Change’, The Hook’s ‘O to ge’ is set to be another social phenomenon that leads a people to a defining socio-political awareness and defining decision.

Experts urge entrepreneurs to build businesses that outlive them Gbemi Faminu

xperts want entrepreneurs to foster sustainability goals to ensure long-term survival of their businesses. They say it is important for entrepreneurs to draw strategies that will ensure that their business outlive them. Abosede George-Orga, director, strategy, funding and stakeholder management of the Lagos State Employment Trust Fund (LSETF), said “it is essential that every business outlive its proprietor. Therefore, sustainability must be the goal of every business.”

Speaking at the Women in Business seminar organised by The Phoenix Learning and Developmental Academy (TPLDA) in Lagos, she said in order to allow sustainable business, it was important for every business to have a structure and for the owners to have values. ”Building a sustainable business entails driving up revenues, reducing cost, mitigating risk and building intangible assets,” George-Orga said. She stated that businesses were started to solve problems, adding that any business setup must be needed in the society because it solved problems. She disclosed that one major problem MSMEs had was people-

network. She advised entrepreneurs to expand their horizons, build people-network, take on big businesses, have a long-term goal and be willing to do the work attached to it. Ajibola Ponnle, registrar of the Chartered Institute of Personnel Management (CIPM) Nigeria, advised that entrepreneurs should know their craft and get every certification available in order to remain distinct and ensure business sustainability. She added that there was a room for improvement in every business, stating that team-building and people- network was important for the growth and effectiveness of businesses. Uduak Ndiokho, acting co-ordinator, Dangote Women Group,

said that it was necessary for women to provide second source of income for themselves and their families while broadening their courage and confidence within the executive space. She advised that women and entrepreneurs leverage on the platforms provided by the government to enjoy the personal business space. Ayodeji Alao, creative director of Aeymoda and one of the participants, stated that the juggling business with personal life was amazing. She added that anything could be achieved as long as determination was involved. She commended the programme as a very good learning platform and an opportunity to share thoughts and

ideas useful for business growth. Olanrewaju Aduloju, chief executive officer and lead consultant at TPLDA, said the programme was a platform to manage, introduce, educate start-ups. He said businesses owners must build value for themselves and their business. He advised entrepreneurs to be bold and put up structures to their passion, adding that it was essential to build structures to passion because passion without structure would not go a long way. He advised government to provide platforms of tools and skills to help establish sustainable businesses which would convert a lot of people from the informal to formal market.

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Monday 04 March 2019

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How to stop obsessing over your mistakes Alice Boyes

o you ever find yourself endlessly mentally replaying situations in which you wish you’d performed differently? Such rumination isn’t just unpleasant. It’s closely linked to poor problem-solving, anxiety and depression. The good news is that there are effective solutions for breaking out of this rut, and they’re simpler than you might think. IDENTIFY YOUR MOST COMMON TRIGGERS. You can’t quell rumination without noticing

that you’re doing it, but people can’t always spot it in themselves. A great way to get better at it is to think about what has triggered you in the past. Your list

might look something like: — Collaborating with people I don’t trust — Being around people who seem smarter or more ambitious

— Taking a step up in my career — Making major money decisions Notice if the dominant pattern of your rumination is to blame yourself or blame others. Most heavy ruminators lean toward one or the other. GET PSYCHOLOGICAL DISTANCE. Next, you need to put some psychological distance between you and the things you ruminate about. For instance, you might feel concern about how you’re perceived by people who have no impact on your success, get hung up about very small amounts of money or see yourself as

an underachiever despite the fact that objectively you’re doing very well. DISTINGUISH BETWEEN RUMINATING AND PROBLEM SOLVING. To shift from rumination to improvement mode, ask yourself, “What’s the best choice right now, given the reality of the situation?” Start by taking one step, even if it’s not the most perfect or comprehensive thing you could do. TRAIN YOUR BRAIN TO BECOME NONSTICK. As soon as you notice you’re ruminating, try to distract yourself for a few minutes. CHECK YOUR THINK-

ING FOR ERRORS. Sometimes rumination is triggered by cognitive errors. If you’re ruminating about someone else’s behavior and attributing a cause to that behavior, at least entertain the idea that your explanation is wrong and try to accept that you might never know the truth. Rumination is a widespread problem. Before you go into your next “would have, should have, could have” spiral, give one or more of these ideas a go.

(Alice Boyes is a former clinical psychologist and the author of “The Healthy Mind Toolkit” and “The Anxiety Toolkit.”)

How to choose your first AI project Andrew Ng

he rise of AI presents an opportunity for executives in every industry to differentiate and defend their businesses. My advice for executives in any industry is to start small. The first step is to choose one or two company-level pilot projects. THE FIVE TRAITS OF A STRONG AI PILOT PROJECT Does the project give you a quick win? Choose initial projects that can be done quickly and have a high chance of success. Is the project too trivial, or too unwieldy in size? Your pilot should be meaningful enough so that a success convinces other company lead-

Try to identify the specific tasks that people are doing, and see if any can be automated.

ers to invest in further AI projects. Is your project specific to your industry? By choosing a companyspecific project, your internal stakeholders can directly understand the value. Are you accelerating

your pilot project with credible partners? Consider working with external partners to bring in AI expertise quickly. Is your project creating value? Most AI projects create value in one of three ways: by reducing costs, increasing revenue or launching new

— APPOINT A LEADER: His or her goal is to build a successful project that will influence the rest of the company’s beliefs about AI. — CONDUCT BUSINESS VALUE AND TECHNICAL DILIGENCE: Make sure lines of business. that, if executed successfully, the business SETTING UP YOUR AI leaders agree that this PROJECT FOR SUC- project will create sufCESS ficient value. But also make sure it is feasible. So what do these traits — BUILD A SMALL look like in practice? TEAM: I have seen nuYou will find that AI merous pilot ideas that is good at automating were executed with tasks, rather than jobs. about five to 15 people.

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— COMMUNICATE: When the pilot project hits key milestones, and especially when it delivers a successful result, be sure to give the team an internal platform. Your goal should not be to compete with the leading internet companies, but to master AI for your vertical industry sector. And remember: The first step is to select the right pilot projects.

(Andrew Ng is the founder and CEO of Landing AI and an adjunct professor at Stanford University.)

Monday 04 March 2019

BUSINESS DAY

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Monday 04 March 2019

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

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 170,675.03 5.90 3.51 270 37,885,256 UNITED BANK FOR AFRICA PLC 259,915.60 7.60 2.01 275 18,418,232 751,946.03 23.95 0.21 665 64,507,920 ZENITH BANK PLC 1,210 120,811,408 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 278,188.52 7.75 1.31 159 11,796,769 159 11,796,769 1,369 132,608,177 BUILDING MATERIALS DANGOTE CEMENT PLC 3,350,163.76 196.60 0.67 233 1,682,193 111,887.22 12.90 - 39 160,441 LAFARGE AFRICA PLC. 272 1,842,634 272 1,842,634 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 364,247.18 619.00 - 64 100,320 64 100,320 64 100,320 1,705 134,551,131 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 1 1,000 11,300.89 45.20 - 1 50 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST 15,876.20 5.95 - 0 0 2 1,050 2 1,050 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 2 1,050 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 2 3,500 76,312.80 80.00 - 17 122,605 OKOMU OIL PALM PLC. PRESCO PLC 75,000.00 75.00 - 6 9,300 25 135,405 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,010.00 0.67 -1.47 12 236,692 12 236,692 37 372,097 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 900.08 0.34 - 5 102,000 JOHN HOLT PLC. 202.36 0.52 - 4 10,307 1,903.99 2.93 - 1 238 S C O A NIG. PLC. 50,403.51 1.24 -2.36 259 43,393,631 TRANSNATIONAL CORPORATION OF NIGERIA PLC 24,491.02 8.50 - 20 53,114 U A C N PLC. 289 43,559,290 289 43,559,290 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 36,300.00 27.50 - 11 47,640 165.00 6.60 - 0 0 ROADS NIG PLC. 11 47,640 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,962.94 1.91 - 18 10,077,643 18 10,077,643 29 10,125,283 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,135.72 1.55 -4.32 12 346,881 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 147,084.21 67.15 - 29 33,257 INTERNATIONAL BREWERIES PLC. 214,896.55 25.00 -4.76 11 1,763,768 NIGERIAN BREW. PLC. 639,752.16 80.00 0.63 135 1,775,352 187 3,919,258 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 49,500.00 9.90 -9.17 69 964,582 DANGOTE SUGAR REFINERY PLC 175,800.00 14.65 -2.33 43 177,818 FLOUR MILLS NIG. PLC. 81,802.57 19.95 - 36 184,554 HONEYWELL FLOUR MILL PLC 10,705.77 1.35 3.05 18 1,247,810 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 50,869.22 19.20 - 18 121,070 UNION DICON SALT PLC. 3,676.41 13.45 - 1 50 185 2,695,884 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,533.30 10.40 - 19 35,487 NESTLE NIGERIA PLC. 1,196,910.94 1,510.00 2.72 56 91,872 75 127,359 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 2 7,728 VITAFOAM NIG PLC. 5,003.38 4.00 - 10 29,900 12 37,628 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 53,402.92 13.45 - 13 78,533 UNILEVER NIGERIA PLC. 222,331.71 38.70 -5.61 30 318,275 43 396,808 502 7,176,937 BANKING DIAMOND BANK PLC 53,500.50 2.31 2.21 131 44,265,612 ECOBANK TRANSNATIONAL INCORPORATED 256,893.72 14.00 - 46 1,503,218 FIDELITY BANK PLC 68,090.77 2.35 6.82 154 21,574,846 GUARANTY TRUST BANK PLC. 1,044,806.86 35.50 0.42 404 15,877,404 JAIZ BANK PLC 17,383.91 0.59 -9.23 42 6,520,480 SKYE BANK PLC 10,687.83 0.77 - 0 0 71,400.24 2.48 -0.80 50 1,768,689 STERLING BANK PLC. UNION BANK NIG.PLC. 195,109.04 6.70 -4.29 44 611,308 UNITY BANK PLC 10,871.08 0.93 - 6 49,949 WEMA BANK PLC. 29,702.34 0.77 4.05 39 1,761,221 916 93,932,727 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 2,000 AIICO INSURANCE PLC. 5,059.05 0.73 - 17 105,414 AXAMANSARD INSURANCE PLC 23,100.00 2.20 - 11 209,562 CONSOLIDATED HALLMARK INSURANCE PLC 2,276.40 0.28 - 11 665,680 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 3,682.38 0.25 8.70 11 2,367,798 GOLDLINK INSURANCE PLC 2,001.98 0.44 -8.33 2 150,200 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,270.26 0.31 -6.06 4 195,000 LAW UNION AND ROCK INS. PLC. 2,362.98 0.55 - 3 7,117 5,040.00 0.63 - 2 80,000 LINKAGE ASSURANCE PLC MUTUAL BENEFITS ASSURANCE PLC. 2,160.00 0.27 - 8 116,900 13,201.26 2.50 - 6 38,703 NEM INSURANCE PLC NIGER INSURANCE PLC 1,857.48 0.24 - 1 3,500 PRESTIGE ASSURANCE PLC 2,906.58 0.54 - 4 10,500 REGENCY ASSURANCE PLC 1,667.19 0.25 8.00 11 1,353,866 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 -4.17 5 981,592 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 2,582.21 0.20 - 0 0 STANDARD ALLIANCE INSURANCE PLC. SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 4 935,421 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 3,328.00 0.24 - 0 0 WAPIC INSURANCE PLC 5,353.10 0.40 -6.98 29 447,739 130 7,670,992 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,292.76 1.44 -10.00 58 3,230,206

Company 58 3,230,206 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,116.00 0.98 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 2,265.95 0.20 - 1 500 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 500 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,400.00 4.70 -2.89 102 3,802,538 35,585.28 6.05 - 8 15,888 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 41,189.64 2.08 2.46 152 18,457,571 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,697.97 0.33 -8.33 4 219,460 STANBIC IBTC HOLDINGS PLC 476,185.71 46.50 0.11 44 857,947 20,100.00 3.35 5.35 56 1,434,214 UNITED CAPITAL PLC 366 24,787,618 1,471 129,622,043 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 100 1,065.94 0.30 - 2 500,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 3 500,100 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 7,425.00 4.95 - 6 7,178 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 14,350.52 12.00 - 12 48,687 MAY & BAKER NIGERIA PLC. 4,140.56 2.40 - 9 38,376 1,272.44 0.67 - 7 107,454 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 34 201,695 37 701,795 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 1,000 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 381.11 0.77 - 0 0 1 1,000 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 3 2,001,100 E-TRANZACT INTERNATIONAL PLC 12,306.00 2.93 - 0 0 3 2,001,100 4 2,002,100 BUILDING MATERIALS BERGER PAINTS PLC 2,391.04 8.25 - 9 62,443 CAP PLC 23,800.00 34.00 - 19 120,021 CEMENT CO. OF NORTH.NIG. PLC 262,212.84 19.95 -0.25 28 294,240 612.00 0.29 - 2 17,000 FIRST ALUMINIUM NIGERIA PLC MEYER PLC. 286.87 0.54 - 1 5,196 1,999.41 2.52 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 59 498,900 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 1 100 3,610.71 2.05 - 7 6,880 CUTIX PLC. 8 6,980 PACKAGING/CONTAINERS BETA GLASS PLC. 39,497.79 79.00 - 1 50 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 50 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 68 505,930 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 500 1 500 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 1 500 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,440.42 0.23 4.55 34 6,041,310 34 6,041,310 INTEGRATED OIL AND GAS SERVICES OANDO PLC 71,480.62 5.75 -2.54 185 4,718,925 185 4,718,925 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 - 13 18,505 CONOIL PLC 15,960.90 23.00 - 21 22,944 ETERNA PLC. 5,738.24 4.40 - 17 100,975 FORTE OIL PLC. 36,469.47 28.00 - 19 42,955 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 4 3,623 TOTAL NIGERIA PLC. 67,904.37 200.00 5.26 14 26,425 88 215,427 307 10,975,662 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 16,576.10 1.70 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 1 460 TRANS-NATIONWIDE EXPRESS PLC. 304.75 0.65 - 0 0 1 460 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 10,000 1 10,000 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 4,427.84 2.13 - 2 966 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 45,222.40 5.95 - 4 1,100 6 2,066 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 241.92 0.40 - 1 1,000 1,157.18 1.50 - 4 12,600 LEARN AFRICA PLC STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 970.67 2.25 - 3 15,356 8 28,956 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 895.16 0.54 - 5 18,380 5 18,380 SPECIALTY INTERLINKED TECHNOLOGIES PLC 766.91 3.24 - 1 300 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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Monday 04 March 2019

BUSINESS DAY

CITYFile

Enugu: Police nab 12 armed robbers, recover arms

he police in Enugu have nabbed 12 suspects for alleged armed robbery at various locations in the state. The Commissioner of Police (CP), Enugu State, Balarabe Suleiman who briefed newsmen on Friday, said the suspects were arrested from February 11, when he assumed office in the state, till date. He said one AK47 rifle, one pistol, two live cartridges, a hammer, two chisels, charms with two Toyota cars, a Camry car with Enugu registration number; ENU 276 RA and a Corolla with registration number ENSJ 88, have been recovered from the suspects. “On February 25 at about 12;35 p. m, the police through intelligence information arrested three suspected armed robbers. They had stolen a Toyota Camry car with registration number, ENU 276 RA, and changed its identity to KJA 10 ES as well as its colour from Gold to Red. “On February 15, police operatives arrested three suspected robbers, who operate on Enugu-Port Harcourt Road, using a tricycle. They set sharp objects that puncture motorists tyres on the road and rob them at gun point. “On February 14, a robbery suspect, Chinonso Ali, was arrested for using hammer and locally made pistol to snatch motorcycles within the outskirts of Enugu metropolis. Also on February 13, another was arrested using fake guns to collect bags and phones forcefully from ladies, along Railway Crossing in Enugu during evening hours. On February 27, our operative on patrol arrested two armed robbers and cultists that steal forcefully and terrorise the entire Ugwu Park in Iva Valley, Ngwo near Enugu. Two others were arrested in another location within the outskirts of the metropolis,” he said. “Enugu State is known for peace and security, I and my team have resolved to continue to keep it so. Suleiman said the feat was achieved by strengthening and fine-tuning the security structure he met on ground when he assumed office. He said that suspects would be charged to court upon the conclusion of investigations into the case.

Two charged with unlawful possession of pistol

wo men, Oragbade Adekunle, 24, and Adigun Idowu, 24, have been charged before an Iyaganku Magistrate Court sitting in Ibadan for unlawful possession of English pistol. Oragbade and Adigun, of undisclosed address, are standing trial on one-count charge of unlawful possession of pistol. The prosecutor, Phillip Amusan, told the court that on February 5, at about 4:00p.m. the defendants were caught in unlawful possesion of Insight Laser English pistol. Amusan said the pistol is with serial number KAK 7774 with intent to use it to commit felony which contravened Section 417 (D) of the Criminal Code of Oyo State 2000. The defence counsel, Mumeen Babatunde, appeared for the defendants. The magistrate, Odunola Latunji, granted the defendants bail in the sum of N100,000 with two sureties each in like sum. She, thereafter, adjourned the case untill March 25, for mention. The offence attracts three years’ imprisonment if found guilty. NAN

Truck pushers wading through flood at Iganmu, Lagos, after the rain on Friday.

NAN

Kaduna acquires drones for security surveillance ADEOLA AJAKAIYE with wire report

aduna State government has acquired drones for aerial surveillance and to beef up security in the state. The state governor governor Nasir El-rufai, disclosed at the weekend when Mohammed Suleiman, air officer commanding, Kaduna Training Command, Nigeria Air Force, visited the Government House, Kaduna on Friday. Kaduna State in the last four years has been a major flash point, as regular clashes between residents rooted in differences in ethnicity and religion have led to the loss of hundreds of lives and property. El-rufai said that the state had received the end user certificate for the acquisition of the drones and would soon invite Presi-

dent Muhammadu Buhari, to perform the inauguration. “We are working closely with the Nigeria Air Force, to acquire more drones for security surveillance for the state,” he said. The governor, however, acknowledged the efforts of the military, saying the presence of some military establishments in Kaduna has enhanced the security of lives and property. He assured of the continued support of the state to the military, adding that more land would be made available to the NAF for its training command. “We are working very hard with Ministry of Defence, to ensure the base has more land needed. We know this training command is what the military wants and we are also looking at giving more land in the eastern part of Kaduna to the Ministry of Defence, to build more hous-

ing facilities. “We have reserved two districts across the river that we are developing in the eastern part of the state around millennium city, we have reserved over 1000 hectares for the Ministry of Defence. Suleiman on his part said that the visit was to increase the synergy and operational capabilities of the security service in the state. According to the air force chief, the command had played a role in providing security during the presidential and national assembly elections. Suleiman said that the last election went well in terms of security, as a result of synergy among security agencies in the state. He thanked the state and Federal Government for providing the command with the necessary assistance to execute their job.

NAFDAC arrests Kano-based ‘chemist’ ... suspect allegedly stored N1.5m fake Tetanus vaccines

peratives of National Agency for Food and Drug Administration Control (NAFDAC) have arrested one Goodluck Nwadike in Kano for storing falsified and substandard Tetanus vaccines. According to the agency’s DirectorGeneral, Moji Adeyeye, Nwadike was arrested at No. 2, Mallam Kato Market, Sabon Gari, Kano. She said that the culprit was found with Tetanus vaccines like

“Absorb Dano’’ and “IP”. “Based on information received, NAFDAC officials stormed the shop and arrested the culprit on discovery of the drugs The vaccines were found stored under poor storage conditions, in drawers in the shop. They were meant to be stored in temperatures between two degrees centigrade and eight degrees centigrade. “The culprit confessed that he gets

his supplies from Bridge Head Market, Onitsha, Anambra,’’ Adeyeye said in a statement. According to her, the drugs valued at N1.5 million are being mopped up. Recall that the Kano State Commissioner of Police (CP), Wakil Muhammed, also recently handed over intercepted fake Azithronmycin tablets and Ampiclox antibiotics caplets to the Kano NAFDAC coordinator, Shaba Mohammed.

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Buhari’s re-election battle between the rich and poor - Umohinyang Emmanuel Umohinyang, Convener, Re-elect Buhari Movement (RBM) led one of the most robust campaigns for President Muhammadu Buhari’s re-election. He speaks on a variety of issues regarding the Presidential election and Buhari’s victory. Excerpts: What are your thoughts on the outcome of the presidential election? here is nothing wrong if people look at the outcome from different perspectives. What is important is what perspective majority of Nigerians look at it from. Don’t forget that the nay sayers had predicted all manner of things. Some funny characters had also used the pulpit to dish out what they call prophesies. Projections were made and people had thought the 2019 elections most likely would end in blood bath, and that the country may not remain the same after the presidential election. But ours is a country that has history of overcoming challenges. We had overcome these same group of people in 2015, so I am not surprised because I know that Nigeria is a country that has strong faith in God and we also know that with God we are majority, so those projections may not have ended the way they thought. We have been able to rise against those evil projections. The 2019 presidential election has come and gone. It is behind us now. A winner has been declared and the celebration that goes with the celebration of the winner will tell anyone that indeed that is was an election that has more to do with the people, not necessarily with the few elites who feel things should normally go their own way. I think generally the election was peaceful, but for a few skirmishes in a few states. You cannot fault the credibility of that election. We should commend INEC, the Federal Government and Nigerians. Particularly, we must commend the President for ensuring that not only was the election free, it was fair and above all it was credible as attested to by local and international observers.

What do you consider the factors that made President Buhari win

Emmanuel Umohinyang

his re-election? I think performance is one of the major factors. I have said before that this president would win the election with a wide margin. I wasn’t surprised. If you look at the opposition, most of their campaign was carried out on Facebook, Instagram and Twitter. Election is conducted on the field. Most of those who make Facebook their past time don’t have PVCs. About 75.5 million Nigerians collected PVCs nationwide according to INEC, but when you look at the actual voting, you can see the statistics. What that tells you is that collecting PVCs is just a step, voting on the day of election is the issue. It was an election between the rich and the poor, and this president in the last three and a half years has shown that he is a president who has come to close the gap between the rich and the poor. Some of the lofty achievements of this administration have been targeted at the poor. You could see how the people

reacted to it. Are you talking about the TraderMoni, farmers moni, the N-Power?. A while lot, even though the opposition criticized it as votebuying. Also, don’t forget what the government has done with the Sukuk bond. The second phase of that bond was over-subscribed. What occupies the president’s mind is what can benefit the generality of Nigerians. That kind of government will not be popular with the elite, but it is popular with the people, and the people came out to vote en-masse to demonstrate that this is a government of the people by the people and for the people, which gave definition to democracy itself. I want to assure you that this president will not let them down as he demonstrated thus far. Don’t you think ex-President Obasanjo’s endorsement of Atiku Abubakar was an issue ahead of the election? It was not an issue. Remember,

I had said at several fora that endorsement does not win election. It was not just the farmer from Ota that endorsed Atiku Abubakar. We also had factions of Ohanaeze Ndigbo, Afenifere, even a faction of Northern Elders Forum, the Middle Belt Forum and PANDEF. Endorsement is good, but it doesn’t win elections. Most of these people who do endorsement do it for personal gains, not necessarily for the interest of their zones. You saw it on February 23 that the endorsement counted for nothing. In all the geo-political zones of the country, the president had an impressive outing including the South-East. What this tells you is that it is better a president focus on the people instead of focusing on a few elites, and that is what the president has done in the last four years. I want to assure you that with this renewed mandate, the president will not only improve the well-being of our people, he will ensure that they are protected. He will ensure that those who have stolen our commonwealth, are brought to account, including the 16 billion dollars spent on power under Obasanjo. What is your reaction to the February elections? Every four years we go out to cast our votes is a celebration of democracy. It is also a referendum on performance. The 2019 election was more or less a referendum on honesty, integrity and due process. It was a referendum on political office holders. However, there are areas of concern. You cannot take the people for a ride at all times. Performance is the only indices to be re-elected. But let me digress a bit. We have also seen in a state like Akwa Ibom, that it was not a case of non-performance, when we had Senator Godswill Obot Akpabio losing to Chris Ekpenyong, a former Deputy Governor of the

state. Akpabio’s four years in the Senate has even over-shadowed the underperforming governor of the state. Akpabio’s four years in the Senate has brought joy and laughter to the people of that geopolitical zone. His four years in the Senate has been like twenty. He spread constituency projects to all parts of the state. Unfortunately, he contested the last election against INEC, not against the opposition. It was an election that in years to come, historians will write history out of it. It was an election that was bastardised. It was an election that one prays will be expunged in the annals of our country. I have never seen such in my entire life. I have never seen where a REC will sit in the comfort of his office, where a REC will threaten EOs who do not do his bidding. A situation where we cannot place our trust in our electoral system, means we are doomed. What are the lessons from this election? The people have sent a message to the political actors that performance is the only ground to be re-elected. The people have sent a message to the political actors that they cannot be taken for a ride. The people have sent a message that if you give them money they will collect it, but that they will vote their conscience. For the first time, we have had presidential election where the president did not give a dime to anybody. Go and find out from all the support groups, not a kobo was given to anybody for this election. But the support groups were not bothered with that because it was our conviction to support and project the activities of Mr. President that we all came together. It is quite different from the 2015 era when billions of naira was spent on bribing all manner of people in the name of getting re-elected.

APC chieftain urges members to vote PDP governorship candidate in A/Ibom Innocent Odoh, Abuja

residential Candidate of the People’s Democratic Party (PDP) and former Vice President of Nigeria, Atiku Abubakar, has assured Nigerians that the massive electoral malpractices allegedly perpetrated by the ruling All Progressives Congress (APC) in collaboration with the Independent National Electoral Commission (INEC) and security

agencies would soon be exposed when he presents the evidence of rigging before the courts. Atiku gave this assurance at the weekend while inaugurating his legal team to challenge the result of the 23 February presidential election, stressing that his victory at the polls was robbed even as he promised to reclaim his ‘stolen mandate’ in court. The legal team is headed by Livy Uzoukwu, SAN, a statement issued on Saturday by Atiku’s Media aide,

Paul Ibe said. The Independent National Electoral Commission had on Wednesday, 27 February declared Muhammadu Buhari as winner of the election. However, Abubakar on Thursday, 28 February rejected the result, citing several malpractices including the use of the military to perfect voters’ intimidation and suppression in PDP strongholds, connivance of INEC officials, security agents and the ruling

party to manufacture bogus figures and outright falsification of the returns from the polling units. Consequently, he had given notice that he will use all available legitimate means to challenge the result of the election. On Thursday night, the PDP presidential candidate met with members of the National Peace Committee prompting concerns in some quarters that he may have been prevailed upon not to proceed with the challenge.

“I have just inaugurated my legal team and charged them with the responsibility of ensuring that our stolen mandate is retrieved”, Atiku said. “I am encouraged by the presence of fearless men and women of the Bench. The judiciary which had in the past discharged itself ably is once again being called upon to deliver judgment on this matter that will be untainted by lucre and uncowed by the threat of immoral power”, he added.

46 BUSINESS DAY NEWS With election over, here comes the hard... Continued from page 1 had a go at decades-old problems

in Nigeria, from poor infrastructure to a scarcity of jobs and endemic poverty. Buhari’s supporters say his intentions are good while critics contend that his statist economic policies are stumbling blocks and are doing the economy, and the same poor he is desperatetoprotect,moreharmthangood. Critics are quick to point out the 76-year-old’s perceived disdain for private capital and are worried his good intentions may lead nowhere, unless there is a change of economic

ideology where private capital is allowed to unlock wealth and create jobs, thereby reducing poverty. Buhari is convinced that his socialist programmes are enough, but the critics say the government’s limited resources lack the capacity to make a dent. Now faced with a second fouryear term, he could either sink deeper into his errors or borrow a leaf from Ethiopia’s 42-year-old prime minster, Abiy Ahmed. In a recent interview with the Financial Times, Ahmed said his model to awaken Ethiopia, described by investors as Africa’s sleeping giant,

C002D5556

was capitalism. Ahmed will achieve this by bringing down age-long barriers to private capital. Ethiopia aims to complete a multibillion-dollar privatisation of its telecoms sector by the end of this year, followed by a sell-off of stakes in state energy, shipping and sugar companies. Buhari’s track record implies a lack of belief in privatisation. Since inception, the Bureau for Public Enterprises, the agency that handles the sale of state assets, has privatised some 142 enterprises, but not much privatisation has happened since 2015 when Buhari came to power, a period that coincides with acute revenue shortfalls.

In two years, 2016 and 2017, the FG only managed to raise N5 billion (USD$16 million) in privatisation proceeds, according to the Central Bank of Nigeria, 14 times less than it raised from the single sale of Eleme Petrochemicals as far back as 2006. Sources say Buhari’s lack of trust in private investors is responsible for his reluctance to embark on any meaningful privatisation. Also, some Nigerians hold the view that past privatisation efforts have been dogged by corruption. For Ahmed, he would proceed cautiously on privatisation in order to avoid any hint of corruption. “We do telecom, we learn something, we evaluate seriously, we continue,” he said. Ahmed’s policies mark a break with the previous administration, which emphasised controlling the economy’s “commanding heights” and reinvesting profits in infrastructure, health and education. Opportunities abound in Nigeria to raise equity capital, whether it’s relocating idle government assets like the Federal Secretariat in Ikoyi or Dodan Barracks, both in Lagos, from the prime locations they are situated before leasing the land out to private investors to generate substantial rental income like Hong-Kong does, or selling some stake in state-owned Nigerian National Petroleum Corporation

Monday 04 March 2019

(NNPC) like Saudi Arabia plans to do by selling 5 percent of Saudi Aramco. Other public assets that can be privatised include the Nigerian Postal Service (NIPOST), Nigerian Commodities Exchange, the national stadium, and the Nigerian Security and Minting Company. This move will not only yield revenue for government and lighten its debt burden, but will also ensure that some of the public assets which are under-utilised are fully utilised, analysts say. Experts cite examples of countries, especially Hong Kong and China, where a significant portion of government budget comes from rents on public assets. They advise that a special purpose vehicle (SPV) should be created to handle the relocation of public assets on prime land on which luxury apartment blocks could be developed and given out for rents. These are hardly new counsels, but they fell on deaf ears during Buhari’s first term. Many will hope he has a change of heart and learn from the mosttalked-about African president today, Ahmed. In the face of intense competition for private capital, Nigeria risks another four years lost if nothing happens to change Buhari’s belief on privatisation.

Lagos yet to find investors for Lekki Int’l... Continued from page 2

L-R: Ugochukwu Eze, P.T.A chairman, West Mills British School; Atinuke Aluko, head of school; Tokunboh Aluko, vice chairman; Yoanna Chikezie (guest speaker), CEO, The Assembly; Maroun Dib, student; Mfon Etim, principal, and Olaoluwa Makinde, HR/administrative office manager, at the West Mills Festival of Arts and Culture (WESTAC 2019) in Lagos, weekend. Pic by David Apara

UBA sets foothold in €280bn Europe-Africa... Continued from page 1

London at the weekend, including

Aliko Dangote, president, Dangote Group, expressed optimism that the move is coming at a good time when Africa needs to strengthen trade relations with the rest of the world. For Dangote, Africa’s richest man, who was a guest at the launch, opening the London bank portrays UBA as dynamic and committed to facilitating trade between Africa and the rest of the world. Tony Elumelu, chairman, UBA Group, described the new UK bank as a global financial movement supporting businesses, both big and small, to carry out seamless transactions. “Our intent is to follow our customers, to continue to support our customers and Africans,” Elumelu said. “We have been in New York for quite some years. We want to help our customers. We want to be around our customers, and we need to help support our customers,” he said. As the only bank of Nigerian origin operating in 20 other African countries, UBA says it wants to consolidate its pan-African status by making businesses in Africa transact directly with contemporaries across the world, without the cumbersome involvement of third parties. Patrick Gutmann, CEO of UBA UK, explained that while the bank has been present in the UK for many years, this is the first time it is present as a full bank. “This is a key part of UBA’s ambitions to be Africa’s global bank,” said Gutmann. “If you want to be Africa’s global bank, you need to have presence in key financial hubs, and London is one of such.” This, according to him, gives UBA the opportunity to service not only

the UBA Group, but all of the clients that work with UBA across all the 20 African markets. The UK was the 7th highest European exporter of goods to Africa in 2017, with a value of EUR9.77 billion, and was the 5th European importer of goods from Africa with EUR14.68 billion, having a trade deficit of EUR4.9 billion with the continent, according to data from the European Commission. The British Office for National Statistics (ONS), in its 2016 report on trade and investment relationship with Africa, also noted that UK’s trade balance with Africa returned to deficit in 2012 following an increase in imports. Trade between Africa and the UK has been growing over time, and remains economically significant. Brexit, of course, remains topical, particularly when considered from the economic perspective of potential transactionsbetweenEuropeandAfrica. “Whether Brexit happens or not, the impact is minimal, and the reason is because we are not a bank that deals across European borders as such,” Gutmann said. “We are a bank that deals with the emerging markets and in our case, the African continent, and those flows are not necessarily going to be interrupted by either of Brexit or no-Brexit,” he said. But then, the value of European trade with Africa is quite significant and could still be a viable market to be explored by UBA. The European Commission reported in 2017 that EU imports of goods from Africa (which is mostly driven by primary goods) stood at EUR131 billion, although they had been as high as EUR187 billion in 2012. On the other hand, European exports to Africa as at 2017 stood at EUR149 billion, with 72 percent of

these goods exported from the EU to Africa being manufactured goods. “Regardless of Brexit or no-Brexit, businesses will always be linked between Africa and Europe. And, of course, we have a rep office in France, so whichever direction they go, UBA is ready for them,” Gutmann said. With the type of licence the bank previously had, African businesses transacting with a partner in England had to deal with another bank, but the UBAnow aspires to service that market. “UBA is interconnecting businesses in Africa with not just United Kingdom but across the world because we have a big franchise in the US which is about 35 years old,” said Kennedy Uzoka, group managing director/CEO, UBA. Uzoka said what has been done is to create a UBA one-stop shop such that whether a client is in Ghana, Nairobi or any part of Africa, by talking to any UBA in an African country, their transactions across the globe will be consummated without going through any third parties. “We are taking away that barrier that used to exist for Africans, to make their business easy,” said Uzoka. In an interview on the sidelines of the launch, Dangote expressed optimism in the Nigerian economy, particularly with the presidential election now concluded. “The thinking from the business community is that things will continue to grow in terms of trajectory. We were not really bothered about election period or not as we continued to invest heavily in Nigeria, which we will continue to do. I think we will have better days,” Dangote said. Gutmann also said in an interview that since “the Nigerian election has come and gone, we see that as an impetus for more flows and investments coming into Nigeria”.

was proposed to cater for the Airbus A380, making it a Code F compliant airport with capacity for 2 million passengers per annum for a start. Investors banked on to get the project off the ground resented and pulled out of discussions four years ago. Since then, the Lagos State government had been unable to talk new investors into the project. The airport was proposed to serve the fast-growing residential cum industrial Lekki hub where several multi-billion-dollar investments are springing up, including the LFTZ, Lekki Deep Seaport, Dangote 650,000bpd refinery, among others. Four rated firms had worked with Lagos State as consultants on the airport project. They include Arup, a firm of consultant engineers, designers, planners and technical specialists; Norton Rose Fulbright, a global legal firm with 54 offices worldwide; Stanbic IBTC Capital, a member of Standard Bank Group, which was appointed sole financial adviser, and Banwo & Ighodalo, a Nigeria-based law firm. Effort to bring the airport into a reality under Babatunde Fashola, immediate past governor of Lagos, suf-

fered a setback because investors who initially expressed interest withdrew from the deal, forcing the government to return to the drawing board. It was gathered that the investors pulled out from the project citing inclement political and social environment, thus forcing the state government and its consultants to launch a fresh search for another set of investors. In 2011, as part of the competitive tender process for the construction of the airport, the Lagos State government, through its consultants, advertised a Request for Pre-Qualification (RFPQ) and 33 Nigerian and international firms indicated interest to participate in the ambitious project. The companies had earlier submitted Expression of Interest (EOI), bidding for the project under a PPP arrangement following a public notice advertised by the state government to that effect. Of the 33 firms, 20 were Nigeriabased. They were to compete against 13 foreign companies, including Munich Airport Germany, Hyundai Engineering and Construction Co Limited, Canadian Commercial Corporation, among others.

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Depleting excess crude account leaves... Continued from page 2

last tranche of the Paris Club loan refund to states. He further said N812.762 billion was distributed between the federal, state and local governments for November 2018. With only a paltry $637 million left in the ECA, Nigeria will pray for stabile oil price within the next few months. But this is hardly within its control. The oil market has become so volatile that a tweet from Donald Trump could easily send prices reeling, as would a crisis in Latin America. “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!” Trump tweeted on February 25. Soon after, oil prices tumbled more than 3 percent. International benchmark Brent crude futures fell $2.36, or 3.5 percent, at $64.76 a barrel. However, Nigeria may not need

Trump’s tweet to bring economic Armageddon closer to home. It can do it all by itself. The stock market lost about N85 billion after the Independent National Electoral Commission announced that President Muhammadu Buhari has been re-elected. Unguarded utterances from government functionaries could further endanger the economy. “This is the time to tighten the belt and avoid reckless expenses,” Nwani said. However, a depleting ECA only complicates the situation with the controversial funds. Withdrawal from the account is subject to the approval of the three tiers of government and the Federal Executive Council (FEC), but this was not obtained prior to the disbursements.

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Onnoghen: Cross River heads to Supreme Court MIKE ABANG, Calabar

gainst the backdrop of unconstitutional suspension of the Chief Justice of Nigeria (CJN) Walter Onnoghen the Cross River State government has taken the Attorney General of the Federation to Supreme Court and asked him to interpret the doctrine of Separation of Powers. Cross River State Attorney General and Commissioner of Justice Joe Oshie Abang disclosed this on Wednesday while speaking with our reporter in Calabar, the state capital. Joe Abang further said the case in question was a selective justice and that due process should be followed. His words: “I thought you were talking to me about the election, but I cannot shy away from what happened to the CJN. The CJN was accused of abuse of office for not filling his Code of Conduct form on time. But you see, the Attorney General of Cross River State told the Attorney General of the Federation to interpret the Doctrine of Separation of Powers between the Judiciary, Executive and the Legislature.” Joe Abang further said, “Our fear is that due process was not followed by Mr. President. He is not the prosecutor but the Attorney General of the Federation who prosecutes all crimes, and then you cannot put the cart before the horse.” According to Abang, due process needed to be followed through petitions, investigations and trail before the commission and communicated same to the National Assembly. The Attorney General explained that this had never happened before and that where a similar incident like that happened in Pakistan, the President of the country was impeached for breaching the Doctrine of Separation of Powers. The commissioner also said, in law you can never be a judge in your own case, and that whatsoever was done in Onnoghen’s matter was wrong in democracy. He further explained that his office and the Cross River State government were taking this stance not because Onnoghen was their son, but strictly a constitutional and legal matter and it could happen to any Nigerian. “If it happens to citizen A and citizen B keeps quiet, when it happens to citizen B, don’t expect citizen A to protest. So, we are just crying for justice, the Doctrine of Separation of Power has been tempered with. That is our grouse, not because Onnoghen is our son,” he said.

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Double efforts on infrastructure improvement, MAN tasks Buhari DANIEL OBI

o stimulate Nigeria’s economy and its growth trajectory from the present 2.4 percent last quarter against 1.8 percent previously, Manufacturers Association of Nigeria (MAN) has tasked reelected President Muhammadu Buhari administration to double its efforts on infrastructure improvement. It also told the government to consider partnership with the private sector to speed up action. Though the Economic

… calls for intensified private sector partnership to speed up action Recovery and Growth Plan of the present administration is focused on tackling the long existing poor infrastructure such as electricity, rail, roads and ports, and improving ease of doing business, but MAN insists that further focus and greater attention on the infrastructure in Nigeria will assist its members create more jobs and improve the GDP. Manufacturing sector’s contribution to Nigeria’s $375 billion GDP is about 9

percent, which MAN says is low due to pitiable infrastructure in the country challenging investors. “Given the resources of this economy, the manufacturing sector should be doing a lot more than that figure and this is one of the key concerns that the association will continue to pursue,” it says. Stating the position of MAN whose members’ operations are directly affected by poor infrastructure, its president, Mansur Ahmed estimates that if

the manufacturing sector’s capacity utilisation could be increased from the present 57 percent on account of improved infrastructure “the amount of new jobs the sector will create immediately will be enormous. “If you are to create the same jobs through FDIs, it can take up to three years. Therefore, there is huge advantage of assisting the existing manufacturers, to increase their capacity because that immediately translates into more jobs,

more goods and services and have impact GDP and inflation reduction,” the MAN president said when he visited BATN recently on a familiarisation tour with his team. As of third quarter of 2018, Nigeria unemployment rate was put at 23.1 percent, an increase from 18.8 percent in third quarter of 2017, while Nigeria’s annual inflation rate stood at 11.37 percent in January 2019, little changed from the previous month’s 11.44

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Access, Diamond celebrate International Women’s Day HOPE MOSES-ASHIKE

igeria’s tier one financial institution, Access Bank plc, as a commitment to women, is set to mark the International Women’s Day, 2019, with Diamond Bank plc, as both banks look forward to the completion of the merger process that will make the new entity the largest retail bank in Africa. The occasion will be celebrated with a two-day event themed ‘Balance for Better’. The celebration will kick off with a cocktail event on Wednesday, March 13, in Lagos, with top management from both banks and other dignitaries in attendance. Both banks will host women across various industries to a breakfast conference on the second day of the event, March 14, in Lagos. This conference will feature insightful panel sessions, where seasoned speakers will address issues related to how women can leverage on technology and finance to build profitable and innovative ventures, as well as accelerate actions towards supporting women

in their quest to be the best they can be. Ada Udechukwu, head of Women Banking, Access Bank, said, “At Access Bank, we are passionate about the woman and her overall wellbeing. We are interested in her growth in family life, career, health and other areas. “We will continue to provide platforms and support programs that will help women and their businesses. This value-packed conference has been organised to help women learn essential lessons, which can be applied to their daily lives and businesses. It will help them become all they want to be and be the best at it.” Speaking about the event, Herbert Wigwe, group managing director/CEO, Access Bank, said, “At the core of our services is catering to the needs of women and we are constantly gearing efforts towards promoting women-focused initiatives and providing opportunities to help them maximise their potential. One of the reasons we are hosting this breakfast conference is to help women overcome limitations as well as reach their best potential.”

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For Buhari, no time to celebrate victory as Nigerian woes mount

uhammadu Buhari will have little time to celebrate his resounding victory in Nigeria’s presidential election before facing the multitude of problems dogging Africa’s biggest oil producer, reports Bloomberg. The legal challenge to last weekend’s vote promised by his main rival, Atiku Abubakar, is the least of his worries. Add to that a listless economy, Islamic State wreaking havoc in the northeast and an explosive cocktail of worsening poverty and rapid population growth. The 76-year-old former general came to power in 2015 on a wave of optimism after becoming Nigeria’s first opposition leader to win at the ballot box, with promises of fighting endemic corruption and ending the economy’s addiction to oil. So far, progress has been slow. “President Buhari can expect an even briefer honeymoon than he did in 2015,” said Matthew Page, a former US State Department specialist on Nigeria, who’s based in Cambridge, UK. “Unless Buhari experiences an epiphany and adopts a more dynamic, reform-minded, and business-friendly strategy, we can

expect Nigeria’s socioeconomic situation to stagnate during his second term.” In his first four years, Buhari was a strong proponent of a statist economy. He called on the central bank not to let the naira weaken and made clear he disagreed with calls to privatize inefficient and lossmaking state enterprises like oil refineries and the Nigerian National Petroleum Corp. His administration’s drive to clean up business practices brought him into conflict with some foreign companies. South Africa’s MTN Group Ltd. is fighting claims that it owes $2 billion of backdated taxes, which have dragged its shares down. Buh.ari’s government is demanding over $20bn in alleged back taxes from the mainly western international oil companies operating in the country And the government is suing firms including JP Morgan Chase & Co. and Royal Dutch Shell Plc in Europe for what it says was a corrupt oil deal in 2011. All companies deny the allegations. There are reasons for optimism. The OPEC member made its first shipments this month from the massive Egina offshore oil field, which will boost its production 10 percent to around 2.2 million

barrels a day. And billionaire Aliko Dangote says he’ll complete an oil refinery near Lagos, the commercial capital, in the next two years that could drastically cut the nation’s import bill for fuel. “Nigeria offers vast opportunities, and a lot of low hanging fruit,” said Mathias Althof, a money manager in Stockholm at Tundra Fonder AB, which is bullish on banking stocks. “People have quite low expectations of Buhari since the first four years lacked major reforms. Hopefully, he has saved them for the coming four years.” Huge difficulties remain, and the economy’s yet to recover fully from a 2014 crash in crude prices. Economic growth accelerated to 1.9 percent last year, the fastest since Buhari took office, but it’s still far below the average of 7.4 percent in first 15 years of this century. Unemployment has soared to a crushing 23 percent and rising debts are curbing the government’s ability to spend money on infrastructure. Interest payments are projected by the International Monetary Fund to soak up more than 80 percent of the federal government’s revenue by 2022. The stock market has

dropped 2.8 percent since Monday, as it became clear Buhari would win. It’s been the world’s worst performer since he was inaugurated in May 2015, losing almost half its value in dollars. “Nigeria’s credit challenges remain and include a lowgrowth environment, very high exposure to fluctuations in oil prices, weak institutions, and high levels of corruption,” Aurelien Mali, an analyst at Moody’s Investors Service, which rates the country five steps below investment grade, said Tuesday. Security challenges have also proliferated. While Buhari succeeded in eroding territorial gains made by Boko Haram militants in the northeast, since December they and a breakaway group affiliated to Islamic State have ramped up attacks in the state of Borno, virtually wiping away security gains by this government. Separate clashes between farmers and herders over grazing land led to around 2,000 deaths last year, mainly in central parts of the country, according to Amnesty International, while a spate of kidnapping and raids has displaced thousands of people in the northwestern state of Zamfara.

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Nigeria oil deals a focus of US probe into Glencore

he US regulatory investigation into Glencore’s activities in Nigeria and Venezuela is focused on agreements to secure oil supplies for its trading arm, according to the company’s annual report. The Swiss-based group was ordered in July to hand over records related to its compliance with US money-laundering laws and the Foreign Corrupt Practices Act (FCPA) by the Department of Justice. As well as the company’s operations in Nigeria and Venezuela, the DoJ is also investigating Glencore’s activities in the Democratic Republic of Congo, Africa’s biggest copper producer. The scope of the investigation dates as far back as 2007. In the annual report, Glencore’s auditor Deloitte notes the company’s activities in Nigeria within this period were “limited primarily to oil offtake agreements.” It goes on to say: “Its (Glencore’s) activities in Venezuela over the period which is subject to the investigation cover certain oil offtake contracts with the Venezuelan national oil company, Petróleos de Venezuela.”

It added: “On receipt of the subpoena, the Glencore Board of Directors reconstituted the existing Investigations Committee to assess the implications of the investigation and to oversee the Company’s response to the DoJ’s investigation.” “This Committee has engaged external independent legal counsel in the US to lead the investigation, who has in turn appointed forensic accountants to assist in the investigation.” The DoJ investigation has weighed heavily on Glencore’s share price, which has fallen 23 per cent over the past year and lagged all of its major rivals. The DoJ subpoena arrived just weeks after Glencore settled a legal dispute over unpaid royalties with Dan Gertler, a former business partner who has been sanctioned by the US for “opaque and corrupt oil and mining deals” in the DRC. Glencore has responded by launching a share buyback programme, with an aim to repurchase $3bn of stock this year. In the annual report, Glencore also acknowledges that investigations have commenced “relating to transactions in Brazil with Petrobras by a number of trading companies including Glencore”.

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ccident Investigation Bureau (AIB) has commenced investigation into an accident involving a Tampico (TB9) aircraft marked 5N-CBP belonging to the Nigerian College of Aviation Technology (NCAT), Zaria, which occurred March 1, 2019 at Rumi forest, Sabon Birnin, Birnin Gwari LGA,

Kaduna State. From the information provided by the NCAT, the aircraft was on a Test Flight being conducted by a pilot and an engineer. “The aircraft was force landed at 14:40 as a result of an engine failure. There was no fatality after the forced landing. Our team of safety investigators have commenced investigation,” Tunji Oketunbi general manager,

lobacom’s executive vice chairman, Bella Disu, and 65 other directors were certified by the Institute of Directors at the February 2019 New Members Induction ceremony of the Institute held at Eko Hotels on Thursday. Disu was among those who bagged the Institute’s full membership. Some others got associate membership, while three directors got life membership at the induction ceremony where the charge was administered by the Institute’s 1st vice president, Chris Okunowo. Disu, who joined Globacom in 2004, is also a director of Julius Berger Plc, the biggest construction company in Nigeria. Ahmed Rufai Mohammed, president and chairman, Governing Council of the Institute, charged the inductees on the importance of corporate governance to lead successfully, noting the inductees must continue on a path of continuous learning to remain competent. Andrew Nevin, chief economist, Pricewater-

public affairs, AIB, said. Two days ago, the NCAT notified the public and AIB in a statement about the accident, “NCAT regrettably announces an accident involving one of its TB-9 aircraft yesterday afternoon. The pilot made a successful forced-landing about 7nm northwest of Kaduna airport. Both occupants were unhurt and have since returned to Base.”

Pan African Towers partners Watts Renewable to boost operations SEGUN ADAMS

he signing of a formal agreement between Pan African Towers Limited, a telecoms infrastructure and wireless service provider, and Watts Renewable, Canadian-based energy solution experts, marks a significant milestone in Nigeria’s telecoms industry, as the synergy sets to revolutionise service delivery, drive broadband penetration and promote financial inclusion in Nigeria. In the formal signing at the weekend in Lagos, and graced by partners of both parties, Pan African Towers and Watts Renewable announced an Infrastructure Investment Partnership worth N7.2 billion at the initial phase of implementation, which takes off in

Northern Nigeria. The partnership entails Pan African Towers leveraging Watts Renewable’s green solutions to power its sites instead of relying on diesel-powered conventional generators, thus ensuring environmental sustainability while solving its energy problem. According to Wole Abu, CEO of Pan African Towers, the formal signing signifies a landmark in the journey of innovation and would significantly improve the quality of service delivery in the telecom space. ‘’Seventy percent at the backend of drop cost can be traced to power disruptions,’’ Abu said, explaining that power requires a huge investment in terms of capital expenditure, operating expense, man-hours, trouble-

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Bella Disu, 65 others get Institute Obaseki inaugurates 17-member PHC board ... urges responsive, efficient primary health care system of Directors’ certification

AIB commences investigation into NCAT aircraft crash IFEOMA OKEKE

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shooting and the likes. ‘’When you stabilise your power, you have eliminated seventy percent of the root causes of service disruption.’’ The overall benefit to be realised from the venture extends beyond cost-savings gain for Pan African Towers and the trickle-down effect on mobile phone users who would see a turnaround in the availability of service for calls and data, as there would be a direct impact on the local communities where these facilities would be situated, he said. “Beyond serving the Mobile Network Operators (MNOs) we are going to promote education, agriculture, entrepreneurship, provide support for businesses and drive the Nigerian dream in the rural Communities where we are found,” Abu said.

houseCoopers, said the number of private sector companies should be increased in the country to banish poverty, adding that the largest foreign exchange earner for Nigeria are its people working in the diaspora. In a keynote lecture themed ‘Eight technologies every director needs to be aware of’, Nevin listed the eight technologies to include cloud computing, Artificial Intelligence, 3D printing, drones, virtual reality, Internet of Things, robotics and blockchain, urging the inductees to get familiar with them to enhance their capacity and competence. Akin Fanimokun of First Bank, responding on behalf of the inductees, said the new members would uphold the ethics of the profession at all times by being good ambassadors of the Institute. The Institute of Directors was established 35 years ago to professionally develop directors by imbuing them with leadership skills to enable them to lead their organisations well and develop the country.

do State governor, Godwin Obaseki, has charged the newly inaugurated 17-member Edo State Primary Health Care Board to deepen the revamp of the state’s primary health care system for responsive, efficient and accessible health care delivery. The governor, who gave the charge at the inauguration of new members of the board in Government House, Benin City, said the board was not a typical public service board but one that must deliver service to the people. He said, “Our vision as a government is to ensure we have a health care system in the state that will be responsive, efficient and effective in delivering health care in Nigeria. “For us in Edo State, our primary health care system will be built on several pillars which include human capacity, provision of technology and data, quality assurance, financing and infrastructure of the health care system.” The governor said the inauguration of the board was to formalise the pro-

cess that started over six months ago in working with consultants to develop 20 Primary Health Care Centres (PHCs), noting, “The objectives of these PHCs is to promote a package of preventive, curative and rehabilitative health care services to our citizens.” The governor explained that part of the key functions of the board include, “to initiate, organise and sponsor programmes for effective health care management and manpower development and creation of public awareness of the importance of PHCs in the state.” He urged the board to “determine the general policies for the administration of your agencies including the management of its properties and finance. Make regulations for the appointment, promotion, transfer and discipline of staff of the agencies.” Chairman of the Board, Victor Iyekekpolo, expressed appreciation for efforts made by the Governor Obaseki-led administration in repositioning the health sector in the state.

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Hope for over 470 homebuyers as new housing scheme nears market CHUKA UROKO

oing by assurances from Lagos State Ministry of Housing authorities, over 470 housing units of various configurations will be coming to the housing market from the Ilubirin Housing Scheme by the end of the first quarter of this year, raising expectations among residents of the state many of whom would like to live in their own homes. What this means that over 470 families would be taken off the state’s crowded housing market and, taking an average of four persons per family, it means that about 1,888 persons will be living in their own homes when these units come to the market. What this means also is that the state’s three million housing units deficit will be reduced. It was expected that construction work on the housing scheme would be completed by the end of last year and, according to the authorities of the state government, the units would be in the market for sale from the first quarter of this year. The Ilubirin Housing Scheme, initiated under the Lagos Home Ownership and Mortgage Scheme (LAGOSHOMS) in 2014 and conceived as a purely residential scheme, was redesigned to accommodate a live, work and play areas after about 24 months of inactivity at the

building site. The scheme will be developed in seven phases. Gbolahan Lawal, the state’s commissioner for housing, said the development would start with the completion of the existing structures which were already underway, while other phases of the project would be completed over a period of three years, terminating in 2022. Lawal had, in a statement, disclosed that due to other housing projects across the state coupled with limited budgetary provision to complete them, the state government had to seek partnership with the private sector through a joint venture agreement. “After a review of the proposals received from various companies for the completion of the project, First Investment Property Company (FIDC) was selected to partner with the state government to realise the vision of the project. The company is expected to source fund for the completion of the project and also to provide technical expertise for its completion. The state’s equity contribution is the land and the development executed to date,” the commissioner said. He said the new design of the project will comprise 472 units of studio apartments, 1, 2 and 3 bedroom flats, Terraces and Penthouses, while commercial unit and recreational facilities such

as sporting facilities, parks, a club house as well as child day care facilities would also be accommodated. “The water front will be developed as an active promenade with restaurants and bars. A shopping mall will be located by the eco-park and will be a destination for visitors and sightseers. There would be something for everyone in Ilubirin,” Lawal said. The commissioner also assured of infrastructural and environmental planning, explaining that due to the location of the scheme on a reclaimed land, flood simulations had to be undertaken, integrity tests carried out while traffic studies were commissioned due to its proximity to the busiest network of roads between the Mainland and Island. “One challenge unique to the site however is its proximity to a series of drainage channels carrying effluent from Lagos Island. To address this, an eco-park has been designed to counter the impact of sewage and contribute to a cleaner Lagos. “The high visibility of the site along the Third Mainland Bridge axis demands exemplary aesthetics. Like the Lekki Link Bridge, this project has the potential of becoming an iconic reference point and a catalyst for the regeneration of the surrounding areas such as Isale-Eko, Dolphin and Osborne Foreshore,” he said.

Senate to investigate INEC’s postponement of 2019 elections - Gaya TONY AILEMEN, Abuja

… says postponements led to low turnout

here are indications that Nigerian Senate, on resumption from 2019 elections break, will investigate the Independent National Electoral Commission (INEC) for shifting the 2019 general elections. Recall that INEC had to reschedule the 2019 general elections slated for February 16 and March 2, to February 23 and March 9, 2019. But the chairman, Senate Committee on Works, Kabiru Gaya, while fielding questions from State House correspondents on Sunday, said the commission had no reason to postpone the elections because all they required to conduct a credible exercise was provided to them. Gaya said on this strength, the Senate would on resumption commence the investigation of the electoral umpire upon its return from recess after the governorship election. Assessing the performance of the electoral umpire at the just concluded

Presidential and National Assembly elections, Gaya, who said, “We will call them and we will investigate the INEC for shifting the election because it caused a poor turnout. “We will find out the reason - if it is funding, we gave them enough funding, if it was issue of security, the security agencies were ready. So why should INEC shift the elections? We are going to investigate that when we come back after the governorship election. But sadly, generally they did what they could do, I could say, it’s a pass mark.” Also speaking on the kind of National Assembly that will be expected in the Ninth National Assembly, Gaya said Nigerians should expect a humble Senate, a vibrant Senate and a Senate that will work with Mr President for the good of the country. He said, “We will give President Buhari all the cooperation that is needed so that we can have a smooth ride, a smooth process, a smooth passage of the budg-

et, a smooth oversight and a relation between the executive and the legislature. We hope by God’s grace we will give him that support. “We thank almighty Allah for given us the life, the strength and the ability to President Muhammadu Buhari the opportunity to contest for a second term and to win the election with a very wide margin.” Gaya, who applauded President Buhari’s infrastructural developmental strides in the first four years of his administration, expressed confidence that the President will do more in the next four “I remember, when I was inspecting one of the roads in Nigeria here, at that time, President Buhari was abroad, I said President Buhari will, insha Allah, commission that road in his first term and also in second term, he will do the second part of the road. People doubted me, but thank God, God has done it - President Buhari has ran for election and he has won the election.”

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Nigerian firms visit France to explore new trends in agric, technology SEGUN ADAMS

romosalons Nigeria, the exclusive representative of SIMA Paris in Nigeria, leads a mission of Nigerian firms and organisations on international agricultural trade shows in France - SIMA Paris 2019 and Salon International De L’Agriculture (SIA). Organisation of the outing involved collaboration with the Lagos Chamber of Commerce and Industry (LCCI) for the two events; the SIMA Paris 2019, held from February 24 to 28, and the Salon International De L’Agriculture is ongoing in Paris, till March 3. According to Akin Akinbola, managing director/ CEO, Promosalons Nigeria, Cameroon and Gabon, some of the firms and organisations include Federal Ministry of Agriculture and Rural Development, Boslan Agro Services, Scoa Nigeria plc, Agro Nigeria Magazine, Gorine Energy Limited, Tamtek Global Business, Premier Seed Nigeria Limited, Fortune Agricultural Services, among other experts in the agribusiness. The SIMA Paris 2019, a biennial event, showcased the latest technology, innovation and trends in agriculture to the Nigerian delegates and provided them an ideal avenue to explore numerous options in attaining developmental strides in the agric sector. More so, the Nigerian business delegates were provided the opportunity to interact, exchange ideas and contacts with other professionals in the agric industry from around the world. In keeping with its theme

of “Innovation for competitive agriculture,” SIMA Paris 2019 at Paris-Nord Villepinte Exhibition Centre, showed two spaces offering centre stage to 34 young companies and to innovation and new technology for the farming world on the theme ‘Startup Village,’ which would act as a springboard in helping young companies emerge among the big market names, Akinbola said. Thirty-four start-ups including businesses that leverage ICT to aid farming operations, drone technology and robotics businesses, online stores were expected to benefit from the platform. Agriconomie, Aptimiz and Carbon Bee were notable mentions among the numerous brilliant start-ups that create value along the various lines of the agric industry. The event also focused at all forms of agric, holding several events relating to the big global challenge for years ahead, which is: Producing more, better. Africa’s goal to spur economic growth in rural regions, mainly through agriculture and the food industry, was highlighted as one of the priorities of development programmes across the continent. The events also included the SIMA African Summit, with a conference co-organised with AXEMA and in association with the South African journal Farmer’s Weekly: the SIMA Dealers’ Day-ting. The essence was to dedicate a day to informal meetings between exhibitors and dealers from the world in association with SEDIMA and CLIMMAR.

Godwin Obaseki, governor, Edo State (2nd left); his deputy Philip Shaibu (m); David Osifo, commissioner for health, (2nd r); Victor Iyekekpolor, chairman, Primary Health Care Board, (left), and Imuwahen Mbaire, secretary of board, (r), after the inauguration of members of the Board by the governor, at Government House, in Benin City, Friday.

Nigeria’s shipping atmosphere will not attract investment in national fleet - Bello AMAKA ANAGOR-EWUZIE

he present operating atmosphere of Nigeria’s shipping business lacks the capacity to attract international and local investors in the establishment of the proposed national fleet, Hassan Bello, chairman, National Fleet Implementation Committee, says. Bello, who doubles as the executive secretary/CEO of the Nigerian Shippers’ Council (NSC), told our correspondent in an interview that there were lots of laws, policies and cost that hinder investment in the nation’s shipping business. Bello blamed the failed Joint Venture (JV) partnership between the Federal Government and a Singaporean shipping firm - Pacific International Line (PIL),

which was aimed at floating a national shipping line, on the unsustainable state of the structure of Nigeria’s shipping business. “We have to make it possible for the investment in national fleet to be profitable and sustainable. We also need to ensure that it is private sector led. We could have continued with PIL and bring in two ships as national carrier, but we believe Nigeria needs something that is sustainable. To do that, we have to guarantee contracts,” he said. According to Bello, there are many taxes and incentives that need to be reviewed, which the committee is currently tackling. “For instance, we are working with the Federal Inland Revenue Service (FIRS), Ministry of Finance, Customs and many other agencies including NEXIM Bank to reduce the 5 percent

holiday from the 3 percent Nigerian Maritime Administration and Safety (NIMASA) fees,” he said. The committee is seriously working to ensure that issues around the change of Nigeria’s crude oil trading policy from Free on Board (FoB) to Cost Insurance and Freight (CIS) are handled, and to ensure effective implementation of the Local Content Act, he said. “We need to develop supporting industries like ship repair and ship building yards because if we do not, ship owners will continue to toll ships to Singapore and Ghana for repair, and this will drain all the profits of having a national fleet. We need our banks and insurance companies to participate and benefit from shipping,” he said. Anthony Ogadi, head, shipping development of the

Nigerian Maritime Administration and Safety Agency (NIMASA), confirmed that the committee had gone far in making presentations to government, especially to the office of Vice President. “The committee has met with the minister of Budget and National Planning, and the ministry has introduced the committee to the Economic Recovery and Growth Plan (ERGP) group. In due time, a focus lab will be initiated to enable all stakeholders make input. This is to ensure that the chief executives that are expected to grant approvals will be there to play their roles,” he said. He further said NIMASA was also working to ensure that cargo was made available for ship owners to lift, especially public sector cargo, which is government owned cargoes.

Abuja Chamber arbitration centre to address concerns of over $5bn loss on commercial case Moghalu advocates fundamental ment in its ease of doing busi- Attorney General of the Fed- reform of Nigeria’s electoral system HARRISON EDEH, Abuja ness drive by ensuring com- eration and the Minister of

buja Chamber of Commerce dispute resolution centre says it is poised to ensure the centre is ready to address concerns of lingering commercial litigation that hinders businesses in the country, with losses due to litigation currently put at over $5 billion through its arbitration centre. The centre notes that it is willing to address commercial disputes through its dispute resolution centre to support government’s effort on ease of doing business, while also encouraging businesses to thrive. Adetokunbo Kayode, president, Abuja Chamber of Commerce and Industry (ACCI), also a former Attorney General of the Federation and the Minister of Justice, says the chamber is poised to assist the Federal Govern-

mercial litigation issues are quickly resolved by the centre to forestall undue effects on businesses. Speaking at a sensitisation workshop organised for members of the centre last week, Kayode explained that the reason for the workshop was to sensitise government arbitration companies on the need to encourage arbitration while also encouraging domestication of arbitration in the centre. “What we are doing is in line with the International Chamber of Commerce (ICC) rules, which encourages arbitration in commercial dispute settlements. I hope you know that even our own federal high courts here also encourage out of court settlement and arbitration also,” Kayode said. According to Kayode, “It is time saving and cost saving, and it is enforceable. The

Justice has approved our centre in writing. Also, the Chief Justice of the Federation was represented by the National Industrial Court.” He stated further that the centre would ensure expedition of action, as it had set a target of 90 days to dispense with arbitration issues, which is in line with the government’s ease of doing business drive. He informed that commercial dispute could be presented to the arbitration, adding, “Under our process, we are looking at a maximum of 90 days in settling a dispute. “I’m worried because I have seen several of arbitration between local firms and international firms being settled in London. I believe we are on the right course and we have got all the approvals to sensitise all the government agencies to key into our programme and vision.”

OLUWASEGUN OLAKOYENIKAN

he presidential candidate of the Young Progressives Congress (YPP) in the 2019 elections, Kingsley Moghalu, has advocated for a fundamental reform of Nigeria’s electoral system in order for the nation’s democracy to have real meaning. Moghalu, who made this known in a statement issued in Abuja, Friday, expressed his displeasure over the February 23 presidential election which returned President Muhammadu Buhari of the ruling All Progressives Congress (APC) as the winner. Moghalu said elections organised in Nigeria demean the nation, noting that only a reform of the system can help salvage the electoral process which he described as “a travesty”.

“We need to reform the systems of registration, voting and collation of votes by making the processes more transparent through better use of technology,” Moghalu said. He maintained that the just-concluded elections were marred by operational failures of the Independent National Electoral Commission (INEC) in the conduct of the polls, massive vote-buying and vote-rigging through various methods, as well as violence in several locations in the country. The former Central Bank of Nigeria deputy governor, who accused the APC and main opposition People’s Democratic Party (PDP) of being complicit in the malpractices, said these issues all combined to make the credibility of the elections open to question. Moghalu also accused INEC of inadequacy, add-

ing that the number of votes tallied for his candidacy by the commission did not represent anything close to the electoral strength of his candidacy. “These false numbers were the result of brazen theft of our votes and the suppression of our voters,” he said. Despite losing the election in terms of overall numbers of votes, Moghalu was confident that 2019 would be “the last gasp of the old political order that has robbed Nigeria of real development”, even as he remained hopeful that the situation would change in 2023. He urged president Buhari to run an inclusive and competent government in his second term in office, adding that these efforts can heal the nation and take millions of Nigerians out of crushing poverty.

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BUSINESS DAY

BDCs set N250/$ exchange rate agenda for President Buhari HOPE MOSES-ASHIKE

L-R: Wole Abu, CEO, Pan African Towers; Lawrence Onyema, MD/CEO, Prime Infrastructure; Sherisse Alexander, director, investor relations, Watts Renewable, and Oluwole Eweje, chief operating officer/ founder, Watts Renewable, at the formal signing ceremony of a N7billion infrastructure partnership between Pan African Towers and Watts Renewable in Lagos.

Airlines decongest Lagos airport, divert traffic to other states IFEOMA OKEKE

n a bid to reduce congestion at the Murtala Muhammed International Airport (MMIA), Lagos, airlines are beginning to divert some of their traffic to airports outside Lagos. The Federal Airports Authority of Nigeria (FAAN) said the diversion of traffic from Lagos would help in putting the newly commissioned terminals in Port Harcourt International Airport (PHIA), Omegwa, and Nnamdi Azikiwe International Airport (NAIA), Abuja, to maximum use. To this end, Turkish Airlines and Emirates Airlines have indicated their readiness to commence scheduled flight operations from PHIA and NAIA, respectively, from June, while Air Peace would also begin direct flight to Dubai from PHIA as from April this year. Henrietta Yakubu, general manager, corporate affairs, stated this over the weekend at the agency’s headquarters at the Murtala Muhammed Airport (MMA), Lagos, in an

interview with aviation journalists. Yakubu explained that it was necessary to divert traffic from Lagos to other airports within the country, but noted that Lagos would remain the hub of airports in Nigeria. She explained that rather than the entire airlines focusing their attention on Lagos airport, they could also make use of the state-of-the-art facilities in other aerodromes across the country, stressing that FAAN was determined to improve flying experience of air travellers within Nigeria. According to Yakubu, Turkish Airlines would commence direct flight from its base to PHIA from June 25, while Emirates would increase its four weekly flights to daily to Dubai Airport from NAIA from June 1. Already, she said Cronos Air operated three weekly frequencies: Mondays, Fridays and Saturdays from PHIA, while Lufthansa Airlines flies four times weekly: Mondays, Wednesdays, Saturdays and Sundays from the same airport.

Also, Air France operates five weekly flights: Mondays, Tuesdays, Wednesday, Fridays and Sundays, stressing that the Turkish flights would be operated four times weekly on Tuesdays, Wednesdays, Fridays and Sundays, starting from June 25, 2019, from the same airport. Apart from the foreign airlines, she emphasised that Air Peace would also commence direct flight operations to Accra from Abuja, while scheduled flights between Port Harcourt and Dubai operations of the airline would commence in April this year. Besides, she explained that Air Cote d’Ivoire would commence direct flight from Abuja to its base in Abidjan soon. She said: “Turkish Air and Emirates would soon commence direct flight to their bases from the new Port Harcourt International Airport terminal. We want to appeal to members of the public that they don’t have to come from Port Harcourt or any part of the Eastern state to fly out of the country. “They can easily go to Port Harcourt to fly. Also, as you

African Energy Chamber congratulates Buhari STEPHEN ONYEKWELU

ith the hope to see continuation of reforms to boost investment, African Energy Chamber and its partners congratulate President Muhammadu Buhari on his re-election. They also hope that his second mandate will achieve the set of reforms undertaken by his administration since 2015. Due to plunging oil prices, President Buhari has been faced with Nigeria’s worst recession in more

than two decades following its first election to the Presidency in 2015. His administration has successfully managed to exit Nigeria out of its economic quagmire and put the country back on the path of recovery, and back into growth since 2017. Now that Nigeria’s macro-economic outlook is stable and various sectors of the economy are experiencing steady growth, the Chamber hopes that Buhari’s second mandate will continue to reform the country’s economy to spur private investment and create jobs.

This notably includes the Petroleum Industry Bill, which the entire industry awaits to be signed this year. “The oil sector is what has allowed Nigeria to exit recession over the past two years, and remains a pillar of the economy. “As such the industry sees the signing of the Petroleum Industry Bill as a crucial step to up investments across the value chain and provide Nigeria with the necessary resources to further drive its economic diversification agenda,” the Chamber’s executive chairman, NJ Ayuk, said.

know, Abuja Airport new terminal too has opened and Emirates would be starting from the terminal from June. We are expecting all the international airlines to start operating also from Abuja Airport. “We want to encourage our passengers that they don’t all have to come to Lagos even though we know Lagos is the commercial nerve centre of the country and the airport is the hub, but passengers can travel from Abuja and Port Harcourt airports to connect to their destinations so that we can decongest Lagos airport. Turkish will soon commence a direct flight from Port Harcourt to Turkey, while Emirates will also do so to Dubai.”

ureaux De Change (BDC) operators in Nigeria have set N250 to a dollar exchange rate agenda for President Muhammadu Buhari in his second term in office. Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON) who disclosed this to financial journalists in Lagos, said achieving a lower exchange rate for the economy would benefit the common man and lift businesses. The naira exchanges at N362 to dollar at the parallel market and N360 to dollar at the BDC segment while the local currency exchanges at N306 to dollar at the official rate. The ABCON boss also said such lower exchange rate would improve the transaction volume for BDCs by enabling operators buy and sell more dollars from their available cash flow. He said a lower exchange rate against the greenback would stabilise the local currency, raise investors’ confidence, improve Diaspora remittance flow and entrench fiscal discipline. Continuing, he said a stronger naira would raise Internally Generated Revenue, help in the implementation of the restriction of foreign exchange access to 42 items that could be produced locally, and improve BDCs capabilities to thrive. He therefore advised the Federal Government to constitute new economic management team and review government’s performance

in the last four years, saying such review would give room for better performance in the second term of this administration commencing May 29, 2019. The economy is not performing to expectations, and government is expected to re-strategise and review its performance in the last four years and develop concrete actionable strategy for better performance, Gwadabe said. The All Progressives Congress (APC) candidate, Muhammadu Buhari, emerged the winner of the 2019 presidential election in Nigeria. The incumbent President, who defeated 73 other candidates, scored a total of 15,191,847 votes across 19 states. If government waits till May 29 before setting up a think-tank economic team with functional experience on the economy, security, agriculture and human resource development, it would have wasted tangible time needed for smooth take-off, he said. He said the committee members should have deep knowledge of the economy, and be ready to access information on how these sectors have worked effectively in other countries in order to deploy similar strategy in the interest of the local economy. Gwadabe said by now, government should know where the complaints over its performance in the last four years came from and give priority to tackling unemployment, fixing road infrastructure, creating better investment opportunities for the people and companies as well as strengthening the financial sector, of which BDCs were key players.

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Monday 04 March 2019

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

LOSERS Opening

Closing

Change

NESTLE

N1470

N1510

TOTAL

N190

N200

N195.3

N196.6

1.3

DANGFLOUR

DANGCEM

Market Statistics as at Friday 01 March 2019

CILEASING

N6.61

N7.27

0.66

N79.5

N80

0.5

Company

Opening

Closing

Change

UNILEVER

N41

N38.7

-2.3

INTBREW

N26.25

N25

-1.25

N10.9

N9.9

-1

DANGSUGAR

N15

N14.65

-0.35

UBN

N6.7

-0.3

ASI (Points) DEALS (Numbers)

NSE organises Fixed Income trading workshop to enhance capacity of dealing members

n line with its commitment to improve the capacity of its members and enhance investors’ participation in the Fixed Income Market, the Nigerian Stock Exchange will today at the Stock Exchange House organise a Fixed Income workshop . This workshop will bring together about 200 stockbrokers, dealing members and other key capital market stakeholders to explore opportunities available in the fixed income market, as well as address the concerns and build the capacity of our members interested in trading fixed income on the Exchange.

All fixed income securities (with the exception coupon bonds) of zero- provide some form of regular interest payments to investors. This makes the fixed income market especially attractive to investors whose main investment goal is providing themselves with a steady income.

creased to N19.68billion, from N17.64billion representing 11.53percent increase. “We expect the yield on government instruments to moderate sharply in the short to medium term while sentiment for equities would improve as investors revert to fundamental drivers of stock market performance rather than political uncertainties”, research analysts at United Capital said in their March 1, 2019 note to investors.

NASD OTC market cap rises by 2.09% to N538.29bn

s at close of trade week ended March 1, 2019, the market capitalisation of NASD OTC unlisted securities increased by N11.04percent or 2.09percent to N538.29 billion from preceding week’s low of N527.25 billion. Also the Unlisted Securities Index (USI) for the review trading week recorded an increase from 733.89 points to 749.25 points. There currently 39 admitted securities on the NASD OTC market; 244 registered brokers; 130 Participating Institutions (PIs). The market has 43.87 billion dematerialised equities, which represents 29.03percent of the total traded. The volume equi-

3.751

MARKET CAP (N Trn

we expect bargain hunting to drive positive trading as investors take up undervalued stock leading to a mixed session at week start”, said research analysts at Vetiva Capital in their March 1, 2019 note. The volume of stocks traded increased to 1.750billion units in the review trading week, up by 18.43percent, from 1.478billion units recorded the preceding trading week; while the value of stocks traded in-

341,954,379.00

VALUE (N billion)

Stories by Iheanyi Nwachukwu

ed stocks decreased from N12.126trillion to N11.868trillion. The NSE 30 Index lost 3.12percent week-on-week; NSE Banking Index (-5.88percent); NSE Consumer Goods (-2.91percent); NSE Oil & Gas Index (-1.33percent); while NSE Industrial Goods was up by 0.93percent WoW. “Given the reaction of investors to the election results, we highlight the possibility of negative sentiment trickling down into the market. That said,

4,513.00

VOLUME (Numbers)

Stock market loses over N250bn in five days he Nigeria stock market lost N258billion in a fiveday trading week after the nation’s presidential and national assembly elections. This negative outcome at the stock market comes on the heels of most analysts’ positive outlook for the economy over the next four years as President Buhari’s victory signals policy stability. The Nigerian Stock Exchange (NSE) All Share Index decreased by 2.12percent in the review week ended Friday March 1, 2019 to 31,827.24 points; this is against a high of 32,515.52 points as at week ended February 22. The sell-off recorded in the review week impacted on the market’s returns year-to-date (YtD) which stood lower at +1.26percent. Also, week-on-week (wow) the value of list-

31,827.24

ties traded year-to-date (ytd) at the OTC market is 996.05million; value traded (YtD) is N2.65billion while the number of trades (YtD) stood at 823 on Friday March 1, 2019. In the review trading week, the OTC market for unlisted securities recorded NASD Plc as highest gainer by N5.41, from N2.59 to N2.73, followed by Central Securities Clearing System Plc which was up by N7.37, from N12.21 to N13.11; while Friesland Campina Wamco Nigeria Plc advanced by N6.21, from N161 to N171. On the losers table, Niger Delta Exploration & Production Plc recorded the highest price decline, from N282.86to N301, after losing N6.03.

11.868

North South Power first 15-year Corporate Green Infrastructure Bond oversubscribed by 60% …attracts many institutional investors, pension funds

orth South Power Company Limited (NSP) through NSP-SPV PowerCorp Plc has issued its first N8.5billion 15 year 15.60percent Series 1 Guaranteed Fixed Rate Senior Green Infrastructure Bonds (Series 1 Green Bonds), due 2034. This bond issuance, under a N50billion Debt Issuance Programme follows the receipt of Board’s approval on September 26, 2018 to raise additional capital and the receipt of regulatory approval from the Securities and Exchange Commission (SEC) on December 31, 2018. The Series 1 Green Bonds is the first certified green corporate bond and the longest tenured (15 year) corporate bond issued in the Nigeria debt capital markets. The Series 1 Green Bonds was oversubscribed by 60percent with firm commitments from twelve (12) institutional investors including nine (9) pension funds, and priced at 70 basis points (bps) spread to the comparable 15-year sovereign benchmark bond (FGN 2034) using the closing yield on the reference date (04 February 2019) adopted for the book building. United Capital Plc acted as Lead Issuing House/ Financial Adviser, while Stanbic IBTC Capital Limited, Vetiva Capital Management Limited and Zenith Capital Limited were Joint Issuing Houses to the Bond Issuance. The bond issuance was guaranteed by InfraCredit, an ‘AAA’ rated infrastructure credit enhancement facility, backed by the Nigeria Sovereign Investment Authority, GuarantCo (a Private Infrastructure Development Group company), KfW Development Bank and Africa Finance Corporation (AFC).

The Series 1 Green Bonds was certified by TUV NORD CERT, an approved verifier under the Climates Bonds Standard, in conformance with the International Capital Market Association’s (ICMA’s) Green Bond Principles, Nigerian Federal Ministry of Environment’s Nigerian Green Bond Guidelines, and the Green Bonds Issuance Rules of the Nigeria Securities & Exchange Commission. The development of the “Green Bond Framework” and the pre-issuance verifications was obtained through technical assistance support from the African Local Currency Bond Fund, an initiative of KfW Development Bank. Olubunmi Peters, Executive Vice Chairman and CEO of North South Power Company Limited noted that the success of the bond issuance is a significant milestone in the company’s longterm corporate strategy, demonstrating its market leadership, innovation and commitment to the highest standards of environmental, social and corporate governance. “With the completion of the Series 1 Guaranteed Green Infrastructure Bonds issuance, the Company has established a long-envisioned link with a more sustainable long-term, local currency financing required to implement its ambitious strategic power generation expansion plan through the capital markets,” Peters said in a statement. NSP currently generates, on the average, 8percent of Nigeria’s power providing power to millions of Nigerians and aims to be the leading power company in Sub-Saharan Africa by safely providing affordable, reliable, and sustainable power to its customer base.

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This is M NEY A guide to your Personal Finance

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BUSINESS DAY

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

The five ultimate levels of money – the real reason why you never achieve your financial goals The Solid Wealth Messenger

Grace Agada

ow do you make more money, achieve your financial goals, be happy, free, and fulfilled regardless of who you are, the state of the economy, your family background, who you know, or where you are from? At the end of today’s article you will be able to know the real reason why you are stuck in a financial rod and what you need to do to change your current financial situation. Most people think that working hard is the key to unlocking money, but working hard is rarely the key. In fact working hard can make you poor, sick and miserable if you are at the wrong money level. Money follows a law that must be obeyed if you must unlock unlimited amount of money. You may be angry, frustrated and sad about your current financial situation, but lashing back at life will only do you more harm. To change your financial situation and achieve the most important item on your goal list you first need to learn exactly what is holding you back. It took me ten years of trial and error to figure the solution out. I spent most of my early career and business years working hard, saving aggressively, investing blindly, and hoping that one day I will find myself on the rich list. However,

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

that never happened until I discovered this one money secret. The only difference between you today who is earning a few thousands or millions and you after today, who will earn multimillions, is for you to understand how the the Five money levels work. You are never going to be taken to a special mysterious place and where some special money genes will be implanted inside you to move you from where you are now to where you want to be financially. Everything you need to make the largest sum of money of your life is already within you. But there are a few problems: Most people never get to figure out exactly where there are going in life. Those who get to figure it out are stuck with financials goals that have remained unaccomplished from year to year. Rather than try to figure out the real reason, many people blame themselves, blame the economy, their job, their employer, bad luck, their family members, or evil forces for preventing them from moving forward. So, how can you propel your life into a whole new level of success, wealth, maximum productivity and happiness? The only way to make more money, feel wonderful about yourself and get along with the most important people in your life is to understand and obey this ONE money principle and it is known as: The Money Levels Money has various levels and each money level has its own maximum cap beyond which no more money can be made. You can be the most hardworking, dedicated and passionate individual in the world but if you are on the wrong money level you

will ultimately get little result for all your efforts. Take a cleaner in an organization for example. Let’s say this cleaner is a man. He is the best cleaner in the entire world, has a 100% punctuality record, has sacrificed 35 years of his youthful life shinning the entire office and making people happy, has never committed any offence or offended anyone, and has even lost touch with his wife and children due to his extraordinary dedication and commitment to his work. The challenge is that all of his immense can at best get him an award as the best Cleaner of the company. No matter how hard he works he can never earn the salary of the General Manager even if the general manager decides to sleep, eat and chat all day. There is an invisible ceiling on the amount of money a cleaner can earn. If the cleaner thus decides to set his 2019 goal as buying a brand-new Mercedes Benz, it will take a combination of eternity, luck and a miracle to give him a slightest chance at achieving that goal. However, if the cleaner decides to develop himself, gain the competence, and grow over time to become the general manager of the same company, his money level changes and it becomes easier for him to achieve his goal of a brand-new Mercedes Benz. The money level is no respecter of person, dedication, hard work, sacrifice or the amount of time invested. The cleaner can complain all he likes about how his employer is heartless, ruthless

‘

You can be the most hardworking, dedicated and passionate individual in the world but if you are on the wrong money level you will ultimately get little result for all your efforts

and mean and how his employer does not value his dedication and service. But the truth is that his financial situation has nothing to do with his employer. It has everything to do with his money level. Making a New Year resolution, setting financial goals, praying, fasting, working hard and being shrewd are all a small part of how you can make money. The bigger and more difficult part is being at the right money level and setting goals that match with your money level or at least be willing to change. Until your financial goals match your money level, nothing is guaranteed to change. There are about five money levels in all. I call them the Five Ultimate Levels Of Money. This five money levels, what they are, what you need to do to move from one money level to a desirable money level of your choice will be discussed in an upcoming FREE Webinar scheduled to hold in March 2019. Attendance is Free but spaces are limited. To gain access and register to attend, kindly send “Webinar” to 08101860042 and a link to the registration page will be sent to you. Remember that no matter what you do, your financial outlook would not change until you change your money level. Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

BUSINESS DAY

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Monday 04 March 2019

ABUJACITYBUSINESS COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

Poor budget responsible for poor health indices – stakeholders OYIN AMINU, Abuja

takeholders in the health sector have attributed the country’s poor health indices to poor budgetary provision and release to the sector. Oladapo Ladipo, Chairman of National Advocate for Health, Oladapo Ladipo who disclosed this at a press conference in Abuja said, non implementation of the national health act, industrial disharmony, occasioned by frequent strikes, poor welfare and working environment, all form a part of the sad tale of the health sector in 2018, partly worsening the level of brain drain in the sector. Ladipo noted that Nigerians have made a demand for a greater investment and accountability in the health sector following a face to face interview conducted by the Nigeria Health Watch in collaboration with NOIpolls in October 2018 with the aim of finding out the voting priorities of Nigerians in the run up to the 2019 elections. According to Ladipo, the result of the poll revealed that 86 percent of respondents at the poll mentioned health as one if the issues that mattered the most to them, financial risk protection, equitable and quality healthcare for women and children are

some of the health priorities of Nigerians ahead of the 2019 general elections. “Nigeria cannot adequately tackle outbreaks of diseases in the country, communicable and non communicable diseases, high maternal and child mortality rate and the many lapses in healthcare facilities across the country if it continues to allocate less than 15percent of its total budget to health,” said Ladipo The Professor of Obstetric Gynaecology further said that health issues are compounded by the fact that over last ten years, health budget has a low percent of the total national budget and keep lingering between 4-6percent. On the recently launched Basic Health Care Provision Fund(BHCPF), Ladipo said not committing the BHCPF as statutory, means if there is paucity of fund within the year, it would suffer a severe budget cuts and the poor implementation. He call on the federal government as a way of recommendation to ensure that the 2019 health budget estimates should be increased from four percent to at least 7.5 percent and the national assembly to strengthen their oversight function so that the Nigerian government will improve budget performance.

Benue Police Command parades 11 suspects BENJAMIN AGESAN, Makurdi

he Commissioner of police Benue State command, Omololu Bishi who has paraded eleven 11 suspects who were caught at different locations committing different crimes at different times all in Benue State. Bishi who paraded the suspects at the Command Headquarters in Makurdi said that the need to arrest, interrogate and prosecute crime commiters in the state became necessary so as to create a peaceful atmosphere for free and fair elections. He explained that most of the suspects are cultists who regrouped to carry out reprisal attacks on rival cult groups, who also specialize in robbing innocent citizens of their motorcycles, phones and other variables at gun points. The Commissioner stated that the paraded sus-

pects were caught involved in cases such as criminal conspiracy culpable homicide and theft, armed robbery kidnappers and illegal possession of arms among others. He explained that, “in a petition written by Iorumbur Amanger of Tombo-Mbala Buruku Local Government Area stated that Hyginus Lubem Mbachi of the same address defrauded him of the sum of Two Hundred and Nine Thousana; One Hundred and Fifty Naira (#209, 150) only being fee for the admission of his son Afa Amanger into a University in Cameroon. The said suspect left his house with his son to Cameroon and since then he could not communicate with his son. “During investigation Hyginus Lubem Mbachii and one Gambo Bulus alias Murphy of Akwanga, Nasarawa State were arrested at Lafia, Nasarawa State in connection with the case.

MNCH Week: 900,000 children in Abuja get free health services JAMES KWEN, Abuja

o fewer than 900,000 children got free health facilities based services from the second round of the Maternal, Newborn and Child Health Week (MNCHW) in the Federal Capital Territory (FCT), Abuja. MNCHW is a week set aside to deliver a package of key maternal, newborn, and child survival interventions, aimed at reducing maternal, neonatal and child mortalities. Adamu Bappah, Mandate Secretary, FCT Health and Human Services Secretariat (HHSS) while flagging

off the exercise in Abuja said it is a 5-Day programme (25th February till Friday, March 1st), during which mothers are expected to access the services from 7am to 3 pm daily. Bappah, who was represented by Director of Administration and Finance (DAF) of the Secretariat, Musa Abdulraheem said it is the second phase of the FCT November/December 2018 MNHCW. He disclosed that there would be free vitamin A supplementation for children between 6-59 months, deworming of children within 12-59 months, adding that other services include routine immunization

against vaccine preventable diseases for children 0-11 months, growth monitoring and promotion, food demonstration, nutrition screening of children -6-59 months, birth registration and focused ante natal care for pregnant women. The HHSS Secretary explained that emphasis has shifted from stand-alone vertical campaigns to a more integrated approach, which exposes caregivers, and children to key interventions that improve health status and enable them thrive through both the existing health system and outreach strategy. According to him, every single day, Nigeria loses

about 2,300 under-five children and 145 women of child bearing age. This makes the country the second largest contributor to the under-five and maternal mortalities in the world. “I also want to use this opportunity to reiterate the urgency and need for all of us to promote this programme, for improvement in health, well-being and survival of women and children in FCT”, he stressed. Ndaeyo Iwot, Acting Executive Secretary, FCT Primary Healthcare Development Board in a welcome address said personnel have already been deployed to the nooks and crannies of the FCT for the exercise.

L-R: Ibrahim Aliyu, chairman, North South Power Company Limited (NSP); Olubunmi Peters, vice chairman, NSP, and Sunny Anene, group executive director, United Capital plc, at the signing of MoU on offer for subscription of N8.5 billion under a N50 billion Medium Term Bond Programme held in Abuja. Pic by Tunde Adeniyi

Shippers council: 10,673 vessels arrived ports in two years STELLA ENENCHE, Abuja

he Nigerian Shippers Council (NSC) has disclosed that a total of 10,673 vessels arrived the nation’s ports between 2016 and 2018 even as 88 attacks were recorded in the Niger Delta, between 2017 and 2018. Hassan Bello, Executive Secretary, NSC Hassan disclosure this during a courtesy visit to the Chief of the Naval Staff, Vice Admiral Ibok-Ette Ibas at the Naval Headquarters, Abuja to find ways on how best to tackle insecurity on the nation waterways. “We aim to reduce the cost of doing business at the ports by streamlining costs tariffs and charges; encourage investment and promote ease of doing business in the sector. Thus, the Council fa-

cilitates trade and promotes fair trade practices. “More than ninety percent of the world’s commerce is moved through maritime shipping over sea lanes. With increasing reliance on just-in-time delivery of products, countries are closely bound together by maritime shipping. “For instance, 2016 to June 2018, there were 10,673 vessel calls at the ports with gross registered tonnage of over 329 mutton”, Bello said. He, however, lamented the security challenges besetting the maritime sector, noting that as a result, shipping companies had been forced to make their own security arrangements. According to the NSC’s executive Secretary, “one of the major challenges in the maritime sector is security. We have received various

complaints from the shipping companies, who have been forced to provide their own security to escort their vessels to port (especially at the eastern ports) In spite of their efforts, between 2017 and 2018, there has been 88 attacks in the Niger Delta. “The adaptive nature of maritime security threats require collective security measures. We believe that ensuring maritime security requires a concerted and sustained effort among coastal states, landlocked states, flag states, international organizations, and most especially, maritime industry stakeholders. “We have had meetings with Nigerian Maritime Administration and Safety Agency (NIMASA) on the same issue and wish to appreciate the Navy for your collaboration with them

especially with regards to Deep Blue Scale Up project. NIMASA assured us that the hi-ted1 surveillance systems and other measures to strengthen maritime security would be in place by the 1St quarter of 2019.” In his response,the CNS, Ibas disclosed that the Navy had continued to build capacity with a view to executing its mandate of securing the nation’s maritime domain as the Service arrested 150 suspected criminals, and 40 vessels in 2018. “Of course, as we speak, in 2018, we arrested 40 vessels and have in our custody over 150 persons which have handed over to the various prosecuting agencies. For last year alone and this year, all together we have over 130 vessels that were seized or arrested for complexity or maritime crime”, Ibas said.

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Defiant Netanyahu paints himself as the besieged saviour Israel’s leader vows only he can safeguard the Jewish state as toxic election battle rages MEHUL SRIVASTAVA

ours after Israel’s attorney-general upended the election campaign by informing Benjamin Netanyahu that he intended to indict him for corruption, the veteran leader addressed the nation with characteristic defiance. In an aggrieved speech, the prime minister blamed a vast leftwing conspiracy for his legal woes, warned of dark threats to Israel’s security, and vowed that only he could safeguard the Jewish state. At one point, close to tears, he outlined the toll that three years of “witch-hunts” had taken on his family. “They have put us through hell,” Mr Netanyahu said. “Even now, they are bleeding my wife, chasing my son.” It was a bravura performance from the dominant figure in Israeli politics, and a harbinger of thing to come in a campaign that has been blown open by the indictment decision that has taken the vitriol in Israeli politics to new highs. Three days on, the pressure on Mr Netanyahu shows no sign of letting up. As political allies moved to distance themselves from the prime minister’s attacks on the judiciary, Ayelet Shaked, a normally resolute ally who was Mr Netanyahu’s justice minister, dismissed suggestions that prosecutors in his case were politically motivated, while an outgoing MP from his Likud party said his attacks were baseless. The influential Times of Israel columnist David Horowitz described Mr Netanyahu as a threat to democracy and Bret Stephens, former editor of the conservative Jerusalem Post who had been a prominent supporter of the prime minister, called on him to

resign. “Netanyahu is a man for whom no moral consideration comes before political interest and whose chief political interest is himself,” wrote Mr Stephens. Yet Mr Netanyahu has built a long political career by styling himself as the besieged leader of the nation at a time of national peril, and his political rivals as weak-willed leftists who threaten Israel’s security and its Zionist ideals. Anshel Pfeffer, a journalist and author of a recent biography of Isaeli’s prime minister, Bibi: The Turbulent Life and Times of Benjamin Netanyahu said: “It is impossible to imagine a politician in another democracy surviving these indictments, but Netanyahu really is not like an other politician. “With half the country supporting him and half against, he will make the election campaign a toxic battle between right and left over his own political survival. It is a battle he has fought many times before — and usually won.” But with the potential that he could be indicted for taking cigars and champagne from wealthy friends, and brokering back room deals to influence media coverage, Mr Netanyahu’s defeat in April elections has suddenly become a real possibility. Smaller rightwing parties are disappearing below the required 3.25 percentage of the national vote, while growing support from leftwingers has helped to strengthen the new centreleft Blue and White Party led by exgeneral Benny Gantz and three other retired heads of the Israeli military. This election was already threatening to be the closest of the prime minister’s colourful political career — Mr Gantz’s arrival had usurped Mr Netanyahu’s claim to be Israel’s “Mr

India’s Narendra Modi lashes out over delayed fighter jet deal PM sparks anger after claiming shortage of Rafale planes ‘harmed’ the country in Pakistan clash STEPHANIE FINDLAY AND AMY KAZMIN

ndia’s ruling Bharatiya Janata party has said the country would have been better placed to handle escalating tensions with Pakistan if it had acquired a new fleet of modern fighter jets earlier. Last week, an Indian MiG jet was shot down in a dogfight with Pakistan. Despite the release of the downed Indian pilot on Friday by Pakistan prime minister Imran Khan as a “peace gesture” and mounting international pressure to de-escalate the crisis, intense shelling along the de facto border in Kashmir has stoked fears that the hostilities between the nuclear-armed neighbours are far from over. Narendra Modi, India’s prime minister, this weekend suggested that India’s aerial skirmishes with Pakistan could have had a different outcome had the country had more modern fighter jets, whose acquisition was stalled for years under the country’s previous Congress government. Mr Modi finally signed an €8bn deal for the acquisition of 36 Rafale fighter jets in 2016, but it has been since engulfed in controversy amid allegations of crony capitalism. “The country has felt the shortage of Rafale jets,” said Mr Modi, “India is asking in one voice what could have happened if we had Rafale. First self-

ish policies and then politics over the Rafale deal have harmed the nation.” His comments immediately provoked opposition anger. “Dear PM, have you no shame at all?” said Congress leader Rahul Gandhi in a Twitter post. “You are solely responsible for the delay in the arrival of the Rafale jets.” India has been due for years to upgrade its antiquated air fleet, including phasing out its Soviet-era MiGs, which saw active combat for the first time in decades last week as the two countries engaged in their most serious hostilities since their war in 1971. New Delhi carried out an airborne missile strike on Tuesday on an alleged terror camp on Pakistani territory, after a suicide bombing on February 14 that killed about 40 paramilitary police in India’s Kashmir region. The following day, Pakistan responded with an attempt to strike Indian military installations, and in the ensuing aerial skirmishes, the MiG was shot down. Precisely what India hit in its missile strike remains a matter of fierce dispute. Pakistan claims the missiles fell harmlessly into the hillside, a version seemingly supported by satellite imagery from the region. But Arun Jaitley, the finance minister, said over the weekend that the Indian government did not intend to share proof verifying its claim that a “large number” of jihadis were killed in the strike.

Security” even before the attorneygeneral unveiled his intention. Polls see-saw daily, varying from a record fourth consecutive term for the prime minister, to the humiliation of being reduced to opposition leader after a decade at the helm. Yet this is the perfect climate for Mr Netanyahu to thrive. In nearly 30 years in politics, Mr Netanyahu has weathered a sex-tape scandal, earlier allegations of corruption, a near-schism with the president of the US, and several inconclusive military campaigns. An enlivened opposition has grasped on to the details from the indictment, which include detailed accounts of the number of bottles of Dom Pérignon champagne and Partagas cigars Mr Netanyahu and his wife received from wealthy friends, and fa-

vours the prime minister did for them in exchange, including interrupting then-US secretary of state John Kerry to help with a visa. Mr Netanyahu’s legal defence against the intended charges, which include fraud and bribery and breach of trust, will not begin until after the elections, and he vehemently denies the charges. His next steps will be to deflect attention from the charges to a wellpractised campaign of fear, according to Aviv Bushinsky, who served as Mr Netanyahu’s media adviser in the 1990s, and then as chief of staff when he was the finance minister. In 2015, for instance, Mr Netanyahu swung a close election in his favour by warning that Israeli Arabs were “voting in droves,” boosting

turnout from his rightwing base. “He has always been the master of the campaign of fear, and it has worked for him,” said Mr Bushinsky. “Campaign-wise, he will dial up the fear — try and move the conversation from his legal issues to what happens to the rightwing if Gantz wins.” The problem this time around is that given Mr Gantz’s security credentials, and a lull in the IsraeliPalestinian peace process, it is difficult to drum up fear because “there is nothing really at stake at the moment, other than Netanyahu’s legal issues”. That raises the stakes substantially for the prime minister, and not only his political future, said Mr Bushinksy. “Netanyahu is all-in at the moment, and it is not just [about] politics. It is about whether he goes to jail or not.”

US discussing emergency economic aid for Venezuela Financial assistance would be dependent on Nicolás Maduro standing down SAM FLEMING, JAMES POLITI AND JOHN PAUL

he US is discussing emergency aid for Venezuela should the regime of Nicolás Maduro fall, including potential financial assistance alongside official loan programmes from the IMF and other institutions. With opposition leader Juan Guaidó touring South America, Trump administration officials have been quietly planning for the chaotic situation that would probably follow any change of regime — even as the US continues to implement tough oil sanctions designed to starve the Maduro government of foreign revenue. Among the key questions is what aid the Trump administration will itself offer — potentially requiring Congressional authorisation — to sustain a new Guaidó government in the initial months before global lenders such as the IMF were able to introduce their own full-blown programmes.People familiar with the situation say emergency aid worth billions of dollars might be needed from the international community in the early months to staunch a humanitarian crisis that has already led to 3.5m refugees fleeing the country. The US’s ability to muster global support for a rescue package both in the

short and long term would be crucial to the country’s fate in a democratic transition. “Venezuela is experiencing an extremely complex situation, one of the most complex we have ever seen,” said David Lipton, first deputy managing director of the IMF. “It’s a crisis of food and nutrition, of hyperinflation and a destabilised exchange rate, of debilitating human capital and physical productive capacity, and a very complicated debt situation.” The stabilisation effort would have to be very well financed and well executed, he added, because “you only get one good shot to stop a hyperinflation [situation] and there are some important choices to make . . . The international community needs to be ready to support economic stabilisation and recovery.” Mismanagement and corruption have caused Venezuela’s hyperinflationary economy to halve in size in five years in the hemisphere’s biggest ever economic collapse. Accelerating the decline are US energy sanctions that could halve oil exports this year to $14bn, economists estimate. Russia’s foreign minister Sergei Lavrov said over the weekend that Moscow was ready to begin bilateral talks with the US over Venezuela, while insisting that “only Venezuelans have the right to determine their future”.

Russia, which has loaned Venezuela more than $17bn since 2006, has refused to recognise Mr Guaidó and remains one of the main backers of Mr Maduro’s government, along with China and Turkey. Russia this week said it would ship more medical supplies and wheat to Caracas following a meeting in Moscow between Mr Lavrov and Venezuelan vice-president Delcy Rodriguez. Mr Lavrov also “condemned American threats” the Maduro regime, calling it “open interference into the affairs of a sovereign state and a flagrant violation of international law”. US deliberations about a rescue package for Venezuela have waxed and waned over the years as successive administrations have grappled with a post-Maduro future in the country. But discussions have intensified recently as senior Trump administration officials portray regime change in Venezuela as a top foreign policy priority, raising the political stakes for the US president. Over 50 countries, including the US, Canada, most of Europe and nearly all of Latin America, have recognised Mr Guaidó as the country’s legitimate interim president and pledged support. Aid commitments from the international community so far total around $200m — far from enough to make a material difference.

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FT Algeria’s president defies street protests to seek fifth term

Canadian cannabis fund returns 50% in two months Horizons Marijuana Life Sciences Index set to be country’s second most profitable ETF

Abdelaziz Bouteflika nominated despite ill health as demonstrations continue across country

OWEN WALKER

HEBA SALEH

rotesters turned out in their thousands across Algeria on Sunday to denounce plans by President Abdelaziz Bouteflika to seek a fifth term in office, as his campaign formally submitted the candidacy papers for April’s presidential election. University students took to the streets in Algiers, the capital, while protests were also reported in other cities. Algeria has been rocked by more than a week of unrest, with hundreds of thousands of people flooding streets in cities across the country on Friday amid a tight security presence. The president, who turned 82 on Saturday, is paralysed and has difficulty speaking. He has rarely been seen in public since he suffered a stroke in 2013. Many Algerians consider his candidacy an insult. The country’s opaque regime is anchored in the military. The rare demonstrations in the country come as Mr Bouteflika is in hospital in Switzerland for “routine medical checks”. Ali Benflis, a former prime minister who had earlier announced that he would be a candidate, said on Sunday that he was pulling out. Speaking to France 24 television station, he described Mr Bouteflika’s candidacy as “a farce, a myth and surreal”. He said there were “non-constitutional forces” which had usurped the powers of the ailing president. He added that it was likely that Mr Bouteflika was “not even aware that he is a candidate”. Algerians have also been angered by Ahmed Ouyahya, the prime minister, who seemed to mock rallies last week in which demonstrators handed flowers to policemen as a sign of their peacefulness. Mr Ouyahya suggested that the civil war in Syria had also “started with flowers”. Mr Bouteflika has been in office since 1999 and many in the country credit him with restoring peace after a decade of fierce conflict between radical Islamists and the military, which cost an estimated 200,000 lives. The huge protests, however, suggest that an increasing number of Algerians reject political quiescence as the price of stability. This new defiant spirit and the intransigence of the authorities, suggests that the country might be hurtling towards a crisis, some observers said. “I think if the president of the republic presents his nomination, it will radicalise the street, because he will be taking a radical position,” said Abdelaziz Rahabi, a former minister of information. “Secondly, I don’t see any signs of appeasement from officials. We don’t [even] know who is governing because the president is incapacitated . . . This worries me.” Djamila Bouhired, an iconic figure in the country and a heroine of the war of independence against France which ended in 1962, was among marchers in central Algiers last week. “I am happy to be here,” she said.

Monday 04 March 2019

South Sudan pledges to raise oil production to prewar levels Improved relations with Khartoum will be key to success, says minister TOM WILSON

outh Sudan’s oil minister has declared that improved relations with Sudan will help restore crude production to the levels it reached when it gained independence, lifting pressure on the two neighbours’ ailing economies. The tone of co-operation marks a stark turnround for two states that fought a decades-long war, signalling a potential boost for big Asian oil companies that invested heavily in South Sudan only to see production disrupted by instability. Ezekiel Lol Gatkuoth, South Sudan’s minister of petroleum, told the Financial Times he and his counterparts in Khartoum, the Sudanese capital, have been instructed by their respective leaders to work as closely as possible to resume and increase production. “Relations between South Sudan and Sudan are at their best,” Mr Gatkuoth said in an interview in Juba, the capital of South Sudan. “We are being strictly instructed by the two leaders,” he said. South Sudan fought a 20-year war for independence with Sudan, seceding in 2011, but the fate of the two economies remains closely tied. With its independence, South Sudan took about three-quarters of Sudan’s proven oil reserves — some 350,000 barrels a day — but remains dependent on two 1,000-mile Sudanese pipelines to export the crude via the Red Sea. In 2012, relations between the

neighbours deteriorated to the point that South Sudan shut production following a failure to agree fees for the use of the pipeline. South Sudan agreed to pay Sudan $24.10 per barrel — approximately 39 per cent of the current price of its crude — in transit fees, pipeline fees and compensation under a transitional financial arrangement. Production restarted in 2013 but was disrupted soon after when South Sudan descended into its own civil conflict, which halved output at some oilfields and ceased production at others. Reduced oil revenues have had a dramatic effect on both sides of the border, but particularly in Sudan where the value of the Sudanese pound fell by as much as 85 per cent last year, ultimately sparking the anti-government protests that are threatening President Omar al-Bashir’s 30-year grip on power. The decision to rebuild relations and let oil flow, analysts say, is a direct response to that threat and the primary reason that Mr Bashir emerged as a surprise mediator to bring South Sudan’s warring sides to a peace deal last year. “Mr Bashir begged the region to let him mediate as he desperately needed South Sudan’s oil payments to come back on line,” said James Okuk, a researcher with the Center for Strategic and Policy Studies in Juba. Following the peace negotiations, Mr Gatkuoth, the country’s oil minister, said he and his Suda-

nese counterpart, Azhari Abdalla, were instructed to work on the resumption of production in parallel. Improved cross-border relations have already seen output begin to rise and will be a relief for China National Petroleum Company, Malaysia’s Petronas and India’s Oil and Natural Gas Corporation that operate South Sudan’s oil-producing fields through two joint ventures. The companies initially hoped to double output to 260,000 barrels a day by the end of 2018, but operational delays have meant that total daily output remains at 170,000 barrels, Mr Gatkuoth said. A plan to restart production at the Mala oilfield in May should add a further 20,000 barrels in the hope of restoring total daily production to 350,000 barrels by the end of the year, he said. Progress of that scale would significantly exceed industry estimates. Research firm Wood Mackenzie forecasts that production is unlikely to exceed 170,000 barrels before 2020 without significant investment, which operators may be wary of making before long-term political stability is assured. “We remain cautiously optimistic about the outlook for South Sudan, however, output will take time to ramp up,” said Mansur Mohammed, research manager for the upstream oil industry in sub Saharan Africa. “Security will be the main concern for operators in South Sudan. The peace deal needs to hold.”

Federal Reserve’s fundamental rethink about inflation Can monetary regime prevent US from morphing into eurozone or Japan in next recession? GAVYN DAVIES

he US Federal Reserve has announced that it will conduct a root and branch review of its monetary policy framework in the next 18 months. The results could be of first order importance for financial markets, especially the bond market. Richard Clarida, the Fed’s vicechairman said last month that the motivation was not any great dissatisfaction with the present policy. Both of the twin objectives — maximum employment and stable prices — were close to target. Instead, the Federal Open Market Committee seems concerned that inflation is failing to respond to recovering economic activity, implying that it might be difficult to cope with even lower inflation when the economy

next enters a recession. The fact that US inflation has not responded to sharply falling unemployment levels, sometimes known as the disappearance of the Phillips Curve, is often described as a puzzle. However, that word is misleading, since a great deal of recent research has established the main reasons for the loosening of this relationship. Structural factors such as the effects of the internet and Chinese imports on goods prices have been important. But a key conclusion is that the growing credibility of the Fed’s 2 per cent inflation target has anchored inflation expectations, so that any temporary fluctuations in inflation and economic activity are ignored. In the decades before 1990, inflation shocks were often “accommodated” by monetary policy, altering expecta-

tions, and causing substantial spikes in inflation. This change in the inflation mechanism is a good thing, but it means that the FOMC cannot rely on easily controlling inflation by adjusting economic activity and unemployment, via interest rate policy. In an extreme case where inflation does not respond at all to unemployment, inflation becomes indeterminate, spelling the end of monetary policy as we know it. The Fed does not believe that the US has reached this extreme state. The most influential members of the FOMC believe the Phillips Curve is “alive and well”. But they think that the flattening in the curve emphasises the importance of keeping inflation expectations anchored to the 2 per cent target, whether inflation shocks are upwards or downwards.

he world’s first cannabis exchange traded fund is set to become the second most profitable ETF in Canada after returning more than 50 per cent so far this year. The Horizons Marijuana Life Sciences Index fund has grown to $1.3bn in assets despite some outflows this year, making it the 18th largest Canadian ETF, according to data provider ETFGI. Its high management charge and ability to recoup large fees from lending stock mean it is fast catching the country’s most profitable ETF, which is more than five times its size. The growth of the Horizons ETF highlights the popularity of thematic ETFs, particularly the handful that focus on the nascent legal marijuana industry in North America. “There is high demand for these products without much supply, which allows the managers to charge a premium and be almost immune to the fee pressure that is widespread across the industry,” said Todd Rosenbluth, director of ETF and mutual fund research at CFRA, a research company. The Horizons ETF charges 75 basis points, or 75 cents for every $100 invested, which is several times the typical charge on a more general product. By contrast, the $7bn iShares S&P/TSX 60 Index ETF, Canada’s biggest, charges 20bp. Mr Rosenbluth said he knew of just one cannabis ETF in the US, the $1.1bn ETFMG Alternative Harvest ETF, known by its ticker as MJ. He said several managers had applied to the Securities and Exchange Commission, the US regulator, to create similar products. He said the hardest part of launching such funds was finding a custodian as although marijuana production is legal in several states, it is not legal at federal level. Many banks were hesitant to be associated with such products. Canada last year became the second country in the world, after Uruguay, to legalise recreational cannabis use. Ten US states and Washington DC have legalised the drug for recreational use and 32 for medical use. In December, the US passed a bill that legalised hemp and allowed growers to qualify for crop insurance and research grants. Cannabis ETFs, which track indices of companies with significant activity in the marijuana industry, have had a rollercoaster ride. For the Horizons fund, a $10,000 investment made at its launch in May 2017 was worth $25,750 at the end of last September but dropped to $15,494 at the end of December. The fund has since returned 52 per cent. “When we launched the fund we had no expectation of how big it would get,” said Steve Hawkins, chief executive of Horizons ETFs. “I would probably have priced it higher if I had known how big it would be.” He said the ETF’s investee companies were in demand from short sellers and Horizons generated up to 10 per cent of the ETF’s yield by stock lending. He said this revenue was distributed to investors.

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Portugal PM warns on EU protectionism over China investment screening António Costa says security procedures must not be misused as pretext for discrimination PETER WISE AND BEN HALL

ortugal’s prime minister has warned European partners against misusing new security procedures for screening Chinese investments, saying it could lead to the continent becoming more protectionist. The European Parliament last month approved new regulations for screening non-EU investment, amid concerns that China and others are seeking to buy up sensitive technology and infrastructure, or to use investments and contracts to conduct industrial and military espionage. Germany and France have urged other EU countries to follow their lead in adopting “tough national legislation” on investment screening. But António Costa, whose country is one of Europe’s biggest recipients per capita of Chinese investment, said in an interview with the Financial Times that EU leaders should not respond to US President Donald Trump by implementing their own protectionist polices. “It is one thing to use screening to protect strategic sectors, it is another to use it to open the door to protectionism,” said Mr Costa, a centre-left Socialist. Mr Costa agreed it was important to scrutinise all third-country investments in sectors such as security and defence, but not to use such controls as a pretext for discriminating against non-EU investment. Chinese groups have pumped billions of euros into Portugal since the financial crisis. China Three Gorges owns 23 per cent of Energias de Portugal, the country’s main power utility, and has launched a €9bn bid for the remaining capital. Other Chinese companies control Fidelidade, the largest insurer, Luz Saude, the largest private hospital group, as well as a quarter of Redes Energéticas Nacionais, the national grid operator, and 27 per cent of Millennium bcp, Portugal’s largest listed bank. “Our experience with Chinese investment has been very positive,” Mr Costa said. “The Chinese have shown complete respect for our legal framework and the rules of the market.”

He said Portugal shared the concerns of other western countries over potential risks arising from the involvement of Huawei, the Chinese telecoms group, in future 5G networks. Portuguese telecoms operator Meo signed an agreement in December with Huawei on 5G development. “We are listening, of course. But it is very important not to stop the modernisation of Europe’s digital infrastructure,” Mr Costa said. The EU needed to invest more in education and research and increase cooperation between member states, “rather than close our borders to innovation coming from abroad,” he added. Portugal is among the group of southern EU members that are more open to Chinese companies because Beijing was prepared to buy assets during the eurozone debt crisis when foreign investors were few and far between. Mr Costa, who leads a minority government supported by the communist and radical left, also warned that German and French proposals for an industrial policy designed to create “European champions” risked distorting competition within the EU. Policy changes that only increased the competitiveness of powerful companies from the strongest economies would in the long term prove “a great mistake for Europe”, he said. “Europe needs an industrial policy, but not one aimed at creating champions from the most developed countries,” Mr Costa said. To increase competitiveness in the global economy, Europe instead needed “an industrial policy tailor-made for each country”. Rather than creating industrial giants, EU policy, inspired by the example of Germany, should encourage the building of “world champions” among small and medium-sized companies serving niche markets, he said. “We need to balance industrial policy with the defence of competition rules in the internal market.” His comments follow the publication by the French and German governments of a manifesto for a new European industrial policy, aimed in part at dealing with Chinese competition and making it easier for governments to support mergers to form EU “champions”.

Whistleblowing complaints to UK regulator rise 24% FCA figures reveal how companies treat their customers is a major concern

CAROLINE BINHAM

he number of whistleblowing complaints made to the UK’s financial regulator has soared, with concerns about how companies treat their customers making up a sizeable proportion, according to data. There has been a 24 per cent spike in whistleblowing to the Financial Conduct Authority (FCA), with a total of 1,755 complaints received in 2018 compared with 1,420 in 2017. Of the complaints, 246 related to treating customers fairly, up from 74 the preceding year — a leap of 232 per cent. Complaints about market manipulation and data security both doubled over the year, according to figures received from the FCA through a freedom of information request. The increase comes after whistleblowing rules were tightened under both the market-abuse regime and rules designed to hold senior managers to account for failings under

their watch, known as the Senior Managers and Certification Regime, or SMCR. These rules have also broadened the definition of a whistleblower beyond an employee of a particular institution. The regime applies to 8,000 businesses but is meant to be rolled out to the entire financial sector — another 55,000 companies — by the end of the year, which could result in a further increase in complaints. “The planned extension of the SMCR was muted by regulators months prior to confirmation of the implementation date. As a result of this planned regulation, the Libor scandal, and a number of highprofile regulatory sanctions, many have already started to embrace higher standards of accountability and responsibility ahead of the final extension of the regime,” said Andrew Jacobs at BDO, the firm that made the freedom of information request.

Portugal’s prime minister António Costa said EU states must not ‘close our borders to innovation coming from abroad’ © Bloomberg

Rolls-Royce dials back on project to build new Turkish fighter jet Erdogan-backed scheme hit issues over intellectual property LAURA PITEL AND SYLVIA PFEIFER

olls-Royce has scaled back efforts to join a Turkish programme to build a new fighter jet, striking a blow to UK ambitions to put the British aerospace industry at the heart of the project. The aero-engine group has been working with the Turkish industrial group Kale to bid for the contract to develop the engine on the TF-X jet, an ambitious scheme to create Turkey’s first indigenous combat aircraft. Senior UK officials, including the prime minister, Theresa May, had lobbied hard for Rolls-Royce to win the deal. Talks ran into problems last year due to a dispute over the sharing of intellectual property and the involvement of a Qatari-Turkish company. After failing to find a compromise, Rolls-Royce has all but abandoned its efforts to win the bid for the fifth generation fighter aircraft, according to several people familiar with the discussions. To restart talks, Turkey would have to come back “at a very senior level”, one person said. Warren East, chief executive of Rolls-Royce, said the company had “substantially ramped down” on the TF-X project and “been re-assigning people” to other schemes.

The company had “satisfied a number of conditions” to enable Turkey to create an engine that was indigenously produced. “We’ve given what we believe is our best offer in terms of the conditions around that,” he told the Financial Times. “It is up to [the Turkish government] if they don’t want to work with Rolls-Royce and want to find another solution. We are not prepared to do anything further on that,” he added, but stressed that defence-related decisions often “do take a long time”. Turkey continued to be an important growth market for the group, he added, which remained in talks on a number of power and propulsion opportunities. The Turkish government’s defence procurement directorate did not respond to a request for comment. Recep Tayyip Erdogan, Turkey’s president, is seeking to develop a national defence industry to supply the second-largest military in Nato, with the aim of boosting the economy and reducing the country’s reliance on western nations for defence equipment. The TF-X is the crown jewel in the plan. Mr Erdogan wants a prototype ready in time for lavish celebrations

planned for the centenary of the Turkish republic in 2023. Rolls-Royce has been in talks with Ankara for several years about the programme, with a plan to share expertise and intellectual property with its Turkish partners. However, the negotiations ran into difficulties last year after the government said that it wanted to bring the Turkish defence manufacturer BMC into the project. The company’s major shareholders include the Qatari ministry of defence and Ethem Sancak, a businessman known for his links to Mr Erdogan. Rolls-Royce has repeatedly made clear that it is unwilling to share its intellectual property with BMC. But efforts to find a mutually acceptable solution to the problem have failed. Tensions have been exacerbated by Turkish media reports that Turkey was courting other groups, including General Electric of the US. Osman Dur, chief executive of BMC Power, the BMC subsidiary that has been working on the TF-X programme, told the FT last year that “all the IP and similar intellectual property rights gained within the scope of this project will remain in Turkey,” and stressed that they would belong to the Turkish government.

Christian investors to target Exxon, Amazon and Broadcom on tax Groups controlling £21bn to use votes against US companies that lack transparency JENNIFER THOMPSON

coalition of Christian investors is pursuing companies including ExxonMobil, Amazon and Broadcom over their corporate tax affairs in an attempt to improve disclosure. The 67 members of the Church Investors Group (CIG) control assets of £21bn and include the pension funds for the Church of England and the Methodist Church. The group said it would vote against the chairs of Russell 50 and FTSE 350 companies that score zero in an assessment of tax transparency. The CIG is being guided by an analysis from FTSE Russell in which Exxon, Amazon and Broadcom scored zero. The study examines areas such as the alignment of tax payments with revenue, whether tax policy is overseen by the board as well as disclosures on corporate tax paid globally. This is the first time the CIG has singled out corporate tax transpar-

ency as an area where it will vote. “We’re very early to this issue [and] we want to send a signal to other investors,” said Edward Mason, head of responsible investment at the Church Commissioners. “We’re seeing increasingly good practice in the UK but a lot of US companies are not displaying enough information about their tax.” The tax arrangements of large companies have come under scrutiny following anger over the low amounts paid by international groups such as Starbucks and Amazon. Justin Welby, the Archbishop of Canterbury, used a speech last year to call on businesses to pay their share of tax to the communities where they earn money. “Not paying taxes speaks of the absence of commitment to our shared humanity, to solidarity and justice,” he said. “When vast companies like Amazon, and other online traders, the new industries, can get away with paying almost nothing in tax, there is something wrong with the tax system.”

Amazon and ExxonMobil declined to comment; Broadcom did not respond to requests for comment. The CIG also plans to increase its efforts to push for greater gender diversity at investee companies. If a group does not have at least one female director on the board, the CIG will vote against the chair of the nominations committee of companies on major indices in Europe, the US, Australia and New Zealand. It had previously limited gender diversity voting to UK companies. Last year it said it would vote against the chair of the nomination committee at listed UK companies where women accounted for less than a third of board members and against all nomination directors if less than a quarter of board directors were women. It subsequently voted against director elections at more than 136 companies. “We will take a really tough line on FTSE 100 companies that don’t have 25 per cent gender diversity,” Mr Mason said.

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Monday 04 March 2019

ANALYSIS New York and Boston lose fund industry jobs to cheaper cities Cost of living and quality of life count against traditional US centres OWEN WALKER

“

Glory Glory Man United? The paradox of profits without trophies Can one of the world’s most profitable football clubs keep growing if it no longer wins the biggest competitions? MURAD AHMED

ou can see we haven’t played games at this level for a while,” Ole Gunnar Solskjaer, interim manager of Manchester United, admitted last month after the team was beaten by Paris Saint-Germain in the Champions League, Europe’s most prestigious club football competition. Mr Solskjaer was an emergency hire after José Mourinho was sacked by the Premier League club in December — the latest coach to be dismissed during a five-year period of decline for a team that once dominated English football. Although Mr Solskjaer has inspired a remarkable recent run, the loss to PSG was a “reality check” on the team’s ambitions to challenge the continent’s best. The two clubs will meet again on Wednesday in the second leg of their round of 16 tie, and Mr Solskjaer insists a famous comeback is still possible. “Mountains are there to be climbed,” he said. The lacklustre performance against PSG in the first leg was one of the most striking examples of the business and sporting conundrum that Manchester United has become. In financial terms, at least, the club is already at the game’s summit. It became one of the world’s richest football clubs by constructing a formidable business off the back of on-field victories of Alex Ferguson, the former manager who won 38 major trophies during an almost 27 year reign. That success has not been easy to replicate. Since Sir Alex’s retirement in 2013, the club has not won the Premier League nor the Champions League — the two biggest, and most lucrative, competitions it plays in. Mr Mourinho was the third manager to try and when he was fired, the team had been languishing in sixth place in the league. Yet, United’s income has continued to rise regardless of the performance on the pitch. Annual revenues grew from £363.2m in 2013 to £590m last year, behind only Spain’s Real Madrid and FC Barcelona. Current executives, former staffers and others with close knowledge of club affairs describe a paradox — a sports business that has become untethered from on-field outcomes. Despite these impressive financial results, however, it is becoming harder to avoid the awkward question — can United continue to be one of the most profitable and respected clubs in the world if the team does not challenge for major trophies? “We need to win,” says Cliff Baty, chief financial officer. “And we don’t

need to win just to be successful [commercially], we just need to win because that’s ultimately our raison d’être.” This dilemma has left the club in a state of flux. Executives are working to strengthen commercial operations, exploiting technology to appeal to younger fans and overhauling sponsorship strategies. This work is intended to earn more money, funding even bigger spending on players. Crucial personnel hires are to be made, including appointing a permanent manager. “That culture of wanting to win is just as true off the pitch as it is on it,” says Richard Arnold, United’s group managing director, and one of the key architects of its business. “As Sir Alex once said: ‘We never get beaten, we sometimes run out of time.’ That is the culture that runs throughout the club.” However, as it seeks to mount a comeback the club faces stiff competition. Real Madrid, Barcelona and Bayern Munich enjoy broadly similar revenues. New footballing superpowers have emerged, such as Qatar-owned PSG and Abu Dhabicontrolled Manchester City. Liverpool and Tottenham Hotspur have surpassed United domestically through savvier choices in coaches and players. “I think they are one of a handful of teams in world football that have such a strong brand and glorious appeal they will be able to withstand dips in form in from time to time,” says Nigel Currie, founder of NC Partnership, a sports consultancy. “But, obviously, not forever.” United’s business took off following the inception of the Premier League in 1992, when the sale of English club matches to overseas broadcasters was stepped up. The club gathered legions of fans globally, becoming England’s pre-eminent team and a powerful brand. In a call with financial analysts last year, Ed Woodward, installed in 2013 as executive vice-chairman by the club’s owners the Glazer family, said: “Playing performance doesn’t really have a meaningful impact on what we can do on the commercial side of the business.” Mr Woodward meant that, regardless of fluctuations in the team’s form, the business has become remarkably predictable. Its main revenue sources are known well in advance. United projects record annual revenues between £615m and £630m this season, almost doubling in size from a decade ago. Around a third of revenues come from broadcasting, mainly from its share of the £8bn worth of multiyear television deals signed by the English

Premier League. Upcoming increases from the league’s overseas broadcast contracts are expected to more than offset a decline in the value of the league’s UK live rights over the coming years. The club receives a further 18 per cent of its revenues from matchdays. Old Trafford, its 75,000 seater stadium, one of the largest in Europe, is sold out for almost all games. The club’s biggest strength lies in commercial deals, such as sponsorship contracts, which represent around half of revenues. Key partnerships have years left to run. In 2015, United signed a decade-long kit manufacturing deal with German sportswear maker Adidas worth £750m. Its main shirt sponsor, US carmaker Chevrolet Motor, is paying $559m over a seven-year contract that runs out in 2022. The deal was predicated on Manchester United’s perceived reach in China, where the club claims to have well over 100m followers. Quietly, United is changing its commercial approach, which could lead to fewer but bigger sponsorship deals. The group has around 100 people on its sponsorship team, far more than any other club. Many of them are analysts who gather industry data for salespeople to help clinch a deal. This dedication to research allowed United to seek marketing deals far and wide, gaining dozens of sponsors across the globe. These include Chi, its “official sports drink partner” in Nigeria, and Manda Fermentation, an “official nutritional supplements partner” in Japan. The model has been copied by rival clubs. United has allowed some of these deals to lapse, focusing on a smaller group of “global” partners happy to pay bigger sums. They include US manufacturing group Kohler which has become United’s first shirtsleeve sponsor. Other recent moves are designed to target millennials. Last August, the club launched an official app, a mobile service that provides live statistics during matches, interviews with players and other content. The plan is to build a direct relationship with supporters online, each a potential customer, gathering data on their preferences. The club claims it has become the most downloaded sports app in 70 countries. “Teams who are now developing their fan base for the first time are doing it from scratch based on current performance,” says Phil Lynch, Manchester United’s head of media who leads its digital strategy. “They don’t have an emotional resonance the way you do if you already have an established fan base and your dad was a fan.”

ashville and Austin may be best known for country music, Stetson hats and flamboyant cowboy boots but they are in a select set of US cities fast gaining a reputation as fund management hubs. The move by AllianceBernstein, the $516bn investment business, to relocate its headquarters to Nashville, Tennessee, is the most highprofile example of US fund managers seeking an alternative location. Traditional investment centres such as New York, Boston and San Francisco are losing ground to smaller cities, including Denver, Atlanta and Charlotte. For the most part, cutting costs is the reason to set up in a new area, but fund managers also say it can be easier to recruit staff, especially younger people who want a better work-life balance and lower living costs. The

Of those, just 60 have relocated from New York. The company expects more to move but it has also announced redundancies, to include workers who have opted against the 885-mile switch. Ms Burke predicts more people will relocate once they see what Nashville can offer. The company expects the move to cost up to $165m between 2018 and 2024 but this will be offset by up to $200m savings. It then expects to cut costs by up to $75m a year, partly due to reduced rent. Another area for savings is lower pay: in Nashville there is much less competition for finance workers. Ms Burke declined to say whether workers’ pay was being cut as part of the move, but says staff will benefit from Tennessee’s tax regime — it has a zero rate of income tax for individuals compared with close to 9 per cent for the highest earners in New York. Some senior executives have reportedly been offered bo-

Whistleblower Stéphanie Gibaud , a former employee of banking group UBS answers journalists’ questions prior to her trial for defamation, on February 2, 2017 in Paris. © AFP

cheaper cities also offer greater flexibility to invest in technology. “There is a big focus among asset managers on reducing costs and thinking about which areas to invest in — for most companies, that is tech,” says Amanda Walters, a senior manager at Casey Quirk, the Deloitte-owned fund management consultancy. She says more managers are likely to relocate staff to second-tier cities. “It’s generating a lot of conversation in the industry.” In Austin, the number of finance industry jobs rose 24 per cent in 2013-18 while Boston’s growth was just 2 per cent in the same period, according to Bureau of Labor statistics analysed by Ignites, a Financial Times news service. AllianceBernstein, the investment group that is majority-owned by French insurer Axa, began to look for a new location for its head office two years ago as one of its New York properties neared the end of its lease. “We opened up the search to other cities and looked at a range of factors, including quality of life, cost of living, housing stock, educational [options] and commuting times,” says Kate Burke, head of human capital and chief talent officer at AllianceBernstein. “We also looked at softer factors, such as whether they offered an inclusive environment and if they were welcoming.” The group plans to have 1,050 staff in Nashville by 2020, nearly a third of its total workforce. So far 200 staff are in Tennessee, including the chief operating officer, chief finance officer and general counsel.

nuses of up to $14m to move. Cities and statesalso offer companies tax incentives to relocate. Tennessee tempted AllianceBernstein with $17.5m, or $17,500 per worker. Up to 850 AllianceBernstein investment professionals will stay in New York. Ms Burke says the company did not want to disrupt their work but said the change would benefit other parts of the business. Austin, Texas, has a reputation as a centre for counterculture and independent thinking, captured by the popular slogan “keep Austin weird” but it also has a small and growing investment industry. At its heart is Dimensional Fund Advisors, one of the fastest-growing US managers. Dimensional has been in the city since 2006, having started in the New York apartment of chairman David Booth in 1981 and later moving to Santa Monica, California. The company takes an academic approach to investing and has its roots in Chicago’s Booth School of Business, since named after Mr Booth. He met fellow Dimensional founder Rex Sinquefield there and several Chicago academics and Nobel laureates were early board members. Dave Butler, co-chief executive of Dimensional, says Austin was chosen at a time when the company needed space. He says the city appealed not only as a destination for workers but also for visiting clients. “Austin had an energy and optimism about it — a general excitement,” he says.

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BUSINESS DAY

FIXED INCOME

INVESTING

Cover Story

COMMODITES

How commercial papers provide a lifeline for corporates seeking cash

Oil & Gas industry analysis shows stocks with best buy rating

Sliding global wheat prices means wider profit margin for flour millers

Nigerian lenders are now cautious to provide credit to private sector as risk of default elevates given the tepid posture of Africa’s biggest

Last week, Nigeria’s stock market extended its weekly bearish trend as the benchmark index of the Nigerian Stock Exchange (NSE) dipped 2.12 percent amid renewed political uncertainty.

These three companies are on course to deliver lower profits for FY2018, here’s why

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The year 2018 was not the best of years for the stock market but the economy grew at its fastest pace since the recession in 2016 after ...

Pages 70-71

Industrial wheat consumers, especially local flour millers can already sight a wider profit margin from the growing decline in the prices of wheat, as they begin hunting record producing regions for the lowest prices.

Page 72

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Fixed Income How commercial papers provide a lifeline for corporates seeking cash ISRAEL ODUBOLA

igerian lenders are now cautious to provide credit to private sector as risk of default elevates given the tepid posture of Africa’s biggest economy. Figures from the National Bureau of Statistics revealed that total bank credit to private sector slumped by 2.54 percent to N61.67 trillion in 2018 compared with N63.28 trillion in 2017. Also, gross loans contracted by 2.28 percent to N62.63 trillion in 2018 from N64.09 trillion a year earlier. As the primary equity markets remain inactive for fund raising combined with banks’ reluctance to give credit, corporates rush to commercial papers market to raise money to finance their short-term projects. This situation of credit crunch prompts corporates to embrace commercial papers as an alternative source of funding. Commercial papers (CP) ended last year in green territory. Data from FMDQ OTC Securities revealed that sum of N505.30 billion were raised by various corporates through CPs in 2018, indicating an elevation of 232 percent over N152.35 billion in 2017. The total number of CPs quotation spiked 81.82 percent to 60 in 2018 from 33 in 2017. There seems to be hope for investors wishing to diversify their portfolio towards CP on the back of the continued efforts of FMDQ to revive the CPs market. The FMDQ-led CP market reforms based on CBN’s guide-

lines has largely revived the market in recent times. What commercial paper means A commercial paper is an unsecured short-term debt instrument issued by corporates with good credit ratings to raise funds to meet near-term obligations. CP is regarded as unsecured because it is not backed by any form of collateral. CP shares similar attributes with Treasury bills. Both are discounted instruments. This implies that interest is paid upfront and they are tax-free. The main difference is that while the former is issued by corporates the latter is issued by the Apex bank on behalf on the Federal Government. This connotes that CPs are riskier than treasury bills, and most times attract higher returns compared to governmentissued securities. Maturities on CP rarely range longer than 270 days.

Subscribing to commercial papers The issuing company dictates the minimum subscription, which is usually N5 million, or may be lower. CPs are issued at a discount to the face value. This means than an investors will pay less than the amount of the face value and will earn full value at maturity. The interest on CPs is the difference between the face value and the discounted amount the investor paid at the time of investment. Investment banks do introduce available CPs in the market to their clients when offer is opened for subscription. Alternatively, individuals wishing to invest in commercial paper enquire from their bank. It is as simple as asking their account officer. Information on the available CPs, interest rate, tenor and minimum subscription will be provided. The offer for subscription of

CPs opens for a short period of time – in most cases, one week. Yields Most times, yields on CPs are usually higher than those on treasury bills. However, the risks inherent in investing in former are higher the latter. CPs is issued within the range of rates obtainable in the money market. This means that borrowers obtain funds at a rate cheaper than borrowing from the bank, and lenders are compensated with attractive yields for taking the risk to give their cash out. Rating Commercial papers are issued with credit rating. This means that investors can evaluate the credit risk of the issuer and also predict their ability to repay. Commercial papers are issued by corporates with good ratings. Risk of Default It is most unlikely for corporates seeking funds through CPs

to default. The implication of a risk default means that the issuing company would have its creditworthiness damaged. Generally, CPs are relatively low-risk investment because of their short maturities and because they are issued by corporates with sound creditworthiness. Regulations The Securities and Exchange Commission (SEC) regulates the CP market in Nigeria and protects investors’ interests to ensure an organized market. The quotation of commercial papers on FMDQ platform involves credit rating. This is to protect investors and create confidence in the market. CPs are listed on FMDQ, where they are bought and sold. It is noteworthy to state that CPs investments are relatively liquid as they can be traded on the secondary market if investors want to sell them prior before maturity.

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

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Investing Oil & Gas industry analysis shows stocks with best buy rating DAVID IBIDAPO & OLUWASEGUN OLAKOYENIKAN

ast week, Nigeria’s stock market extended its weekly bearish trend as the benchmark index of the Nigerian Stock Exchange (NSE) dipped 2.12 percent amid renewed political uncertainty. This implies investors are realigning their portfolios by rotating into fixed income as yields of government bonds fell to their lowest levels in 5 7 months with treasury bills at the primary market auction conducted during the week getting more than ten times oversubscription. This is even as the nation’s banking stocks, where foreign investors are most attracted to as a result of their transparency and liquidity, fell the most since 2016. The oil & gas sector was not left out in the flood of losses as it also got its share last week to halt its four-week bull run. In spite of these, checks by BusinessDay indicate that opportunities still abound in the sector, particularly certain equities with potentials to deliver returns for growth and value investors as well as those seeking to take advantage of dividend payment in the short term. Our analysis revealed that amongst companies in the oil & gas industry, 11 Plc, formally known as Mobil, stood as the stock pick for the week. Following a review of its 2018 nine-month financial statements, Nigeria’s second-largest downstream oil & gas company showed strong fundamentals. Profit within the period grew 71.35 percent, making it the company with the third-highest growth in post-tax profit. Meanwhile, the company has been identified as a growth stock with a price-to-book ratio of 2.0x, rising above the industrial average of 1.22x. This signals a

good pick for growth investors. In agreement with the above stance, analysts at Meristem Securities Limited, a Lagos-based investment house, placed a “BUY” rating on the stock owing that the company has the best cost-to-sales ratio in the industry with 86 percent and return on equity after the first nine months of 2018 at 34.48 percent compared to an industry average of 17.60 percent. 11 Plc has a 21.8 percent upside potential, according to the analysts. On the other hand, Seplat Petroleum Development Company Plc, a leading Nigerian indigenous oil and gas company, has been identified as an undervalued stock with strong fundamentals. The conference call and webcast to present its full-year 2018 financial results scheduled to hold on Wednesday, March 6, came at the right for investors

seeking capital appreciation and ready to take advantage of dividend payment. Seplat shares have remained unchanged at N619 since Friday, Feb. 15 after it announced a closed period in the run up to the announcement of its 2018 full year results, bringing the stock to 19.04 percent close to

its 52-week low of N520. But Meristem analysts have placed its 2019 target price at N700.35 indicating over 13 percent from its current price. As at the close of trading, Friday, Seplat’s price-to-earnings ratio stood at 2.71x, this is lower when compared with its peer in the upstream energy sector,

‘

Our analysis revealed that amongst companies in the oil & gas industry, 11 Plc, formally known as Mobil, stood as the stock pick for the week

’

Oando Plc, at 4.79x. Besides, the company’s stock is selling for less than the actual worth of its assets as investors are willing to pay only 64 kobo for every naira of its book value. The industry average is about 1.22x, making Seplat a value stock. In the first nine months in 2018, Seplat’s gross profit was up 145 percent to N93.51 billion from N38.08 billion in the same period in 2017 The oil company pulled itself out from a pool of losses as it made N27.97 billion as profit in the review period compared with a loss of N1.62 billion recorded in the corresponding period of 2017. This was triggered by over 396 percent surge in its operating profit to N80.76 billion, while finance income rose to N2.05 billion in the nine months to September 2018 from $483 million in the previous year.

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Cover Story

These three companies are on course to deliver lower profits for FY2018, here’s why IFEANYI JOHN

he year 2018 was not the best of years for the stock market but the economy grew at its fastest pace since the recession in 2016 after real gross domestic product in 2018 expanded at 1.9 percent. Companies like Zenith Bank and Dangote who have released their 2018 results have seen strong profit growth in the past year, however, BusinessDay has identified 3 companies who despite having a better business performance in 2018 than in 2017 are on course to still deliver lower profits when their full year results are released, and you will never guess why. In 2017, companies like Seplat, Forte Oil and Presco had Uncle Sam to thank for their big profit after tax (PAT) figures. These three companies received combined tax credits from the government totaling around N83.7 billion, which helped boost their bottom-line figures significantly. The highest tax credit was enjoyed by Seplat who received about N67.6 billion, which helped the company report full year PAT of N81.1 billion in 2017 after the oil exploration company had earned only N13.4 billion in profit before tax (PBT). Based on projections using the 2018 Q3 report, analysts now expect that excluding any tax credit, the full year profit of the oil company will be around N36 billion, representing a profit decline of around 56 percent. Don’t be fooled by the bottom-line numbers though, Seplat had one of its best years in 2018. Although net profit could decline, the company will deliver revenue growth of around 67 percent while PBT will jump around 444 percent, capping a fantastic year for the company after the oil price rebound has helped boost revenue and al-

BUSINESS DAY

Portfolio inflows to emerging markets dip 49 percent in February ISRAEL ODUBOLA

oreign funds flows to Emerging markets (EMs) plunged 49.1 percent to $26 billion in February 2019 compared with $51.1 million attracted in January, figures from Institute of International Finance (IIF) showed. Equity inflows to EMs in the second month stood at $14 billion, indicating 57.6 percent contraction over $33 billion recorded in the previous month. Similarly debt inflows slumped by 33.3 percent to $12 billion as against $18 billion received a month prior. Debt issued by sovereigns and corporates from developing economies attracted $11.8 billion, accounting for 45.7 percent of total inflows in February, with a large chunk going to Latin America and Asia.

Investors’ sentiment in EMs remains positive despite the decline in foreign inflows, said the IIF, which tracks investor flows across capital markets. IIF, the global association of financial institutions, cited pause in hawkish policy stance

of Federal Reserve, possible resolution of US-China trade spat as well as reduced concern about global growth as the factors driving investors’ positive sentiments in EMs. After a horrid 2018, the MSCI Emerging Markets equity index gained 9 percent since the start

of the year. Of the $14 million flows in equities, world second largest economy, China, attracted $10.6 billion, representing 75.7 percent share. “We expect flows to maintain a positive trend in coming months. While China has been driving much of the recent pickup, we expect the pattern to broaden”, IIF posited. Meanwhile, MSCI, leading provider of indexes announced Thursday, February 28, that it would quadruple the weighting of Chinese mainland shares in its global benchmarks in November. The global index provider also announced that it would add Chinese mid-cap stocks to its emerging market benchmark, thereby increasing the number of Chinese constituents. In a statement on its website, MSCI promised to increase

the inclusion factor of Chinese large-cap stocks to 20 percent from the present 5 percent in two steps – May and August, 2019. The decision was made after extensive global consultations with a larger number of international institutional investors including asset owners, managers, brokers/dealers and other market participants worldwide, MSCI posited. MSCI said it will add Chinese A mid-cap shares including ChiNext shares to its benchmarks in November. Upon completion, there will be 253 large and 168 mid-cap Yuan-denominated stocks, including 27 ChiNext shares, on a pro-forma basis in the MSCI EMs index. This is expected to elevate the weighting of Chinese stocks to 3.3 percent. Analysts and investors believe that this move would drive more foreign inflows to China.

Commodities

Investors miss opportunities in cocoa value chain OWOEYE OLUFIKAYO

lowed the company pay down some of its debt. Analysts told BusinessDay that they do not expect Seplat to allow its PAT to fall that low considering they could still call on more tax credits in 2018. The company currently holds around N41.83 billion in deferred tax asset and has already paid about N9.6 billion of tax liabilities in advance as at the end of Q3 2018. Therefore, the oil producer still has more tax credits to collect at their disgression which may see them report profits that significantly exceeds our forecasted N36 billion PAT. A deferred tax asset is an asset on a company’s balance sheet that may be used to reduce taxable income. It is created when

recorded income taxes payable are higher than the income taxes paid to the government. Presco, one of Nigeria’s largest oil palm producing companies is expected to see its PAT decline to N7 billion in 2018 from N25.4 billion in 2017. Presco owes most of its profit in 2017 to the government after it received about N14.4 billion in tax credit, adding to its PBT of around N10.9 billion. The tax credit accounted for around 57 percent of PAT and 132 percent of PBT. Asides the tax credit, Presco’s profit was also lifted by revaluation gains of around N2.78 billion which analysts now expect that the revaluation gains and tax credits may not be available for pickup as it was

last year. Another oil company with a similar story is Forte Oil which has been in the news lately as its former owner is currently divesting away from the company. In 2017, Forte Oil received tax credit of around N1.6 billion, which helped the company deliver PAT of around N12.2 billion after the company reported N10.6 billion in PBT. This year, analysts project that the company’s full year 2018 PAT will be around N8.9 billion if Uncle Sam fails to extend a helping hand once again. Unlike Seplat, the company’s revenue and PBT is expected to be slightly lower in 2018 than it was in 2017 due to sluggish sales. “We will have to wait and see

if these companies take a hit on profit in 2018 when their full year reports are released. While I see Forte oil and Presco reporting lower yearend profit, its possible Seplat will deliver profits that show marginal growth if the deferred tax assets are converted to tax credits in their reports,” said Tochukwu Okafor, Lecturer in Banking and Finance department at Covenant University. Dangote Cement another benefactor of tax credits in 2018 reported its highest profit ever in 2018 after it collected tax credit of around N89.5 billion when it secured its pioneer status last year. Analysts say the company may struggle to match its N390.3 billion PAT it achieved last year in 2019.

overnment at all levels have stressed the need for the diversification of the nation’s revenue away from oil. Sadly, despite the various initiatives aimed at increasing the revenue from the non-oil sector, little has been achieved. Before the years of the oil boom, Agriculture was the mainstay of the nation’s revenue. During this period, products such as Cocoa, Groundnut, Oil Palm, among others were top on the list of Nigeria’s export items. The years of Petrodollar, however, saw these products relegated to the back end. According to the World Cocoa Foundation, Africa accounts for 72 percent of the global Cocoa production. The major producing countries in Africa include Cote d’Ivoire which is also the largest cocoa producing coun-

try in the world; accounting for 33 percent of global cocoa production, other countries include Ghana, Nigeria, and Cameroon. The global cocoa market value will be worth $14,572 million by 2026 from $10.14million in 2015, due to the rising inclination of younger consumers towards chocolate across the globe. What is driving the global Cocoa market The demand for cocoa is very high due to its numerous uses. Organic cocoa and chocolate – as chocolates are reputed for its high-calorie food to boost energy; cocoa powder and confectioneries are among the various uses of cocoa which have strengthened its demand globally, and major confectionery companies like Nestle and Cadbury are some of the largest buyers of cocoa. The increasing awareness about the health benefits associated with the consumption of cocoa-rich products, such as dark chocolates, is affecting the market positively. Cocoa pro-

vides a large number of benefits. For instance, it decreases hypertension, reduces the indications of chronic fatigue syndrome, provides protection against sunburn, promotes heart health etc. The cocoa value chain in Nigeria comprises of several players which include the fragmented farmers which are spread across states in the southern region, fermenting and drying, marketing, packing and transporting, roasting and grinding, pressing, and chocolate making. Nigeria currently exports cocoa in the form of raw cocoa beans, fermented cocoa beans, and natural cocoa butter.

Foreign Trade statistics figures for the third quarter of 2018 released by the Bureau of Statistics shows that the country exported N7.59 billion worth of raw cocoa beans, N2.03 billion worth of fermented cocoa beans and N2.55 billion of cocoa butter. It is estimated that the exporting of raw cocoa will attract about $10bn, the export of chocolates worth $100 billion, while the total value of all finished goods made from cocoa is estimated to be as high as $200 billion a year. This shows the huge opportunities that await investors in the cocoa value chain.

Sadly, the export of premium cocoa is at its lowest ebb in Nigeria whereas the global market for premium cocoa is rapidly expanding. The production of chocolates which is a by-product of cocoa constitutes a significant part of the cocoa value chain and this is barely developed in Nigeria. That is why globally, the largest cocoa processing country is the Netherlands, which handles about 13 percent of the global grinding. Why is Nigeria Lagging behind Nigeria is plagued with dying old cocoa trees, coupled with aging farmers many of them are not exposed to modern farm practice, non-availability of good quality inputs (fertilizer/ chemical). Also worthy of note is the inconsistent quality of beans, high-interest rate and operating costs occasioned by relative lack of backward integration programs by confectioneries in the country.

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Monday 04 March 2019

Commodities

Sliding global wheat prices means wider profit margin for flour millers Temitayo Ayetoto

ndustrial wheat consumers, especially local flour millers can already sight a wider profit margin from the growing decline in the prices of wheat, as they begin hunting record producing regions for the lowest prices. Wheat prices have been sliding since the last seven months but took a poorer turn lately to shed more than 6.5 percent to $4.57 a bushel last week, just as surplus global supply weighed on prices. The glut comes with a stiff competition from the Black Sea region, placing pressure on the US export prospects. Russia, the world’s top wheat exporter holds a surplus of 4 million to 5 million tonnes of old-crop grain for export. The market has been expecting the Black Sea region suppliers, mainly Russia and Ukraine, to run out of surpluses following an aggressive export drive in the second half of 2018, creating avenue for the United States to sell some of its large invento-

ries. “The slower pace in sales was the main reason for the weaker US prices although the excessive cold weather, with potential adverse impacts on growing conditions, limited the downward pressure,” according to the Food and Agricultural Organisation. Industry observers see Russia extending export of the oldcrop wheat beyond April to August. Russian wheat for delivery in March was $234 a tonne, free on board, during the week ended February 24. In the near term, this competition may last enough to underpin prices, and will make cost sense to most local millers who rely majorly on imports for sourcing wheat. Wheat is a core raw material for most flour millers, an ingredient used in the processing of most confectionery meals including bread and pastries. But Nigeria’s wheat production remains poor and uneconomical for flour milling. David Anazia, CFO at Dangote Pasta & Noodles Ltd. said the wheat market trend could at least inject N350 million in the

profit margin of the company. Since the capacity of milling companies increased by 20 to 30 percent, millers have engaged in a game of size of market coverage instead of price, an tactic to stay competitive. “They will rather look for shares than for profitability. So what will expand the margin is the reduction in the wheat price itself. So it is a weaker price for us is positive,” Anazia told BusinessDay.

“A dollar increase in the price of wheat will cause our production cost to go up by about N350 million, depending on your volume. For flour millers of Nigeria for instance, it might be triple. Last year we bought black sea between $268 to $272 per metric tonne. But this year, the last one we bought was N258. You can see the differential of about $10 to $20.” Domestic consumption for 2018 was estimated at 4.86

‘

Buying locally produced wheat has become a case of corporate social responsibility, an exercise to encourage farmers rather than a decision informed by market fundamentals

’

trillion metric tonnes while the 2018/19 consumption has been projected to rise by 200,000 tonnes to 5.4 million tonnes. Nigeria’s production at less than 300,000 metric tonnes of 2018 on the one hand cannot absorb this demand. The current cost of locally produced wheat pegged at N130, 000 fails to be competitive with what is obtainable from imports. Buying locally produced wheat has become a case of corporate social responsibility, an exercise to encourage farmers rather than a decision informed by market fundamentals. Victor Oritedi, head of sales, Agro Allied Products at Flour mills said the firm would also save a significant amount from a cheaper global price trend to widen its profit margin. Flour Mills consumes about 2.5 million metric tonnes of wheat yearly and spends between N80, 000 to N90, 000 on a metric tonne. “The price determines where we buy from and as it is, the trend means an opportunity to lower cost,” he said.

Monday 04 March 2019

Data

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BUSINESS DAY

Federal Government Eurobond Federal Government Eurobonds rose to the highest in 5 to 7 months following the announcement of President Muhammadu Buhari’s victory over former Vice President Atiku Abubakar of the People’s Democratic Party (PDP) in the 2019 general elections. Yields on Eurobond fell 1.81 percent to an average yield of 6.871 percent on Wednesday from 6.998 percent in the previous day’s trading. Consequently, dollar denominated government bonds rose to the highest in 5- 7 months on Wednesday with the buy pressure persisting in the 2049s recorded an uptick in price level compared to Wednesday – other price of most other longer dated foreign denominated bond eased compared to the Mid week’s level. Week-on-week Average yield contracted across all tickers by c1.33bps with yields on FGN 22s, 25s and 27s dropping the most. On the other hand, Yields on FGN 32s and 38s rose by 3862 basis point and 1679 basis point respectively.

Corporate Eurobond Across board, yields on Nigerian Corporate Eurobonds fell by an average of c.05bps week-on-week. For the week there was mixed performance as Yields on Four corporate bonds rose while Five declined with Diamond bank as at Friday offer the highest yield on the Eurobond list at 16.51 percent, a 707 basis point uptick from last week, compared to Zenith Bank which offered the least at 6.64 percent, a -211 basis point decline compared to 6.64 percent offered on Friday last weekend.

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BUSINESS DAY

News Week Ahead Week Ahead (4th March – 8th March, 2019)

Inter-bank rates rise as CBN mops up N1.1trn HOPE MOSES-ASHIKE

igeria’s overnight interbank rates rose further to 17.42 percent on Friday from 14.25 percent the previous day after the Central Bank of Nigeria (CBN) mopped up a total of N1.075.85 trillion from the banking system on Thursday. Overnight rate is the rate at which Deposit Money Banks (DMBs) borrow and lend to each other. In some countries, it is the rate targeted by the central bank to influence monetary policy. In the same vein, the Open Buy-Back (OBB), the money market instrument used to raise short term capital, increased from 13.17 percent on Thursday to 16.33 percent on Friday last week. The CBN on Thursday resumed its Open Market Operation (OMO) auction, selling a total of N1.075.85 trillion to investors for an offer of N400 billion. At the opening of the auction, the CBN offered a total of N400 billion for various category of tenure days but the investors oversubscribed it by 168.96 percent. Ayodeji Ebo, managing director, Afrinvest Securities Limited said, due to

the anticipation of a lower yields before the end of the year, investors are investing in longer dated bills to lock in on this current rate, hence the huge bid for the 364-day instrument. In addition, Ebo said the CBN has also reduced the frequency of OMO auction in the past two weeks, leading to a decline in the secondary market rates. The summary of the OMO auction showed that N50 billion was offered for 91 day tenure, which will mature on May 30, 2019. This was sold at 11. Percent after the investors bided at the range of between 10.85 and 11.9 percent. It was oversubscribed by N55.51 billion. However, investors could not subscribe fully the N100 billion offered for 182 days tenure with maturity date of August 29, 2019. They bided at a bid range of between 12.95 and 13.5 percent for an offer which was undersubscribed by N92.59 billion at a stop rate of 13.5 percent. The CBN offered N250 billion for 364 days tenure, whic was oversubscribed by N1.2 trillion but the regulator was able to sell N927.75 billion at a stop rate of 14.3 percent. Investors bided at a bid range of 13.9 and 15.00 percent for the OMO security, which matures on February 27, 2020. Consequently, the

overnight interest rate, which is the rate at which banks borrow and lend to each other, on Thursday rose to 14.25 percent from 10.58 percent on the previous day. Data from FMDQ revealed that the Open Buy Back (OBB), the money market instrument used to raise short term capital, increased from 9.50 percent on Wednesday to 13.17 percent on Thursday. Last week, the CBN conducted only two OMO auctions which surprised investors. A report by Afrinvest indicated that at the first auction which held on Monday, the Central Bank issued a no-sale result despite the 325.9 percent oversubscription to its total offer of N30.0 billion (vs N127.8bn subscription) across the 101-, 178-, and 353-day tenors. This was to ease system liquidity on Monday (short N518.4bn). Interestingly, at the second intervention on Thursday, the CBN prorated its allotment – for the first time in months – on its long-term offer of N400.0 billion with an allotment ratio of 0.8x due to the significant demand (bid-to-cover ratio of 1.8x) while the short and medium-term offers of N50.0 billion and N100.0 billion witnessed moderate demand, resulting in a bidto-cover ratio of 0.2x and 0.5x respectively.

Commodities Wheat prices to sustain its trend in the coming weeks on strong Russia wheat export. Oil prices not to fall below current levels on the back of OPEC’s continuous commitment to production cut and optimism on US-China trade truce. Fixed Income Commercial paper with description “Mixta CP II 7-Mar-19” with A3 and BBB rating from Global Credit Ratings Co. (GCR) issued by Mixta Real Estate Plc on December 7, 2018 will mature on Thursday, March 7, 2019. Currency Naira/US dollar rate in the parallel market to remain constant as the apex bank continues to supply foreign exchange into the market, coupled with its frequent Wholesale and Retail SMIS programme. Data Release The National Bureau of Statistics to release data on Nigeria Port Statistics (2018) on Friday, March 8, 2019. Event Seplat Petroleum Development Company to host a conference call on Wednesday, March 6, 2019 by 8:30 am GMT (London) and 9.30am (Lagos). The Nigerian Stock Exchange will join global exchanges to celebrate the International Women’s Day on Friday March 8, 2019 by hosting a half-day seminar themed “Balance for Better”

Chart of the week Dangote Cement’s Profit Growth Over Last 5-Years

Dangote Cement Plc, Nigeria’s largest listed company both by assets and market capitalisation, almost doubled profit after tax in 2018. Net profit rose 91 percent to N390.33 billion from N204.25 billion recorded in the 2017 financial year. The company’s stock gained 2.13 percent to N196.60 at the close of trading on Friday.

Monday 04 March 2019

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UNDERSTANDING THE ECONOMY OF NIGERIA’S 36 STATES

he purpose of this series is to present evidence-based picture of Nigeria vis-a-vis the current presentations by politicians and various interest groups which are not backed by facts and figures. Such presumptuous speculations have driven the various national discourses or debates on the future of Nigeria, including such thorny issues as restructuring, whether fiscal, political, geographical or administrative. Facts are sacred, they say, and as such must be given priority in our search for national viability and survival.

‘Understanding the Economy of Nigeria’s 36 States’ series presents such an objective, dispassionate picture of the state of the economy and so viability and sustainability of the various component parts, sub-nationals or federating units of the country going forward. This series will serve to either buttress or discountenance some of the claims made on both sides of the restructuring argument. The series, written by Cambridge-trained economist, Dr. Ayo Teriba, looks at each state at a glance in the context of its geopoliti-

cal zone and as it compares to other states. The data present irrefutable facts about each region and its component states and raise the question: are they viable as constituted today and going forward? Each series examines a state’s realities from the perspectives of economy, resource endowment, state of wellbeing of its populace, and its budget (revenue and expenditure profile). Today’s edition covers an overview of Jigawa State and Kaduna State, in the North-West region.

JIGAWA • Economy

Jigawa State Summary

Jigawa’s Gross State Product was 2.06 percent of Nigeria’s GDP in 2017, 6th in the North-West, 9th in the North and 13th in the country. Agriculture was 81 percent, Services, 18 percent, while Non-Oil Industry was 1 percent.

• Endowments

With a Gross State Product (GSP) of N2.3 trillion or 2.06 percent of the gross outputs produced in the country, the 6th in the North-West, 9th in the North and 13th among the 36 States and the FCT. 6.2million Population in the State is 3.1 percent of national population, the 4th in the North-West, 5th in the North, and 8th in Nigeria. The State’s 23,300/km2 Land Area is 2.56 percent of Nigeria’s land mass, 6th in the North-West, 17th in the North and 18th in the country. Jigawa State’s N56.6billion Revenue is 1.8 percent of all States’ total revenue, the 5th in the North-West, 11th in the North, and 23rd among the 36 States and the FCT.

Jigawa’s Land Area is 2.56 percent of Nigeria’s land mass, 6th in the North-West, 17th in the North and 18th in the country. The State has no coastline, shares a boarder with Niger Republic to the north and is bounded by four States: Kano and Katsina from its region, and Bauchi and Yobe from the North-East.

• Wellbeing

Jigawa’s population is 3.1 percent of national population, 4th in the North-West, 5th in the North, and 8th in Nigeria. The State’s density is 18th in the country, 36th most literate and has the 32nd life expectancy with a Per Capita GSP that is 4th in the North-West, 8th in the North, and 13th in the country.

• Budget

Jigawa retained 1.8 percent of States’ revenue in 2017, 23rd in the country; spent 2.8 percent of States’ outlays, 13th in the country, incurred a deficit, and held 0.9 percent of States’ total debt, 34th in the country.

Economy

Structure Jigawa State’s 2017 Gross State Product (GSP) was an estimated N2.3 trillion or 2.06 percent of Nigeria’s GDP, 6th in the North-West, 9th in the North and 13th in the country. Agriculture was 81 percent of this, Services, 18 percent while Non-Oil Industry was 1 percent.

Endowments

Jigawa state was carved out of Kano state in 1991. Jigawa has no coastline, shares a boarder with Niger Republic to the north and boundaries with four States, Katsina to the northwest, Kano to the west, Bauchi to the south, and Yobe to the northeast. Jigawa’s 23,300/km2 land area is 2.56 percent of Nigeria’s land mass, 6th in the North-West, 17th in the North and 18th in the country. Major towns and cities are; Auyo, Guri, Roni, Kiyawa, Birnin Kudu, Buji, Babura, Dutse, Garki, Gumel, Gwaram, Hadejia, Jahun, Gwiwa, Biriniwa, Miga, Ringim, Sule Tankarkar, Kafin Hausa, Kaugama, Maigatari, Taura, Malam Madori, Yankwashi.

– N1.89 trillion Agricultural output in the State was 7.9 percent of all agricultural produce in the country, 5th in the North-West, 7th in the North and in Nigeria. • N1.8 trillion in crops was 95 percent of the State’s agricultural output, • N90.7 billion in livestock was 5 percent and • N0.5 billion in fishery was negligible. • Forestry is Nil. – Jigawa State’s N26.0 billion 2017 Non-Oil Industrial output was 0.2 percent of the gross Non-Oil Industrial output in Nigeria, the smallest among the North-Western States, 17th in the North and 34th in the Country. Manufacturing and Construction jointly accounted for 98 percent of the State’s non-oil output. – N418.2 billion Service output in the State was 0.7 percent of Nigeria’s Service sector, the 6th in the North-West, 15th in the North and 30th in Nigeria. Inter-State Comparisons

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UNDERSTANDING THE ECONOMY OF NIGERIA’S 36 STATES 3.

Wellbeing

4.1.2.1 Revenue The State’s 2017 Actual total revenue of N56.6 billion was 1.89 percent of all States’ actual total revenue, the 5th in the North-West, 11th in the North and 23rd among the 36 States and the FCT. The revenue components in 2017 were: • Statutory Allocations of N31.7 billion was 2.17 percent of the total allocations to all States and the FCT, 4th in the North-West, 9th in the North and 18th in the country. • Internally Generated Revenue of N4.3 billion was 0.56 percent of total, the least among the States in the North-West, 18th in the North and 33rd in Nigeria. • Value Added Tax of N11.3 billion was 2.38 percent of States’ total, the 4th in the North-West, 5th in the North and 9th in the country. 4.1.2.2 Spending Total expenditure of N104.2 billion in the State was 2.82 percent of actual total spending by all States, 3rd among its peers in the North-West, 7th in the North and 13th in the country. The spending components in 2017 were: • Recurrent Spending of N66.8 billion, 2.52 percent of the recurrent outlays of all the States and the FCT, the 3rd in the North-West, 9th in the North, and 17th among the States and the FCT. • Capital Spending of N37.3 billion in the State was 3.59 percent of States and FCT’s total capital outlays, the largest in the North-West region and the North, the 5th in Nigeria. 4.1.2.3 Deficits Jigawa State is one of the 25 States and FCT that had deficits in 2017. The State’s N47.5billion deficit was the 3rd among the 6 States in the North-West that had deficits, 5th among the 17 States in the North that had deficits and 7th among the States that had deficits in the country. 4.1.2.4 Debt Total outstanding debt of N43.5 billion in the State was 0.9 percent of the States and FCT’s total debts, the 6th in the North-West, 18th in the North and 34th in the country. Domestic Debt of N33.3 billion in December 2017 was 1.0 percent of States and FCT’s domestic debts, the 5th in the North-West, 17th in the North and 33rd in the country. Foreign Debt of N10.2 billion in December 2017 was 0.8 percent of the total foreign debts of the States and FCT, the least in the North-West, 15th in the North and 32nd in the country. 4.1.3 2013-2017 Trends Jigawa’s Total Revenue: Total Revenue declined slightly from N61.9 billion in 2014 to N56.6 billion in 2017. The decline in revenue came from gross statutory allocations (GSA) while internally generated revenue and value added tax both grew to partly offset the GSA loss. Total Spending: Total spending however doubled from N53.2 billion in 2014 to N104.2 billion in 2017; Recurrent spending trebled from N21 billion in 2014 to N66.8 billion in 2017, while capital spending also grew only slightly from N32.2 billion in 2014 to N37.3 billion in 2017. Revenue Use: Jigawa maintained current surpluses that funded part of capital outlays

Jigawa’s 6.2million Population is 3.1 percent of national population, the 4th most populated in the North-West, 5th in the North, and 8th in Nigeria. With a land area of 23,300/ km2, density in the State is 266 people per km2 compared to the country average of 219 people/km2; the 3rd most densely populated State in the North-West and the North, 18th in the country. Jigawa’s literacy is the least in the North-West, 19th in the North and 36th in the country. Jigawa’s life expectancy of 46 years is 6th in the North-West, 15th in the North and 32nd in Nigeria. Female life expectancy of 49 years in the State is the least in the North-West, 16th in the North and 32nd among the 36 States and FCT. Male life expectancy of 45 years is the 6th in the North-West, 13th in the North and 29th in Nigeria. The State’s Per Capita GSP of N376 thousand is the 4th in the North-West, 8th in the North, and 13th in the country.

until 2016 before incurring current deficits and a larger overall deficit in 2017. Financing • Revenue financing: overall surplus of 14.5 percent of total revenue in 2014 gave way

4. Budget 4.1. Fiscal Realities of Jigawa State 4.1.1. 2018 Aspirations Jigawa State’s N138.7 billion 2018 budgets is 1.49 percent of all States’ and FCT’s 2018 budget, the 6th in the North-West, 13th in the North, and 28th among the 36 States and FCT. 4.1.2. 2017 Realities

to an overall deficit of 27.4 percent in 2015 and 83.9 percent in 2017. • Spending finance: overall surplus of 16.9 percent of total spending in 2014 gave way to an overall deficit of 21.5 percent of total spending in 2015, and 45.5 percent in 2017. • Capital budget: overall surplus of 27.9 percent of capital budget in 2014 gave way to an overall deficit of 70.6 percent of capital budget in 2015, and 127.3 percent in 2017. Jigawa’s Debt • Domestic debt stock grew significantly from N1.6 billion in 2013 to N33.3 billion in 2017, from 2.3 percent of revenue in 2013 to 58.8 percent in 2017. • The State’s foreign debt stock had risen from N5.6 billion in 2013 to about N10.3 billion in 2017, from 8.3 to 18 percent of the State’s revenue in 2013 and 2017 respectively. • Total debt stock rose from 10.7 percent of revenue in 2013 to 76.9 percent in 2017.

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UNDERSTANDING THE ECONOMY OF NIGERIA’S 36 STATES

KADUNA • Economy

Kaduna State Summary

Kaduna’s Gross State Product was 2.45 percent of Nigeria’s Gross Domestic Product in 2017, 4th in the North-West, 7th in the North and 11th in the country. Agriculture contributed 58 percent of the GSP, Services, 38 percent, and Non-Oil Industry, 4 percent.

population, 2nd most populated in the North-West and the North, 3rd in Nigeria. Kaduna’s 42,500/km2 Land Area is 4.67 percent of Nigeria’s land mass, largest in the North-West, the 6th in the North and in Nigeria. N73.2billion Revenue of the State is 2.4 percent of all States’ total revenue, the 2nd in the North-West, 3rd in the North, and 9th among the 36 States and the FCT.

• Endowments

Kaduna’s Land Area is 4.67 percent of Nigeria’s, the largest in the North-West, the 6th in the North and in Nigeria. The State has neither a coastline nor a boarder but shares boundaries with seven States and the FCT: Zamfara, Katsina and Kano from its region; FCT, Niger, Nasarawa and Plateau from the North-Central; and, Bauchi from the North-East.

• Wellbeing

Kaduna’s Population is 4.3 percent of Nigeria’s, the 2nd most populated in the North-West and the North, after Kano, and 3rd in Nigeria, after Kano and Lagos. Kaduna is Nigeria’s 21st most densely populated, 20th most literate, and 35th in life expectancy, and the Per Capita GSP in the State is 5th in the North-West, 9th in the North and 15th in the country.

• Budget

Kaduna retained 2.4 percent of States’ revenue in 2017, 9th in the country; spent 2 percent of States’ outlays, 21st in the country; incurred an overall deficit and held 3.4 percent of total debt, 8th in the country.

Economy

Structure Kaduna State’s estimated Gross State Product (GSP) in 2017 was N2.78 trillion or 2.45 percent of Nigeria’s GDP, 4th in the North-West, 7th in the North and 11th in the country; 58 percent was Agriculture, Services, 38 percent, Non-Oil Industry, 4 percent. – N1.6 trillion 2017 Agricultural output in the State was 6.7 percent of all agricultural produce in the country, 6th in the North-West, 8th in the North and in Nigeria. • N1.54 trillion in crops was 96 percent of the State’s agricultural output, • N61.4 billion in livestock was 4 percent, and • N8.1 billion in fishery was 0 percent/negligible, • Forestry is Nil. – The State’s N0.1 billion 2017 Non-Oil Industrial output was 0.8 percent of the gross Non-Oil Industrial output in Nigeria, 3rd in the North-West, 7th in the North and 15th in the Country. Manufacturing and Construction jointly dominated 98 percent of the State’s non-oil output. – Kaduna State’s N1.1 trillion Service output was 1.6 percent of Nigeria’s Service sector, the 2nd among the North-Western States, 3rd in the North and 7th among the States and the FCT. Inter-State Comparisons With a Gross State Product (GSP) of N2.78 trillion or 2.45 percent of the gross outputs produced in the country, the 4th in the North-West, 7th in the North and 11th in the country. The State’s 8.6million Population is 4.3 percent of national

Endowments

Kaduna State was originally created in 1976 but subdivided into Kaduna and Katsina States in 1987. The State has neither a coastline nor a border but shares boundaries with seven States and the FCT: Zamfara, Katsina and Kano to the north, Niger to the west, FCT and Nasarawa to the south, Bauchi and Plateau to the East. Kaduna State’s land area of 42,500/km2 is 4.67 percent of total land mass in Nigeria, largest in the North-West, the 6th in the North and in Nigeria. Major towns and cities are; Makarfi, Kaduna, Chikun, Birnin Gwari, Igabi, Kachia, Kagardo, Zaria, Lere, Kaura, Giwa, Jaba, Soba, Kubua, Ikara, Kajuru, Jema’a, Kudan, Sabon Gari, Sanga, Zangon Kataf.

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UNDERSTANDING THE ECONOMY OF NIGERIA’S 36 STATES • Capital Spending of N21.1 billion in the State was 2.03 percent of States and FCT’s total capital outlays, the 4th in the North-West region, 7th in the North, and the 14th in Nigeria. 4.1.3.3 Deficits Kaduna State is one of the 25 States and FCT that had deficits in 2017. The State made an overall deficit of N1.9 billion, the smallest among the 6 States in the North-West, 2nd least deficit among the 17 Northern States that had deficits and 24th among the States that had deficits in the country. 4.1.3.4 Debt Total outstanding debt of N156.5 billion in the State was 3.4 percent of the States and FCT’s total debts, the highest in the North-West and the North, 8th in the country. • Domestic Debt of N83.8 billion in December 2017 was 2.5 percent of States and FCT’s domestic debts, the 2nd in the North-West, 5th in the North and 15th in the country. • Foreign Debt of N72.67 billion in December 2017 was 5.8 percent of the total foreign debts of the States and FCT, the largest foreign debtor in the North-West and the North, 2nd in the country. 4.1.6 2013-2107 Trends Kaduna’s Total Revenue: Total Revenue declined slightly from N78.5 billion in 2013 to N73.2 billion in 2017. The decline came largely from gross statutory allocations (GSA). Internally generated revenue and value added tax grew to offset some of the losses from GSA.

4 Budget 4.1. Fiscal Realities of Kaduna State 4.1.2 2018 Aspirations Kaduna’s N216 billion 2018 budget is 2.33 percent of all States’ and FCT’s 2018 budget, 3rd in the North-Wests and the North, 11th among the 36 States and FCT. 4.1.3 2017 Realities

Kaduna’s Total Spending: Total Spending grew very slightly from N73.9 billion in 2014 to N75 billion in 2017, recurrent spending grew from N38.5 billion in 2014 to N53.9 billion in 2017, while capital spending fell from N35.4 billion in 2014 to N21.1 billion in 2017.

Revenue Use: Except for 2015 when it incurred a current deficit, Kaduna typically kept enough in current surpluses to meet the bulk of capital outlays and minimize recourse to deficit financing. Financing: • Revenue financing: overall deficits were 2 percent of total revenue in 2014, 63.3 percent in 2015 and 2.6 percent in 2017. Spending finance: overall deficits as a fraction of total spending was 2 percent in 2014, 38.7 percent in 2015, and 2.5 percent in 2017. • Capital budget finance: overall deficits as a fraction of the capital budget was 4.2 percent in 2014, 151 percent in 2015 and 9 percent in 2017.

4.1.3.1 Revenue The State’s 2017 Actual total revenue of N73.2 billion was 2.4 percent of all States’ actual total revenue, the 2nd in the North-West, 3rd in the North and 9th among the 36 States and FCT. The revenue components in 2017 were: • Statutory Allocations of N37.2 billion was 2.5 percent of the total allocations to all States and the FCT, 2nd in the North-West, 3rd in the North, and 9th in the country. • Internally Generated Revenue of N16.9 billion was 2.2 percent of total, the 2nd in the North-West, 5th in the North and 13th in Nigeria. • Value Added Tax of N13.7 billion was 2.8 percent of States’ total, 2nd in the NorthWest and the North, 5th in the country. 4.1.3.2 Spending Total expenditure of N75 billion in Kaduna State was 2.03 percent of actual total spending by all States, 4th among its peers in the North-West, 11th in the North and 21st in the country. The spending components in 2017 were: • Recurrent Spending of N53.9 billion was 2.03 percent of the recurrent outlays of all the States and the FCT, the 4th in the North-West, 11th in the North, and 20th in the country.

Kaduna’s Debt • Foreign debt stock by the State was N37.9 billion in 2013 and doubled to N72.8 billion in 2017, from 43.3 to 99.5 percent of revenue in 2013 and 2017 respectively. • Domestic debt stock grew more rapidly from N9.8 billion in 2013 to N83.8 billion in 2017, from 12.5 percent of revenue in 2013 to 114.5 percent in 2017. Total debt stock rose from 60.8 percent of revenue in 2013 to 214.1percent in 2017.

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LegalPerspectives

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Odunayo Oyasiji

Case Review

Afrotec Technical Services (Nig) Ltd. V. Mia & Sons Limited & Anor (2000) LPELR-SC.132/1992

hat to note: This matter was decided at the Supreme Court of Nigeria on the 15thof December, 2000. This matter bothers on commercial law issues like rights of a seller, lien, contract of sale, sale of goods, credit sale transaction and hire purchase. We will touch on some of these issues in the course of the review. Facts The plaintiff (MIA & Sons Limited) and defendant (Afrotec Technical Services (NIG) LTD) are both limited liability companies. The head office of the plaintiff is in Kaduna while that of the defendant is in Lagos. The plaintiff is a customer to the defendant. On February 8, 1978 the plaintiff ordered for Parker 5245 crushing plant combination (N476,600), Foden Dump Truck (N84,000.00 ) and BD 440440 KVA generating set (N66,000.00). The parties also agreed on the supply of spare parts for crushing plant (N38,000), transportation of equipment to Kotangora at the cost of 28,000 naira and commissioning fee of 10,000 naira. The total cost of everything is N702,600. The plaintiff subject to some terms and conditions contained in its letter of March 28, 1978 gave an undertaking to pay the defendant the sum of N702,900 being the cost of the equipment and other expenses agreed upon. The plaintiff claimed that it made a payment of N281,160 (representing 40% of the agreed sum of N702,900). On the basis of the payment, the defendant installed the equipment at Kotangora as instructed by the plaintiff. It was agreed that the 60% balance is to be paid in six equal instalments. The plaintiff gave post-dated cheques to cover the outstanding 60% balance. The cheques are to be presented for payment on April 27, August 27 and September 27. The plaintiff defaulted in the payment of the instalments. The reason the plaintiff gave for its failure to meet up with its payment obligations is that the equipment broke down soon after it was installed and the defendant failed to supply spare parts to fix it. The plaintiff requested that the defendant should transfer the equipment to Kaduna in 1980 and install it. The plaintiff agreed and dismantled the equipment for the purpose of transferring it to Kaduna. However, the plaintiff kept the equipment in its warehouse claiming that it had repossessed it due to failure of the defendant to fulfil its payment obligation. On the basis of the above, the

diate possession” clauses, following the failure of the plaintiff to complete the payment for the equipment. (c) Whether the said rights of lien and “immediate possession” have been waived by the conduct of the parties. (d) Whether the plaintiff has by pleadings and evidence, established the defence of waiver. (e) Should the Court of Appeal have granted the relief that the equipment be delivered to the plaintiff subject to the defendant being paid the entire sum? (f ) Was the Court of Appeal right in holding that the plaintiff had established a legal right to the equipment?” The court adopted the issues raised by the appellant/defendant for the determination of the matter. plaintiff instituted an action in the High Court of Kaduna State. The High Court dismissed the claims of the plaintiff and the plaintiff further appealed to the Court of Appeal. The Court of Appeal gave judgement in favour of the plaintiff. The defendant being dissatisfied appealed to the Supreme Court. Issues for determination The seven issues below were submitted to the court by the appellant/defendant“(i) Whether the Court of Appeal was right in its view that Ownership in the equipment passed to the plaintiff on proper construction of Exhibit 1 merely because the defendant had delivered the equipment at the site of the plaintiff at Kontagora. (ii) Whether the Court of Appeal was right in its view that acceptance of negotiable instruments as payment for the equipment had converted the conditional sale of these equipment into an absolute sale. (iii) Was the Court of Appeal right in its view that the only remedy open to the defendant was an action for the recovery of the balance of the sum unpaid and not in its exercise of the right of lien or Repossession of the plant when the agreement between the parties provided for those remedies? (iv) Was the Court of Appeal right in holding that plaintiff has established a legal right in the equipment as to entitle it to the Equitable reliefs sought? (v) Was the Court of Appeal right in holding that the defendant has waived all the restrictive conditions in Exhibit 1 when the waiver of the same as a defence was not specifically pleaded nor were circumstances and facts amounting to waiver pleaded in answer to the plaintiff’s pleadings?

(vi) Was the Court of Appeal right in making an order to enforce the second agreement when the respondent failed to fulfil its obligation under the first contract? (vii) Whether the Court of Appeal was right in making an order that the said equipment be delivered to the plaintiff subject to the plaintiff paying

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An unpaid seller still reserves some rights with regards to the property sold out. ...where the sale of goods is made subject to the fulfilment of some conditions, the ownership of the property will not pass until and unless the conditions are fulfilled the entire sum outstanding as balance of total cost of the equipment taking into account N381,160.00, the plaintiff has so far paid to the defendant when such relief was not placed before the trial court.” The respondent/plaintiff on the other hand submitted the issues below“(a) Whether having regard to the pleadings and evidence led, the defendant established any legal right to the equipment in dispute. (b) If so, whether such legal right could be defeated by the “right of lien” or “right to imme-

Arguments/Submissions The learned counsel to the appellant argued that the appellant by virtue of the agreement between the parties have the right to repossess the property if the respondent fails to fulfil its payment obligations. Therefore, the appellant exercised its right under the agreement by repossessing the property since the respondent has defaulted in payment. The respondent’s counsel on the other hand argued that the conduct of the appellant with regards to parting with possession before full payment and charging of interest on the outstanding balance after the plaintiff defaulted is a clear sign of intention to transfer the property. He further argued that the appellant didn’t insert any clause that reserved its ownership right. Therefore, ownership cannot pass at the point of repossession after earlier delivering the equipment to the respondent. Judgement The Supreme Court in allowing the appeal and giving judgement in favour of the appellant held that- “An unpaid seller can exercise the statutory right of resale of the Goods in his possession whether or not properly, the goods has passed to the buyer or not and the new buyer acquires good title in such goods… Under section 48 of the Sales of Goods Act, the unpaid seller retains the right to sell the identified property, where the buyer has become insolvent. The right of sale can be exercised by the seller under this section where he has been in continuous possession of the goods or where he has regained possession by exercising his right of lien or stoppage of the

goods in transit. This right is available to him whether or not the property in the goods has passed to the original buyer who has become insolvent by his failure to pay or tender the purchase price as agreed in the contract, within a reasonable time. The intention to sell the goods must be notified to the insolvent buyer. What is a reasonable time in this context is a question of fact”. It was further held that “The object of sale of goods is generally to transfer its ownership to the purchaser from the seller. See sections 16-19 of the Sale of Goods Act, 1893. But where a contrary intention is shown, the property in the goods only passes to the buyer at such time as the parties to the contract intend to. And for the purpose of ascertaining the intention of the parties, regard must be had to the terms of the contract the conduct of the parties and the circumstances of the case. “ Also, the court noted that “where a contract for the sale of specific goods, as in the present case, is made subject to a condition which to all intent and purposes suspends the passing of property, the property will not pass to the buyer at the time of the making of the contract, but only when the agreed condition as stipulated by the parties is fulfilled. Until then, the contract takes effect as an agreement to sell, and not an outright or absolute sale of the goods.” With regards to the nature of credit sale, the court held that “in the credit sale transaction, there is a sale on credit. The credit may take the form of payment of the entire purchase at an agreed future time or payment of the purchase price by agreed instalments. In a credit sale, there is no question of an agreement to purchase the goods at a future time. A purchaser of goods under a credit sale agreement does not have the option, which the hirer has, of returning the goods and freeing himself from the obligation to pay further instalments…It is evident that a credit sale is not a hire-purchase transaction. A credit sale is a sale transaction subject to the same principles in regard to the passing of property in sale transactions which are not on credit.” Conclusion An unpaid seller still reserves some rights with regards to the property sold out. Furthermore, where the sale of goods is made subject to the fulfilment of some conditions, the ownership of the property will not pass until and unless the conditions are fulfilled.

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Insight Buhari’s re-election: The oddity of Nigerians voting to be poorer global Perspectives

OLU FASAN

igerians have re-elected Muhammadu Buhari as president for the next four years. He defeated former vice president Atiku Abubakar, his main opponent, by 56% to 41%, securing 15,191,847 votes against Atiku’s 11,262,978. Atiku has rejected the result, describing the election as “a sham”. In truth, though, while there were huge irregularities in the election, they did not materially affect the result. So, Buhari won, Atiku lost! That said, Buhari doesn’t deserve his re-election. In hardly any civilised country would an incumbent with President Buhari’s appalling record, especially on the economy, secure a second term. Under Buhari’s presidency, unemployment rose from 8.2% to 23%; youth unemployment skyrocketed from 3m to 13m (a 263% increase), Nigeria’s stock market became the worst performing in the world, FDI dropped from $8.9bn in 2011 to $2bn in 2018, and Nigeria became the world’s poverty capital, with 90m people living in extreme poverty, while the country ranked 8 out of 128 in the world’s misery index in 2018. How could a president with such awful failures claim entitlement to a second term? So, Buhari’s re-election is not earned. The initial negative impact on the stock index, a barometer of market sentiment, proves this. As Bloomberg reported, “Bank stocks in Nigeria fall most since 2016 after Buhari victory”, showing that the anti-business president, whose economic record and grasp of economic fundamentals are miniscule, was not investors’ or the wider business community’s preference. Yet, Buhari has won; albeit by default! Why by default? Well, as the American

journalist Franklin Adams famously said, “Elections are won by men and women because most people vote against somebody rather than for somebody”. Truth is, Buhari won because most Nigerians voted against Atiku rather than for him. They didn’t want Atiku and, by default, settled grudgingly for Buhari. As I predicted in this column, the election was fought on integrity, and Buhari’s perceived personal integrity, his reputation for incorruptibility, worked for him, while Atiku’s perceived lack of integrity, his reputation for graft, worked against him. It’s as simple as that; integrity trumped ideas and competence in the election! Yet, each of the two candidates was a bundle of contradictions. Buhari was pro-poor, yet anti-business; Atiku was pro business but brash and amoral. A London Times journalist captured this contrast well when he wrote that “Atiku would enrich himself and Nigerians, but Buhari would do neither”. In other words, while Buhari would not enrich himself, his statist anti-growth policies wouldn’t enrich Nigerians either but rather impoverish them. In contrast, Atiku’s pro-business and pro-growth policies would enrich Nigerians, but, as part of that, he would enrich himself or at least his cronies. The trade-off was unpalatable, but, for me, Atiku was the lesser of two evils! How could a leader be pro-poor and yet anti-business? It defies logic. As Sir John Major, a former British prime minister, said, “A society in which business is not successful is going to be a society which is poor”. This is because the greatest antidote to poverty is private sector-driven economic growth, not state interventions through government handouts. But an economy will not grow where the private sector is stifled or where markets can’t operate freely in a competitive environment. Recently, in an interview with the Financial Times, the Ethiopian prime minister Abiy Ahmed said “My economic model is capitalism”, adding: “We need the private sector”. Is it any wonder that Ethiopia’s economy is growing at 8.5%, while Nigeria’s state-led economy is languishing under 2%? The truth is that Nigeria lacks a supportive market-based policy environment to attract private financing and long-

term domestic and foreign investment flows. The government doesn’t seem to understand the distinctions between drivers, enablers and barriers. For instance, some say the Buhari government’s main achievement is infrastructure spending. But physical infrastructure is not the driver of investment, that is, the direct reason someone would invest in a country. Lack of infrastructure will constitute a barrier, i.e. delay or prevent an investment, and having infrastructure would be an enabler, i.e. helping to overcome the barrier. But the drivers of investment are policies that increase, or guarantee, returns or profitability. These are macroeconomic stability and polices that allow markets, not government, to allocate or regulate resources such as foreign exchange, imports and prices. But Nigeria talks a lot about enablers, such as infrastructure, but ignores policy drivers, such as economic openness and marketbased institutions. In its Nigeria Biannual Economic Update (2018), the World Bank described the Central Bank’s development financing schemes and foreign exchange restrictions to support import substitution as “suboptimal policy measures” and called for “significant structural and fiscal reforms”. Buhari rejected structural reforms in his first term and, in his re-election acceptance speech, signalled a more-of-the-same approach, saying “We have laid the foundations and we are committed to seeing matters to the end”. In other words, he wants to build on the same foundations that made Nigeria and Nigerians poor in his first term. But such continuity will simply make Nigeria poorer, and increase the pauperisation of Nigerians. Which raises the questions: Why did Nigerians vote to be poorer by re-electing Buhari? Indeed, there are many oddities about the presidential election. First is the low turnout. 73m people collected Permanent Voter Cards (PVCs), but only 29m, about 36%, voted. Even 1.3m of the 29m votes were rejected. Given what was at stake, the future direction of Nigeria, and who to entrust it with over next four years, why did over 60% of Nigerians with PVCs refuse to vote? Of course, one can blame INEC’s incompetence, but it’s also true that Nigerians don’t take elections seriously.

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...the greatest antidote to poverty is private sector-driven economic growth, not state interventions through government handouts

In the more affluent South, where most citizens were critical of Buhari, and should have preferred Atiku’s liberal policies, the turnout was well below 30%. They refused to come out in large numbers to vote for Atiku, perhaps unimpressed by his fabled integrity problem. But they are now stuck with Buhari! The other oddity is the voting behaviour of the poor. Several people who are unemployed or can’t make ends meet voted massively for Buhari. A World Bank’s report says about 66% of Nigeria’s poor reside in the North. Yet, the poor in the North, who have suffered under Buhari’s first term and would be further immiserated under his second, if he continues his failed economic policies, preferred him to Atiku, whose policies could create jobs and reduce poverty. But for most of the poor, concerns about Atiku’s integrity trump consideration of how his proposed economic policies could improve their welfare. Why would anyone act against his or her own economic interests? Well, evidence shows that the poor often do. For instance, during Britain’s EU referendum in 2016, poor people and regions, which would suffer most from the UK’s exit from the EU, voted for Brexit. So, there is a parallel between the voting behaviour of the poor in the UK and those in Nigeria. In the UK, poor people and regions put sovereignty and immigration issues above the economic benefits of remaining in the EU. In Nigeria, the poor preferred a pious Marxist, whose policies would make them poorer, to an amoral capitalist, who could improve their living standards. Yet, all that said, the onus is now on President Buhari to show that, by voting massively for him, the poor in Nigeria did not vote to make themselves poorer. This means he must change direction and implement policies that generate economic prosperity for Nigerians. But don’t hold your breath. He has already said the next four years “will be touch”! Nigerians have got the leader they deserve! 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

More on jobs: Give labour-intensive growth a chance? ECONOMIST

NONSO OBIKILI

ack to jobs question and my argument for the focus on labour-intensive sectors with potential for exports. I promised I would write a but more on how to start to move the needle on that. First a bit of caveat emptor. The world is very complex and there is no guaranty that if you follow a set of guidelines you will get to the expected outcomes. Even if you fulfil all the supposed checklist of currentlyknown things to do you can still end up without success. That is the unfortunate nature of the global economy and human interactions.Regardless, there are things to learn from those who have successfully tread that path, and doing those things in the right context certainly increases the likelihood that you would get to the proverbial promised land.

But back to the matter. When trying to grow a labour-intensive sector for exports the first obvious thing that counts is wages. If you want to compete for labour-intensive exports then your wages must be competitive, all else being equal. Importantly, “wages” here does not mean how much you pay people a month, but how much you pay to get something done. How much would you have to pay for a worker to properly stitch 50 blouses in a working day. How competitive is Nigeria in terms of wages? In a 2009 study by the World Bank they showed wages in South Asia were at least 40 percent lower than in Africa. A more recent study also by researchers at the World Bank shows that wages in Kenya were four times larger than wages in Bangladesh in US dollars. You can guess how competitive we are based on that information, although we have no doubt become more competitive since the series of devaluations between 2014 and 2016. You might wonder how people in Bangladesh are able to live on such low wages. Part of the story of the cost of living. If you want people to be able to survive on comparably lower wages then it has to be cheaper to live. So if you create a high cost economy by doing things like creating a protectionist racket for cement which makes construction and housing more

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No industry trying to export can thrive in an environment where inflation in high, where big exchange rate shocks happen every two years, and where arbitrary restrictions on things like buying and selling foreign exchange are implemented randomly

expensive, or slapping a 70 percent tariff and thousands in added costs as a result, on vehicles, which makes transportathen you are not going to be competitive. If tion more expensive, or banning cheap you talking services, then you need cheap imported food which makes eating more and fast connectivity. expensive, then you are making your Fourth, you need trust and fairness also space less competitive by indirectly forcing know as institutions that allow people to do wages up. business without bottlenecks, injustice, and The second important factor is the free- stories that touch. This is easier said that dom to trade without restrictions. If you done. We have made a lot of noise about are trying to build a labour-intensive sector ease of doing business in Nigeria and the that exports, then they need the freesupposed improvements in the rankings, dom to import raw materials even if you but does that translate into actual improveproduce some locally. Competitiveness ment in the business climate? I don’t know. requires have access to the highest quality Other countries have tries to tackle this and cheapest raw materials. If those are problem in innovative ways. Some set up domestic, then that’s fine. But if they are “special zones” where legal rules from a not then forcing firms to buy local only jurisdiction where people trust the legal makes them less competitive. We tend system applies. Others to demonize imports but if you import Finally, you need macroeconomic $150bn worth of wheat and export $150bn stability. No industry trying to export can worth of pasta then what is the problem thrive in an environment where inflation exactly? In fact, most countries who export in high, where big exchange rate shocks import just as much. If you restrict the happen every two years, and where arbiability of your firms to import freely, then trary restrictions on things like buying and they are less likely to be competitive when selling foreign exchange are implemented it comes to exporting. randomly. Although, we I must point out Thirdly, if you need to import and export that macroeconomic stability is not the efficiently, then if goes without saying that same as having a fixed exchange rate. you need infrastructure that allows you to Continues online @www.businessday.ng import and export efficiently. If you have Dr. Nonso Obikili is Chief Economist at scenarios where your only export point comes with an average of 30 days in delays Business Day.

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