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Nigeria could earn $7.5bn from October oil export on higher price

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Inside details of $1.3bn Malabu scandal exposed in Italian court onathan Benton, former jointhead of the International Corruption Unit at United Kingdom based National crime Agency has alleged that former president Goodluck Jonathan and his Attorney General, Moham-

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L-R: Mehmet Asik, general manager (Abuja) Turkish Airlines; Aare S.P. Phillips, executive chairman, Peacock Aviation and Allied Services, and Tarkan Ince, general manager (Lagos) Turkish Airlines, after a business meeting in Istanbul, Turkey, recently.

DIPO OLADEHINDE

fgn bonds

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Former President Godluck Jonathan, Adoke, Lamorde, Diezani named Next hearing on October 10

med Adoke were not interested in investigating the allegations of corruption in the sale OPL 245,

a prolific oil field containing an estimated nine billion barrels of crude oil reserves.

OPL 245, also known as the Malabu oil field was sold to NethContinues on page 38

he surge in oil price to $85 a barrel has increased the prospects of Nigeria’s export earnings rising to above seven billion dollars for the month of October according to leading economist Bismarck Rewane.

This could help steady the countr y’s foreign reser ves ($44bn) which has come under pressure lately and offering support to the local currency that analysts say may weaken ahead of the 2019 elections.

The Central Bank spent $1.04bn supporting the local Continues on page 38

Inside Ambode concedes defeat, congratulates Sanwo-Olu

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Nigeria, Angola, South Africa are now a burden on Africa - World Bank HOPE MOSES-ASHIKE & MICHEAL ANI

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he World Bank on Wednesday revised downward its economic growth forecast for sub-Saharan Africa (SSA) economy in 2018 to 2.7 percent from an earlier forecast of 3.1 percent, because it sees sluggish growth in the continent’s bigger economies (Nigeria, South Africa and Angola) weighing on overall growth of the continent.

“The slower pace of the recovery in SSA is explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa,” the bank said in a statement.

The World Bank in April this year predicted the region to grow at 3.1 percent, up from 2.3 percent last year due to increased prospect seen in the Nigerian economy.

However, growth in the Nigerian Gross Domestic Product slowed 1.5 percent in the second quarter of 2018, from the 1.95

percent that was recorded in the previous quarter owing to a decline in the oil sector.

South Africa entered into recession after its economy shrank 0.8 percent in the second quarter of the year. The main reasons behind this contraction were slowing agriculture, transport and trade sectors, according to Statistics South Africa. In particular, the agriculture market fell back by 29.2 percent, taking 0.8 percent off economic output.

“Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture,” the bank said.

The rest of the countries in the region have been growing steadily this year, the bank said, especially those that do not depend on commodities, such as Ivory Coast, Kenya and Rwanda, according to Reuters’ reports.

“There are strong justifications for such downward revision in the economic growth

forecast. The economies of Angola and South Africa are in recession at the moment while that of Nigeria is in sluggish growth mood - moving toward a contraction except urgent measures are adopted,” Ayodele Akinwunmi, head, research, FSDH Merchant Bank Limited, says in an e-mailed response to BusinessDay. Akinwunmi sees the downward review of growth forecast by the World Bank as a wakeup call for policy makers and the economic managers in Nigeria to implement measures that will strengthen the economy.

In addition, he says such downward revision may mean that Nigeria should be expecting lower Foreign Direct Investment (FDI) in the short term, increase in interest rate, increased demand pressure at the foreign exchange market.

“All these are because of the elevated risk usually associated with the economy that is in recession or at the verge of entering a recession,” he says.

Reacting to the development, Razia Khan, managing director, Chief Economist, Africa at Standard Chartered Bank, says given that the two economies account for a sizeable amount of SSA GDP, it is no surprise that the weighted GDP average was reduced.

However, “In both cases we expect the growth slowdown to be temporary. South Africa’s technical recession was largely due to transient factors. Signs of recovery in more forwardlooking indicators are already in place. In Nigeria’s case, higher oil prices should create much more momentum in 2019,” Khan says in an e-mailed response to BusinessDay. Nigeria annual GDP Growth Eases to 1.5 percent in the second quarter (Q2) of 2018. The economy of Nigeria grew 1.5 percent year-on-year in the second quarter of 2018, slowing from a 1.9 percent expansion in the preceding quarter.

Angola’s GDP contracted 2.2 percent annually in the first

quarter of 2018, primarily on the back of a subdued performance in the all-important oil extraction and refining industry, as well as in the trade sector.

The South African economy slipped into recession during the second quarter of 2018, shrinking by 0,7 percent quarteron-quarter (seasonally adjusted and annualised). This followed a revised 2,6 percent contraction in the first quarter of 2018.

Albert Zeufack, the World Bank’s chief economist for Africa, urged governments in the region to stop wasting money, but boost productivity to support the region’s economic recovery.

High public debt in some countries in the region, combined with weakening currencies and rising interest rates, could endanger their ability to service those debts, the bank warned.

“Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt,” Zeufack said.

Ambode concedes defeat, congratulates Sanwo-Olu ... pledges to work for party’s success in 2019 ... as Sanwo-Olu thanks governor for good fight JOSHUA BASSEY

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fter a tense political atmosphere that almost grounded governance in Nigeria’s economic capital in the build-up to the All Progressives Congress (APC) direct governorship primaries, Governor Akinwunmi Ambode, has finally conceded defeat, and congratulated Babajide Sanwo-Olu, his opponent and winner of the primaries held statewide on Tuesday.

Ambode, in his shortest broadcast speech ever, on Wednesday, thanked the leadership of the APC at both the state and national levels, promising to work for the success of the party in the 2019 general elections.

The governor’s speech ends speculations about his possible defection to another party to contest in the 2019 governorship election.

Ambode had rebuffed the consensus position of the Lagos APC, to withdraw from the race, and back Sanwo-Olu, the anointed candidate.

The governor, who assumed the leadership of the state on May 29, 2015, also promised to do everything to ensure smooth transition of government in 2019, saying also it was time to move forward after the political upheavals that jolted the state.

The seven-paragraph speech reads: “Fellow Lagosians, the last few days have witnessed intense

political activities that have gripped the attention of the nation and created palpable tension in the polity.

I strongly believe that the time has now come for the state to move forward in order that the gains of the last three and half years are not lost.

Dear Lagosians, APC is a great party and the interests of our beloved state must always supercede that of any person or group. It is in this regard that I wholeheartedly congratulate the winner of the Lagos State APC primaries, Babajide Sanwo-Olu and urge all Lagosians to immediately support our party’s gubernatorial candidate in the 2019 elections and work for the success of our dear party.

As governor, I will do everything possible to ensure a smooth transition in the remaining period of this administration and ultimately to the new governor, come May 2019.

I therefore appeal to all our party members that we remain one family and unite behind the candidate of the party, so that we can continue to move this state forward.

The progress of Lagos State is non-negotiable. It is a project that I have passionately worked for in the last three and half years as your Governor and one to which I will forever be devoted.

I wish to use this opportunity to thank our national leader, Asiwaju Bola Ahmed Tinubu, and the lead-

L-R: Mbonu Gold Adaeze, Ecobank customer; Adeola Elliot, chief executive officer, Stephen’s Innovation Nigeria Limited, Ecobank customer; Patrick Akinwuntan, managing director, Ecobank Nigeria; Elizabeth Osikanlu, Ecobank customer, and Emmanuel Mayaki, head, operations and technology, Ecobank Nigeria, during the flag off of Customer Service Week by Ecobank in Ikorodu, Lagos.

ership of our great party at state and national levels, all party faithfuls and all Lagosians.

I thank all Lagosians for their faith and trust in me. I urge you not to relent in your support for our party as we prepare for the general elections.”

Sanwo-Olu, winner of the primaries, earlier in the day thanked Ambode for putting up a good fight.

In his acceptance speech to party members, the former commissioner for establishments and training, appreciated Ambode for adding glamour to the election, and wished him well in the remaining months of his administration.

The results of the election were initially contested by Ambode’s supporters, who alleged harassment. The APC seven-man election committee sent from Abuja and headed by Clement Ebri, a former governor of Cross Rivers State, had on Tuesday cancelled the election, and announced it would be conducting a fresh primary in the state, but was overruled by Adams Oshiomhole, national chairman of the APC, and his National Working Committee (NWC).

The results of the primaries which held across the 245 wards of the state, and later signed by Ebri, show Sanwo-Olu polling 970,851 votes, against 72,901 secured by

the incumbent governor.

The outcome of the election finally nailed Ambode’s second term ambition. The governor now has up till May 29, 2019 to vacate the Government House, Alausa, having been rejected by his party as their flag bearer for the 2019 general elections.

Sanwo-Olu, who also thanked the leadership of the APC at both state and national levels, as well as elders and members of the party for massive support given him, promised he would not betray the confidence reposed in him. He said the battle to retain Lagos in 2019, and consolidate on the gains of the APC in the state, has begun.

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OPEC faces bigger dilemma in Washington than Trump’s social media antics DIPO OLADEHINDE & AMBIMBOLA HASSAN

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ith oil prices hitting fresh fouryear highs of $85 and expected to rise further, Organisation of Petroleum Exporting Countries (OPEC) will be facing growing pressure as United States under Donald Trump looks set to take the war against higher prices from social media to court room.

Rising oil prices are again stoking predictable anger in Washington, as US Senate subcommittee this Wednesday heard testimony on the resurrected No Oil Producing and Exporting Cartels (NOPEC) Act, which proposes making the cartel subject to the Sherman anti-trust law, used more than a century ago to break up the oil empire of

John Rockefeller.

Emmanuel Afimia, energy analyst at Afimia Consulting Limited, says the US wants to use NOPIC to protect her citizens from the effect of surging oil prices. However, he warns that the negative impact of NOPIC, if passed, will be felt by oil dependent nations like Nigeria.

“NOPIC will limit OPEC’s power to influence and control oil price.

Hence, oil price will fall and may remain low for a very long time,” Afimia says.

The bipartisan NOPEC bill would tweak US antitrust law to explicitly ban the kind of collusive behaviour that OPEC was created to engage in. The bill, a carbon copy of previous legislation, makes illegal any activity to restrain the production of oil or gas or set oil and gas prices and knocks away two le-

gal defences that in the past have shielded OPEC from US anti-trust measures.

“The success of NOPIC may lead to the end or collapse of the organisation if a new strategy is not developed to for influencing oil price,” Afimia says on phone.

According to Ademola Henry, team leader at Facility for Oil Sector Transformation (FOSTER), sanctioning OPEC will bring about no resultant effect despite the fact that NOPEC acts claim to remove their immunity.

“This act will have no effect on oil prices as oil prices are up as a result of Iranian sanctions and OPEC holding sway in oil output, which will as well have no effect on the committee going forward,” Henry told BusinessDay. The bill was re-introduced in late May and cleared its first legislative hurdle in June, when the

House Judiciary Committee quickly sent it to floor deliberation. It would allow the US government to sue OPEC for manipulating the energy market, potentially seeking billions of dollars in reparations.

The bill faces a long, difficult journey before it can become law as previous attempts have cleared the Judiciary Committee four times, and despite a veto threat by then-president George W. Bush. The House of Representatives even approved the bill in 2007 in a 345-72 vote, and the Senate by 70-23, only to die afterward.

“It remains to be seen if House leadership will bring the bill to the floor for a vote, Brian Griffith,” a spokesman for bill sponsor Representative Steve Chabot, an Ohio Republican was quoted to have said by Bloomberg.

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IGR to soar as Edo deploys tech-based revenue collection scheme

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do State government has deployed its innovative technology-based revenue administration scheme that automates the entire process of revenue administration from capture, profiling, assessment generation and notification through to cashless settlement.

This is to boost internally generated revenue (IGR) in the state by expanding the tax net and enhancing payment convenience for citizens. Governor Godwin Obaseki explains that the new scheme will eliminate man-made barriers and other extraneous variables that interfere with the revenue collection process.

According to Igbinidu Inneh, chairman/CEO of Edo Internal Revenue Service (EIRS), the innovative solution, christened Edo Revenue Administration System (ERAS), “is being delivered as part of the strategic institutional transformation of the EIRS and feeds off the governor’s objective to transform Edo State into an innovation hub.”

Inneh said, “The ERAS solution is a distributed revenue administration system which seeks to solve the challenges faced by revenue authorities in Nigeria for Edo State.”

Tagged Project Dobberman, ERAS, according to the technology partners, “in every sense has been delivered in an unprecedented record time in less than 18

months from conceptualisation, partner selection to development and integration.

“This is significantly ahead on time for the deployment of most Enterprise Resource Planning (ERP) systems anywhere in the world.”

The EIRS boss noted, “The current tax base which grew within weeks of testing ERAS from just about 190,000 to over 250,000, will double within the first six months of operations and to one million within two years.”

The visibly elated EIRS boss further said that “This accomplishment is truly one legacy Edo State will bequeath to the Nigerian Revenue Administration process and indeed other emerging economies of Africa.

On the project name ‘Dobbermann’, Mr. Inneh explained that it took its root from tax history and the strategy of Karl Friedrich Louis Dobermann, who first bred the Doberman Pincher dog breed in the town of Apolda, Germany, around 1890 as the local tax collector. He ran the Apolda dog pound and aimed to create a breed that would be ideal for protecting him during his collections, which took him through many dangerous, bandit-infested areas.

“It is simple to see that ERAS has been conceived, conceptualised and developed as the technological, modern day watch dog of government revenues.”

Firm holds agro export confab ‘Meet the Farmers Nigeria’ IFEOMA OKEKE

L-R: Simpa Adaba, head, wealth management, Standard Chartered Bank (SCB); Saheed Omobolaji, head, investigation unit, lands registry, Lagos State Lands Bureau; Dayo Aderugbo, head, corporate affairs, brand/marketing, SCB; Adejoke Gbenro, managing partner, Adebanke Adeola & Co, and Osifuye Adesanya, general manager, Lagos State Physical Planning Permit Authority, at the Standard Chartered Bank Mortgage Fair for clients in Lagos.

MBA Tour returns to Lagos to link prospective students with college officials

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o provide the information needs of professional students, business executives and academics who are interested in pursuing a Master in Business Administration (MBA) or an Executive Master’s degree abroad, the MBA Tour will return to Lagos on Saturday, October 13, 2018 to provide prospective students a free opportunity to engage with the world’s most prominent business schools from various countries.

“This initiative aims to educate prospective students on the components of an MBA degree when considering international business schools. Our previous tours in Nigeria have been

very successful, and we are delighted with the interest shown by so many young professionals in an MBA qualification.

“We therefore see great value in returning and giving prospective students an opportunity to interact with admissions directors from the world’s top business schools,” says Peter von Loesecke, CEO/managing director of the MBA Tour.

This year’s participating business schools include Columbia University (USA), MIT Sloan (USA), Northwestern University, Kellogg (USA), University of Toronto (Canada), Boston University (USA), Duke University (USA), University of Pennsylvania (USA), and IE

Business School (Spain).

Von Loesecke added that most prospective students do not have the opportunity to source information on campus. To bridge this gap, The MBA Tour grants them the opportunity to have oneon-one conversations with admission representatives, collect all the necessary information they require, and have all of their MBA-related questions answered.

The MBA Tour conference will be held at the Four Points by Sheraton Hotel Victoria Island, Lagos on Saturday, 13 October 2018.

Attendees can expect presentations from the various business schools, a panel discussion on obtaining scholarships and financial

aid, the application and admission process, GMAT strategy sessions, as well as a chance to network with the admissions directors and alumni.

Established in 1993, The MBA Tour is an international business recruitment platform with emphasis on personal interaction between prospective MBA students, business school admission representatives, alumni and other like-minded education enthusiasts. It has built its reputation based on representing only the top business schools from Africa, Asia, Latin America, The Middle East, Australia, Europe and North America.

The event is free to attend.

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renov8 Consulting, a consulting and digital technology firm in the Middle East, Dubai and Africa, is set to hold its agro export conference tagged ‘Meet the Farmers Conference (MTFC), Nigeria’ on October 10, in Lagos.

Meet The Farmers’ Conference is an agro stakeholders’ meeting aims at connecting large-scale agro commodity producers to buyers and investors in the Middle East, while also establishing and strengthening the international trade ties that exist between Africa and the GCC through agriculture.

Crenov8 embarked on this mission in 2017 to create a platform where the African agricultural producers will meet with off takers in the Middle East and beyond, to effectively translate business deals and network, collaborate, and form potential business partnerships across borders, to ensure food security in the

Middle East and promote agribusiness in Africa.

2017 MTFC, which held in Dubai, received governmental and political recognition, moderated by Juma Al Kait, undersecretary of the Ministry of Economy Dubai, and underwritten

by Saud Salim, the CEO of Hamriyah Free Zone Authority, the largest free zone in the United Arab Emirates (UAE), was hugely successful.

“Meet The Farmers Conference is targeted at both large and small-scale farmers to tap into the $100billion market in Dubai- that is why we are partnering with relevant stakeholders across both government, to help us aggregate farmers to export Agric produce to the UAE,” Bola Oyedele, business consultant at Crenov8 Consulting, said.

This year, Crenov8 has successfully held editions of the conference in Ghana on July 4, Kenya on September 21, 2018, and another to hold in Rwanda on October 5, while the Nigerian edition holds October 10.

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Coronation Merchant Bank deepens investment banking with graduate analysts HOPE MOSES-ASHIKE

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n a bid to foster continuous human capital development within its organisation, Coronation Merchant Bank Group has graduated some young Nigerians at the second graduation ceremony of its annual banking and finance academy.

The annual banking and finance academy is a graduate trainee programme for investment banking analysts, which takes place over a period of eight months. During that time, budding analysts are trained across various areas of banking and financial services by exposing them to a broad-based organisational learning function, a three-month internship programme, community development projects, corporate/ soft skills development and a culture management programme.

Speaking at the ceremony, Abu Jimoh, group managing director/CEO, Coronation Merchant Bank Group, said, “The graduate trainee programme is our key way of resourcing the bank. It provides us with a platform to make meaningful contribution to the development of our host communities through the opportunities it provides to young people in the form of human capital development.

“Our strategy is to attract the best and brightest from across the world and immense them in our culture at a very early stage. We believe this strategy will help us in leadership sourcing as well as ensuring a well-diversified workforce that will serve the organisation in the years to come.”

Also speaking at the ceremony, Onayimi Aiwerioghene, head, Enterprise Management of the bank, said, “Our goal is to build the

future of the banking group around these set of young and dynamic people. As they commence their journey towards becoming leading investment bankers in Nigeria, we are committed to providing them with the tools, resources and skills they need to make their career with us very successful.”

Coronation Merchant Bank group was established to fill the gap in a long-underserved market segment, seeking to address the need for long-term capital across key sectors of the economy.

The Group offers investment and corporate banking, private banking/wealth management and global markets/treasury services to its diverse clients. It also offers securities trading/brokerage, asset management and trustees services via its subsidiaries; Coronation Securities Limited, Coronation Asset Management Limited respectively.

BudgIT ranks Edo high on ability to meet monthly recurrent expenditure

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he frugal allocation of resources by the Governor Godwin Obaseki-led administration in Edo State, which has enabled the state meet its monthly recurrent expenditure commitment, has been applauded by independent researcher, BudgIT. The organisation’s ranking validates investors’ rating of Edo State as an emerging investment haven with sound reforms in critical sectors such as land administration, company registration and the positive disposition of the government to investment, domestic and foreign.

In its “State of the States 2018 Report on the ability of States to Meet Monthly Recurrent Expenditure Obligations for January – June 2018,” BudgIT, a civic organisation, said: “Rivers, Bayelsa, Delta, Akwa Ibom, Edo and Ondo are among the top ten states

in our Index.”

The organisation in its fiscal sustainability index analysis explained that “Index A looks at the ability of states to meet their recurrent expenditure obligation with state-owned revenue like value added tax, 13 percent derivation and Internally Generated Revenue (IGR).

States like Rivers, Lagos, Delta, Bayelsa and Edo sit top of Index A.” On Index B which looks at the states’ ability to cover all recurrent expenditure without resorting to borrowing, the organisation noted: “Interestingly about 16 states could cover the recurrent expenditure obligation without borrowing funds – a marked improvement over 2017.

“In the first six months of 2017, only four states could effectively meet their recurrent expenditure without borrowing, selling assets or/

and donor funds. States like Kano, Bayelsa, Edo, Rivers and Delta sit on top of the index.

BudgIT noted, “Edo State appears to have shown some initiative by trying to resuscitate its rubber and palm plantations in conjunction with the private sector, a move likely to increase earnings.”

The plan is to “leverage on high-yielding varieties and long tradition of oil palm production to acquire about 100,000 hectares of land for the development of oil palm estates.” It advised, “The timelines in which this project will be achieved are crucial.”

It assured that “the Gelegele Seaport, which is to be transformed into a container port, holds great promise, if Edo aggressively revitalises her rubber industry – especially as the commodity trades at about $2,000 per ton.”

Tambuwal promises to restructure, reposition Nigeria INIOBONG IWOK

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overnor of Sokoto State and a presidential aspirant on the platform of the People’s Democratic Party (PDP), Aminu Tambuwal, says he will rescue, restructure and reposition the nation if given the opportunity to be the party’s presidential aspirant and win the 2019 presidential election.

Tambuwal, a former speaker of the House of Representatives, recently defected from the ruling All Progressives Congress (APC) to the PDP.

The governor stated this yesterday in Lagos, during his visit to the secretariat of Lagos chapter of the PDP in continuation of consultation with delegates and party leaders ahead of the national convention in Port Harcourt on Saturday.

Tambuwal appealed to the party delegates to support him with their votes, promising to fix the country; tackle marginalisation of some ethnic groups, stressing that he was trustworthy and understood the complexities of the nation.

He said he was a true Nigerian, had made friends across the country, not-

ing that during his tenure as speaker of the House of Representatives, he and his other colleagues knew how to handle national issues with common interest.

Speaking further, the former speaker noted that he would make all Nigerians have a sense of belonging; operate his transparent administration on the principles of democracy, adding that restructuring of the country would be a major priority of his administration.

He lamented the deplorable state of the country, adding that Nigeria could not be static when the world was dynamic.

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Digital technologies will reshape global trade – WTO Osinbajo, Ambode, others join Kumuyi at

... time for Nigeria, African peers to ramp investment in human capital ISAAC ANYAOGU

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igital technologies, namely the Internet of Things, artificial Intelligence, 3D printing and Blockchain, will have a profound impact on global trade adding as much as 34 percentage points to trade growth by 2030 due to lower costs and higher productivity, according to the World Trade Organisation (WTO).

The organisation in a report released October 3, says digital technologies are likely to further reduce trade costs and boost trade significantly, especially in services and for developing countries, but cautions they could also create a challenging environment for those seeking to keep up with the latest innovations.

“Global trade is projected to grow by an additional 2 percentage points annually between 2016 and 2030 as a result of digitalisation, falling trade costs and the increased use of services. This corresponds with a 31-34 percentage point higher trade growth over 15 years,” said a release by the organisation.

According to the report,

the share of services in global trade is projected to grow from 21 percent in 2016 to 25 per ent in 2030. The report also finds that the reduction in trade costs could be especially beneficial for micro, small and medium sized enterprises (MSMEs) and firms from developing countries, provided they have the ability to keep up with the adoption of digital technologies.

“In the best scenario, developing and least-developed economies’ share in global trade is predicted to grow to 57 percent by 2030, from 46 per cent in 2015, whereas if they cannot keep up, this share is predicted to rise to 51 per cent,” said the report.

The challenge experts say is making the right investments now to foster growth in developing countries.

Bill Gates, a philanthropist, and Emmanuel Macron, French President, recently harped on the need for massive investments in health, human capital development and agriculture as Africa’s path to a sustainable future.

Gates admitted these investments require global support but African countries must lead the way through investments in hu-

man capital development, which will have big impacts in the young population.

“If those investments are made in the right way, you get two kind of amazing effects.

One is those kids are able to contribute fully and drive a lot of economic growth, and then further, the patterns of behaviour on a voluntary basis would be that the level of population growth would actually diminish, just like it has in so many other countries,” said Gates.

WTO said digital technologies can unlock savings, such as through better route planning, autonomous driving and smart inventories made possible by artificial intelligence and robotics.

Blockchain solutions a system of decentralized, digital transactions - can reduce time spent on customs compliance and logistics.

The Internet of Things, the networking and processing capabilities of everyday objects, can help to improve operational efficiency through better preventative maintenance of machinery and products. These technologies can therefore reduce transportation and storage costs, which represent a major share of overall trade costs.

special anniversary service Sunday SEYI JOHN SALAU

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he Deeper Life Bible Church is set to host a special church service to mark Nigeria’s 58th Independence Anniversary on Sunday, October 7.

In a statement issued from the office of the General Superintendent of the Church, Pastor William F. Kumuyi, the service, which is at the instance of the Lagos State gov-

ernment, will be attended by the Vice President Yemi Osinbajo, and the state governor, Akinwunmi Ambode.

Members of the diplomatic corps, corporate chief executives, the military, top civil servants and other distinguished Nigerians from all walks of life are expected at the service.

The special service will, among others, include intercessions for the nation,

poetic renditions as well as speeches and goodwill messages by distinguished guests. A mass choir will minister to the huge congregation of about 40,000 people. The church service will also highlight a rare assembly of Nigerians born on October 1, 1960.

Kumuyi, the host pastor, will deliver the message at the Special Anniversary service.

New national minimum wage negotiation resumes 10.30am today - Ngige KEHINDE AKINTOLA, Abuja

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ederal Government on Wednesday confirmed its resolve to reconvene the renegotiation on the new national minimum wage today. The negotiation is expected to end on Friday, October 5.

The meeting is scheduled to take place at Transcorp Hilton Hotel, Abuja, by 10:30am, BusinessDay can report authoritatively.

Recall that the organised labour had on Sunday announced the suspension of the seven day warning strike declared to demand for the conclusion of the

negotiation, which was allegedly adjourned sine die by the Minister at the twilight of considering the new wage for Nigerian workers.

Speaking on behalf of the three labour centres: Nigeria Labour Congress (NLC), Trade Union Congress (TUC) and United Labour Congress (ULC), Ayuba Wabba, NLC President explained that the warning strike was suspended sequel to the “firm and formal invitation to a reconvened meeting of the Tripartite Committee scheduled for 4th and 5th of October, 2018.

“We demand that this shall be the final session of the

committee and that a final report will be submitted to Mr. President immediately.

“In order to avail the committee the necessary conducive environment to hold its crucial meeting and conclude its work, organised labour has, after obtaining the mandate of their necessary organs, decided to suspend the strike action with effect from today, Sunday, September 30, 2018.”

To this end, the Congress urged all its affiliates and state councils to “maintain a high level of mobilization and readiness until the struggle for a reasonable minimum wage is achieved,” Wabba said.

8 BUSINESS DAY NEWS HiFL 2018: Pace Sports, NUGA review games management structure

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ACE Sports and Entertainment Marketing (PSEM) and the Nigerian University Games Association (NUGA), organisers of the Higher Institutions Football League (HiFL®), a subsidiary of the Higher Institutions Sports League (HiSL®), have announced a realignment of the league management as the competition advances into the semi- finals.

In view of this, the role of Green White Green Sports Centre Limited (GWG) headed by Ahmed Shuaibu Gara Gombe, who was contracted as technical consultant for the league, has been suspended in line with a termination notice issued to GWG effective October 3, 2018. Following the termination notice, GWG ceases to be a representative of HiSL and by extension HiFL® in any capacity as regards correspondence or communication on behalf of the league.

Speaking on the realignment, director, PSEM, Sola Fijabi, said ‘PACE appreciates the contribution of GWG towards the league, however recent events dictated the need for a review in order to sustain the league’s integrity and continued success.

As HiFL® moves into the finals phase of the first edition, we find the need to step back and re-evaluate processes and relationships in line with the League’s objectives. And to ensure the positive level of play both on and off the field is sustained with a view to achieving a reliably compliant league model that works for all. As such, it has become necessary to inform the media and the public of our realignment decision.

HiFL®, its organisers and partners remain committed to sustaining a fair and transparent league, devoid of any form of abuse and misconduct, while stimulating healthy rivalry among students across Nigeria in the unifying spirit of sportsmanship, he said.

In his remark, the President of the Nigerian University Games Association (NUGA) Stephen Hamafyelto appreciated PACE for their determination to see the league succeed and set an enviable record in collegiate sports in Nigeria.

“We are happy with the successes recorded so far with HIFL. Despite expected challenges of a newly formed league, we are getting stronger”.

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Thursday 04 October 2018

WHO starts global initiative to treat children with cancer ANTHONIA OBOKOH

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he World Health Organisation (WHO) on Wednesday announced a new effort, the WHO Global Initiative for Childhood Cancer initiative, to treat children with cancer globally.

The agency states that the initiative is with the aim of reaching at least a 60 percent survival rate for children with cancer by 2030, thereby saving an ad-

ditional one million lives.

“This new target represents a doubling of the global cure rate for children with cancer,” it says.

The Initiative is announced on the heels of the Third Global HighLevel Meeting on Noncommunicable Diseases, which convened dozens of heads of state and ministers from all countries to prompt more urgent action on non-communicable diseases – among them cancer, diabetes, heart and lung diseases which kill 41 million peo-

ple each year.

According to the agency, the aims of the initiative are two-fold, to increase prioritisation of childhood cancer through awareness raising at global and national levels, and to expand the capacity of countries to deliver best practice in childhood cancer care.

“St. Jude Children’s Research Hospital in the United States, the first WHO Collaborating Centre on childhood cancer, has committed $15,000,000 to supporting

implementation of the initiative,” says agency.

Cancer is a leading cause of death for children, with 300,000 new cases diagnosed each year among children aged 0-19 years.

Children with cancer in low- and middleincome countries are four times more likely to die of the disease than children in high-income countries. This is because their illnesses are not diagnosed, they are often forced to abandon treatment due to high costs,

and the health professionals entrusted with their care lack specialised training.

Concretely, WHO will support governments to assess current capacities in cancer diagnosis and treatment, including the availability of medicines and technologies; set and cost priority cancer diagnosis and treatment programmes, and integrates childhood cancer into national strategies, health benefits packages and social insurance schemes.

Thursday 04 October 2018

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COMMENT POSITIVE GROWTH WITH BABS

BABS OLUGBEMI Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa

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igeria celebrated her 58th independence on Monday, October 1, 2018. The low-key celebration is understandable given the positions of the two divides-something to celebrate and nothing to celebrate groups.

They earnings of the majority of the Nigerians to live a life above average cannot be said to have been met given the level of poverty and the drama in our democracy. The fact that previous policies like the housing for all by the year 2000 have been a slogan without measurable impacts and the show of affluence by the few business and political elites has left much to be desired.

However, Nigerians are hopeful.

We believe the country will get it right and make histories like Singapore, Taiwan and a host of countries without the enormous resources Nigeria is endowed with. We look up to have visionary leadership that will one day write our names in history and create another Singapore story-from survival to fulfilling development among the nations of the world.

One thing to celebrate in this year’s independence is the increasing political awareness of Nigeria’s populace and the call to the account-

Thursday 04 October 2018

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Nigeria and the sustainable development goals ability of the people saddled with the resources and responsibility for governance. Though this is yet to be fully reflected in the electioneering process, a few examples are the loss or almost loss of power by the incumbents.

To most Nigerians, the economic and social welfare of the citizens is important than who holds the political power. To effectively meet the yearnings of Nigerians for a better life, Nigeria must develop a yard stick of Key Governance Indicators (KGIs) that are not disputable and in line with the global aspirations for the citizens around the world.

The Sustainable Development Goals (SDGs) is the United Nations General Assembly initiative established in 2015 to drive an inclusive and minimum standard of living for people in the world by the year 2030. The seventeen SDGs are the summary of the one hundred and seventy-nine targeted objectives that are to be achieved to make the world a better place for living for people.

The primary themes of the SDGs are: 1. No poverty, 2. Zero hunger, 3. Good health and wellbeing for people, 4. Quality education, 5. Gender equality, 6. Clean water and sanitation, 7. Affordable and clean energy, 8. Decent work and economic growth, 9. Industry, innovation and infrastructure, 10.

Reduced inequality, 11. Sustainable cities and communities, 12.

Responsible consumption and production, 13. Climate action, 14. Life below water, 15. Life on land, 16. Peace, justice and strong institutions and, 17. Partnerships for the goals.

The assignment of the SDGs projects to a senior special assistant to the President and the creation of a structure around it are laudable.

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People should have the right perspectives of the achievements of the public officers. Having the right perspective that public officers are custodians of resources, and not the owners will reduce the praisesinging industry and sponsored accolades

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Howbeit, the mandatory adoption of the SDGs at all levels in Nigeria will eliminate ambiguity in the direction the country is heading to. This uniformity of purpose is a platform for achievement and the yardstick of resolving the conflicts of the divides as to whether there is something to celebrate or not from October, 2019.

Having uniform policy objectives from the federal to the local government levels will shape expectations and allow the performance appraisal of the people elected to act for others easier than envisaged.

For the SDGs to be successfully pursued and achieved there must be a collective political will to create, align and drive relevant policies irrespective of political affiliations, religious or sectional beliefs. There

is a call for a document with constitutional backing to align efforts in the same directions and with the identified objectives in mind.

Aside political will, SDGs 16 and 17 preclude others in the Nigeria situation. No growth and development will be achieved even if pursued with all the resources and effort, except there are strong institutions, peace and justice. That is where Nigeria might likely fail to be counted in 2030 when there view of the SDGs is being done. In the interest of Nigerians, the political elites should ensure justice without which having peace is an illusion.

The independence of the judiciary, the legislature, the press and the entrenchment of the rule of law will create institutions that can uphold the aspirations of a society worthy of having for Nigerians.

SDG 17 demands the partnerships of all in driving all the other sixteen SDGs. The partnerships are stronger if it starts within the country. For, SDG 8, decent work and economic growth to be achieved, the institutionalization of the private sectors is inevitable. Thus, the private sectors must be deeply involved in the people’s mental well-being and balance as the employers of labour.

The private sectors’ supports and involvement cut across most of the SDGs 1 to 12. However, a score of 8 out of 10 in SDGs 3, 8, 9, 11 and 12 will complement the government efforts.

It takes visionary leadership to buy in to and work in the interest of the people of Nigeria. A visionary leadership team will develop or align policies, create an enabling environment and administration of all the components of the country in the interest of the generality of the citizens. A visionary leadership will live above the religion, ethnicity and sectional bias and upload the tenets

of the Nigerian constitution.

One area of alignment is the way our public officers’ achievements are measured and benchmarked.

The political office holders under the SDGs’ environment will not attribute the outcome of governance to self. The resources are of the people and not personal. People should have the right perspectives of the achievements of the public officers. Having the right perspective that public officers are custodians of resources, and not the owners will reduce the praise-singing industry and sponsored accolades.

At the institutional levels, the budget sessions of the federal, state and local governments, the state competitive index rating, the performance rating of the private sectors, the non-profit organisations and all the Key Governance Indicators (KGIs) should be benchmarked with the 17 SDGs goals. The award of contracts or grants should have a section for the SDGs effect analysis.

The rating organisations should hence, measure the impacts of business entities on SDGs outside the size of profits and return on investments to shareholders. The award issuing bodies should align the awards to individuals and organisations to focus on the contributions to the achievement of the SDGs. In conclusion, all the sectors of the economy are important and needed to make Nigeria a country we will all be proud of by 2030, a country to be counted for the SDGs’ achievements. In achieving this, one class of the Nigerian workers who deserves more focus is the teachers.

The teachers will drive and sustain the achievement of the SDGs beyond this generation of the citizens.

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Company policies and procedures: A path to equity, consistency, growth and longevity

JUDE ADIGWE Adigwe is a certified Human Resource Management (HRM) professional and is the Human Resources and Administration Manager at Sharemind Lagos

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olicies and procedures form part of the structures in organizations and they give rise to standard processes in organizations. The emphasis on standard processes implies that some processes may exist but may not be standard owing to the source as well as variations on a case-to-case basis. Such processes are usually as a result of informal practices that hold sway in organizations. Some, due to an absence of formal structures and others, due to a deliberate attempt to circumvent laid down formal prescriptions.

Some companies, especially sole-proprietorships, consider policies and procedures as cogsin-the-wheel of business advancement because of emphasis

laid on fairness and due process.

For many of these companies, profit is the sole measure of performance (a narrow perspective) and whatever means ought to be employed in achieving that should be employed even if it requires jettisoning policies and circumventing laid down procedures. While many companies may not see beyond the constraints that policies and procedures place on them, it is important at this point to offer a refreshing and reassuring perspective. This perspective seeks to emphasize the huge benefits of having policies and procedures in place in organizations.

Business Dictionary defines policies as “principles, rules, and guidelines formulated or adopted by an organization to reach its long-term goals and typically published in a booklet or other form that is widely accessible”.

The same dictionary defines procedures as “the specific methods employed to express policies in action in day-to-day operations of the organizations”. It is important for me to stress here that robust and practical policies are products of thorough research.

Policies ought not to be in dissonance with federal and state laws as this would render such poli-

cies null and void. Furthermore, policies must not only reflect the laws of the state or federation, they must reflect an aspiration for ideals.

I advocate for policies and procedures in organizations because they help in achieving equity, consistency, growth and longevity. It is common knowledge that policies and procedures promote equity by ensuring that everyone abides by the prescriptions contained therein – no inequity or bias and company issues are not left to the discretion of individuals on a caseto- case basis. This goes to state that policies and procedures engender a system that is fair. With such in place, organizations move away from discriminatory practices that leave stains on their reputation.

Closely linked to equity is consistency. Policies and procedures guarantee the institutionalization of processes as they ensure that on a case-to-case basis and within or across departments and company branches, the processes are consistent. Consistency is very essential in the maintenance of corporate culture especially as companies expand across geographies. These policies and procedures will stay same although with some nuances to reflect the differences in geographies.

Of utmost importance is the

fact that policies and procedures help companies grow owing to the fact that they guarantee that rules/guidelines/regulations are not a function of verbal dictates of company leadership – though (to company owners) verbal dictates guarantee control however it is not sustainable owing to their non-possession of the attribute of omnipresence. Besides, substituting policies and procedures with verbal prescriptions requires a great deal of mental and physical energy.

To grow as a company requires that powers devolve from the top and that solid structures be in place to guide the exercise of these powers. These structures are policies and procedures that guarantee a proper use of powers enjoyed by those in authority. Interestingly, to grow requires a sharp focus (on critical matters) and with policies and procedures in place that can be achieved because processes will be in motion with little or no interference from those in authorities. Lastly, policies and procedures guarantee longevity of companies.

Ideally, companies ought to outlive their founders and/or owners. This is only possible when solid structures that drive processes are completely independent of company owners. Company owners need to start seeing their companies from

the perspective of legacies. Build a structure with the future (without you) in mind. This is important because if companies revolve around them (owing to no policies and procedures) then it is almost certain that their companies die with them and all efforts put in ab initio will be wasted.

To achieve all these, companies must go beyond merely formulating policies and procedures, they must uphold them in order to promote the desired company culture.

Lest I forget, there is the need to constantly review policies in line with changes from within and/ or without. This is very important because good policies and procedures are not only fair and practical, they are responsive and amenable to change. While companies seek to promote fairness across board through policies and procedures, they must stay focused on ensuring their businesses meet financial and non-financial targets -- this they can achieve through a tactical mapping of business objectives on policies and procedures so that as processes are being driven by policies and procedures, they are consequently achieving company targets.

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A fallacious Christian doctrine

TOCHUKWU EZUKANMA Tochukwu Ezukanma writes from Lagos, Nigeria via maciln18@yahoo.com

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am a preacher without a pulpit. As such, I hardly have the opportunity to preach in a church. On the very few occasions that I was opportune to preach to a congregation, I did not preach prosperity because Prosperity Doctrine is self-serving convolution of the Gospel of Jesus Christ. It is a perversion of the word of God necessitated by the need to make Christianity relevant to a grasping and wealth-obsessed society. For the most part, Prosperity Doctrine is falsehood.

The object of the earthly ministry of Jesus Christ was not to make us rich but to reconcile us unto God. It is this reconciliation and its attendant salvation and righteousness that are the desiderata for the blessings, which includes good health, happiness, prosperity, etc, of a Christian. It was a point Jesus succinctly made in Matthew 6: 33, “Seek you first the kingdom of God, and his righteousness: and all these things (wealth, mansion, fancy cars, good health, etc) shall be added unto you”. It is a statement remarkably similar to God’s

Conversation beyond Optics

RASAK MUSBAU Musbau is of the Features Unit, Lagos State Ministry of Information and Strategy, Alausa, Ikeja.

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t the turn of the millennium, and for the first time in human history, about half of the world’s population began to live, not just in ‘cities’, but in ‘mega-cities’. In this league of cities are Tokyo, New York City, Mexico, Mumbai, Sao Paulo, Delhi, Shanghai, Calcutta, Los Angeles, Karachi, and Rio de Janeiro. Lagos joined the league in 1995 when it reached population of over ten million from about 665,000 in 1963.

Observably, difficulty in waste management, scarcity of resources, air pollution, human health concerns, traffic congestions, dete-

earlier instruction to Joshua, in Joshua 1: 8, “The (word of God) shall not depart from thy mouth; but thou shall mediate there in day and night, that thou may observe to do according to all that is written therein: for then thou shall make thy way prosperous, and then thou shall have good success.”

The prosperousness and good success of a Christian are corollaries of Christianity, things that naturally follow true Christians because they have sought and found the kingdom of God and all its righteousness. Just as smoke inevitably accompanies fire; the blessings of God unavoidably follow a true Christian. So, to seek prosperity without having first sought and found the kingdom of God and all its righteousness or observed to do according to all that is written in the Word of God is comparable to seeking smoke without fire, which is Abracadabra.

Before the moral and ethical collapse of the Nigerian society, prosperity doctrine would have outraged Nigerian Christians; they would have considered it inconceivably sacrilegious. Then, pastors exhorted their flock to be law abiding, content, trustworthy, compassionate, etc. They preached chastity, humility, patience and love for others, which will in the end earn a Christian eternal life. In line with the stipulations of the Bible, they denounced avarice, cupidity, lechery and all forms of worldly excesses.

The moral and ethical collapse of the Nigerian society resulted from that woeful amalgam of military rule and oil boom. With military intervention in politics, Nigeria lost her innocence. The

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To pander to their own insatiable greed and make Christianity pertinent to a country wholly engrossed in her conscienceless voracity and unbridled materialism, the pastors contrived prosperity doctrine. With prosperity doctrine, the pastors ignore the central themes of Christianity and dwell on wealth acquisition…

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brutality and bloodletting that attended military intrusion in politics brutalized the national psyche and encouraged a culture of violence.

Secondly, soldiers are trained to kill or be killed. Consequently, without knowing it, they live today as though they are dying tomorrow. Those with very little regards for human lives and the future must invariably be hedonistic and financially reckless. Their riotous self-indulgence and financial wastefulness fuelled by the then burgeoning oil wealth heightened materialism, corruption and moral squalor in the Nigerian society.

Their deeds denigrated hard work, honesty and commitment to duty; and glamorized greedy; extolled might is right and reaping

where you have not sown; and established wealth and material possession as the only real indexes of achievement and/or success. And, as religion (which is distinguishable from the Truth) is susceptible to the social environment, this emergent warp societal mores, with time, deeply influenced Christian doctrine in Nigeria.

To pander to their own insatiable greed and make Christianity pertinent to a country wholly engrossed in her conscienceless voracity and unbridled materialism, the pastors contrived prosperity doctrine. With prosperity doctrine, the pastors ignore the central themes of Christianity and dwell on wealth acquisition (money, cars, mansions, etc). They teach the “principle of wealth”, which to them is giving – giving to the church and the pastors.

They preach that wealth accrues as harvest from sowing (your money) into the church and lives of pastors. God will bless you only in accordance to what you have giving to Him – through His representatives – the pastors. They preach that Abraham was ready to give God all he had, his only son, Isaac, and consequently God blessed him. So, if you give the pastors (the vicars of God) all – all the money you have –God will bless you as He blessed Abraham.

Such a doctrine is fallacious: it perverts the Gospel of Jesus Christ and circumvents the essence of Christianity, such as, repentance, forgiveness and love. Not surprisingly, many Nigerian Christians profess Christ but do not strive to be Christ-like, which explains a major problem of Nigerian Christianity: Nigerian Christians, by their words and deeds, are not

distinguishable from unbelievers.

Despite their profession of being born again and filled with the Holy Spirit, their utterances and behaviours betray no discernible difference from those of heathens.

Just like the generality of Nigerians, they are lawless, wicked, dishonest, greedy, arrogant and snobbish.

In their desperation to acquire wealth, they, like unbelievers, lie, steal, kill and dally with satanic forces.

So, when I preach, I preach against that Whiten Sepulcher – falsehood cloaked as the Word of God – prosperity doctrine. I preach that the life of a Christian should be exemplary. He should be, as the Bible stipulated, the light of the world, the salt of the earth. I preach against greed, wickedness, lawlessness, impatience, dishonesty, arrogance, and disdain for the poor and adoration of the rich, etc. I preach honesty, love for others, patience, obedience to the law, respect for all, irrespective of their station in life, etc.

Just as those believers were called Christians in Antioch because their words and deeds portrayed their creed, the words and deeds of Nigerian Christians should demonstrate the teachings of Jesus Christ. A Christian should pride himself less on being born again and filled with the Holy Spirit and demonstrated flair for quoting the Bible, but more on exemplifying the teachings of Jesus Christ, as encapsulated in the fruit of the Spirit: love, joy, peace, longsuffering, gentleness, goodness, faith, meekness and temperance. This is because “an ounce of example is worth more than a ton of precepts.”

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Lagos, urban development and livability riorating and aging infrastructures among others are inescapable physical and material problems in mega-cities. Lagos was caught in the web of some of these problems largely because it has developed independently of the efforts of city planners, through unstructured urbanism. The State was a good case study of everything that is wrong with Nigeria’s pseudo-federal system.

Ordinarily, large cities, towns and even small neighbourhoods do not spring up overnight. They are the result of careful planning by civil and design engineers, project managers, architects, environmental planners and surveyors. The reverse was the case with Lagos State. No one foresaw or planned for the disarray and congestion caused by exponential increase in the population of the state sequel to influx of Nigerians from different geo-political zones, especially starting from period after the Nigeria’s civil war.

Before Alhaji Lateef Jakande came on board in 1979, the state had gradually become a city with reverse development as investment on the state infrastructure was far below the requirement. The Jakande administration worked

tirelessly to bridge deficit of infrastructure in education, housing, transport, environment, health and other sectors until its tenure was halted on 31stDecember, 1983.

From the period of military misrule until 1999, Lagos had become a slum known more for contravention of building code, traffic jam, heaps of refuse and decayed infrastructure.

Nigeria itself was underdeveloped and left to be surpassed in terms of development by the likes of Singapore, Malaysia and South Africa. In other words, Military rule failed Lagos, just as it failed the entire country.

Urban sociologists and perceptive Nigerian observers who are watching what’s going on in Lagos State today would rightly agree that making Lagos a more livable city is emerging as a strategy to mitigate the problems engendered over the years.

Improving on the strides of preceding administrations, especially from 1999-2015, the present government is focused on formulating policies and implementing programmes that will change the narrative of a city that has largely developed independently of the efforts of city planners.

Consequently, the current administration has adopted a proactive strategy to turn identified activity centres within the state into vibrant

and organized areas through the preparation of master and model city plans. Twelve model city plans had so far been prepared. These are Lekki Comprehensive Master Plan, Badagry Master Plan, Ikoyi-Victoria Island Model City Plan, Ikeja Model City Plan, Alimosho Model City Plan, Mainland Central Model City Plan, Apapa Model City Plan and AgegeIfako Model City Plan. Others are Epe Master Plan, Ikorodu Master Plan, Oshodi-Isolo Model City Plan and revised Ikeja Model City Plan.

Urbanization is being raised as the major thrust of government to provide a safe, secure, productive and functional State as an essential ingredient for the physical, psychological, social and economic well being of the people of Lagos State in accord withÌtèsíwájúÌpínlèÈkó (Lagos’ Progress) dictum of the current administration. The logic of Lagos urban renewal could be better understood from the new research that postulated that If Nigeria’s population continues to grow and people move to cities at the same rate as now, Lagos could become the world’s largest metropolis, home to 85 or 100 million in the next 50 years.

This is why government policies are focusing on today and the future.

A lot is also being done in the

area of building control as an inventory of abandoned buildings in the State is being undertaken. Recently the state government published the first batch of these abandoned buildings and issued a 90 days ultimatum to owners to take possession or be ready to face legal the wrath of the law. The focus of the State government is to continue to carry out this inventory and other such control mechanisms until every building constructed in Lagos State is fit for human habitation.Government is determined to ensure that no developer is allowed to put people’s lives at risk.

It is worthy of commendation that the State government is embarking on substantial projects simultaneously across the state and still lining up more to bridge huge infrastructure deficit estimated at over US$50bn. The truth is that ongoing infrastructure development, upgrade and urban renewal of the state are the impetus that could actually propel and consolidate the State in the global livability ranking.

Note: The rest of this article continues in the online edition of Business Day @https://businessdayonline.com/

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Editorial PUBLISHER/CEO

Frank Aigbogun EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya

EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Thursday 04 October 2018

Nigeria’s response to serial flooding

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t was in 2012 that Ni g e r i a e x p e r i enced what was then referred to as the worst rain disaster in the last 40 years. According the nation’s National Emergency Management Agency, NEMA, the 2012 floods claimed 363 lives, displaced 2.1 million people and affected other seven million people in 30 states of the federation. Experts put the economic loss in that year’s flooding to N2.5 trillion.

The official cause of 2012 flooding was attributed to heavy rainfall and the usual fear of the releas e of excess dam water from the Lagdo Dam in Cameroon.

Six years down the l i n e , Ni g e r i a i s a g a i n witnessing another devastating flood disaster.

Available records show that this year’s rain related activities have claimed over 200 lives, displaced over 19,500 p e ople and destroye d about 6,000 houses. In addition, farmlands, properties, infrastructures, businesses, etc. have also been affected.

T h i s n u m b e r i s e xpected to rise as national agencies have indicated that the rain will extend to October. Earlier, the Na t i o n a l M e t e o r o l o g i cal Agency (NiMet) and t h e Ni g e r ia Hyd rol o g ical Agency (NHSA) have warned against flooding, stating that 35 states in the country would experience severe flooding because of change in the pattern of rainfall.

Several warnings by relevant agencies preceded the 2012 flood, but as is customary in Nigeria, they were all ignored. Available records show that in 2013, heavy rains and flo o ds caused the death of 19 people, damaged over 6,500 homes and destroyed 2,217 farmlands. Altogether, over 81,000 people were affected across the country. In 2015, National Orientation Agency (NOA) recorded that 53 people lost their lives, 100,420 were displaced and a lot of farmlands, houses and businesses were swept off by floods and heavy rains, in the country.

Similarly, in 2016 available data shows that over 100 people lost their lives

to flood. Over 9,000 houses were destroyed which gave birth to over 92,000 p e ople without home s.

Again, the disaster swept away farmlands and over 26,000 livestock died.

Just last year, NEMA said over 90 people died in 27 states across the country through floods.

In all instances from 2012 to date, the causes of the floods have always been torrential rain, overflowing dams, poor drainage, poor town planning and poor public orientation.

But the worse may yet come. Cameroon is yet to releas e excess water from her Lagdo dam, but this might happen. That m e a n s m o r e d e v a s t a ting floods in Nigeria. We exp e ct the government not to take chanc e s on the lives of its citizens. A constructive discussion should happen between Ni g e r ia a n d Ca m e ro o n ov er th e L o g do dam in order to find a lasting solution to the spillover of water from the dam.

The National Orientation Agency should roll out the drums to properly educate citizens on the damages of torrential

rains and flooding. It is unfortunate that people who were displaced by floods often go back to rebuild on the same vulnerable area.

It is a common knowledge that many cities are facing sanitation problems. In Lagos for example, the rubbish dumps along the roads and in homes are forcing people to dump their wastes outside whenever it rains, thereby putting much pressure on the drainage system. The resultant effect is the blockage of the drainage forcing flood water to escape to people’s homes. We think one of the ways to overcome this challenge is to find lasting solution to the sanitation problem faced by cities in Nigeria.

A s i t s t a n d s , Ni g e r i a does not have adequate emergency response mechanism to handle emergency situations w h e n e v e r t h e y o c c u r.

Even when dangers are fores e en, Nigeria lacks adequate responses to possibly evacuate people who are prone to danger.

The authorities must do more beyond helicopter trips to commiserate with the victims.

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Thursday 04 Octoer 2018

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

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Why understanding the 2017 Debt Sustainability Analysis matters AMAMCHUKWU OKAFOR

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the quality of a country’s policies and institutions. It is based on the WorldBank/IMF’s Country Policy and Institutional Assessment (CPIA) index ranking which classifies countries into one of the three policy performance categories: Weak Policy (CPIA<3.25); Medium Policy (3.25≤CPIA≤3.75) and StrongPolicy (CPIA >3.75), and applies different indicative debt thresholds, depending on the performance category. Along with such countries as Ghana, Mozambique, Ethiopia and Sierra Leone, Nigeria is classified as a medium performer on the CPIA index with a score of 3.41.

The 2017 DSA conducted a stress test for the economy under

three scenarios: the baseline scenario which hinges on assumptions of the annual budget and the medium term expenditure framework (MTEF) 2018-2020; the optimistic scenario anchors on the optimism of the Economic Recovery and Growth Plan(ERGP) with a target growth rate of 4.80% in 2018 and 7% by 2020; while the pessimistic scenario assumes continued shock to the foreign exchange earner – crude oil – at less than $30pbd, deterioration in the external balance and depreciation of the domestic currency.

However, since the Q2 2018 growth rate of 1.5% lags behind the ERGP optimism of 4.80%, but global oil price has increased to

17.3% in 2037.

The pessimistic scenario presented an increase from 352.4% in 2017 to 428.8% in 2019 for total public debt stock-to-revenue; and an increase from 39.9% in 2017 to 47.4% in 2019 for total public debt service-to-revenue ratio.

The pessimistic scenario shows a significant worsening trend throughout the debt projection period. Total debt stock in percentage of revenue is expected to rise from 389.4% to 520.2%, while the total-debt service to revenue is also expected to rise from 46.2% to 80.7% through 2018 to 2027.

In all, the trend in the national debt profile calls for caution as borrowing, both external and domestic, expands. The projected fiscal position of 20.9% for 2018 is only 4.1% higher than the 25% extended threshold for the period 2018-2020.

This implies that based on the GDP projection of US$360.0 billion, the volume of borrowing for 2018 would be 1.37% (=4.1/3) of $360.6, which equals $4.94 billion (N1.506 trillion).

Interestingly, the total public debt already rose by nearly N1 trillion in the first three months of 2018 to N22.71 trillion (US$74.28 billion).

Since 2006/2007 when the country struck a debt buy-back deal of $30 billion with the Paris Club, Nigeria has accumulated debts in excess of $57 billion. With non-accelerating revenue and external reserves, the limit to government fiscal deficit is public debt.

However, as debt stock is increasing, the yield on bonds is also rising. This condition is indicative of government presence in the debt market which could have crowding-out effect on private sector investment. This implies that output and employment will remain at low levels. With a nonaccelerating GDP growth rate, high unemployment, inflation and interest rate environment combined with revenues uncertainties (or shocks) and growing debt profile, the economy is susceptible to a repeat recession, most likely due to debt default.

12734BDN

igerians have shown considerable interest in the management of the nation’s total public debt in recent times. The total public debt in this case encompasses the external debt and domestic debt. Of particular concern to Nigerians is why the total public debt has been increasing and the nation’s ability to service those debts based on the terms agreed with our creditors.

It is not surprising therefore that the issue of debt sustainability has been deliberated on different media platforms across the country.

The opinions of a number of commentators reveal that concerned Nigerians are not convinced by the actions taken by the debt office with regard to public debt management in the country and this development may not be unconnected with the limited engagement of the media by the Debt Management Office (DMO). As a result, it has become expedient to make an objective analysis of the subject matter based on the current debt position and on the DMO’s Debt Sustainability Analysis.

First, what is the Debt Sustainability Analysis?

The Debt Management Office (DMO) conducts annually the Debt Sustainability Analysis (DSA) to ascertain the country’s exposure to debt distress and ensure compliance to established fiscal boundary and best practices. The DSA framework puts into perspective the nation’s 10-year historical macroeconomic indices and 20year projected data to assess the level of exposure to debt default. It evaluates the country’s repayment capacity for its current and future debt obligations.

The 2017 DSA exercise adopted the latest version of the joint World Bank/IMF Debt Sustainability Framework for Low-Income Countries which provides indicative debt thresholds that reflect

$70bp, and exchange rates have been stable at N359/$1; it may be objective to rely on the baseline scenario however not overlooking the other extremes.

Debt outlook Government spending is typically financed by government borrowing – externally and domestically – and by raising taxes. Both domestic and foreign debts have been increasing because the Debt Management Office (DMO), having proposed an extension of the borrowing threshold from 19.39% to 25%, has embarked on various borrowing schemes – Nigerian Eurobond, Diaspora bonds, FGN savings bond and other multilateral borrowing from foreign governments including China.

As of June 2018, total public debt stood at $73.2 billion, external debt was $22.08 billion and domestic debt was N12.15 trillion – a 14.7 percent rise from $63.8 billion which was the total public debt level in 2015; that is, $10.3 billion and N8.4 trillion for external and domestic debts respectively.

On fiscal responsibility, a look at the DMO’s scenario analysis in the DSA (2017) reveals more than is concealed: even though the total public debt-to-GDP ratio for 2016 and projections for 20 year period are well below IMF threshold of 56% for Nigeria’s country peers, the baseline scenario shows a rising trend from 20.9% to 22.8% through 2018-2027. And accounting for shocks, it increases from 30.9% to 44.7% and exceeding the IMF threshold in 2037 at 59.4%.

The ratios of the total public debt stock-to-revenue and the total public debt service-to-revenue show significant susceptibility to revenue shocks and debt default in all scenarios. The optimistic debt scenario projects total public debt stock-to-revenue ratio to increase to peak at 360.4% in 2021 from 359.3% in 2018; and the total public debt service-to-revenue ratio to increase from 43.3% in 2018 to 45.8% in 2021, however, with a possibility of declining to

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CityFile

Fake cleric remanded over N17m fraud

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fake cleric, Mohammed Mohammed, 42, has been arraigned before an Ilorin Magistrate Court, Kwara for allegedly defrauding one Abdulkareem Abiodun of N17 million under false pretext.

The accused was arrested following a petition written on September 5, to the Commissioner of Police (CP), Kwara State command, by one Abiodun, a resident of Ilorin, accusing the suspect of defrauding him.

According to the victim, the accused deceitfully introduced himself as an Alfa and also claimed that he has a connection with Saudi Arabian government pilgrimage.

The victim alleged that the accused told him that he won a contract with the department in charge of displaced people in the Northern part of Nigeria and needed money to execute it.

Thereafter, the accused was said to have dishonestly collected N17 million from the victim under the pretext of making him his business associate.

The prosecutor, Alhassan Jubril said that the accused was one of the notorious criminals who went around the state and swindled unsuspecting citizens of their hard earned money.

He added that on hearing the arrest of the accused, others whom he had duped earlier came to the police station to report similar cases against him.

Jubril said that the accused appeared before the court on a one-count charge of obtaining money under false pretence contrary to Section 1(3) of the a Penal Code.

He objected to the bail of the accused and urged the court to remand him in prison custody pending the outcome of investigation.

The defence counsel, Aisha Jimoh prayed the court to admit the accused to bail pending the outcome of investigation.

She submitted that the 1999 Constitution of the Federal Republic of Nigeria still presumed the accused innocent of the allegation until contrary was proved.

The judge, Afusat Alege, who declined to take the plea of the accused for lack of jurisdiction, ordered that the accused be remanded at the Federal Medium Security Prison, Mandala in Ilorin. The court adjourned the case till October 8 for further mention. (NAN)

Thunder kills 23 cows in Ekiti community

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wenty-three cows have been killed by thunder in Ekiti State. The deafening thunder was accompanied by a downpour recorded in parts of the state in last couple of days.

The incident, which occurred at Okeowa Eluju, a farmstead in Iloro-Ekiti, Ijero local government area of the state, has caused apprehension among local residents.

While confirming the incident, a Fulani herder and owner of the dead cows, Abdulkadri Kadiri, said he was devastated by the development.

Kadiri described the incident as a strange occurrence. I went to farm after about six hours of heavy rain on Monday morning, only to discover that 23 of my cows had died After careful observation, I found that there was no trace of bodily injuries on the dead cows. I want to believe it is an act of God since I did not offend or quarrel with anyone,” he said.

Kadiri, however, said he had not experienced such incident in his 35 years of business.

The regent of the community, Joseph Alofe who also confirmed the incident, described the victim as a gentle and peace loving herder.

The community leader, who also described the incident as strange to the village, called on government and well meaning individuals to assist the herder, to revive his business. NAN

Flood at Christ the King Primary School in Ogbia LGA, Bayelsa State on Tuesday.

NAN

Ambode seeks collaboration with OPS to grow MSMEs JOHN SALAU

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agos State governor, Akinwunmi Ambode has called for collaboration between the Organised Private Sector (OPS) and government to increase the productive capacity of Micro Small and Medium Enterprises (MSMEs) and enable them create wealth and generate more employment opportunities.

Ambode spoke at the 3rd edition of the Lagos State Micro Small and Medium Enterprises Fair organised by the state ministry of commerce, industry and cooperatives, which held at the Teslim Balogun Stadium, Lagos.

This year’s Lagos MSME fair, with the theme: Enhancing the quality of MSMEs’ products for global competitiveness, is aimed at facilitating MSMEs’ product quality improvement and readiness for local and international markets.

Ambode said his administration will continue to create opportunities for MSMEs

to thrive by focusing on the development of complementary infrastructure and other facilities that would help to improve competitiveness and productivity of MSMEs in Lagos.

“As a people-oriented government, we shall continue to design and implement policies and programmes that would accelerate the actualisation of our goals of sustainable trade, industrial and economic development. We are, therefore, emboldened to call on the organised private sector to continue to collaborate with our government in our bid to enhance the quality and overall performance of our MSMEs for business prosperity and economic development of Lagos and Nigeria as a whole.

“In terms of small business infrastructure, we are fast-tracking the construction of the Imota Light Industrial Park, Ikorodu which would complement existing industrial estates in the state upon completion,” said Ambode.

According to the governor, the MSMEs sector are the backbone of the state’s economy and are largely responsible for lo-

cal industrialization, value addition, wealth creation, poverty alleviation and improved standards of living for Lagosian.

“I hope to see a newer Lagos with a healthier and more supportive business environment, more virile, sustainable and consumer-driven enterprises with qualitative and globally-competitive Made-inLagos brands. I am assured that the MSME Exclusive fair, for many years to come, would continue to serve as a veritable marketing and business support platform for all small businesses in the state,” Ambode said.

Olayinka Oladunjoye, the state commissioner for commerce, industry and cooperatives, said exhibitors were selected based on the innovativeness, quality and marketing appeal of their brands.

According to Oladunjoye, the Lagos MSME fair is open to consumers, investors and visitors as a means of promoting the ‘made in Lagos’ brands ranging from finished leather goods; food and beverages; textile, fashion and accessories; household and domestic products, health, fitness and lifestyle products; and arts and crafts.

Flood: ActionAid gives succor to 1,800 IDPs, others in Kogi

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ctionAid Nigeria has donated relief materials to over 1,800 women from 300 women-led households in communities across four local government areas ravaged by flood in Kogi.

The relief material distributed to each of the 300 women-led household includes; 10 kg of rice and garri, 3.5 kg of semolina, 1 roll of milk (6 sachets), 1 roll of tea (6 sachets) and one carton of indomie noodles.

Others include 1 packet of seasoning cubes, 1 liter of groundnut oil, tissue papers, sanitary pads, 1 roll of tomatoes paste (6 sachets), 5g of detergent, 2 tablets of bathing soap, 1 pack of salt, 1 mosquito net, for nursing mothers only.

The non-governmental organisation made the donation in collaboration with Participation Initiative for Behavioural Change in Development (PIBCID).

Gift Owonipa, the executive director of PIBCID and ActionAid in Kogi, said 35 households

were selected in Kogi local government, 40 in Lokoja, 15 in Ajaokuta and 210 in Ibaji.

She said that the selection was based on a data of nine hard-to-reach communities with over 702 lactating mothers, 492 pregnant women, 30 PLWD and 15,439 children made available to it by the ministry of environment from an assessment it conducted.

According to her, the ActionAid team in line with its principle of reaching out to the unreachable, informed the ministry of its intention to bring laughter to communities in Ibaji, Lokoja, Ajaokuta and the unreached communities of Kogi local government.

Owonipa said that based on the budget available, the team decided to target 300 women-led households, family of six with priority for lactating mothers and pregnant women.

Juliana Abuya, a widow with 14 children, was among over 1,260 women from 210 women-led households given succour by ActionAid

in the selected four communities in Ibaji Local Government. The 48-year-old widow said that eight of the 14 children were her biological children, while the six others were children of her late sister.

Narrating her ordeal, the widow said for over five years since her husband’s demise, herself and the children had been living from hand-to-mouth with the little food from her farm, saying that their plight was further worsened by the flood.

Gloria Unubi, who gave birth at the IDP camp in Barrack-Onyedega, said she was rushed to a makeshift structure about 30 metres from the IDP camp to have her baby on Wednesday.

The 35-year-old mother of five said her family lost all of their crops to the flood, which submerged their farm. She explained that, “Even our house was overrun by the flood and I had the pregnancy to content with.”

Thursday 04 October 2018

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COMPANIES & MARKETS

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‘Stalled marginal field bid is like locking up assets without getting value for it’

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

FSDH Research warns against imminent debt crisis HOPE MOSES-ASHIKE

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SDH Research, an arm of the FSDH Merchant Bank Limited, has advised the Federal Government to urgently implement policies that will grow and diversify the revenue base of the country to avoid an imminent debt crisis.

T h e f i r m’s a n a l y s i s shows that the growth in Nigeria’s debt is higher than the growth in revenue and Nigeria has the lowest government revenue to Gross Domestic Product (GDP) ratio at 6 p e rc n t a m o n g s o m e selected countries.

F S D H R e s e a r c h a ttributed the sluggish grow th in g overnment r e v e n u e t o N i g e r i a’s ov e r- d e p e n d e n c y o n crude oil revenue, combined with volatility in both the price and production of crude oil.

Growing non-oil rev-

e nu e w i l l re q u i re t hat the Nigerian economic environment has inherent structures that can support business growth.

Such structures include adequate physical infrastructure, policies, legal a n d re g u l at o r y f ra m e works that will make the economy businessfriendly to generate taxable profits.

Further analysis of the ratio of the interest payment on domestic debt relative to the FGN allocation from the Federal Account Allocation Committee (FAAC) shows that the FGN is spending too much of its revenue to pay interest on loans.

“This leaves the government with little resources to spend on critical sectors of the economy that could support strong growth and maintain a healthy economy to generate revenue”, analysts at FSDH Research said.

The firm was concerned that current high

L-R: Nathaniel Ligbago, marketing manager, Equipment Hall; Ololade Olotu, solutions sales specialist, Dell EMC West Africa; Gbolahan Olayomi, CEO, Equipment Hall; Chioma Okpara, client solutions specialist, Dell EMC West Africa; Edem Kubiangha, senior manager, technology development, Equipment Hall, and Bolarinwa Dorojaiye, IT Systems Engineer II, Addax Petroleum, at the TechExec Breakfast Series 1.0 at Four Points by Sheraton Hotel, Victoria Island, Lagos.

interest payment relative to revenue may also increase the credit risk of the country.

Although the government has been able to

meet its debt obligations (interest and principal payments) so far, if the current situation is not a d d r e s s e d , t h e i n t e rest rate on government

Standard Chartered reaches $100m goal to tackle avoidable blindness Iheanyi Nwachukwu

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tandard Chartered said it has reached the goal it set in 2011 to raise $100 million for the fight against avoidable blindness and visual impairment. The goal has been reached two years ahead of the Bank’s 2020 target date.

The news was shared with employees, clients and charity partners at the British Museum to mark 15 years of Seeing is Believing (SiB), Standard Chartered’s global partnership with the International Agency for the Prevention of Blindness (IAPB) to tackle avoidable blindness and visual impairment.

By funding projects run by international eye

health organisations, SiB provides access to affordable and quality eye health services to people in low- and middle-income countries.

The money raised through SiB has reached more than 167 million people through medical interventions, eye examinations, and eye health education and training. The initiative has funded 184 eye health projects in 37 countries, supported 4.4 million sight-restoring surgeries and trained more than 318,000 health workers.

David Fein, Group General Counsel and Chairman, Seeing is Believing: “Seeing is Believing has changed the lives of millions of individuals and families by providing eye health

services that enable many to return to education and work. As a result, this has boosted local economies and strengthened communities.”

Avoidable blindness is a key health issue across Standard Chartered’s footprint.

Globally, there are an estimated 36 million blind people and a further 217 million people suffering from moderate or severe visual impairment. Yet 80 per cent of all visual impairment can be prevented or cured.

Initially launched in 2003 to fund 28,000 sight-restoring surgeries, SiB has evolved into a leading multistakeholder partnership that is supporting comprehensive eye care solutions, strengthening

eye health systems and fostering the development of new technologies across 37 countries. In 2011, the Bank committed to raise $100 million for Seeing is Believing between 2003 and 2020.

With the fundraising goal achieved, SiB will continue to fund eye health projects up until the end of 2020. After this point, Standard Chartered will support the fight against avoidable blindness and visual impairment through the Vision Catalyst Fund (VCF). Led by a group of private sector and philanthropic organisations, the VCF is an ambitious plan to establish a USD1 billion fund that will provide eye care to all people in the Commonwealth and around the world.

loans may increase because of the perceived elevated risk. This would also lead to higher interest rates for private s e c t o r o p e ra t o r s. It i s

important to note that the external environment is becoming tighter than before because of the rising interest rate in the US.

Marriott reveals robust expansion plans across Africa

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rom the Africa Hotel Investment has announced rapid expansion plans across Africa. Strong demand for select-service brands and conversion opportunities are driving the momentum of growth for the company, amplified by five new hotel signings. The new signings will further consolidate Marriott International’s presence in Ghana, Kenya, Morocco and South Africa and mark the company’s entry into Mozambique. The signings put Marriott International on track to increase its portfolio by 50 percent with over 200 hotels and 38,000 rooms by 2023 estimated to generate 12,000 new job opportunities.

Marriott International’s planned growth reinforces its commitment to Africa and underscores the substantial emphasis that countries across Africa are placing on the travel and tourism sector.

The company estimates that the five new projects signed will drive investment of over $250 million by the prop-

erty owners and will generate substantial economic activity.

“Marriott International’s acquisition of Protea Hotels followed by the acquisition of Starwood Hotels & Resorts Worldwide has given an impetus to our organic growth on the continent. Today we are seeing strong owner interest in our brands, backed by our combined loyalty program, the collective strength of our global platform and our highly-experienced, local teams,” said Alex Kyriakidis, president/MD, Middle East and Africa, Marriott International.

“African economies have sustained unprecedented rates of growth, which have mainly been driven by a strong domestic demand, improved macroeconomic management and increased political stability. The continent is still under capacity as far as branded hotel supply is concerned, presenting us with a fantastic opportunity to grow our brands and enhance our footprint,” he added.

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Thursday 04 October 2018

COMPANIES & MARKETS

‘Stalled marginal field bid is like locking up assets without getting value for it’ STANLEY FAGBULE is the chief executive of SellyFak Energy Services Limited, an indigenous engineering services company with specialty in asset integrity maintenance, flow line and pipeline construction, mechanical fabrication and general servicing of the oil and gas industry. In this interview with FRANK UZUEGBUNAM, editor, West Africa Energy, he talks about the Nigerian Content initiative, stalled marginal field bid-round among other issues. Excerpts: How will you describe SellyFak and what you do? e l l y Fa k E n e r g y Services Limited is a wholly indigenous engineering services company with specialty in asset integrity maintenance, flow line and pipeline construction, mechanical fabrication and general servicing of the oil and gas industry including the upstream sector. We work with most of the International and Indigenous Oil Companies and we have done some remarkable jobs and projects for them.

Our major accomplishment is being able to establish a brand for the company within the oil and gas service sector such that if you mention SellyFak with respect to asset integrity, it is a recognizable brand. Our quality of service, speed and response time is our comparative advantage We have our main facility in Port Harcourt and an office in Lagos. Our facility in Port Harcourt is 4500sqm with offices and fabrication yard and where we have most of our equipment. The Lagos office for now is more for commercial and business development and in course of time, will engage in other things when we move our head office to Lagos by next year.

We feel that the SellyFak brand that has been delivering quality services to some IOCs should be replicated with other IOCs. That is one of the reasons why we are vigorously pursuing our Lagos head office project. The company is well structured and certified to Bureau Veritas ISO 9000-2015. Our people are the best assets we have,

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and are continuously trained to global standard to achieve industry best practice.

Is SellyFak a product of Nigerian Content Initiative?

In as much as there is no perfect law, the Nigerian Content initiative has helped us to some extent. Most of the services we render to the IOCs used to be exclusive right of some foreign companies but we have been able to break that barrier. The opportunity of Nigerian Content initiative afforded most Nigerian entrepreneurs the opportunity to delve into the industry and help with the achievement we have made so far.

What are your challenges?

One of our biggest challenge is patronage. There are so many portfolio companies with everybody pursuing the same thing, stretching ourselves too thin and cutting away margins. If 5 people that are supposed to work in the same organization spread themselves and bid for the same job, at the end of the day, obviously, the competition moves to price and we end up reducing margins.

This also limits opportunities.

The other challenge is the government policy in the industry; preceding administrations had problem of not meeting cash call requirement to the industry. That affected a lot of projects from the IOCs because there was no real investment in the industry. Quantum of jobs that should have been available for vendors were hindered.

The other thing is capacity – a lot of the expertise required to perform our job in terms of personnel are not available because there is no investment in the industry.

If you have a marginal field license, you may poach one or two people from Shell for instance, they will promote people up to fill those vacancies and they will also bring in new people for those openings

Stanley Fagbule

The quality of workforce in the oil and gas service industry is moderate. There has not been successive training for people to step into the shoes of those who are retiring.

You literally have to spoon feed the quality of graduates we produce these days because they lack motivation and initiative and that affects the industry too. Most of the schools are not training people to work with their hands because the focus has been paper qualification – that is affecting the quality of people in the industry. You cannot employ somebody today and that person will hit the ground running. You have to do some re-training before he can adapt and work for the industry.

At SellyFak, we have a 2-year graduate training scheme for our new intakes.

After the training, we select amongst them before we unleash them to handle our operations.

Areyou equipped for the jobs you get?

We have in-house capacity for most of the jobs we get. We have a fabrication yard that can handle 110 tons per year in terms of capacity. Most of

the asset integrity jobs that we do offshore are all done on site.

In this last coating season, which is dry season window, we were able to complete 3 platforms for our major clients in terms of maintenance.

We have ability to do 3 – 4 spreads of personnel, equipment etc; that is deploying 3 different sets of personnel for 3 locations at the same time.

We are also trying to increase that capacity to see how we can meet the demands of the industry.

Have you encountered any problem with your host communities?

We have been able to establish a very good relationship with the host community, on a continuous engagement basis, we have established a symbiotic and sound interaction with them.

The basic thing is to be open and transparent with the host communities and make sure you deliver on your promises.

We have strong community relations team and our community liaison officers interface with the communities on a daily basis.

We have corporate social responsibility (CSR) projects

in all the communities we operate to appreciate them and at the same time develop the communities by creating economic multiplier effect by virtue of our operations The most recent one is the Ibeno community where we have assisted the Youth association them to construct Youth Centre and set up training center, we have continuous engagement with them that they see us as part of them and even protect us. Our other CSR initiatives is with Junior Achievement and Blazing Hearts Autism Centre We make sure that most of our staff, at least 80 percent, working in a particular area are from that community. By so doing it cause a multiplier effect within the community.

What is your opinion on the exit of government from Joint Venture funding?

It is quite commendable that government took this step. In the past, government’s inability to meet its joint venture (JV) cash call requirement was a big setback. The new policy which now makes the JVs a kind of Independent Joint Ventures (IJVs) has caused a flurry activities to happen in the industry.

The impact of phasing out the JV cash call is very simple; the level of activities now is about 3 – 4 times of what they used to be after the IOCs were paid. The IOCs were being owed about $5 billion, there was a negotiation to shave of about $1.2 billion, and payment was tied to increase in production and all of them are now working on their assets to make sure they ramp up their production. That has spurred up a lot of activities in the industry and its paying off though at the detriment of exploration. It has given some of the IOCs the courage to invest because there is confidence, but ultimately the best investment government can make is passing the PIB and signing them into law so that there can beunhinderedactivities in the industry.

How do you see government’s failed attempt to hold the marginal field bidround?

The marginal field issue is quite unfortunate. It was meant to take place in 2013,

then 2015 and another one for 2017. None of them happened. It is like locking up assets and not getting value for it because those marginal fields apart from the fact that it will help to increase our daily output as a country, it is going to increase our capacity as a people. The marginal fields basically help indigenous players especially in the area of transfer of technology.

We have over 40 assets that is available for licensing but due to lack of action and political will, those acreages are lying down there wasting.

The multiplier effect of licensing and getting the companies to operate those fields is going to generate employment and increase revenue for the government. It will also bridge some of the gaps in the industry like lack of capacity – they are avenues to train new engineers. If you have a marginal field license, you may poach one or two people from Shell for instance, they will promote people up to fill those vacancies and they will also bring in new people for those openings. Those are part of the multiplier effects and it is going to help the economy. These are avenues to really grow the industry and ultimately the economy.

Where do you see SellyFak in the near future?

We have a very ambitious vision of where we want to be in the next 5 years. We have a 5-year strategic plan that we are following to the letter right now. We have started, we are moving in that direction and I can tell you that in another one year, we will be in 2 other African countries apart from Nigeria. Before the end of the year, we are going to open an office in Ghana. After that, we are looking at Kenya. Our plan is to open 3 outposts in African countries.

Another thing we are trying to do is that we want to diversify from services to production so we want to take the advantage of opportunity in the exploration and production space. We are bullish about the growth we want to achieve as a company. The board of directors are fully in support of what we are trying to do and 5 years down the line, we see ourselves having a good share of the market.

BUSINESS

Thursday 04 October 2018

DAY

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COMPANIES & MARKETS Unveiling Dangote’s novel ‘King of Cement’

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f the verdict of Nigerian builders, Quantity Surveyors and civil engineers is anything to go by, then the emergence of the recently launched Dangote BlocMaster Cement is a long-awaited development; like a breath of fresh air.

Nigerian apex builders had given a unanimous approval after thorough due diligence and laboratory experiments to a product they now dub ‘The King of Cement’.

While not resting on its oars, Dangote Cement Plc has hit another landmark achievement in its researchbased venture by rolling out a mouth-watering 42.5R brand that has left block-makers scrambling to place their orders, to showcase their immense satisfaction with the new product.

That the launch came barely a week after the unveiling of the All Purpose Flour by the Dangote Flour Mills, speaks volume of Dangote Group’s new research based trajectory, pundits say.

“This is a new era. This is a new quality. This is a product of research,” the Group Managing Director, Dangote Cement Plc, Joseph Makoju assured different stakeholders in the construction industry.

According to him, the new product is affordable and strong because of its rapid setting qualities, especially during raining season.

Perhaps the most unique characteristic of the innovative cement product is its capacity to attain 50 per cent strength after just 24 hours.

Adding a scholarly flavour to the discourse, a renowned academic in the Bayero University Kano, Alhassan Dahiru, has also recommended the cement to Nigerians.

Dahiru, who is the Chair-

man of Nigeria Institute of Quantity Surveyors, Kano State Chapter and Head of Quantity Surveying Department, Bayero University Kano, said the new BlocMaster Cement can be used to construct bridges and bigger concrete structures requiring strong cement.

The innovative cement product had been adjudged outstanding, due to its rapid setting of about an hour, strength and top quality, by the country’s engineers, builders and block makers before it was rolled out recently in Kano.

Speaking at the official unveiling of the product, Kano State Governor Abdullahi UGanduje called on all Nigerians to patronise the new cement to help minimise the menace of building collapse in the country.

The Governor, who was represented by the Secretary to the State Government, Usman Alhaji, also commended the Dangote Group, adding that it has always been supportive in all sectors of the economy.

Speaking, Group Chief Marketing Officer, Dangote Cement Plc, Oare Ojeikere said the new cement product is multipurpose and very strong, urging Nigerians to adopt it for all construction purposes.

He expressed happiness that hundreds of builders in Kano had used it before the launch.

The immediate past chairman, Nigeria Institute of Building and Director Consultancy Services, Science and Technical Schools Board, Kano State, Abdullahi Alhassan SanSan, also said he was elated because the new cement block will help address the issue of building collapse in the country.

Nura Yahayah, manager Magina Blocks Industries Kano said he has used the cement block and can therefore

recommend it to Nigerians.

Umar Faruk Musa, chairman Kano State Concrete Block Makers and Allied Products Association said the cement innovation will translate into more income for block makers immediately and in the long run for Nigeria. He commended Aliko Dangote for yet another giant stride; coming barely a week after a flour brand was unveiled by the same Group.

In his own submission, Chairman Trustee Committee for Association of Block workers in Kano, Alhaji Aliyu said lives will be saved and wastages will be prevented with the emergence of the BlocMaster, adding that the product is a welcome innovation.

Meanwhile, the Secretary General of the Block Makers Association in Kano, Engr.

Abdullahi Usman has called on Nigerians from all walks of life to switch to the new cement product. He thanked Dangote Group, and indeed its President for the innovation, and asked God to continue to protect him, with sound health and long life.

Muhammad Mustapha, Dangote Cement’s area sales manager, said the new cement is a response to calls by builders, adding that it sets rapidly and it is affordable. Dangote Cement Plc is Africa’s top cement producer with presence in about 18 African countries.

While the Dangote Group receives accolades and commendations from various quarters over the new product, construction engineers are upbeat that with Dangote’s ‘King of Cement’ the era of building collapse will soon be over in the country; hitherto a sore point in the nation’s quest for rapid development and adequate provision of infrastructure.

PILA announces investiture of new president

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he professional Insurance Ladies Association (PILA) has announced the investiture plan for its incoming president, Ose Oluyanwo, who is an assistant general manager and regional director at Consolidated Hallmark Insurance Plc. Ose will be decorated as the 12th President of the body whose objective is to promote and empower women for higher responsibilities in insurance and the corporate world in entirety.

The investiture ceremony slated for next week Thursday at Havilah Event Centre in Lagos, and to be chaired by Eniola Fadayoimi, former president of IOD, will see the association launch its first and new book‘Trend and Evolution of PILA.’

Addressing the press in Lagos on the investiture plan, Ajoke Awoderu, chairperson, Investiture committee said other dignitaries expected at the investiture include the governors of Edo and Lagos; past commissioners of insurance and other chieftains of the insurance industry.

Ajoke said, while Babatunde Olatunde-Agbeja, managing director/CEO, Boff and Company Limited will present the new book that marks PILAs 45 years of existence, Mohammed Kari, the Commissioner for Insurance and CEO NAICOM will be the host.

Oluyanwo who hails from Edo State attended Ireti Primary School, Ikoyi Lagos and Federal Government Girls’ College Akure.

She is a graduate of Mass Communication from the Ogun State Polytechnic Abeokuta Ogun State.

Her working career has taking her through organizations like Asset & Liability Insurance company (Defunct), Highgate Insurance Brokers, Consolidated Risk Insurers Ltd and now Consolidated Hallmark Insurance Plc. She is an Alumnus of the Prestigious Lagos Business School (SMP 62) and has attended several technical trainings and conferences to enhance her competences.

A seasoned practitioner and fellow of the Chartered Insurance Institute of Nigeria, Oluyanwo has over 30 years’ experience in the Insurance Industry.

Business Event

L-R: Bello Bamanga, representing special control unit on Money Laundering; Buno Nduka, representing the director general of Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA), and Francis Usani, representing Nigeria Financial Intelligent Unit, during the opening ceremony of GIABA’s training of stakeholders ahead of Anti Money Laundering and Counter-Terrorism Financing Mutual Evaluation Exercise in Abuja. NAN

L-R: Abiola Sanni, managing partner of Sanni and Co.; Adetunji Eleso, managing partner of Growth Capital by CcHUB; Morayo Afolabi-Brown, Television Continental (TVC) director of programme; Tope Ashiwaju, Dufil Prima Foods group public relations and events manager; Agatha Amata, managing director of Inside-Out Media Limited; Toyosi Akerele-Ogunsiji, chief executive officer (CEO) of Rise Networks; Adekunle Adeniyi, social critic, and Tola Badamosi, managing director of BD Consult, after the judges’ sitting to select 2018 Indomie Independence Day Award (IIDA) winners in Lagos.

L-R: Segun Ogunleye, senior brand manager, Seven-Up Bottling Company Plc; Tokini Peterside, founder/director, ART X Lagos, and Amaechi Okobi, group head, corporate communications & external affairs, Access Bank PLC, at a Press briefing to announce ART X Lagos 2018, recently in Lagos.

ejoke Oshodi-Olasukanmi, director of NGOs, Lagos State Ministry of Women Affairs and Poverty Alleviation; Sarah Sosan, former deputy governor of Lagos State; Okeowo Oyeleye, representing wife of Ogun State governor, and Wale Afolabi, president, Ajoke Ayisat Afolabi Foundation, during the 10th anniversary of the foundation in Lagos.

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Thursday 04 October 2018

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Helping you to build wealth & make wise decisions NSE All Share Index

Year Open

38,243.19

Market capitalisation

N13.609 trillion

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

2,564.13

1,713.69

1,087.32

Week open (21 – 09–18)

32,540.17

N11.880 trillion

2,338.51

1,452.15

797.69

Week close 28– 09–18)

32,766.37

N11.962 trillion

2,355.35

1,461.93

797.69

Percentage change (WoW) Percentage change (YTD)

0.70 -14.32

0.72 -8.14

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

330.69

2,560.39

1,975.59

1,379.74

762.21

289.80

2,272.18

1,549.76

1,219.17

758.36

287.69

2,262.98

1,528.69

1,226.16

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

1,746.68

475.44

139.37

1,461.15 1,473.63

401.32

124.11

411.25

125.27

NSE 30 Index

0.67

0.00

0.85

-14.69

-26.64

-15.63

2.47 -13.50

0.93 -10.12

976.10

-0.51 -22.31

-0.73

-0.40

-1.36

0.57

-13.00

-11.62

-22.62

-11.13

Analysts reiterate negative outlook for equities heanyi Nwachukwu

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any stock m a r k e t analysts have restated their views on the outlook for the Nigerian stock m a rk e t p a r t i c u l a r l y i n t h i s fourth-quarter (Q4) saying the current downward trend will continue.

T h o u g h, t h e re a re l i k e l y positives that are capable of redirecting the current trend –such as impact of rising oil price on reserves, impressive companies’ third-quarter ( Q 3 ) e a r n i n g s b u t a na l y s t s sentiments still tilt towards negatives.

Though the stock market had closed last week higher by 0.70 percent but renewed s e l l - o f f s e e n a s at Tu e s d ay O ctob e r 2 , 2 0 1 8 da mp ene d market performance indicator by 0.17 percent and impacted negatively on the year-to-date (ytd) returns from the market which stood at -14.46 percent on Tuesday.

“It is difficult to call, but if I have to hazard it, we will s e e m o re o f t h e d ow n w a rd trend till the first-quarter (Q1) of next year. We expect this trend to continue till year end, aside any destruction that can make things worse,” Aigboje Higo, Chief Executive Officer,

L-R: Fidelis Ayebae, MD/CEO; Segun Adebanji, chairman of the board; Yomi Adebanjo, company secretary, all of Fidson Healthcare plc, during Fidson Healthcare plc’s annual general meeting held in Lagos

Capital Bancorp Plc said at the press briefing ahead of the company’s 30th anniversar y celebration.

Tola Mobolorin, chairman, Capital Bancorp Plc also noted at the breifing that the Ni g e r i a n s t o c k m a r k e t h a s become too dependent on foreign investors.

“Nigeria needs enough domestic savings to counter the impact of the exiting foreign investors. Overselling and mis-selling of the stock

market has negative impact o n i n v e s t m e n t s . We m u s t get people back to the stock market if we want the country to progress,” Mobolorin added.

“Equity investment helps to reduce the risk of companies’ failure and equity capital raising is affected by investor apathy. An unproductive nation can never be rich ; by importing products, Nigeria only su cce e ds in e nr iching other nations and keeping the jobs of those countries citizens

while hers are unemployed,” Mobolorin stated.

Meanwhile, despite recent gains, Cordros Capital analysts in their recent note to investors reiterated their negative outlook for the equities market in the shortt o - m e d i u m t e r m , “a m i d s t political concerns ahead o f t h e 2 0 1 9 e l e c t i o n s, a n d absence of a positive market t r i g g e r. H o w e v e r, p o s i t i v e macroeconomic fundamentals remain supportive of recovery

in the long term”.

“Despite there being more negative sessions than positive (3 to 2) the market closed 70basis points ( bps) up on Friday thanks to strong trading earlier in the week.

Trading on the bourse closed very marginally in the green amidst an even split between gainers and losers. We anticipate a tepid start to this week’s trading amidst a shaky market sentiment and low market turnover indicative of sustained weakness in investor participation”, Vetiva research analyst said.

“We exp e ct the ons et o f t h i rd - q u a r t e r ( Q 3 ) 2 0 1 8 earnings season to spur some bargain hunting amid the prevalent bear ish theme as w e n e a r t h e Fe b r u a r y 2 0 1 9 general election”, said United Capital research analysts in their recent investment view.

The subscription for the FGN Savings Bond, which guarantees quarterly coupon payments, re-opened on O c t o b e r 2 , 2 0 1 8 . Th e o f f e r, according to the Debt Management Office (DMO), will remain open for four days till Friday October 5, 2018, at the following rates: 2-Year FGN S av i n g s B o n d d u e O c t o b e r 10, 2020: 11.175percent ; and 3 -Ye a r F G N S a v i n g s B o n d due October 10, 2021: 12.175 percent.

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United Capital investment views

ASI sustains w/w gain as MPC maintains status quo on policy rates

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lthough Nigerian equities opened the week on a lull theme, intermittent bargain hunting on two of the five trading days of the week was enough to hoist the main index to a second consecutive w/w gain. Hence, the NSEASI rose 0.7percent w/w to close at 32,766.4 points but still declined 6percent in Sep-18, while YTD return settled at -14.3percent. Market capitalization gained N82.6bn to N11.9tn. On the other hand, the level of activity on the exchange contracted w/w; average volume traded dipped 32.5percent to 184.9mn units while average value traded diminished by 32.5percent to N184.9billion.

Dissecting performance across sector indices, the Banking index (+2.5percent w/w) was the weeks outperformer, owing to buying interests in STANBIC (+9.5percent), GUARANTY (+5.3percent), UBA (+5percent) and FBNH (+3.5percent).

The Insurance index (+0.9percentw/w) also trended northwards as bargain hunting in NIGERINS (+19.4percent), LINKASSURE (+9.4percent) and MANSARD (+4.8percent) buoyed the index. On the flip side, the Industrial Goods index (-1.4percent) recorded the largest w/w loss as declines in BERGER (-8.7percent) and WAPCO (-5.5percent) outstripped the gains recorded in CCNN (+6.8percent). The Agriculture (-2.5percent), Oil & Gas (-0.7percent) and Consumer Goods (-0.5percent) indices also declined w/w consequent on slumps in PRESCO (-5.8percent), FO (-6.7percent), OANDO (-1.9percent), NB (-1.6percent), DANGSUGAR (-3.4percent) and DANGFLOUR (-2.7percent).

Investors sentiment waned as market breadth weakened to 0.7x from 2.2x recorded in the previous week as 39 stocks declined, outpacing the 28 stocks that advanced. This week, we expect the onset of Q3-18 earnings season to spur some bargain hunting amid the prevalent bearish theme as we near the February 2019 general election.

Money Market: Rates price in liquidity dynamics Markets remained sufficiently liquid, albeit relatively tighter. OBB and overnight rates averaged 11.4percent (vs. an average of 7.2percent in the preceding week) as liquidity was guided by outflows from CBN’s wholesale FX intervention, as well as CBN’s debit with respect to reversals of Paris club payments to State governments which resulted in rates spiking to 18.7percent on Tuesday. All these activities more than offset inflows from OMO maturities, retail FX refunds, and FAAC, which conceivably led to the CBN’s decision to halt OMO sales during the week. In the coming week, inflows from OMO maturities (N268.2bn) is expected to hit the system and we expect the CBN to maintain its spate on OMO and FX interventions in the market.

Yields: Bulls rule the roast in bonds space amid an oversubscribed bond auction In the primary market, the Debt Management Office (DMO) conducted its monthly auction of FGN bonds for September. The DMO was initially looking to raise N90.0bn but ended up selling N96.7bn as the auction was oversubscribed by 1.5x compared to 1.1x in the August auction. Notably, the 2028 bond was mostly demanded (bidto-cover: 3.1x vs 0.5x and 0.8x at the 2025 and 2023 bond respectively). The auction was carried out at the following stop rates: 5-year (15percent vs. 14.4percent at the last auction), 7-year (15.2percent vs. 14.6percent at the last auction) and 10-year (15.2percent vs. 14.7percent at the last auction).

In the secondary market, the T-bills space witnessed a mixed theme especially as players were anticipating renewed supply of long-tenured bills at the CBN’s OMO auction which ended up not take place. Added to this, bouts of sell-off were recorded during the week as players reacted to the reversal of the Paris club credit by the CBN which led to a significant squeeze in system liquidity. Overall, average T-bill yield edged higher marginally by 5bps to close the week at 13.8percent. (91-day (down 1bps to 12.7percent), 182-day (down

8bps to 13.2percent) and the 364-day (up 25bps to 15.5percent). In the bonds space, trading sentiments were guided by expectations and the ultimate outcome of the bond auction. Consequently, average bonds yield inched lower by 23bps to end at 15percent. Looking into the week, the FGN is expected to roll over maturing NTB’s (N133.5bn).

Accordingly, we expect the tempo of this event, alongside possible OMO interventions by the CBN, to guide trading sentiments through the week. In the bonds space, we anticipate further upticks in yields towards the year-end, as the DMO becomes more desperate in meeting its borrowing targets for the 2018 budget deficit, considering inflationary pressures and electioneering spending, as well as the global tightening in liquidity, not to mention added political risks as we near the February 2019 presidential election.

Foreign Exchange: Pressure on Naira continues to mount In the Foreign exchange market, the naira sustained its recent narrative as it traded within a tight band across all the FX windows, depreciating marginally w/w even as Brent price traded above $80/b throughout the week. Also, in a bid to further support the naira, the CBN sustained its weekly FX intervention in the wholesale and retail FX market, further pressuring the nation’s FX reserves down by 1.1%w/w to $44.4bn,

election result after the Independent National Electoral Commission (INEC) declared the incumbent APC as the winner, in the aftermath of the re-run election that was conducted on Thursday. This week, we expect economic activities to resume fully amid the suspension of the strike action by the NLC. Also, the APC primary election in Lagos is expected to dominate headlines during the week.

GlobalMarketReviewandOutlook Fed meeting, trade talks, and Italy’s budget announcement guidesentiments Two primary themes guided sentiments in the global equity market; the Fed meeting and Italy’s budget announcement. As expected, the Fed raised its benchmark rate by 25bp to 2.25percent, the third rate hike in 2018. Elsewhere, the US Department of Commerce confirmed Q2-18 GDP growth at an annualized 4.2percent - in line with the previous estimate. In other news, trade tensions between the U.S. and China continued to mount as 10percent tariffs on $200 billion worth of Chinese took effect. Amidst these events, the S&P 500 and DJIA declined 0.5percent w/w and 1.1percent weekon-week (w/w) respectively, while techladen NASDAQ index rose 0.7percent w/w.

In Europe, Italy stood in the limelight as it proposed a 2019 budget deficit of 2.4percent GDP – though this was higher

Investor’s Square •Have you been shabbily treated by your registrar, stockbroke r or other capital market operators?

Let us know and investor will help you investigate and report back.

E-mail: iheanyi.nwachukwu@businessdayonline.com

Vetiva Research

PZ Cussons Nigeria: New quarter, same story for HPC player

RSA fund price of PFAs as at August 3, 2018 S/N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

PFAs CrusaderSterling Pensions Premium Pensions ARM Pension Mgrs.

Stanbic-IBTC Pensions Legacy PFA NLPC PFA PAL Pensions First Guarantee Pension Trustfund Pensions SigmaVaughn Pensions AIICO Pension Managers Leadway Pensure PFA APT Pensions Fidelity Pensions AXA Mansard Veritas Glanvlls Pensions OAK Pensions Investment One Pension Mgrs.

IEI Anchor Pension Managers Radix Pension NPF Pensions

as at Thursday. Overall, the naira traded sideways in the parallel market to settle at N360.0/$1, while rates at the Interbank and Investors’ & Exporters’ FX windows inched lower marginally by 2bps and 6bps respectively to finish at N306.4/$1 and N363.9/$1. Looking ahead, the outlook of the naira is expected to remain tied to the spate of CBN’s intervention in the spot and forward market, as well as the better price discovery in the I&E FX window. Also, we expect the sustained weekly FX intervention by the CBN to continue to put pressure on FX reserves.

Macro Highlights and Outlook During the week to September 28, 2018, the Central Bank of Nigeria (CBN) announced its intention to revoke the operating licenses of 182 financial institutions operating in the country. These institutions include; 154 microfinance banks, 6 primary mortgage banks, and 22 finance companies. The CBN also stated that 62 of the microfinance banks are already non-operational, 74 had become insolvent, 12 were terminally distressed, and six voluntarily liquidated. Elsewhere, the Monetary Policy Committee voted (7 to 3) to maintain interest rate at 14percent.

In other news, disagreement between the Federal Government (FG) and the Nigerian Labour Congress (NLC) over minimum wage led to an industrial action last week. However, after further meetings between both parties, the NLC called off the strike over the weekend.

In the political space, the Osun state governorship re-run election dominated headlines as the opposition party, People Democratic Party (PDP), rejected the

CURRENT PRICE 3.9820 3.9805 3.9034 3.7542 3.6384 3.4638 3.4618 3.3070 3.2793 3.1244 3.0571 3.0502 2.7911 2.7460 2.7331 2.6680 2.5785 2.4792 2.3461 2.0434 1.4670

than the 1.6percent target demanded by the finance minister in order to comply with commitments to the EU. Consequently, the Italian FTSE MIB index shed 3.8percent w/w as the Pan European STOXX (-0.3percent) and Germany’s DAX (-1.5percent) declined w/w while UK’S FTSE (+0.3percent) advanced w/w.

Emerging market performance was mixed. Brazil’s IBOV (-0.1percent) declined w/w ahead of the general elections in October 2018, while India’s SENSEX (-1.7percent) and South Africa’s JALSH (-2.5percent also diminished w/w. On the other hand, Russia’s RTSI (+3.7percent) and China’s SCHOMP (+0.9percent) closed the week upbeat.

Elsewhere, Central banks in Indonesia and in the Philippines delivered rate hikes of 25bp and 50bp respectively while maintaining a hawkish stance while Argentina’s central bank governor resigned barely three months after he ascended the office. Thus, the Argentinian MERVAL index shed 2.5percent w/w.

In the commodities market, Brent price broke above the “psychologically important” $80/bbl level, with markets preparing for tighter supply once U.S. sanctions against Iran kick-in by November 4th. Also, the joint OPEC/ non-OPEC ministerial committee (JMMC) did not recommend increasing production above quota levels. Looking ahead, we expect supply-side concerns to continue to brace oil prices, bearing in mind that any additional shortfall such as a weakening of the situation in Venezuela, could tighten oil supplies even more and ultimately induce higher oil prices.

Ifedayo Olowoporoku

P

Z Cuss ons released its Q1’18/19 financial statements showing a 14percent year-on-year (y/y) moderation in revenue to N15.9 billion (Vetiva estimate: N17.5 billion) and beginning the year with a N205 million loss after tax (Vetiva estimate: N1billion PAT).

Revenue for the quarter came in as the lowest Q1 performance in three years and 9percent below our estimate amidst sustained difficult trading conditions according to the company. Though Management has alluded to the implementation of innovative marketing strategies to strengthen growth for the past t h re e q u a r t e r s, re c e nt performances are yet to show any benefits from these plans.

Whilst we understand that tighter disposable income has subdued sales in PZ’s Electricals segment, the tepid performance across home and personal care products is quite unimpressive given the stronger turnover trend observed across its competitors.

We believe a mix of intense competition, slow response to market developments and seemingly weaker brand

equity on its HPC products have contributed in reducing market share and limiting pricing power.

High production costs, OPEX drag operating profit to five-year low Gross Profit came in 12percent and 24percent below our expectation and the prior year respectively amid sustained margin volatility. Gross margin came in at 29percent, lower than our 30percent estimate a n d way o f f 3 6 p e rc e nt recorded in the previous q u a r t e r. Me a n w h i l e, a flat y/y performance in operating expenses relative to the 14prcent y/y decline in revenue was a major drag on earnings.

Notably, Q1’18/19 EBIT printed at N385 million, significantly behind our N1.9 billion estimate and the lowest figure recorded s i n c e Q 4 ’ 1 3 . How e v e r, foreign exchange losses moderated 63percent y/y to N668 million, albeit still above our N420 million estimate. Overall, bottom line for the quarter came in negative at N205 million, marginally higher than the N123 million loss recorded in Q1’17/18.

Bearish on sales capacity for FY’18/19 We revise our FY’18/19 revenue estimate 10percent low e r to N 7 5 . 1 bi lli o n (FY’17/18: N80.6 billion) as reduced product prices

and a lower volume rollout weigh on the top line figure.

Whilst we have left our gross margin estimate for the year unchanged, we revise our OPEX to sales ratio 200bps higher following the Q1’18/19 surprise. As such, we forecast a 22% y/y decline in operating profit for the year to N6.4 billion (Previous: N9.2 billion).

Meanwhile, having revised our FX losses higher to N2.5 billion (N2billion), our FY’18/19 PAT forecast is revised sizably lower to N2.6 billion (Previous: N4.9 billion, FY’17/18: N1.9 billion). Following this, our 12-Month Target Price of PZ is revised lower to N20.15 (Previous: N23.79). Despite the unappealing earnings results for the financial year, the stock remains a BUY at the current market price of N12.55.

Business description PZ Cussons Nigeria PLC is amongst Nigeria’s top HPC companies with the Nigerian business representing parent company, PZ Cussons Plc largest single market. The company’s sales span two main business segments – Consumer Branded Goods (home & personal care (HPC)) and Durable E l e c t ro n i c A p p l i a n c e s (White Goods). PZ also distributes the products of Nutricima Limited, Harefield Industrial Nigeria Limited and PZWilmar Limited.

Thursday 04 October 2018

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May & Baker Nigeria floats N2.45bn rights issue

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he directors of May & Baker Niger ia Plc and professional advisers to the healthcare company have signed off the offer documents f o r t h e c o m p a n y ’s recapitalisation, paving the way for application list for the offer to open.

May & Baker Nigeria will be offering 980 million ordinary shares of 50 kobo each at N2.50 per share to existing shareholders.

The rights issue has been provisionally pre-allotted on the basis of one new ordinary share for every one ordinary shares held as at the close of business on Tuesday, September 4, 2018.

Application list for the rights issue is scheduled to open on Monday October 15, 2018 and close on Wednesday November 21, 2018.

At a signing ceremony, the board of the company, issuing houses and other professional parties rounded off the pre-offer processes with the formal signing of the offer documents including the rights issue circular, posters and other agreements.

The signing ceremony followed approval of the r ights issue by the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE). Shareholders had in 2014 empowered the company to raise up to N3.2 billion new equity capital.

Capital Assets Limited and Compass Investments

&Securities Limited are the stockbrokers to the rights issue while Cordros Capital Limited and Afrinvest (West Africa) Limited are the issuing houses.

Theophilus Danjuma, chairman, May & Baker Nigeria Plc recently told shareholders that directors of the company believed that the time is now right to raise the funds to enable the company harness new opportunities.

“Therefore our rights issue will soon open and I hope shareholders will take up their rights to support our company in achieving its new vision. We shall all reap the rewards in

the immediate future and beyond,” Danjuma said.

He outlined that the company has envisioned a new vision that will see it dominating the SubSaharan Africa (SSA) markets in line with its new vision of being the leading healthcare brand in SSA. According to him, the new five-year strategic plan of the company entails focus and expansion along the company’s competitive advantage of healthcare and it will soon begin to establish footprints and seek dominance in this area in the SSA region. “ Yo u r c o m p a n y h a s turned the corner and is

now solidly on the path of growth and strong profitability. Our plan in the next few years is to focus on driving our new vision, strategic goals and establishing our footprint as a leading healthcare b r a n d i n S u b -S a h a r a n Africa. The company will strive to acquire required competencies in related business areas, expand its regional reach to explore n e w m a r k e t s, i m p rov e capacity utilization at our WHO GMP pharmaceutical facility in Ota and continue to deliver value and returns on investments to our loyal shareholders,” Danjuma said.

More corporates tap into commercial papers market for short-term finance

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o re c o r p o ra t e entities have continued to seek innovative ways to source funding to finance their institutional needs, thereby tapping into the commercial papers (CP) market to raise short-term finance to support their business operations.

Given the increasingly competitive and demanding market environment, the past few months have seen increased participation in the issuing and quotations of CPs on FMDQ, which have all

been successful as investors scrambled to partake in the offers.

The just ended month of September also saw key activities in the CP quotations space on the OTC Exchange, wherein the Board Listings, Markets and Technology Committee of FMDQ approved the quotation of Access Bank Plc N28.79billion Series 18 CP under its N100billion CP Programme, Sterling Bank Plc N14.40billion Series 6 and N32.58billion Series 7 CP under its N100billion CP Programme and Flour Mills of

Nigeria Plc N8.01billion Series 1 CP under its N100billion CP Programme.

With its streamlined and efficient registration process, FMDQ has continued to show its steadfastness in aligning the Nigerian debt capital markets to international standards, through the promotion and provision of a world-class quotations service, availing issuers and investors the much-needed global visibility, confidence and protection in the markets.

The total turnover for the January to August 2018 period

amounted to N115.68 trillion.

Trading activities in T.bills contributed the largest to overall turnover, accounting for 39.48percent of the market.

FX market transactions (Spot FX and FX Derivatives) accounted for 37.51percent, whilst Repos/Buy-Backs product categories accounted for 15.39percent of overall market turnover. Bonds and Unsecured Placements and Takings, which contributed the least to overall market turnover, accounted for 7.08percent and 0.54percent respectively.

FMDQ Learning Introduction to Sustainable Finance

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his edition of FMDQ Spotlight provides an overview of sustainable finance, including but not limited to its various categories and rising importance in the economy. Sustainable finance refers to any form of financial service that integrates the Environment, Social and Governance (ESG) Criteria into business and investment decisions for the common good of clients and the economy at large.

A sustainable financial centre is a financial marketplace that contributes to sustainable development a n d v a l u e c re a t i o n i n economic, environmental and social terms. In other words, sustainable finance e n s u re s a n d i m p rov e s economic efficiency, prosperity and economic competitiveness both today and in the long-term, while contributing to protecting and restoring ecological systems, as well as enhancing cultural diversity and social well-being.

Categories of Sustainable Finance •Socially Responsible Investing (SRI) or Social Investment – This is a finance strategy that seeks to consider both financial returns and social/ environmental good to bring about a positive change in a society. This favors an economy by encouraging portfolio management companies and investors to consider extra-financial and non-financial criteria when selecting asset values.

S o c i a l ly re sp o n s i b l e investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights and diversity, amongst others.

•Green Finance – This includes all financial transactions that support climate-related or environmental projects. One of its main tools is green bonds. Bonds categorised a s ‘g r e e n ’ i m p l y t h a t proceeds raised from their issuance will be tagged for projects intended to benefit the environment. Green bonds could be issued by financial, non-financial organisations, and public entities. A complementary approach in green finance is the decarbonising of investor portfolios by financing companies that limit their ecological footprint.

•Social Finance. This includes savings and assets invested into social finance products. This sector offers funding to projects that do not fit into classic financing circuits, such as businesses tied to employment, international solidarity and the environment.

•Social Business. This refers to businesses whose ends are not only lucrative, but primarily social in nature.

In addition, they follow viable economic models and profits are reinvested in order to combat exclusion, protect the environment or promote development and solidarity. Social business comes in three (3) main forms: •Microfinance – This is a solution that facilitates access to credit for the most disadvantaged populations •Impact Investing – This refers to investing in companies with a strong social or environmental impact •Social Impact Bonds (SIBs) – These are bonds repaid to investors only if the project’s social objective is met Sustainable Finance and its Rising Importance It i s e s t i m a t e d t h a t between $5.00 -$7.00 trillion of investment in green infrastructure globally would be required to mitigate the effects of climate change in order to meet the goals of the Paris Agreement. It is clear that public finance alone cannot fund this amount, but will play a major role in securing private sector contributions.

Today, companies and governments are pursuing sustainability strategies, and globally, there is a rising need and huge opportunity for allsectors (public and p r i v at e ) , e s p e c i a l l y i n the area of technologies and development of new businesses, that meet the needs of socio-economic changes. Individuals and institutions that are able to key into these opportunities are definitely positioned for astronomical growth and wealth creation.

At the local level, the Federal Government of Nigeria (FGN), in its effort to bridge the sustainable finance gap, raised funds from the debt capital markets (DCM) through the Ministry of Finance (MoF), Ministry of Environment (MoE) and the Debt Management Office (DMO), for environmentally friendly projects to support development for the good of its citizenry. The FGN listed the first green bond in the Nigerian DCM - the Federal Government of Nigeria N10.69 billion Series 1 5-Year 13.48percent Fixed Rate Bonds due 2022 - on FMDQ, in July 2018.

Sustainable finance has become topical in financial markets across the globe.

Concerns for sustainability, centred around the ability of organisations to function optimally in the present without necessarily jeopardising the future, have also become a major focus around the global financial markets. In the years to come, the question o f s u s t a i nab l e f i na n c e will greatly influence institutional objectives, strategies and their day-today management.

24

BUSINESS DAY

Harvard Business Review

Thursday 04 October 2018

Global Business Perspectives CONNEC TING

THE

WORLD

ONE

BUSINESS

AT

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TIME

Fixing the gender imbalance in health care leadership ance in male-dominated divisions such as sales, for example, although the gender imbalance in leadership generally still persists.

LISA S. ROTENSTEIN

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emale physicians continue to face myriad challenges in medicine ranging from implicit bias to gaps in payment and promotion to sexual harassment. So it is not surprising (though it’s still appalling) that although equal numbers of men and women now graduate from medical school, only a small fraction of female physicians become medical leaders.

Currently in the United States, only 3% of health care CEOs are women, 6% are department chairs, 9% are division chiefs, and 3% are serving as chief medical officers. This is despite the fact that women comprise 80% of the health care workforce, and evidence that having women in upper management and on corporate boards is associated with improved financial performance and enhanced accountability.

These numbers point to a clear need for better representation of female physicians in leadership.

How exactly to achieve this given the many barriers they face is less clear. Yet bright spots have emerged, both in health care and in other industries asking themselves a similar question.

They highlight four priority areas for organizations seeking to systematically improve the promotion of women.

QUANTIFICATION Before they can make progress, health care organizations need to see how well (or poorly) women are represented among their leadership. They’ll also benefit from understanding female physicians’ experiences in the workplace, and how those compare to those of their male counterparts.

Quantification is a key facilitator of change in addressing gender imbalance. A powerful example of this can be seen in the United Kingdom’s Athena Swan Charter and Awards. The Charter recognizes commitment to advancement of women in higher education and research. Depending

on how well they meet the Charter’s requirements, institutions are eligible for Bronze, Silver or Gold Awards. As of 2011, organizations must have received at least Silver Awards to qualify for National Institute for Health Research Funding. Evaluation thus far suggests that the Charter has increased awareness of gender and other diversity issues, created numerical and financial incentives for change, and catalyzed structural and cultural changes, such as increased career support for female researchers.

RE-THINKING AWARDS AND PROMOTIONS Women physicians lag behind their male colleagues in the rates at which they receive major awards or recognition. This obviously has an impact on promotions. Systematization can ensure that male and female faculty’s achievements are equitably recognized. Recent work from Brigham and Women’s Hospital highlights that gender gaps in recognition emerge early in female physicians’ careers, but that systematic identification and publicity of their accomplishments can narrow gender-based gaps. This lesson can be applied more broadly, in-

cluding to systematizing search processes, appointment of physicians to committees, and nominations for leadership roles and increased responsibility.

For many decades, medicine has valued and preferentially promoted clinicians who also conducted biomedical research.

As the career paths available in medicine have broadened, the career profiles of those who get promoted have not commensurately expanded. Continuing to prioritize clinician-researchers for promotion can disadvantage certain groups (among them female physicians, who are more likely to choose careers as clinician-educators) and doesn’t necessarily align with the skills needed for modern health care system leadership. Several institutions have begun promoting for accomplishment in less traditional career paths in which women may be overrepresented.

For example, Duke has promotion tracks specifically for faculty with clinical service and educational focuses to their careers, providing tenure-track guidelines for advancement from assistant all the way to full professor. Similarly, the Dana Farber Cancer Institute each year names those among its most accomplished clinical faculty as

Senior and Institute Physicians, recognizing clinical prowess that is often not acknowledged in a traditional, academics-focused institution.

ENGAGING BROADLY Men and women alike should work to enhance gender diversity in leadership. There is substantial data on the pervasiveness of implicit bias and gender-based microaggressions in STEM fields in general, and medicine in particular. Implicit bias training has been shown to decrease negative, implicitly held beliefs and attitudes about women’s capabilities in STEM. Engaging men alongside women in efforts to reduce bias has proved to be powerful. At Dell, for example, the Men Advocating Real Change program engages men as key allies in driving gender equity.

Targeted at the largely-male executive leadership, the program is run by the nonprofit group Catalyst and covers topics such as privilege, unconscious bias, dominant culture and gender role conditioning and its link to leadership. Anecdotal feedback suggests the program is having a positive effect on Dell’s ability to recruit, retain and promote women and on the gender bal-

2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

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CREATING OPPORTUNITIES FOR DEVELOPMENT AND SPONSORSHIP A final lesson from the technology industry suggests that support for women’s advancement must go beyond networking and other forums toward true sponsorship and career advancement opportunities. Both male and female leaders should take on sponsorship roles to promote high-potential women’s access to diverse opportunities, and to avoid the common problem of female leaders becoming overburdened with mentee requests.

IBM’s Technical Women Pipeline Program is a good example.

Established in 2010, it engages mid and senior-level women identified as strong leadership candidates in a two-day program aimed at boosting their careers.

The women are paired with executive advocates with whom they work on development plans and check in on a quarterly basis after initial face-to-face meetings. Women also join quarterly, international calls with others in the Pipeline Program community. The program has improved retention rates for mid- and senior-level technical women and increased the number of women considered distinguished engineers.

Given the value placed on data and evidence in medicine, the impact of these interventions will be further increased by rigorous study of their effects. In the meantime, they provide valuable starting points for a problem affecting not just female physicians, but the health and performance of the systems they work in.

Lisa S. Rotenstein, MD, is a resident physician at Brigham and Women’s Hospital and a Clinical Fellow at Harvard Medical School.

Thursday 04 October 2018

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BUSINESS DAY

25

BUSINESSTRAVEL Global freight volumes continue to trend upward in August Stories by IFEOMA OKEKE

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he International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), rose 2.3percent in August 2018, compared to the same period the year before. This pace of growth was unchanged from the previous month but was less than half the five-year average growth rate of 5.1percent.

Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 4.5percent year-onyear in August 2018. This was the sixth month in a row that capacity growth outstripped demand growth. Yields, however, appear to be holding up.

Growth is being supported by a number of factors, including buoyant consumer confidence, an upturn in the global investment cycle and growing international e-commerce.

However, demand is being negatively impacted by three factors: A broad-based weakening in manufacturing firms’ export order books. Specifically, export order books in Europe, China, Japan and Korea have fallen in recent months.

Longer supplier delivery times are being reported by manufacturers in Asia and Europe, the top two global trading areas by volume. This typically means that they have less need for the speed afforded by air freight. There are risks to global trade from the recent escalation in trade tensions.

“August demand for air cargo grew at 2.3percent, unchanged from the previous month. Buoyant consumer confidence, the growth of international e-commerce and the broad-based global economic upturn are behind the growth. But there are downside risks. Order books are weakening and supply delivery times are lengthening. And the growing trade tensions are a specter over the industry.

“The early focus of tariffs was not on products typically carried by air.

But as the list of tariffs grows so does the air cargo industry’s vulnerability.

And, we can expect souring trading relations to eventually impact busi-

ness travel. There are no winners in trade wars,” Alexandre de Juniac, IATA’s director general and CEO said.

For regional performance, all regions reported year-on-year demand growth in August 2018, except Africa which contracted. All regions reported that capacity growth exceeded growth in demand.

African carriers saw freight demand contract by 7.1percent in August 2018, compared to the same month last year. This was the fifth time in six months that demand contracted. Capacity increased by 6.0percent year-on-year. After a peak in demand at the end of 2017, seasonally-adjusted international freight volumes have stopped declining in recent months. However, they remain eight percent lower than the November 2017 peak. Demand conditions on all key markets to/ from Africa remain weak.

Asia-Pacific airlines saw demands for air freight grow by 1.6percent in August 2018 compared to the same period last year. This was an increase over the previous month but a marked slowdown in growth from the past year. Weaker manufacturing conditions for exporters, particularly in Japan and China, have impacted the demand. As the largest freightflying region, carrying more than one-third of the total, the risks from protectionist measures are disproportionately high. Capacity increased by 3.4percent.

North American airlines’ freight volumes expanded 2.8percent in August 2018 compared to the same period a year earlier. Capacity increased by 3.2percent over the same period.

The recent momentum of the US economy and solid trade flows across the Atlantic has helped strengthen

demand for air cargo, benefiting US carriers. A pick-up in supply chain bottlenecks, which is typically alleviated by the speed of air freight, may also be benefiting the demand.

European airlines posted the fastest growth of any region in August 2018, with an increase in demand of 3.7percent compared to the same period a year earlier. Despite a weakening in manufacturing firms’ export order books in Europe, particularly Germany, international air cargo demand has trended upwards at an annualized rate of 8percent over the last six months. Strong conditions on the transatlantic market and a pickup in demand between Europe and Asia have driven this growth. Capacity increased by 5.2percent year-on-year.

Middle Eastern carriers’ carriers posted a 2.2percent increase in freight volumes in August 2018 compared to the same period last year. This was a significant deceleration in demand over the 5.4percent recorded the previous month. The decrease mainly reflects developments from a year ago rather than a substantive change in the near-term trend. International cargo demand is trending upwards at an annualized rate of 6% in the region supported by a pick-up in trade to/from Europe and Asia. Capacity increased 7.9percent year-on-year.

Latin American airlines experienced an increase in freight demand growth in August 2018 of 1.6percent compared to the same period last year and capacity increased by 5.3percent.

Some of the smaller markets within the region have seen strong growth in international freight volumes so far this year. Nevertheless, the broader pick-up in demand seen over the last 18 months has now paused.

SAHCOL chairman bags NUATE philanthropic award

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aiwo Olayinka Afolabi, the Chairman of the Board of Directors of the Skyway Aviation Handling Company Limited, SAHCOL, has been honoured with the ‘NUATE Philanthropic Award’, by the Nigerian Union of Air Transport Employees, NUATE. The award was presented to him at the Union Quadrennial National Delegates Conference and Awards Ceremony, held at the Grand Hotel Convention Centre and Resort, Asaba, Delta State, in the presence of eminent Nigerians, Labour and Chief Executive Officers in Private

and Public Sector, and delegates to the conference.

According to the Nigerian Union of Air Transport Employee, Taiwo Afolabi is an ‘internationally renowned and labour friendly entrepreneur’, hence his choice as the recipient of the “NUATE Philanthropic Award” to recognize his “immense contribution to the growth and development of transportation in Nigeria.”

While receiving and conveying the solidarity message of the Chairman of SAHCOL to NUATE at its Quadrennial National Delegates Conference, Basil Agboarumi, the managing director/ CEO, expressed profound thanks of

Taiwo Afolabi to the entire leadership and membership of NUATE for deeming it fit to pick him for the award, stating that he’s deeply honoured to receive the award.

Commenting on the Conference theme, ‘Public Private Partnership in Aviation, with Perspectives from three key stakeholders; investor, Labour, and Management”, Afolabi stated that today’s workplace is in continuous need of partnership of all stakeholders, reiterating that he has always partnered with Labour to create industrial peace and harmony for the purpose of business growth.

SAA sees green shoots in first quarter performance

S

outh African Airways (SAA) is on track with its turnaround strategy with quarter one results showing that the company is ahead of the plan in its trading performance.

The airline has always maintained that it will take it until 2021 to break even. This means that its costs will remain higher than revenue until it reaches the breakeven point.

The company continue to implement initiatives to drive costs down and improve revenue as part of the turnaround strategy. The quarter one results, reflect the Board and management’s commitment to turn the airline around despite the challenges.

The company currently has access to financial facilities to support its working capital requirements.

The Board and the shareholder are working around the clock to find a lasting financial solution to the company’s capital requirements.

SAA continues to honour its obligations to all its travelling customers, suppliers and other creditors and will not file for bankruptcy.

The company’s airline operations remain solid with its on-time Performance ranking well amongst its peers.

Quarter one results show material improvement in the trading performance of the company with some of the routes delivering positive gross profit margins for the first time in more than a decade, proof that the initiatives implemented are beginning to yield results.

The airline has made some headway in the implementation of its turnaround plan to transform SAA into a commercially viable entity, which must have the ability to sustain itself financially and remain competitive operationally.

“At a recently held Board strategy session on 11 – 12 September 2018, the executive management

presented to the Board a comprehensive strategy update reflecting on the present-day strategy execution achievements and challenges as well as the road map and options for the outlook of the business.

No decisions have been taken to dispose of any SAA entities or assets at this stage. Options were merely presented to the Board for consideration.

“The full and meaningful implementation of the turnaround plan, which for the first time has been fully cost, will depend on the realisation of certain enablers. “ These include meeting the funding requirements of 21.7 billion rand over a three-year implementation cycle, aggressively containing costs through smart procurement and optimal organisation design, SAA Technical (SAAT) transformation to bring more efficiencies as well as revenue optimisation and network rationalisation,” the airline said in a statement issued to the media.

Since the implementation of one of the key initiatives on revenue optimisation and network rationalisation, SAA has seen encouraging positive financial performance for quarter one of this financial year. These results are borne out of network changes and capacity redistribution SAA implemented earlier this year in its route network.

The shareholder is aware of the funding requirements and the matter is currently under consideration. There are ongoing engagements with the lenders who in 2017 agreed to grant SAA conditional extension on its maturing loans, which are now due in March 2019.

In April 2018 the lenders extended a five billion rand bridge facility to SAA. We remain focused on implementing the turnaround plan and we are seeing positive results.

Arik Air celebrates Nigeria’s independence with 250 free tickets

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rik Air, gave away 250 free tickets on October one, 2018 to celebrate Nigeria’s 58th Independence anniversary.

Customers who flew Arik Air on Monday, October one had the opportunity of winning complimentary tickets on board as five one-way economy class tickets were raffled on each and every flight of the day.

In the course of the day’s flights, the crew conducted a raffle using the seat numbers to draw five winners on each flight for the free one-way economy class domestic

tickets.

Speaking on the Independence offer, Roy Ilegbodu, Arik Air’s Chief executive officer (CEO), said: “Arik Air is a wholly Nigerian airline and the independence anniversary of the country is an auspicious occasion to appreciate our customers for their loyalty.

“We wish all Nigerians a Happy Independence Anniversary”.

Arik Air is one of the oldest commercial airlines operating in Nigeria. The airline will be celebrating its 12th anniversary on October 30, 2018.

26

BUSINESS DAY

Luxury

Malls

Companies

Deals

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Spending Trends

Amazon boosts wages, Pepsi raises prices and Consumers are caught in between …U.S. companies are coping with tight labour market, tariffs … ‘You feel better off but you’re probably not,’ analyst says

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mazon.com Inc.’s promise of higher pay is welcome news for workers. PepsiCo Inc.’s plan to raise prices on what they eat and drink?

Not so much.

Th e a n n ou n c e m e nt s Tuesday by the online retailing behemoth and the food company show the opposing pressures building in the U.S. economy: Wages are picking up in a tight job market, while firms face higher transportation and materials prices due in part to tariffs on products from China and Canada.

And passing those costs to consumers erodes pay gains.

“So you get a raise, but if inflation takes it away, are you really better off?” said Michael Gapen, chief U.S. economist at Barclays Plc. “You have to be careful that it’s not just a money illusion of sorts -- you feel better off but you’re probably not.”

Amazon said it’s boosting its minimum U.S. hourly wage to $15 effective Nov. 1, applying to more than 350,000 full-time and seasonal workers in the country.

That follows pledges by other large retailers, including Tar-

get Corp. and Costco Wholesale Corp., to boost pay.

Meanwhile, PepsiCo is raising prices on beverages and snacks, blaming higher transportation and aluminum costs for hampering profits. The announcement comes after rival Coca-Cola Co. previously said it had increased prices because of higher commodity prices amid tariffs. Other companies are reporting or warning of price increases including Samsonite International SA and Steven Madden Ltd. Stagnant Earnings In September, wages unexpectedly jumped year-overyear by the most since the recession, raising expectations for more upside surprises in

worker pay. They’ve still yet to surpass the kinds of gains seen before the 2008 financial crisis, while a pickup in prices means inflation-adjusted earnings have been basically stagnant in recent months.

Companies could be forced to boost pay further to attract and retain workers. Weekly filings for unemployment benefits are near a five-decade low. The monthly jobs report due Friday is projected to show the jobless rate fell to 3.8 percent in September, while average hourly earnings cooled to a 2.8 percent annual gain from 2.9 percent in August.

While Amazon’s move probably won’t show in national economic statistics,

“it’s reflective of a tight labor market and the difficulty in finding, training and retaining the right kind of workers,” Gapen said.

At the same time, consumers are facing faster price increases than they were a year earlier, and seasonally adjusted gasoline prices increased 3 percent in August from the prior month, the most since April.

Consumer spending has shown steady, if not spectacular, increases in the third quarter, coming off a strong April-June period. Rising oil prices in recent weeks portend a fresh pickup in gasoline costs that will bite further into Americans’ wallets.

Amazon’s higher wages come before the busy holiday shopping season, which should help recruit workers to deal with surging demand.

The company’s move doesn’t just reflect the economy -- it also has political overtones. The company has faced public scrutiny over employee pay and work conditions, something it hinted at in its press release, which said “we listened to our critics.” °Culled from Bloomberg

Power Oil seeks to build healthy families with quality products—Brand manager …marks World Heart Day with ‘Pay with Calories’

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ower Oil, Nigeria’s healthy cooking oil, says it is commitment to building a healthy nation, by providing families with nutritious products which are of best standards.

Amisha Chawla, brand manager, Power Oil, disclosed this during the fifth edition of its annual health promotion campaign “Pay with Calories” staged in remembrance of the annual World Heart Day and also to encourage Nigerians to adopt a healthy lifestyle.

“Pay with Calories’, is actually one of our major events being held annually. Interestingly, this edition has coincided with a day when the heart is being celebrated worldwide,’’ said Chawla. ‘‘Power Oil as a brand, seeks to help to build healthy families, and by implication a nation of strong and healthy citizens by providing them with nutritious products of quality standards,’’ she added.

The brand’s activation held at Festival Mall in Amuwo Odofin area of Lagos State, and also at various locations in Ibadan in form of street engagement.

During the activation in Lagos, participants had the opportunity to use the equip-

Thursday 04 October 2018

L-R: Kenneth Iruonagbe, social media manager, Power Oil; Rejoice Uzochukwu, participant; Judith Biegusa, participant; and Omotayo Azeez-Abiodun, public relations manager, Power Oil, during the ‘Power Oil Pay With Calories 5.0’ event in commemoration of the World Heart Day, recently in Lagos.

ment to exercise for a minimum of at least five minutes to burn some calories, after which they were rewarded with amazing prizes. The prizes won were based on the amount of calories the participants were able to burn on the spot within the allotted time.

The campaign created an exciting atmosphere for the brand to cater to the health needs of its teeming customers in a fun, relaxing and rewarding manner. Various gift items were labelled and displayed for consumers to select from depending on the number of

calories burned.

Omotayo Azeez- Abiodun, public relations manager, Power Oil, said the experiential campaign was borne out of the need to encourage Nigerians to become mindful of their heart health by making efforts to maintain good body fitness, and possibly eliminate unhealthy consumption habits, which lowers the risk of blood pressure and heartrelated ailments.

“And because the World Heart Day is a symbolic event for us, we went a step further to go into the streets of Ibadan

to engage consumers in some calories-burning moves while they get to win gifts in exchange,” said Azeez- Abiodun.

The activation which began at 9:30a.m and lasted till the evening of that day, was well attended as families and individuals trouped out in their numbers to participate in the exercise.

The customers who smiled home with amazing gift items could barely hide their excitement.

Judith Biegusa, one of the winners who was visibly happy, having won herself a smart wristwatch after working out to burn 75 calories within six minutes said: ‘‘healthy activities like this inspires me and encourages people to believe that going the healthy the way remains one the best channels to a long and sickness free life.’’

Obaide Austin, a participant of the press-up challenge was full of excitement.

“It has been so much fun. Getting rewarded for this made it more interesting and I applaud the Power Oil brand for coming up with such a remarkable campaign,’’ said Austin. ‘‘I and I believe everyone present here, will be looking forward to next edition.’’

Home Depot expands same-day delivery to keep up with shoppers …Partners with startups Roadie and Deliv to quicken shipping … Stores serve as delivery centers in $1.2 billion upgrade plan

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s part of an ongoing $1.2 billion supply-chain upgrade, Home Depot Inc. has started sameday deliver y across the U.S. to help it stay relevant with consumers’ need-ityesterday mentality.

The home-improvement chain had already been using trucks to deliver large items such as building materials from stores in a day or so. Now, aided by star tups Roadie Inc. and Deliv Inc. in its top 35 metro markets, online orders made before noon of about 20,000 products -everything from Halloween decorations to power tools -- can arrive by van or car the same day, starting at a cost of $8.99.

“We set an overarching goal for our supply chain to be the fastest, most efficient delivery in home improvement,” said Mark Holifield, Atlanta-based Home Depot’s executive vice president of supply chain and product development. Customers “want it cheap, but also want it to be quick.”

To compete with Amazon.com Inc. and other e-commerce companies, retailers are realizing they need to speed delivery of online orders, especially because web purchases are often the fastest-growing part of a chain’s business.

This is true for Home Depot, whose online revenue grew more than 20 percent in this year’s first half.

Now many retailers are using stores to create a so-called omnichannel network, because they are already closer to their customers than big distribution centers that tend to be on the outskirts of cities or in rural areas.

Delivery Centers Using stores as distribution centers has created options that Amazon can’t replicate, like enabling customers to pick up online purchases at the closest location to avoid shipping fees. It also has given physical locations added value.

The current push is shipping web orders from a store, with a heavy focus on groceries by retail giants such as Walmart Inc. Lowe’s Cos., Home Depot’s smaller competitor, is just now testing same-day delivery in a few markets and does offer next-day shipping for in-stock ap-

pliances. Marvin Ellison, its new chief executive officer and a former Home Depot executive, has made revamping the supply chain a priority, including hiring a former Walmart manager to run it.

“This is the new table stakes,” said David Schick, director of research for Consumer Edge Research. “This is the next iteration of giving consumers choice. If this decade proves anything, it’s that consumers want control and choice.”

But these kinds of deliveries can be inefficient and costly, with trucks not filled to capacity and taking longer in congested city streets. That’s where firms like Roadie and Deliv come into play. They’ve created Uber-like online platforms that crowdsource delivery from drivers who are independent contractors.

Subsidizing Costs While that helps reduce costs, Home Depot’s Holifield said the retail giant isn’t passing all of the delivery expense to customers. Thanks to its size -- $100 billion in annual revenue and rising -- the company can afford to subsidize some of it. It doesn’t hurt that its shares have soared almost 10 percent this year, closing at a record $213.85 on Sept. 11.

“Delivery can be expensive,” Holifield said. “What we look at is delivery helping us to make stronger customer relationships.”

About a decade ago, Home Depot paved the way to be an omnichannel leader by backing away from the rush to open stores, choosing instead to wring more from every existing location.

That proved prescient. While other retailers continued to add stores that they now regret with the rise of online shopping, Home Depot forced itself to reconsider every aspect of operations.

That’s led to upgrades in customer service and instore technology, helping it increase same-store sales 6 percent on average over the past five years -- gains that any legacy retailer would covet. And now it’s turned to supply chain.

“Everyone is investing in more and more choices for the consumer,” said Schick, the Consumer Edge researcher. But Home Depot is “ahead on the complete omnichannel experience.” °Culled from Bloomberg

Thursday 04 October 2018

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27

Global retail update

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here are s ome thought-provoking initiatives a ro u n d t o d a y .

German retailer Schwarz Group is tackling garbage, Belgium’s Bioplanet is offering individualised nutrition advice to customers, Walmart seems set to monitor the stress levels of shoppers, and a San-Francisco start-up has consumers exploring their telekinetic powers.

The fight against plastic and waste goes on - with discounter Aldi UK announcing it will use nonrecyclable plastic packaging on its cooked meats range, followed by Tesco and its trial to reward customers for returning plastic bottles, while Australia’s Woolworths is backing new sustainability targets.

Below are the updates: Waste management in Europe: Germany’s Schwarz Group, the parent company of discounter Lidl, is in the midst of establishing its own waste disposal system ‘PreZero Dual GmbH’ (paywall, in German). It is expected to be fully operational by 2020 and will cover the entire waste chain, from organizing pick-up to sorting and recycling.

Food conscious: Belgian retailer Colruyt’s organic chain Bioplanet, has unveiled ‘Food Compass’, a free service designed to give customers personalised diet advice through weekly meet-

ings with a dietician.

Competitive edge: EU regulators are questioning the ethics of Amazon’s dual function, as a company hosting retailers on its platform and simultaneously as a competitor to these same merchants with its ownbrand products. The European Commission is now questioning retailers. The results could lead to a formal case and fines against Amazon.

Changes ahead in Asia, Australasia: Chinese e-commerce giant Tencent has announced a major restructure amid growing regulatory, strategic and financial challenges faced by the company.

Meanwhile, in Australia bigbox retailer Harvey Norman is confronting its own challenges head-on with the launch of its first flagship store on home turf.

Fundraising success : Alibaba has made an undisclosed investment in Chinese garment-sharing platform YCloset. The service, which specialises in renting clothes to its 15 million registered users, will use the funding to expand its data analysis and physical operations centres.

Fo c u s o n S o u t h ea s t Asia: A new online platform between JD Thai JV and Chinese retail giant Central Group has launched under the brand ‘JD Central’ and plans to revolutionise the e-commerce experience for Thai customers. Meanwhile, in neighbouring Myanmar KFC is capitalising on increasing local acceptance of fast food with a planned expansion of 70 stores.

Making connections in United States: Walmart has filed a patent for a biometric shopping trolley handle

designed to track shoppers heart rates, grip intensity and temperature. Employees could then offer additional support to stressed out customers. The retail giant is also investing in a new platform to assists suppliers posting content on their website.

Monumental blow: Sears has taken another hit, with shares dropping to an alltime low and falling below USD 1 as the department store chain runs out of time to stay afloat. The embattled retailer risks being delisted from the Nasdaq altogether if its stock doesn’t increase within 30 days.

Merger investigated in Europe: Britain’s competition regulator has concluded that the proposed takeover of supermarket chain Asda by rival Sainsbury’s could lead to reduced competition. The two groups could be forced to

offload more than 460 stores to satisfy authorities before the planned merger could go ahead.

Going green: Aldi is set to cut more than 1,000 tonnes of plastic a year by introducing recyclable packaging across its range of cooked meat products in the UK, while competitor Tesco encourages shoppers to recycle plastic bottles, trialling instore recycling machines which pay customers for every bottle returned.

Focus on Turkey: Several large Chinese companies, including tech giant Alibaba, are reportedly in talks with Turkish firms about buying local assets after the country’s currency sell-off has made them cheaper. Alibaba has already purchased Turkish online retailer Trendyol earlier this year.

Ongoing expansion in US, SA: Florida-based supermarket chain Publix plans to expand its headquarters in Lakeland and bolster its workforce. The grocer wants to add 700 jobs by the end of 2027. Currently, Publix operates 1,198 stores and is owned and operated by its more than 195,000 employees.

Changes at the top: J.C. Penney is losing another top executive as its chief financial officer, Jeffrey Davis, plans to step down. CEO Marvin Ellison quit in May. Two months later, chief customer officer Joe McFarland left the department store

operator.

Online push: South Africa’s Woolworths is offering shoppers the options of ordering directly from its upgraded mobile app. The department store chain, which faces a possible downgrade

by S&P Global Ratings, aims for a larger share of the country’s growing e-commerce market, worth an estimated USD 1.28 billion of sales.

Decathlon debuts in Asia, Australia: The Frenchheadquartered sports goods retailer has launched its first store in South Korea, rapidly growing its Asian footprint.

Decathlon operates in 47 countries, among them Germany, where the retailer has recently opened a compact format in Frankfurt. Click here for pictures (captions in German) Fashionable pizza: Fast food giant Yum China Holding is about to give its Pizza Hut brand a high-end makeover and has partnered with American fashion designer Anna Sui to open a test centre for innovative products in Nanjing this week and roll out new “Kiosk” and “Express” store formats.

Sustainability targets Australian supermarket major Woolworths supports an initiative that aims to see 100 % of the continent’s packaging become reusable, recyclable or compostable by 2025 or earlier. The targets were announced earlier this week by Australian Packaging Covenant Organisation.

Living under poverty line How Nigerians are struggling to survive

If you want to contact the writer of this story call: +234(0) 803 889 1567, +234(0) 8155184838 chinwe.agbeze@businessdayonline.com

BusinessDay readers lift cancer patient with N430,000

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atricia Ebenuwa, a cancer patient in Lagos, has received N430,000 donations from kind-hearted BusinessDay readers to pay for her medical bills.

The patient was featured in this section of Thursday July 31, August 2, August 23, and September 6 & September 20, 2018, where she said that money to pay for her medical bills was her greatest challenge. ‘‘I spent all I have, and had to go borrowing for more to enable me pay for my medical bills. My family and I are currently in debt, but the treatment is not yet over. I was told to commence chemotherapy after which I have to go to Abuja for radiotherapy,’’ Ebenuwa told BusinessDay in August, 2017.

‘‘All these cost the money that I, my aged parents and siblings don’t have. I am appealing to kind-hearted Nigerians to assist me get this treatment so I could return to business and be able to take care of my family,’’ she said.

A graduate of Marketing, Ebenuwa began dealing in female accessories when she couldn’t secure a white collar job. With the proceeds from the business, she took care of her aged parents and siblings.

But she quit trading when she took ill and all the money she had went on hospital bills. ‘‘When I exhausted all my savings, I had to rely on my poor family for financial aid. My family has incurred over N800,000 in debt since I commenced treatment last

Frank Uzuegbunam, editor, Businessday West Africa Energy (R) presenting cheque to Patricia Ebenuwa, cancer patient (l) on Monday at BusinessDay corporate headquarters in Lagos.

year, and they can borrow no more because no one is willing to lend,’’ she said amidst tears. ‘‘I need N188,000 for chemotherapy, and radio-

therapy costs N600,000 at National hospital in Abuja because that’s the only hospital that has a functional radiotherapy machine in the country. I

still have to worry about transport fare and where to stay for a month while receiving radiotherapy,’’ she added.

Ebenuwa received the sum of N100,000 each from two BusinessDay readers and N100,000 from a Foundation to help pay her medical bills.

She also received N50,000 each from two BusinessDay readers, N20,000 from another and N5,000 each from two anonymous readers, bringing the total donation to N430,000.

Presenting the cheque of N430,000 to Ebenuwa, Frank Uzuegbunam, Editor, Businessday West Africa Energy, advised her to put it to good use.

Overjoyed Ebenuwa, who was close to tears, thanked her donors for their

Analysts: Chinwe Agbeze, Stephen Onyekwelu, David Ibemere, Graphics: Joel Samson

generosity. ‘‘I have almost given up hope because I don’t know where to get the money for my treatment from,’’ she said in an emotion-laden voice. ‘‘I am overwhelmed by this show of love.’’ ‘‘I pray for all those who supported me, that God will drive sickness away from their families and answer all their prayers. Wherever they took out the money to support me from, God will give it back to them in thousand folds,’’ she added.

Diagnosed of cancer of the breast in June 2017, Ebenuwa completed her chemotherapy in January, 2018 and had a mastectomy (surgery to remove the breast) in April, 2018. She was billed to commence radiotherapy, but she could not afford to pay for the treatment.

Innovation

Apps

Fin-Tech

28 BUSINESS DAY

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure C002D5556

Bank IT Security

Thursday 04 October 2018

Nigeria@58: Time to address foreign-led boom in Nigeria’s tech sector FRANK ELEANYA

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he growing integration of technological solutions into e v e r y d ay l i f e around the globe has seen Nigeria, as well as the rest of Africa increasingly incorporate technology as a strategy to addressing the many challenges that face the continent.

Young people on the continent getting into the tech space often see it as a means of addressing lack of jobs after school, breaking poverty circles and positioning themselves as the future talents for the digital age. Over time, the space has attracted some of the best minds who have built companies solving local problems and have in turn caught the attention of investors.

In terms of funding, 2018 has been a most defining year for most tech entrepreneurs. More than any other time, tech businesses have received massive cash inflows in this year.

The first half of the year saw Cellulant, a fintech company co-founded by a Nigerian, Bola Akinboro, secure $47.5 million to make it the most funding received by a tech and a fintech startup on the African continent in that period.

First quarter was very eventful with tech compa-

nies like Terragon Group and Rensource receiving $5 million and $3.5 million in equity. O-Mobile Multimedia Limited and Lidya brought in $10 million $6.9 million respectively in the second quarter. Paystack, Mines and Paga with $8 million, $13 million and $10 million led the third quarter.

As remarkable as the investments may seem, about 99.9 per cent of the funds were led by foreign investors including TLcom, Village Capital, Y Combinator, Amaya Capital Partners, Omidyar Network, The Rise Fund, Endeavor Catalyst, Satya Capital, among many others. Local investments into startups are at most abysmal.

Charles Ojei founder of Hybr and board member of Village Capital say that the nature of investments in tech is something that traditionally a lot of investors in Nigeria are not used to.

“These are riskier investments: investing in ideas and early stage companies,” he began, “It is not something that we are traditionally very used to. Secondly, it is mostly about technology; a lot of people might not understand that. The people that understand it are coming from outside. They have lots of capital. They have also been doing for decades so they understand exactly how it works. Africa is emerging and they are cashing in.”

In essence, tech investments are generally driven by sector expertise, which as a result lends itself to foreign investors who have experience in the sector from their home markets.

Rahmon Ojukotola, director of StartCredit and advisory board member of Florida Schools group, told BusinessDay that one of the implications is when the naira depreciates, it makes it more likely for the foreign investors to withdraw capital from either a successful or unsuccessful business as it adversely affects their return on investment. An example is Efritin.com.

“Foreign capital is generally more short term than domestic which increases pressure on the tech firm o

unsustainably grow fast to meet the investors timeline,” he said. “Investment in Nigeria from abroad is generally seen as non-core to help diversify their portfolio and due to the inherent higher risks in the country makes the capital highly elastic and subject to flight.”

Ojei also told BusinessDay why it matters.

“Like every economic story, these tech companies eventually are assets and if your assets are being owned more and more by foreign parties, it means you are giving away part of your future,” he told BusinessDay in an interview. “The more local investments that we can have the more we can retain some of these assets in this country. Foreign in-

vestments are not bad, but we have to find the balance.”

Abasiama Idaresit, CEO and founder of Wild Fusion Group, in a recent article on BusinessDay, also pointed out that a knowledge economy wholly owned by foreign companies and stakeholders, means the country’s intellectual capital, proprietary assets, data will be domiciled offshore, solutions to local problems will be owned and controlled by foreign companies.

“Tax on revenue in country will be paid to foreign government while profit will be repatriated offshore,” he wrote. “Whoever, owns technology determines who has access and how the politics of the technology could evolve.”

in machine learning and AI features, such as Adaptive Battery and App Actions, ensure smarter resourcing of power and processing and accelerate smartphone functionality.

The device is optimised to extract every bit of supply from the already powerful battery. With Adaptive Battery, Android 9 Pie uses deep learning to understand patterns in phone usage and prioritises battery power for apps that are important to users.

dicting your next move and displaying the right action on your phone * Slices – Identifies relevant information of your favourite apps to make them more easily accessible when you need them * Adaptive battery – Uses deep learning to understand usage patterns and prioritise battery power on important apps * Adaptive brightness – Automatically adapts phone brightness by learning from your interactions with different settings * New System navigation – Features a single home button that provides intelligent predictions and

The lopsided direction of funding has also impacted some of the tech solutions in that most are not localised. In most cases, the localised solutions are not being funded because foreign investors do not always see them as viable.

It is partly responsible for why startups in fintech secure the chunk of funding - mostly in huge equity investments - while those in health or education or energy make do with the ‘change’ or grants.

CK Japheth, founder of Innovation Village, a tech hub in Uganda told BusinessDay that it is not only a Nigeria problem. Most African startups are swayed by the success of Silicon Valley and the promise of funding from foreign investors that they end up building solutions that are disconnected from local realities.

“For every startup that has managed successfully to break into that market (Silicon Valley), there are millions that have died on the road,” Japheth said.

To increase the input of local investors and attract new ones, Japheth believes a lot depends on education.

“The issue is Nigerian investors won’t invest in a sector, they do not understand such as blockchain,” Ojukotola adds. “The way it can be mitigated is over time, when Nigerians gain experience in the sectors.”

Android 9 Pie rolls out on Nokia 7 Plus

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ndroid 9 Pie, the latest update on the popular mobile operating system is to start rolling out on the Nokia 7 Plus, as the brand tries to stay ahead of trends in the industry.

HMD Global, which currently makes Nokia phones, announced that Nokia 7 Plus users will start receiving Android 9 Pie update, packed with Google’s intuitive software, and only the most essential apps loaded.

The device update, according to the company, will come without bloatware, skins UI changes or hidden processes eating up the battery life. This upgrade builds

upon the strong features of Android 8.0 Oreo™, and focuses on a more tailored experience with emphasis on AI, machine learning and digital wellbeing.

Juho Sar vikas, chief product officer, HMD Global, said: “We constantly strive to deliver on our promise of offering pure, secure, up-to-date Android on Nokia smartphones.

Today, we are extremely delighted to start the roll out of Android 9 Pie on Nokia 7 Plus – making us among the first to offer the latest innovations from Google, including Android One exclusive features such as App Notifications, to the value

flagship tier.”

As part of the Android One family, the Nokia 7 Plus will introduce App Actions – a new feature unique to Android One devices and Google Pixel phones running Android 9 Pie. App Actions learns more about a person’s daily usage and assists with everyday tasks. The Nokia 7 Plus will predict and recommend a user’s next action at the moment it’s needed the most whether it’s business, music or lifestyle.

The Nokia 7 Plus powered by Android 9 Pie, according to HMD, creates the most efficient Nokia smartphone yet. Advances

Key features of Android 9 Pie * App actions –Helps you get things done faster by pre-

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com

suggestions (user enabled) Digital Wellbeing features available later in 2018 * Dashboard – Highlights screen time and phone usage including how many times device has been unlocked and number of notifications received * App Timers – Set time limits on app usage * Wind Down and Do Not Disturb – Set a daily schedule to get your phone ready for bed. Your screen fades to Grayscale, while Do Not Disturb silences notifications for a restful sleep. You can activate Do Not Disturb anytime you want to disconnect.

Thursday 04 October 2018

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LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Perchstone & Graeys seals KiakiaFX, Turtlewax BDC partnership THEODORA KIO-LAWSON

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he law firm of Perchstone & Graeys (P&G) recently adviced on the partnership between KiaKiaFX, an indigenous Fintech company and Turtlewax BDC to promote the sale of retail FX – a move which culminated in an official signing by the parties at the Lagos office of Perchstone & Graeys.

As part of this partnership, the duo of KiaKiaFX and Turtlewax have set up an online platform where customers can conduct Foreign Exchange from the comfort of their homes or offices via a desktop computer or a mobile device. According to the promoters, the website offers its users the opportunity to navigate through KiaKiaFX’s extensive range of services with ease.

Speaking about the firm’s involvement, P&G Partner, Tolu Aderemi, stated that business lawyers were mandated to work with stakeholders alongside the Presidential Enabling Business Environment Council (PEBEC); to fashion out ways to assist the federal government in its effort to further increase Nigeria’s Ease of Doing Business Ranking.

He said, “Our ranking has gone from 165 to 145 and now we are looking at moving this figure a bit higher with technology. This is why we are happy to work with a platform like KiakiaFX, which enables the exchange of foreign currency through technology. What they do is provide you with an online platform where buyers and sellers can meet to make these exchanges.”

According to Tolu, P&G sees this as an opportunity to work with both

micro and macro schemes. Micro for us, is a platform which we think will aid the ease of doing business and macro is a scheme which we will be

having more collaborations with, as major stakeholders.

Speaking further about this area of specialisation, Tolu highlighted

the need for expert counsel in specialised transactions.

“There are specialised areas of practice and we cannot downplay

the place of skill and expertise in this regard. It is important to have the right advisor and consultant guide through transactions requiring some level of expertise in the given area. Perchstone and Graeys is a robust firm with ICT departments and they are skilled in the provision of cutting-edge technology. Gone are the days were lawyers can be everything. Now we have specialized practices,” the P&G Partner said.

Also speaking at the signing, managing director of KiaKiaFX, Abisoye Coker disclosed that the FX market was growing worldwide due to increased globalisation and KiakiaFX has identified a market need for transparent and convenient retail space for multiple currency pairs.

He said, “We are very thrilled about the launch of the website.

We hope that users would find our interface accessible and easy to use.

“The site is just the first step of our strategy and we will be communicating future services in the nearest future,” Coker added.

Adding to this, the managing director of Turtlewax, Olatunbosun Sanyaolu-Oyo disclosed that customers were already excited about the platform. “No longer will location and time be a burden for our retail customers,” he said.

In closing, members of Perchstone & Graeys congratulated the two companies for the strategic partnership, hoping that the platform will achieve its goal of eradicating needless middlemen in foreign exchange transactions.

Both KiaKiaFX and Turtlewax BDC are looking to expand their businesses while building a long and prosperous partnership.

Rights group warns against ineffective election tribunals ahead of 2019 ...reveals content of report from 2017 Anambra elections THEODORA KIO-LAWSON

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he Human Rights Law Service (HURILAWS) has expressed concerns over the process of dealing with complaints and resolving election disputes.

Speaking at a special presentation of the report, “Judicial Application Of Election Petition Laws At The 2017 Anambra State Governorship Election Tribunal” to the media, Senior Programmes Officer of HURILAWS, Collins Okeke stated that the process of dealing with complaints and resolving election disputes was very vital to the survival of any democracy particularly a fragile one like Nigeria.

According to him, in addition to observing/monitoring the voting process, attention must also be paid to the process of managing pre and post-election disputes because the tribunals/courts represent the confidence of the people not only in the electoral process but also in the rule of law and the nonexistence or malfunctioning of these tribunals could lead to the electorate

and the political class settling political scores through unconventional means.

Presenting the report, Okeke spoke of the group’s involvement in advocacy for reforms of the election conflict management process in Nigeria since 1999 and how it has developed the practice of observing proceedings at election tribunals. This is to identify problem patterns and issues with the court system and propose potential solutions - a process, which he disclosed has led to the presentation of its most recent report (“Judicial Application Of Election Petition Laws At The 2017 Anambra State Governorship Election Tribunal”) from the observation of the election tribunal process following the 2017 Anambra Governorship election.

In its report of the Anambra State Governorship election which held on 18th November, 2017, where about 37 political parties fielded candidates for the governorship election, HuriLaws revealed that out of the 37 candidates who participated in the elections, only three candidates filed petitions before the Election Tribunal.

According to HURILAWS, one of

funding, could not muster enough financial muscle to deploy the massive array of evidence and witnesses requisite to upturn the apple cart, as it were.”

HURILAWS further revealed that access to relevant election materials or documents by candidates in the election for purposes of election petition was also a fundamental challenge with the Independent National Electoral Commission levying very exorbitant fees for issuance of certified true copies Collins Okeke, Senior Legal/Programme Of- of the election results and other elecficer, Human Right Law Service (HURILAWS). tion documents to candidates.

“Petitioners in the Anambra State election Petition Tribunal had to pay the critical challenges encountered application fees in the range of N1, by petitioners include cost of fil- 000, 000 .00 to N1, 500, 000 .00 to access ing these petitions and prosecuting, such documents. The huge financial which was as much as N400, 000 .000 cost attendant to procuring election and definitely discouraged quite a materials and documents from INEC number of potential petitioners, who for purposes of Election Petition might were financially incapable of pursuing have contributed in dissuading potentheir cause. tial Petitioners from challenging the Okeke said, “Beyond this, it was outcome of the 2017 Anambra State also cumbersome for Petitioners to governorship election,” the Senior establish the corrupt practices they Legal/Programmes Officer said. alleged, as candidates of less popular Other issues highlighted in this political parties who were largely self- report include, time within which to

dispose of petition, funding of election petitions, amongst other things.

HURILAWS thus recommended that it would be fair to reduce the standard of proof where a Petitioner is alleging corrupt practices against the conduct of an election to proof on a balance of probabilities. In this case the onus can shift to the Respondent where a Petitioner has volunteered reasonable evidence that warrant rebuttal evidence by the Respondent.

They also suggested that, the rule on substantial non-compliance should not be restricted to what transpired on the Election Day, because matters such as voters registration, unlawful campaign outside of the statutory period, campaign funding, accreditation of voters, collation of results etc., form the composite process of an election and could be manipulated to thwart the fairness of an election and totally change the outcome thereof.

On the issue of access to and high cost of procuring relevant election documents needed for election petiContinues on page 32

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LEGALINSIGHT

Thursday 04 October 2018

BDLegalBusiness

IP valuation as value-enhancement in corporate Mergers & Acquisitions IP due diligence reveals the inherent realities of IP assets, which may not be apparent at first instance, and help a purchaser or IP owner to reach a more accurate value of his or her asset.

TOLU OLALOYE

I

t is incontrovertible that business and financial transactions are undertaken for profit-oriented objectives. For instance, assets will be purchased for the cash flows they will ultimately generate; not to decorate the portfolio of the purchaser. Therefore, knowing what an asset is worth and what determines that value is a prerequisite for intelligent decision making i.e. in choosing assets to comprise a portfolio, deciding the appropriate price to pay or receive for an asset, and in making investment and financing choices when running a business.

Intellectual property (IP) shares many of the characteristics associated with real and personal property. For example, intellectual property is an asset, and as such it can be bought, sold, licensed, exchanged, or gratuitously given away like any other form of property.

Valuation therefore plays a critical role in the financial investment making decision process. The obvious question then is what is valuation? Valuation refers to the process of ascertaining the inherent worth of an asset which will form the basis of the price a buyer is willing to pay for that asset.

In corporate M&A deals, where valuation underpins the commercial transaction being consummated, failure to accurately assess and determine the inherent worth of an asset or company may lead to obtuse pricing on the side of the buyer and seller.

An illustration of this is the case study presented by the Broadcast. com case. In 1999, Yahoo bought a financially unsuccessful internet radio startup – Broadcast.com – for a reported 5.7 billion dollars, in one of the biggest deals in internet history. Broadcast. com seemed to be a successful company, with huge internet presence and cutting-edge technology. Yahoo’s valuation of the company was based on its overly bloated “performance on paper” and an inaccurate forecast of internet trends and online consumer behaviour. In fact, Broadcast.com had been steadily losing money before the acquisition. The deal turned out to be a massive flop. The service has since been shut down, along with all its derivatives.

In hindsight, Broadcast.com was not even worth $100,000,000.

A cornerstone of investment and financial decision-making thus is that; you must never pay more for an asset than it is worth or, inversely, you must never accept less for an asset than it is worth. Consequently, perceptions of value must be backed up by reality; a reality which postulates that the price paid or received for an asset must reflect the cash flow it is expected to generate sooner or later.

THE IMPORTANCE OF IP VALUATION IN CORPORATE M&A In 1998, German carmaker, Volkswagen, purchased the assets of Rolls Royce and Bentley for about $900,000,000. Supposedly, Volkswagen had purchased everything it needed to begin the manufacture of the Rolls Royce automobiles, which was a key objective of the entire acquisition exercise. However, Volkswagen did not realize until after the deal was closed, that the IP assets it had just purchased did not include the right to use the Rolls Royce Trademark! The Rolls Royce airplane engine company had licensed the right to use the “Rolls Royce” mark to the defunct auto manufacturer under a license that terminated in the event of the latter’s sale to any third

Tolu Olaloye

party. At the point of Volkswagen’s purported purchase of the assets of the Rolls Royce automobile company, the license to use the mark terminated by operation of law and full ownership of the mark reverted to the Rolls Royce airplane engine company who subsequently sold it to BMW, an arch-rival of Volkswagen. Thus, Volkswagen had acquired everything necessary to build Rolls Royce cars except the right to use the Rolls Royce mark, which effectively made the entire acquisition exercise a near-failure.

The purpose of acquiring Rolls Royce automobiles was not just to build plants; it was to own the right to use the Rolls Royce mark. The value of $900,000,000 was not just for plants and equipment; it was for the right to manufacture vehicles that bore the Rolls Royce trademark; plants and machinery were only incidental to this objective. Failure to obtain the IP right made the entire acquisition exercise redundant, If Volkswagen had realized that the acquisition would not include the right to use the trademark, it would either have valued the company at less than half of the price paid, or it would not have bothered with the acquisition at all.

It is really simple: The price Volkswagen offered for the company was a reflection of its value for the brand, being a function of the perceived cost of attempting to create from scratch, a luxury brand of its own.

Without valuation, there can be no adequate financial arrangement in Corporate M&A. How will the buyer decide on an adequate offer for the target firm or asset? How will the target firm decide on an adequate value for itself or its assets, below which acceptance will be impossible?

The above example also highlights the role of IP valuation in Corporate M&A as well as the integral role IP due diligence plays within transaction. In Corporate M&A, valuation and IP due diligence must work hand in hand to reflect an accurate value for the target firm.

There is a significant difference between valuing a business as a growing concern and valuing a business on the basis of its assets. As a going concern, its valuation is based not only on existing investments but also on expected future investments and their profitability. In an asset-based valuation, focus primarily is on the existing assets with the value of each asset estimated separately. A particular example of asset-based valuation is liquidation valuation, where assets are valued upon the presumption that they have to be sold as soon as possible.

The urgency associated with liquidating assets often results in a discount on the value. How large such discount will depend on the number of potential buyers, the urgency of the transaction, the characteristics of the asset and the state of the economy.

When undertaking a valuation for the purposes of Corporate M&A, IP due diligence is of utmost importance. All known models of valuation will prove inaccurate, no matter how much care and expertise is involved, where due diligence is not performed. As evidenced in the example of Volkswagen above, IP due diligence can be the difference between a successful or failed acquisition; regardless of how much money the acquiring party has at its disposal.

During valuation for a Corporate M&A, one must seriously consider the context of the IP asset, i.e. the operating environment within which such asset will be deployed. Sometimes, an IP asset may look incredible on paper, but the operating environment may be such that will hamper or restrict the potential revenues from such asset. For instance, if Company X develops an online platform for streaming television shows live in Nigeria, via mobile phone, this seems like cutting-edge innovation. However, any valuation of this innovation for the purposes of acquisition must consider the “context” or operating environment which include: high costs of internet data, the relative ease and convenience of watching TV shows via television as opposed to the inconvenience of a small mobile screen, the poor quality of TV shows available locally etc. These are important considerations that IP due diligence will help reveal which will then feed into the valuation criteria to be adopted when pricing the innovation.

Also, of extreme importance in valuation for corporate M&A is the quantification of the remaining economic life of the IP asset, and its decay rate. IP assets have different lifespans. Typically, the legal life of an asset is often shorter than the economic or useful life of the same asset. The economic life of an IP asset is the period during which the asset will continue to generate income. The decay rate is the rapidity with which the asset approaches the end of its useful life. For instance, trademarks practically last forever, and this must be a determining factor in valuation exercises. However, the economic life of copyright varies wildly between different sub-categories of IP. While the copyright in books, lyrics and other texts may have long economic lives, the same cannot be said for copyrighted Software, which typically has a maximum economic lifespan of three years before they are replaced by newer technology.

METHODS OF IP VALUATION All methods of valuation of IP assets fall under three main heads: The Market Approach. This seeks to assign value to IP assets by comparing the price at which comparable assets are changed under similar circumstances.

This is as opposed to running an intrinsic valuation on the IP asset itself. The market approach is most applicable where; an active market exists for the asset; there is a significant number of similar asset exchanges in the recent past; price information on similar asset exchanges is available to the public; the exchanges are between independent parties who enter into the subject transactions without compulsion. There are challenges though, or this approach is difficult enough when valuing tangible assets because no two transactions are ever exactly comparable. In valuing items of IP, the search for comparable market transactions becomes almost futile since, usually, most IP sales are only a small part of a larger transaction and details are kept extremely confidential.

The Cost Approach. This estimates the value of an IP asset by comparing such asset with the cost to replace it or recreate another identical or similar asset. The fundamental assumption underlying the Cost Approach is that the cost to acquire an IP asset should not significantly outweigh the cost of developing and utilizing a similar asset, and both should correspond with the economic value that the asset can provide during its economic life. This “cost to create” or “cost to replace” approach ignores changes in the time value of money, maintenance and has very little to commend itself other than ease of use.

The Income Approach. This is based on the net present value of the future economic income expected to be received by the owner during the remaining useful life of the IP asset. The most prevalent technique under this approach is the Discounted Cashflow Valuation (DCV). Using DCV, the value of an IP asset is the present value of the expected cash flows from the asset, discounted back at a rate that reflects the risks associated with these cash flows. Using this method, assets with predictable cash flows tend to be preferred to assets with volatile cash flows.

The discount rate is a function of the risk associated with the cash flows: high-risk assets will carry higher discount rates, thereby reducing their present value.

DCV allows for the assumption that $1 in your pocket today is worth more than $1 in your pocket next year. It makes room for the time value of money by adjusting expected future returns to today’s monetary values by using a discount rate which compensates for risks, including expected rates of inflation.

In practice, the three basic approaches analyzed, have been recognized and adopted during transactions.

IP VALUATION IN NIGERIA CONTEXT: KEY TAKEAWAYS In April 2018, Yudala, merged acquired Konga to become Africa’s largest e-commerce platform. The acquisition took effect from May 1, 2018, after which both companies became one entity, operating under the KONGA brand name. Before the merger, Konga was Nigeria’s second largest online mall, second only to Jumia. Yudala was also a strong online and offline retail business with an expansive network of fully

stocked offline stores. Together, they have become Africa’s largest online ecommerce business.

The two companies in the above example; Konga and Yudala, are online businesses whose existence revolve around the utilization of their IP assets.

The merger is historic in the economic context of Nigeria, where corporate acquisitions typically involve businesses in the banking, oil and gas, or FMCG sectors who ordinarily place more emphasis on tangible assets. The acquisition of Konga by Yudala was not only unprecedented from a sectoral perspective (as it involved two businesses operating in the e-commerce space) but also the fact that the acquirer changed its brand name to that of target because of the inherent IP value of the target.

This underscores the rising importance of IP in the Nigerian economic landscape and hints at a future, where the value of a company in Nigeria will not be based solely on its tangible assets and immediate cash flow, but on the value of its IP portfolio.

However, in the area of IP valuation, there has been little/slow progress whatsoever in Nigeria. Mergers and acquisition continue to be motivated by factors other than Intellectual Property, and the value of IP in such transactions is typically measured as a subset of the overall value of the company, in terms of cash, stock value, shareholdings and tangible assets.

AMCON did not bother about the inherent value in the trademark “Bank PHB” before summarily withdrawing its license. The owners and management of the company which used to be known as Econet Nigeria have not shown much regard for the value of the trademark rights in the company’s name, as evidenced in the company’s repeated name change: The Company has changed the brand name 5 times!

Given the above, the following prescriptions should be adopted by prudent Nigerian businesses: Nigeria businesses should identify all their IPR used in generation of business through IP audit and protect IPR by ensuring registration.

Periodically conduct an audit of its IPR, value them and regularly combat infringement of the IPR in order to keep its value them and regularly combat infringement of the IPR in order to keep its value intact.

International accounting best practices should be adopted whereby, the value of a company’s IP portfolio would not be subsumed under the value of its tangible assets, but would be, measured separately, such that they may be the subject of an acquisition, independently of the parent organization.

Organizations should undertake extensive IP management, to catalogue all IP assets, after which each asset should be valued appropriately.

IP lawyers and accountants should be trained and educated on IP valuation systems and methods.

Lawyers and accountants, in a merger and acquisition, should insist on the recognition of IP assets as separate and independent of other assets and should place a price tag on each asset.

CONCLUSION IP valuation is crucial to its exploitation or deployment for any form of financial gain. Without valuation, commercial transactions involving IP would be frustrating, at best, and inherently inequitable to one or both parties.

Valuation is, therefore, a must for every IPR holder since it is key to obtaining adequate financial benefit.

Tolu Olaloye, Senior Associate, Jackson, Etti & Edu

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LegalBusiness

2018 flare gas regulations: a whole new framework for governance

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n the 28th of June 2017, the Federal Government of Nigeria, through the Federal Executive Council, approved the National Gas Policy (‘‘Policy’’). Admirably, the Policy encapsulates a recurrent theme showcasing an unwavering drive and high priority objective to position Nigeria as a formidable gas-based industrial nation by the adoption of gas flare out strategies using flare capture and utilization technologies, amongst other strategies. It remains a classic irony that in spite of Nigeria’s prolific gas reserves; gas centric legislation, investment and development within the Nigerian gas sector have historically been minimal, significantly lagging behind its more profitable fossil fuel counterpart- crude oil. The result of this inertia has been high levels of gas flaring across oil and gas producing fields in the country.

In 2017, Nigeria ranked as the 6th largest gas flaring country in the world, flaring 7.6 billion cubic meters of gas in that year.

Gas flaring constitutes an egregious energy waste practice in the Nigerian petroleum industry and has significant detrimental effects on the environment and the Nigerian economy. In 1979, the Federal Government sought to address this problem through the Associated Gas Re-injection Act of 1979 (“AGRA”) and its subsidiary legislation, the Associated Gas Re-injection (Continued Flaring of Gas) Regulations of 1985 (“the 1985 Regulations”). These laws prohibited gas flaring without the permission of the Minister of Petroleum Resources (“the Minister”). The Minister’s permission is granted in the form of a certificate for the continued flaring of gas (“AGRA Certificate”), which contains specific terms and conditions including the payment of gas flare fees. The gas flare fees remained at NGN0.50/Mscf until 1998, when it was increased to NGN10/Mscf.

The Policy criticized the gasflaring regime as incentivizing gas flaring over utilization as the negligible flare charge of NGN10/ Mscf provided a cheaper option for operators compared to gas commercialization. In reacting to routine gas flaring, the Policy advocates a vision 2020 flare out target that will be enabled by the development of flare capture projects and the enforcement of applicable sanctions. To birth the Nigerian flare free era, the Federal Executive Council, in 2016, approved the Nigerian Gas Flare Commercialization Programme (‘‘NGFCP’’). And in 2018, the President of the Federal Republic of Nigeria, in his capacity as the Minister of Petroleum Resources and in reliance on section 9(1) of the Petroleum Act and section 5 of the AGRA, issued the Flare Gas (Prevention of Waste and Pollution) Regulations of 2018 (“the 2018 Regulations’’/ ‘‘Regulations”).

The Regulations focus on the reduction of the environmental and social impacts of gas flaring, prevention of waste of natural gas resources and creation of social and economic benefits from gas flare capture. The Regulations aim to incentivize the commercialization of flare gas because of the zero royalty regime but disincentivize continued gas flaring

Yemisi Awonuga

through the imposition of a new flaring fee regime. The Regulations will also underpin the implementation of the NGFCP, especially the permit bidding process. If properly implemented and enforced, this piece of subsidiary legislation will erase the historical narrative of Nigeria’s associated gas wastage.

An Evolving Era for Flare Gas Commercialisation In order to actualize the nation’s associated gas flare out target, the Federal Government has now decided to assert and enjoy its rights enshrined in section 1 of the Petroleum Act and paragraph 35(b)(i) of the First Schedule to the Petroleum Act, to take associated gas at the flare free of cost and without payment of royalty. This right, which is more than 5 decades old, applies to any natural gas discovered under petroleum leases and licenses issued pursuant to the Petroleum Act. Under the 2018 Regulations, the Minister may through a ‘Permit to Access Flare Gas’ authorise a “Qualified Applicant” to take flare gas on behalf of the Federal Government at any flare site specified in the Permit.

To reduce the likely controversies that may arise on the scope of the 2018 Regulations and the type of gas caught by the provisions of the 2018 Regulations, flare gas is characterized using three components – production, diversion and intention: The gas is produced in association with crude oil by an upstream oil producer.

Such produced gas is finally diverted toward a site where produced associated gas is flared commencing at a flare header and going to the point of the flare within an OML or Marginal Field area or within an oil terminal or refinery.

The diversion to the flare site is done by the upstream oil producer with the intention to flare such gas.

Once identified as flare gas, such molecules may become the subject of a Permit to Access Flare Gas (the “Permit”) which may be granted to a qualified applicant selected through a competitive bid process conducted by the Federal Government. The Permit authorizes the holder on an exclusive basis to take flare gas from the sites designated in the Permit on behalf of the Federal Government and to utilize the flare gas or otherwise dispose it any manner authorized by the Federal Government. It is however useful to note that the Permit may only be granted to a Nigerian company who is not a holder of an Oil Mining Lease or an allottee of a Marginal Field, and

Biegbana Jaja

is not transferable except with the prior written approval of the Director of the Department of Petroleum Resources (“DPR”). It is interesting to note that the transfer approval stops at the level of the Director of the DPR and does not have to be escalated to the Minister. However, the power to revoke a Permit resides in the Minister. The Regulations do not specify any duration for a Permit and it seems that the duration of each Permit may vary depending on the life cycle of the relevant upstream asset and status of the concession.

The permitting regime creates an entirely new class of stakeholders in the oil and gas industry, called Permit Holders, whose primary purpose is to commercialize flare gas without a corresponding obligation to pay royalties to the Federal Government. The Regulations expressly stipulate that a Permit Holder must be a company that is not a holder of an Oil Mining Lease or an allottee of a Marginal Field.

Pending any regulatory clarification in this regard, one wonders whether companies that hold pure economic as against “ownership” interests in oil and gas upstream concessions pursuant to other contractual upstream arrangements would qualify as “Qualified Applicants” within the context of the 2018 Regulations, and may therefore bid for a Permit. This development lends further credence to the Federal Government’s policy initiative to treat gas as a commodity separate from crude oil, develop a viable gas midstream sector and create a diverse industrial base that is fired by natural gas. It also signifies the Federal Government’s readiness to enforce its ownership rights to gas at the flare.

The above nonetheless, Regulation 14 of the 2018 Regulations provides a platform for an upstream producer to commercialise flare gas under a “Producer’s Approved Flare Out Project”, without the need to incorporate any midstream company for that purpose. This seems to contradict the provisions of Regulation 3 which requires a producer who seeks to utilize the flare gas from its E&P efforts to incorporate a midstream company for that purpose. The Regulations do not resolve this inherent controversy as it only makes a tacit reference to the “Producer’s Approved Flare Out Project”. Perhaps, the intention of the drafters is to retain a residual right of a producer to commercialise flare gas volumes subject to the terms and conditions applicable to the Producer’s Approved Flare Out Project and therefore provide a

Producer the option to choose either a) to incorporate a midstream company or b) undertake the Producer’s Approved Flare Out Project.

The 2018 Regulations also create an additional operational interest for the Permit Holders, in the form of easements and other forms of rights of way, within the OMLs and Marginal Fields. Upstream producers may not resist or contravene the Permit Holder’s interests created under the 2018 Regulations, as they may be liable to fines, penalties and the ultimate revocation of their concessions. The Regulations also compel upstream producers to enter into connection agreements with Permit Holders, to connect their facilities to one another, or risk steep fines and the revocation of their licenses.

The 2018 Regulations contain certain ancillary provisions, including a requirement that no person shall have access to flare gas data without first obtaining a Data Access Permit from the DPR. The DPR is also required to develop operational safety standards, within 12 months of the effective date of the 2018 Regulations, to be complied with by all producers and Permit Holders in connection with flare gas.

This commercialization and utilization strategy has significant implications regarding the transfer of technology because of its reliance on the use of flare reduction and capture technology, including the execution of license and transfer of technology agreements and registration with the National Office of Technology Acquisition and Promotion.

Gas Flare Commercialization and the status of the Upstream ProducerNotwithstanding the fact that the production of flare gas is borne out of the E&P efforts of an upstream concessionaire, an upstream producer who intends to commercialize the flare gas may only undertake this through its midstream subsidiary (existing or prospective) or under the aegis of an Approved Flare Out Project. In the former, the application is expected to be made by the producer on behalf of its midstream subsidiary and the venture must be developed and implemented by that midstream subsidiary. It remains unclear from the Regulations whether a producer’s application on behalf of its midstream subsidiary will follow the same process as the prescribed process for the qualified applicants for the Permit to Access Flare Gas or whether it would be a more relaxed regime. There is also no telling whether a producer’s application which has satisfied the stipulated requirements in the Regulations could still be rejected and if a right of recourse would be available in the event of a rejection.

To ensure that the implementation of the flare commercialization programme is not jeopardized, the Regulations restrict the utilization of associated gas by a producer if such utilization will affect or impact the flare gas volumes that is the subject of a bid process. This provision has generated controversies as it is capable of being interpreted as a restriction on the right of a concessionaire to claim title to produced wellhead associated gas. There is another school of thought that sug-

gests that the restriction only applies to production going on in locations already designated as flare sites.

Ideally, the provision should not be interpreted as being targeted at producers who are currently commercializing wellhead associated gas. In the same vein, it should not affect green field producers whose intentions are to commercialize wellhead associated gas.

Zero Flaring and Venting Importantly also, the 2018 Regulations contain varying degrees of prohibition against gas flaring depending on whether the subject is a greenfield or brownfield producer or a Permit Holder.

A producer of a green field project is absolutely prohibited from engaging in routine flaring or venting of natural gas. This provision expresses the Federal Government policy initiative to prohibit green field projects from proceeding without proper integrated plan ensuring that no gas flaring occurs. This would imply that there is no scope at all for a green field producer to flare gas, contrary to what was applicable under the AGRA which did not prefer brownfield projects over green field projects in terms of their ability to procure an AGRA Certificate to flare gas. It is also noteworthy that a Permit Holder is under the same absolute prohibition from engaging in the routine flaring or venting of natural gas on its facilities.

On the other hand, a brown field producer may flare gas only where it has been issued an AGRA Certificate by the Minister. While the requirement to procure an AGRA certificate is a reproduction of AGRA and the 1985 Regulations, the 2018 Regulations further provide that an AGRA Certificate may be revoked in the event of non-compliance with the 2018 Regulations. The ongoing practice in the industry has been for producers to apply for an AGRA Certificate, pay the gas flare fees, receive a receipt for such payments and continue gas flaring, without actually receiving the AGRA Certificate. The reasons behind the Minister’s delay or otherwise implicit refusal to grant AGRA Certificates after application are yet to be substantiated. However, with the strong emphasis on the issuance and revocation of AGRA Certificates and the severe penalties attached to non-compliance with the provisions of the 2018 Regulations, producers must give the AGRA Certificate issuance process serious consideration and comply with it, or risk the forfeiture of their concession. It is also important to note that the Federal High Court in Federal Inland Revenue Service v. Mobil Oil Producing Unlimited, called the industry’s ongoing practice of flaring without procuring an AGRA Certificate, illegal. The AGRA Certificates and the flare charge provisions of the 2018 Regulations also have tax implications, which are addressed in the ‘Increase in Gas Flare Fees’ section of this Newsletter.

Increase in Gas Flare Fees The 2018 Regulations introduce a Continues on page 32

Yemisi Awonuga, Partner, and Biegbana Jaja, Associate are both of Templars.

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PHOTOFILE

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BDLegalBusiness

Business Recovery Practitioners Association of Nigeria (BRIPAN) International Conference

Olisa Agbakoba Legal Partner, Corporate and Commercial; Bisi Akodu and Senior Associate/Practice Manager To the Firm, Ifeatu Medidem at the Business Recovery Practitioners Association of Nigeria (BRIPAN) International Conference at Four Points, Oniru, Lagos.

LCCI Stake holders’ Meeting

The Lagos Chamber of Commerce & Industry organised a Stakeholder’s meeting on the Petroleum Industry Bill. Dr Deoye Adefulu was the Guest Speaker whilst Tolu Aderemi was the Moderator for the panel session.

Tolu Aderemi, Partner, Perchstone & Graeys (R), Moderating the Dr Adeoye Adefulu, Secretary, NBA Section on Business Law (SBL), Speaking at the event. panel session

Flare gas (prevention of waste and pollution) regulations, 2018 Continued from page 31

graduated gas flare fee regime that is tied to the producer’s production levels. Producers producing 10,000 or more barrels of oil a day, shall be liable to the Federal Government for flare fee payment of USD2.00 per 28.317 standard cubic metres of gas flared within the OML or Marginal Field, irrespective of whether the flaring is routine or non-routine flaring except where the flaring occurs as a result of events or phenomena beyond the producer’s reasonable control. The fee reduces to USD0.50/Mscf where the field produces less than 10,000 barrels of oil a day. These fees, when considered cursorily, represent a significant increase from the previous rate of NGN10/Mscf. However, when one considers the corresponding deleterious effects of gas flaring on the life and health of Nigerians, the impact on the environment and the economy, one may reach the conclusion that these effects far outweigh the projected increase in revenue that will be generated by the Government from gas flare fees.

By increasing the gas flare fees, it has been argued that the Federal Government intends that the new regime will change the ongoing practice where gas flare fees paid by an AGRA Certificate holder are tax deductible. Under the AGRA, gas flare fees were introduced as a condition for being issued an AGRA Certificate and not as a penalty for flaring gas. This inadvertently subjected those fees to section 10(1) (e) of the Petroleum Profits Tax Act which provides that any sums paid to the Federal Government by way of charges are tax deductible expenses. Consequently, producers have taken advantage of these

provisions to deduct their gas flare fees from their annual profits for the purposes of tax assessment.

The Ministry of Finance recently lamented the practice, noting that it has cost the government billions of dollars in potential tax revenue and stating that the government was approaching lawmakers to amend the AGRA to use the word ‘penalty’ in describing gas flare fees. However, the 2018 Regulations do not change the nature of the charge. The issuance of the AGFA Certificate, which in essence is a flaring permit, will still be on terms prescribed by the Minister which may include the payment of gas flare fees. As such, the characterization of the gas flare fees may not necessarily be affected by the steep increase. Also, the 2018 Regulations cannot purport to change the nature of the charge which is provided for in AGRA itself, since a subsidiary legislation cannot overreach or amend a principal act. Without amending the AGRA, it may be a flawed presumption by the Federal Government to assume that these new fees will not be tax deductible. The Federal Government may consider amending the relevant provisions of the Petroleum Profits Tax Act to achieve this.

It is also important to note that the Federal High Court has halted the prevalent practice where producers who apply for but are not awarded AGRA Certificates from the Minister regard their gas flare fees as tax deductible. The Federal High Court held that only an AGRA Certificate holder may treat its gas flare fees as tax deductible.

New Operational Burdens The 2018 Regulations include detailed requirements to maintain accurate records and make reports

to the DPR. Producers are required to maintain and report the following records: flare gas data, daily logs of gas flaring and venting within their facilities, daily records of associated gas produced from their fields, and annual reports containing flare gas data and a list of flare sites that are not the subject of a connection agreement. Permit Holders are required to maintain and report the following records: daily logs of gas flaring and venting within their facilities and annual reports containing information on the volume of flare gas utilized, flared and vented within their facilities.

The 2018 Regulations also require that these records be retrieved from metering equipment installed and maintained in producers’ facilities which must comply with the standards issued by the DPR. Ostensibly, these reporting obligations are put in place to allow DPR monitor the rate of gas flaring and gas utilization on an ongoing basis.

These new recording and reporting obligations constitute additional operational costs to producers, ranging from the purchase, installation and maintenance of the prescribed metering equipment to the compilation and submission of the requested data. These obligations are enforced with severe financial penalties of USD 2.50 per Mscf of gas flared within the OML or Marginal Field, which are to be paid in addition to any other relevant gas flaring payments that an upstream producer may be subject to under the 2018 Regulations. The penalties for an upstream producer’s breach of its reporting obligations are more stringent than those for a Permit Holder. While an upstream producer is subject to financial penalties which may culminate in the revo-

Thursday 04 October 2018

Rights group warns against ineffective election tribunals ahead of 2019 Continued from page 29

tions, it was recommended that INEC should immediately after announcing the result of an election, make available at no cost, certified copies of all relevant election documents to all the political parties to facilitate fair challenges against the election outcome. Alternatively, certified copies of such documents may be made available by INEC to the National Library, which will in turn issue at nominal cost recertified copies to any person who wishes to have them; be it for election petition, research, or other personal or public purposes.

It would be recalled that at the end of the Anambra State Governorship Election which held on November 18th, 2017, the incumbent, Willie Obiano, was returned as elected; having polled the highest number of votes cast at the election. He was closely followed by Tony Nwoye of the All Progressive Congress (APC).

Out of the 37 candidates who participated in the Elections, only three candidates filed petitions. The 1st Petition was between African Peoples Party (APP) and Willie Obiano.

Also joined by the Petitioner were the All Progressive Grand Alliance (APGA) and the Independent National Electoral Commission (INEC). The

cation of its license, it seems that a Permit Holder may not be liable to financial penalties for the breach of its reporting obligations but may have its Permit revoked. The 2018 Regulations impose new responsibilities on the DPR, which include enforcing the reporting obligations in the 2018 Regulations, issuing its own annual reports on the state of gas flaring in the country, issuing and enforcing the new standards for the metering equipment and the operational safety standards and issuing Data Access Permits.

These responsibilities will involve new bureaucratic processing fees and possible time delays, especially because the 2018 Regulations do not prescribe response time periods for the DPR. This is a factor that participants within the industry must consider, as the Federal Government begins implementing the 2018 Regulations.

New Revenue Sources for Producers The 2018 Regulations allow producers to charge the Permit Holders handling fees under the approved connection agreements and guarantee fees under the approved deliver or pay agreements. Although this provides a platform for producers to earn fees for enabling gas flare commercialisation, the language of the 2018 Regulations seek to ensure that the connection agreements and the deliver or pay agreements conform to the DPR template and the terms are approved by the DPR. This could be seen as unnecessary oversight by the DPR on the commercial undertakings of private parties. The Regulations are however silent as to whether the DPR has any discretion to regulate the fees payable to the producers under those agreements.

Fines and Penalties Fines and Penalties applicable to a Producer In general, where a producer fails to abide by the Regulations, the Minister may revoke the AGRA Certificate; in particular, where the producer commercialises flare gas in breach of the Regulations (for example, where the producer neither has an Approved Flare Out Project nor has midstream company through which it commercialises

second Petition was between Praise Okechukwu and her Party, the Mega Progressive Peoples Party (MPPP) against Willie Obiano. Joined in that Petition are the All Progressive Grand Alliance (APGA) and the Independent National Electoral Commission (INEC). The third Petition was between Dr. Paul Chukwudi Obianaso against Willie Obiano. The Independent National Electoral Commission (INEC) was joined as Co-Respondent to the Petition.

The tribunal dismissed Petition One (1), for failure by the Petitioner to file the mandatory Pre-Hearing Notice in Form TF007 as required by Paragraph 18(1) of the First Schedule to the Electoral Act, 2011. The tribunal dismissed Petition two (2) and three (3) on grounds that the petitioners failed woefully to reach the threshold of standard of proof to warrant rebuttal from any of the Respondents.

HURILAWS has however continued to advocate for principled, and disciplined election petition tribunals, as it continues its election monitoring roles and directing its efforts towards proffering solutions for the most effective election petition tribunals/court processes.

The presentation of this report took place at the Apapa office of HURILAWS.

flare gas, or the producer otherwise interferes with the rights of a Permit Holder over flare gas). Where a producer is in breach of its recording and reporting obligations to the DPR, its obligations to install the required metering equipment, and its obligations to provide a Qualified Applicant or a Permit Holder with access to any flare site for any purpose described in the 2018 Regulations, it shall be liable to pay a fine of USD2.50/Mscf of gas flared or vented within the OML or Marginal Field, for each day that the producer fails to meet these obligations. This fee is in addition to the required penalties for gas flaring stated above. Where the non-compliance continues for an extended period, the Minister may require the producer to suspend its operations or revoke any OML or Marginal Field awarded to it. The 2018 Regulations also include personal offences for individuals acting on behalf of a producer. Where such person provides inaccurate or incomplete flare gas data to the DPR or any other duly empowered lawful authority, such person commits an offence and is liable upon conviction to either or both of a NGN50,000 fine and an imprisonment term of no more than 6 months.

Fines and Penalties applicable to a Permit Holder Where a Permit Holder fails to prepare and submit accurate gas flare logs and reports or fails to install the required metering equipment, the Minister is empowered to revoke the Permit.

Conclusion The 2018 Regulations have created a whole new framework for the governance of flare gas, geared principally towards gas utilization and commercialization. With the new rates, the robust reporting requirements, the zero royalty regime and regulated landscape for new midstream players, the Federal Government is clearly moving away from the previous regime that incentivized gas flaring towards a system that will reverse the classic irony.

Yemisi Awonuga, Partner, and Biegbana Jaja, Associate are both of Templars.

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GARDEN CITY BUSINESS DIGEST Town Hall Meeting series begins in Port Harcour on Not Too Young to Run •••as YIAGA Africa, Ford Foundation sensitise youths on political participation IGNATIUS CHUKWU & INNOCENT IWARA

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series of Town Hall Meeting has kicked off in Port Harcourt, Rivers State capital, to enforce the NotToo-Young-To-Run law that encourages youths to go for political positions instead of bemoaning everyday.

This is being run by initiated the Youth Initiative for Advocacy, Growth and Advancement (YIAGA Africa) - a non-governmental organization promoting democratic governance, human rights and youth political participation in Africa to boost the rate of youth inclusiveness in the politics of Nigeria and across Africa.

It is to train and sensitize youths on political participation and inclusiveness.

YIAGA Africa is doing this with support from USbased Ford Foundation.

In Port Harcourt on Friday, September 28, over 40 youths were gathered in a town hall meeting where invited politicians, INEC staff and the police educated the youths on electoral

L-R: ADC House of Reps contestant Rex Idaminabo, PPRO Nnamdi Omoni, YIAGA officer Queen Ogbanga INEC protocol head Zilly Joseph Elemson, and facilitator/CEPSI founder Mina Ogbanga.

processes, punctuated by interactive, question and answer sessions as well as group engagement and networking segments.

The aim of the training, according to Queen Ogbanga, Port Harcourt CAMB (Campaign, Advocacy and Movement Building) organizer for YIAGA Africa, was to accomplish a common objective - make the society better by ensuring inclusiveness and give youths a platform to channel concerns.

She said: “The aim is to

bring together all youths, to bring together highly esteemed members of the society and make sure that we all accomplish one goal - which is to make the society better, making the governance include youths in their decision making and democratic government.“ She said with the knowledge the youths across Nigeria and Africa received from the town hall meeting and several other training platforms, it was time they took bold steps and fight hard to be included in the

governance process.

“YIAGA; the organization, CAMB and Ford Foundation; we have organized rallies in all the 36 states and across some countries in Africa: in Zimbabwe, in Togo, in Senegal, in Tanzania and various other countries. We have done all these things because the youths are going to be part of the decision making. They are to take action themselves. If nobody gives you (power), then they (youths) should go and take it. It is about time youths take what is

theirs.”

On the choice of Port Ha rc o u r t f o r t h e p ro gramme, Ogbanga said: “Port Harcourt is a hub of a lot of people with creative ideas. It is a hub of innovative people.”

Don’t carry guns again - INEC Meanwhile, at the even, the Independent National Electoral Commission (INEC) reminded youths that being used by some old and over recycled politicians does not amount to youth inclusiveness, hence the commission asked them to rather get involved lawfully instead of using guns and other dangerous weapons to rig elections for politicians.

Resident Electoral Commissioner (REC) in the state, Obo Effanga, represented by the head of protocol, Zilly Joseph Elemson, said this while reeling out the electoral processes to the youths.

“We need the youths to set themselves and get involved in elections. Let there be violence-free election.

Don’t carry gun. You also

can contest. Make sure you support the youths (contesting), they need your voice.

It is time for the youths to arise,” said Elemson.

INEC said rather than behave in an unbecoming manner, youths should call INEC’s complaint centre (control room) if they observed any unlawful conduct during elections.

On whether it is lawful for INEC officials to arrive polling units on election day without result sheets as had been decried in past elections, the official said “It is a crime for an INEC staff not to have result sheets at the polling units”, except such a staff was up to something funny. She asked the electorate to use issued phone numbers at the public domain to report such issues to the commission’s control centre during elections.

On its part, the police in Rivers State promised to wear a nonpartisan posture during next year’s elections.

“We are going to provide an enabling environment and a level-playing field for all of them (electorates) to cast their votes and go about your lawful elections seamlessly. If anybody or persons are found wanting in any way, such persons will be singled out and dealt with according to (the) law,” the police commissioner, Zaky Ahmed, said through the state police public relations officer (PPRO), Nnamdi Omoni.

Hardened journalists ready to cover bomb-prone elections in Rivers

Port Harcourt by Boat With

IGNATIUS CHUKWU

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lections are back in Nigeria and Rivers State and bombs and bloodshed are back, too. Now, only tough and hardened journalists dare do their jobs well, insured or not.

On Sunday, September 30, 2018, an explosive was thrown under a car trying to park in front of the APC office in PH. The explosion rocked the secretariat where journalists and party officials were getting set to move down nearby for the primaries.

Guess who would have been the first victim; my driver, Emeka, who of late has escaped two cult attacks and one case of abduction. He spent a night tied to a stick near the PH International Airport at Omagwa! We had arrived at the APC (Ojukaye group, that is) at Agudama Junction on Aba Road after Garrison.

We saw space in front of Mr Bigg’s next to the APC. Soon while I was inside with others, a loud explosion rocked the place.

While others hid, the journalists said, let’s walk to the scene and find out.

With fear and trembling but determination to find out, we walked to the express and behold, Emeka was explaining details to some security operatives and others. I knew once again that our duty car has escaped another attack.

We have always been attacked at elections in Rivers State. We always try to get to the real spots.

Once at Ubima, when it was Chibuike Amaechi vs Celestine Omehia in Rivers elections, our car came into a polling station where Celestine Omehia used to vote and TUC team led by Peter Esele (then) just arrived. Soon, boys started reacting and they fled. Because our car (Kia Saloon) very new and sparklingly white was near, they pounced on it with sticks and stones. I had sensed it and left the car, motioning Alex my driver then to move the car away but he seemed excited at what he was seeing to notice the danger. Soon, they descended on him thinking he was part of the Esele team.

They said Amaechi procured Esele/TUC to come and monitor and prevent them from being free. One youth waged in and saved both the car and my driver, but not without dents. I later rejoined and we still covered the elections fully.

Gain was that we had the

innermost details of the elections and the Esele incident. Others relied on one sided accounts.

At Okrika in 2015, it was do or die whereby the town said APC must not hold their rally in Patience’s domain, but the APC said ‘lai-lai’, they must hold it. We went with Chapel bus and saw the killing of a policeman and attack on Channels TV camera man and others. We saw big men running like Boys Scouts. It was blood and fun. It is journalism.

So it was that bombers joined us to cover the APC primaries this Sunday. According to my driver who leaned on our car booth to look around, a bomber emerged with two others in a car. A Toyota Camry was just parking on the median opposite our duty car. Just then, this other Camry (old model) appeared and the guy at the back brought out an object in a black wrap, threw it under the parking Camry,

by the fuel tank side.

Then, just then, the driver of the targeted car moved the car forward one bit, not knowing a bomb had been thrown under. Just then the bomb exploded, missing the Camry and missing the tank. It was to explode the tank and threw fuel and fire to other cars, starting from mine.

The noise was deafening. It poured gun powder on my driver, shook my car, but damaged the back of the targeted car slightly. The attacking car pulled away immediately while the driver of the targeted car flew out of the door like a bat out of hell. He jumped across the express, ran back, entered his car and drove away.

Then, people started rushing to the scene.

We joined in inspecting the spot as security operatives and some boys blocked the area. That was the third explosion that Sunday but the closest to the APC secretariat. A fac-

tion of the APC led by the senator, Magnus Abe, has its own secretariat further down Aba Road. There was no bomb attack there.

PDP held its own governorship primaries where Gov Nyesom Wike was endorsed; no bomb there.

Some boys hinted that they had hint that a group of bombers were camping at a street not far there in D-Line. That was where the Ojukaye/Amaechi APC was doing its primaries.

When it was time, we marched in group to Igboukwu field where the primaries held till after 10pm. Somebody emerged and we went away to file the stories. That is the new definition of journalism where we serve, now.

They issued accreditation cards to us, but we asked for bullet vests, hahaha.

None of us is insured, so we are ready to face the bombs any moment, for nothing. Yet, we can never be heroes of Nigeria’s democracy.

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INVESTING IN RIVERS STATE Fire disaster and threat to SMEs:

Rivers moves to save N15.3bn Fruit Garden Market in Port Harcourt IGNATIUS CHUKWU, FORTUNE OKORIE, FAVOUR ICHEMATI, KELECHI ANOZIE, CHIDIMMA ELEMUO & MIRACLE IBOKO

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ruit Garden Market may not be biggest market in Port Harcourt, Rivers State, but it is the most sensitive in the sense that it is the preferred market for the expatriate community in the oil region. Last week Thursday (September 27, 2018), late in the evening, the market estimated at over N15.3Bn was burnt down, sending hundreds of traders into economic downturn.

Now, the Nyesom Wike-led administration has moved into gear to justify its appellation of ‘Mr Projects’ by initiating moves to build 800 shops back in the place located near the Catholic Cathedral on Kaduna Street.

The move seems to restore some hope for the 600 shop owners and reduced the shock that has continued to spread in the business community.

BusinessDay team gathered that some food stuff merchants had just stocked N15m worth of items to wait for the season only for the shops to go down in flames. A particular woman was said to have just bought a shop for N1m and stocked it with another N1m but fire came same day and ‘ate’ up the entire investment. Wailing has continued on Kaduna Street. The minister of transportation, Chibuike Rotimi Amaechi, who has handed some fire situation in his almost eight years as governor of the state, has firmly promised to bring the FG to handle compensations. There seems to be some relief, if these promised interventions come quickly especially as those making the promises are tested leaders who have fulfilled promises in the past.

The fire and the evils of strike actions by those on essential services BusinessDay team gathered through painstaking investigations that the last persons left the market area at about 7.30pm that evening. A source said he was however alerted at about 9pm that the place was on fire. The fire started from the Cabbage Section which is the richest part made up of 200 shops. The security guards (Hausa men) said when power supply returned there, they noticed smoke in a shop. They said they tried to stop it but it got worse.

Soon, it was gathered, people nearby saw the flames and wanted to rush in and fight it, but the guards allegedly refused. A guard told BusinessDay that they did so because they would be made to pay for any loss in the market. To them, the order was to make sure nobody entered the market after closing no matter the circumstance till everybody would be back the next day. “We obeyed the last order”, the source said.

Fire Service without service Instead, the security guards called the Rivers State Fire Service nearby as they had been previously instructed. After all, fire was stopped there three weeks earlier by the Fire

Governor Nyesom Wike

Service, a source added. This time, the Fire Service did not come. The security people now went there to notify them but allegedly met only security guards there who told them that nobody was around, and that the workers were on strike.

They dejectedly returned. Seeing that the fire had taken new dimension and most of the Part A of the market was going in flames, they joined the people to restrict the fire by cutting off or demarcating the market so the fire would not cross to Part B. They started fighting the fire with water they fetched from a nearby Mosque that had borehole.

The Mosque officials decided to pump water to save the situation.

There was no religious dichotomy at that point. At this point, almost half of the market or 200 shops were gone.

Later, Fire Service arrived and the boys attacked them, stoning them for not coming all that while, it was gathered. The firemen left, only for the people to realize they were not the Rivers State Fire Service but firemen from Agip.

Wike’s intervention About 15 minutes later, Gov Nyesom Wike and his team arrived but met blockaded roads to the market.

Eye-witnesses said ‘boys’ wanted to be violent but the governor’s men shot in the air. The shooting increased the tension but the governor was able to gain some access that late evening. He left, according to a government official who went there in disguise to avoid attack.

Early in the morning, the governor came back and inspected the ruins and addressed the traders, assuring them of support.

Likely cause: Reckless wiring?

The traders seem to seriously suspect illegal connections as the likely cause of the fire. As always, it is electrical spark often caused by endless connections without professional and regulatory approvals.

They call it ‘Illegal connection’, the number one suspicion. This is said to be rampant in the market and has been a problem there. Some markets have banned this practice because of the disasters it has always brought and always insist on plugging off all electrical appliances. Else, everybody would pay for the mistake of one person. Sources said the union heads had battled it but were not able to stop it before the fire came.

The true position is that people just would call in an electrician and connect whatever they wanted without any professional assessment. The market has dwarf walls and but was fully built up by buyers who used wood to build up each shop and put doors. It was originally designed as open shops. Traders built them up and connected electricity anyway they wanted. There were no regulation of activities, and in fact, people usually noticed that some iron bars often had electric currents in them and shocked sometimes. “It was disaster waiting to happen,” a trader told BusinessDay team.

There were no fire extinguishers

in the market, yet, the local council was steadily collecting levies from the shops per year.

The economics, the figures It was gathered that to acquire a shop there, a trader would cough out between N700,000 and N1m to the owners, the City council. Now, there is annual rate of N3,500 to the Council, Sanitation N500; and Table fee N5,000; all making N4,500 per shop paid in bulk every year. Union leaders collected landing levies from trucks that bring goods there.

The shops were built by the City Council and sold to the traders. Few years ago, it would take a trader about N600,000 to secure one. These days, those who bought from the City Council are selling at N1m depending on where it is located. By this calculation, the traders must have paid at least N360m some years ago to acquire the 600 shops at average of N600,000 each from the City Council. They pay at least N2.7m yearly on levies.

Now, there were 600 shops there.

The market is called European Foods Market, later called Fruit Garden.

This is because that is the market that services the European and expatriate community in Niger Delta. The market stocks European foods such as oils, baking beans, rice, corn, tin foods, vegetables, frozen foods, etc.

It is also a supply centre of supply to the many hotels in the Garden City and entire Niger Delta region.

The centre supplies to rigs, estates, expatriate homes, SPAR, etc where European meals and veggies rule the diet schedule.

BusinessDay team found that the market is three sections: Cabbage line; Onions line, and Tomato line. It is the Cabbage line that has built up shops that are always fully stocked. The Cabbage line is owned by bigger traders and many of them have stocked food supplies for the coming season. The shops are 200 in number but heavier than the other two sections.

The minimum person’s shop has N2.5m worth (or N500m for the 200 shops burnt), and maximum of N15m (N3Bn), but average could be N7m (N1.4Bn). Some sections store their goods in boxes and also sample some. One man in particular stocked goods for supply to big time customers. It all got burnt.

Sympathy and hope for empathy The leaders of the land seem to throw their gab of political division away to rally for support, or so it seems, BusinessDay gathered that Gov Wike came twice with the Port Harcourt City Mayor. Not up to 10 minutes after his early morning visit, former governor and now minister of transportation, Chibuike Rotimi Amaechi, came with his own team.

Wike firmly promised to rebuild the market before Christmas. He asked his officials to measure the market immediately, and they have done that. He plans to rebuild everywhere including the areas not burnt.

He plans to build 800 shops instead of 600. We are worried if the space

would be enough, but he is the Governor, he knows what to do.

To show seriousness, the scraping of the market has begun, too, on the governor’s order. The FG/Amaechi team also visited. He asked the victims to send list of those affected, fast. He promised to help the victims restart life through compensation.

Others who have so far visited include the senator, Andrew Uchendu, and a House of Reps member, Ken Chikere.

Shock and lull everywhere Most of the traders are lazing about, still in shock. The place looks desolate. Meting of the traders was held on Monday, October 1, 2018.

They saw scraping going on and it brought some hope. Traders said they were allowed to manage anywhere in front of the market until more areas were scraped and made usable. They were yet to be told where construction would start, inside or from the front.

Business is stalled for now.

Things seem tricky for them so far. They have rejected temporary relocation ideas to avoid losing their shops. They have their certificates of ownership. They prefer to hang around and watch progress of work.

A source said; “We do not want what happened to Mile One traders to happen to us”. Traders there spent up to N1.5m each to get a shop back. Many left the city because of the Mile One fire disaster and the consequences of shop allocation intrigues.

Trucking: The Fruit Garden Market is a destination for trucks carrying food items from the north. Other items are usually imported. Trucks keep coming in loaded with goods. Cabbage, the man commodity, comes in many trucks every week. The trucks come twice a week; four on Tuesday and five on Friday, the insider told us. For Tomato: It is three times a week (Monday, Wednesday, Friday; about four trucks per market day or 12 trucks per week. Onions do not come too much; about two trucks per week.

Appeals The traders hope the sympathy they have seen so far would translate to empathy. They have appealed to the state and federal authorities to ensure that all traders with certificates and approvals get back their shops after rebuilding. They would have preferred to do the rebuilding. There hundreds of squatters however. The traders have pleaded for at least one year levy-free period after resumption of the market. They plead for adequate compensation or support.

Conclusion: Future The governor is said to be sad that the Fire Service failed the state that evening by going on strike when they belong to the Essential Services group.

The governor may create another fire service that would not be tied down by civil service shenanigans. Some however said the firemen are not being taken care of and their equipment usually break down. This must be addressed.

Fire should no longer be allowed to eat up the struggles of traders in Port Harcourt markets. Guards should be trained and retrained on what to do when there is fire. Government agents should inspect the market from time to time to ensure that people are not violating safety rules. Above all, government should follow through on their promises so that hopes would not be dashed. In return, the traders may use their PVCs more forcefully and wisely in the new spirit of citizenship reawakening. We gathered.

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Live @ The Exchanges

says committed to Focus shifts to Q3 scorecards FMDQ developing fixed income market as sell-off continues F

…negative year-to-date return increases to 15.14% Stories by Iheanyi Nwachukwu

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s sell-off continues at the Nigerian stock market, the release of impressive third-quarter (Q3) earnings by companies will help incite investors buy decisions.

Many companies have notified investors at the Bourse about their “close periods” as their Board of Directors meet to consider their Q3 unaudited financial statements.

“Sentiment across market segments would remain bearish, presenting an opportunity for discerning investors to lock in funds at cheap valuation prices over the election cycle in Q12019”, according to Kayode Tinuoye-led research team at Lagos-based United Capital Plc in their October 2 daily

insight.

The returns from Nigerian stock market furthered into the negative zone at the close of trading on Wednesday October 3 as Dangote Cement Plc led other largely capitalised stocks on the offer list.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) was down by 0.79percent to 32,454.03 points, from preceding day close of 32, 711.65 points.

The value of listed stocks at N11.848trillion at the close of trading on October 3, 2018 represents a decline of N94billion when compared to N11.942 trillion recorded the preceding trading day.

Nestle Nigeria Plc led the gainers table after its share price rose from N1399 to N1400, representing N1 or 0.07percent gain.

Dangote Sugar Refin-

ery Plc followed as its share price increased from N13.9 to N14.5, 60kobo or 4.32percent. Zenith Bank Plc share price gained, from N21.5 to N21.8, up 30kobo or 1.40percent.

Cutix Plc stock price gained 20kobo, from N4.1 to N4.3, representing 4.88percent rally; while the share price of GTBank Plc advanced from N36.5 to N36.7, up 20kobo or 0.55percent.

The share price of Dangote Cement Plc recorded highest dip, from N205 to N200.1, down N4.9 or 2.39percent; Nigerian Breweries Plc was the second largest loser, from N91.5 to N89, down by N2.5 or 2.73percent.

Unilever Nigeria Plc stock price declined, from N46 to N45, down by N1 or 2.17percent. FBN Holdings Plc was also down, from N9.2 to N9.1, losing 10kobo

or 1.09percent; while Access Bank Plc declined from N8.15 to N8.05, down by 10kobo or 1.23percent.

In 2,801 deals, stock traders exchanged 136,731,565 units valued at N1.430billion.

Actively traded stocks on the Nigerian Bourse were FCMB Group Plc, UBA Plc, Fidelity Bank Plc, Access Bank Plc and Zenith Bank Plc. Stock traders exchanged 38,380,467 units of FCMB Group Plc shares valued at N65.723million; 20,808,622 units of UBA Plc valued at N172.535million; and 19,183,116 units of Fidelity Bank Plc shares valued at N35.337million.

Also exchanged were 7,897,929 units of Access Bank Plc shares valued at N64.153million; and 6,714,593 units of Zenith Bank Plc shares valued at N145.769million.

MDQ OTC Securities Exchange has reiterated commitment to the development of fixed income securities market in the country.

Tumi Sekoni, Associate Executive Director, FMDQ made this remark while receiving Capital Market Development Award given to the Exchange by Capital Market Correspondents Association of Nigeria (CAMCAN).

She added that one of the mandates of the securities exchange was to educate investors, explaining that investor education was critical in order to increase retail participation in the nation’s capital market.

Sekoni commended CAMCAN for recognising FMDQ OTC for its contribution to the development of the Nigerian debt capital market.

FMDQ recently deployed a fixed income market STP settlement solution through its Proprietary Market System – FMDQ’s Q-ex, a customised integrated multi asset trading system with attendant posttrade services capabilities.

The achievement was based on the critical support of the

CBN and the FMDQ Dealing Member (Banks), according to Sekoni.

According to the management, FMDQ’s Q-ex has been integrated with the CBN’s Scripless Securities Settlement System (S4) to provide STP capabilities for efficient settlement in the fixed income market, improving the efficiency of the trading, reporting and settlement processes, whilst further developing, in no small measure, the Nigerian financial markets.

“Q-ex provides an unrivalled means through which trades executed by its Members (currently the Dealing Member (Banks), are reported and subsequently settled, with minimal to no human intervention, via the respective channels.

“The deployment of the FMDQ Q-ex Settlement Solution operated by FMDQ Clear Limited, a wholly-owned subsidiary of FMDQ, will essentially streamline business processes to reduce friction along the fixed income trades settlement value-chain, boost productivity of the market participants and promote efficiency of post-trade services”, Sekonisaid.

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37 NEWS

BUSINESS DAY

Hawthorn Suites Abuja now open for operations HARRISON EDEH, Abuja

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L-R: Oluwole Ajimisinmi, regional executive, Lagos directorate, Wema Bank; Adeyinka Adewole, GCFO, Bond Global Energy Project; Folake Sanu, executive director, support services, Wema Bank; Martins Awofisayo, MD/CEO, Harvestfield Industries Ltd; Wole Akinleye, executive director, corporate/South Bank, Wema Bank, and Adamu Yaro, MD/CEO, Autosprings & Axles Ltd. at the Wema Bank Customer Trade Forum Introducing the China Desk, yesterday.

EU mobilises €44bn for investment in Nigeria, other African countries DANIEL OBI

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uropean Union (EU) is mobilising €44 billion (about N1.8trn) over the next three years under its newly launched External Investment Plan (EIP), to encourage investment in Nigeria and other partner countries in Africa.

Through a new guarantee mechanism involving partner development banks, the EIP is expected to increase private investment in higher risk environments, facilitate private sector investment that otherwise would not be available and mobilise investment for countries where investing is difficult.

The EIP, according to Richard Young, deputy head of delegation of European Union to Nigeria and ECOWAS, is a new approach to supporting sustainable development through in-

vestment in Africa. Under the plan, EU is targeting five key sectors for the investment. They are sustainable energy; micro, small and medium sized enterprises financing; sustainable agriculture, rural entrepreneurs and agribusiness; sustainable cities and digital for development.

Speaking in Lagos at a pre-EU-Nigeria business forum designed to explore ways to boost growth and job creation in Nigeria, Young said the EIP would hopefully improve the way in which scarce public funds were used and how public authorities and private investors cooperate on investment projects.

The plan, which is also expected to strengthen EU partnerships by promoting inclusive growth, job creation and sustainable development, according to Young, will also tackle some of the root causes of irregu-

lar migration.

“The Plan will also assist in developing economically and financially viable projects to attract investment, and help to improve the business environment in partner countries by supporting reforms and economic governance,” Young said.

The EIP is adapted to the specific needs of partner countries and builds on the very successful model used within the EU, he said.

“The EU is pushing Nigeria-European forum to promote investments in Nigeria. Europe wants to contribute to making Nigeria a better place. What is good for Nigeria is good for Europe and Africa,” he said. Today, African population is calculated at 1.2 billion people with Nigeria accounting for about 180 million. In the next 20 years there will be about 2.3 billion people in Africa.

Young said the growth in

N1bn alleged fraud: ICPC arraigns ex-Kebbi governor FELIX OMOHOMHION, Abuja

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mmediate past governor of Kebbi State, Saidu Usman Nasamu Dakingari, has been brought before Justice Ismail Haruna Bashir of Kebbi State High Court 2, sitting in Birnin Kebbi, by the Independent Corrupt Practices and Other Related Offences Commission (ICPC) for alleged misapplication of N1,094,320,000 belonging to the state.

The ICPC in a press statement by Rasheedat Okoduwa, spokesperson for the Commission, Wednesday, said the former governor was accused of conniving with the then commissioner of finance, Mohammed Bello Tunga, and the secretary to the state government (SSG), Garba Rabiu Kamba, to defraud the state of the sum of N349,475,000. The fund was meant for the provi-

sion of power generators and “other logistics” for all polling units in Kebbi State for the 2015 general elections.

Tunga and Kamba are already facing prosecution by the Commission at the Kebbi State High Court. However, immediately after the commencement of proceedings Wednesday, the court was informed that Tunga, the former finance commissioner had passed on. Consequently, the prosecution counsel by way of oral motion prayed the court to strike out the late commissioner’s name, which was granted.

Dakingari, who was the state governor between 2007 and 2015, was further accused of conspiring with his political associates to misappropriate the sum of N430,000,000, which was released to provide logistics support for security agencies during the 2015 gen-

eral elections.

The two-time Kebbi State governor was also charged of siphoning N315,000,000, approved and disbursed to enable Imams and Mallams organise sensitisation and enlightenment programmes against religious incitement of supporters for the 2015 general elections in the 21 local government areas of the state.

However, ICPC’s investigation revealed that the said amounts were shared among his political allies as no power generators were purchased nor was any Imam or Mallam among the beneficiaries of the sensitisation money.

The former governor was therefore arraigned on a sixcount charge of offences bordering on criminal conspiracy, theft, conferring corrupt advantage on political cronies and using position for gratification.

population presents challenges and opportunities. It means Nigeria will become rich in population but if the country does not deal with poverty, it will become largely poor population.

The country has to therefore leverage the opportunity of rich population.

He said to deal with the challenges Nigeria therefore needed more investments, jobs and policies to drive growth and jobs.

What EU wants to do is work closely with Nigeria to help contribute to that economic growth and create jobs.

The seventh EU-Nigeria Business forum holding today with government and private sector officials in attendance will address bottlenecks to investments to accelerate diversification of the Nigerian economy.

ollowing the multimillion dollar renovation works it underwent, Hawthorn Suites by Wyndham and a member of Wyndham Hotels and Resorts, an international hotel and resort chain based in the United States, has commenced operations in Abuja, Nigeria’s capital city, after undergoing renovations.

Amine Saad, the general manager, said at the opening announcement on Wednesday that Wyndham Hotels & Resorts was the world’s largest and most diverse hotel company, encompassing approximately 9,000 hotels and more than 600,000 rooms in 66 countries under 20 hotel brands.

Hawthorn Suites by Wyndham Abuja is owned and operated by Shelter Suites & Hotels Limited, a leading hotel developer and

operator in Nigeria.

The hospitality outfit, he explained in his remarks, is a 108-Suite hotel offering guests single, double and suite accommodations. Property features complimentary hot buffet breakfast and high-speed wired and wireless internet access, infinity pool, fitness centre, guest laundry, meeting spaces for up to 2000 pax and Wednesday evening social hour.

The room’s features include wet bars, expanded cable television, and upgraded bedding featuring signature sweet suite bedding experience.

Hawthorn Suites by Wyndham, member of the Wyndham Hotels & Resorts family of lodging brands, are extended-stay hotels located throughout the world, featuring studio, one and two - bedroom suites with fully equipped kitchens and wet bars.

Abuja plane crash victim, Elizabeth gets FCT scholarship JAMES KWEN, Abuja

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he Federal Capital Territory Administration (FCTA) has offered a 15-year-old Elizabeth Elijah hit and injured by debris of the crashed F-7Ni Aircraft belonging to the Nigerian Air Force, NAF, life scholarship.

Elizabeth was said to be fetching firewood at the scene of the air mishap that killed the pilot, Squadron leader Bello Ari of the NAF in Abuja, during rehearsal for the celebration of the Nigeria’s 58th Independence anniversary.

The victim, who hailed from Kachia Local Government Area of Kaduna State and resides with her family in Chikoko village in Bwari Area Council of the Federal Capital Territory, was Wednesday issued a scholarship for proper documentation at Maitama General Hospital, Abuja, where she is receiving treatment.

CHANGE OF NAME

I, formerly known and addressed as Mr. Gbolahan Oyegunle now wish to be known and addressed as Mr. Gbolahan Oyegunle Shofolahan. All former documents remain valid.

General Public please take note.

38 BUSINESS DAY NEWS

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Inside details of $1.3bn Malabu scandal exposed...

Continued from page 1

erlands based Shell and Italian based Eni for US$1.3 billion, but only US$200 million of the money was transferred to federation accounts while balance of US$1.1 billion went to Malabu’s oil’s owner Dan Etete.

The allegation is that most of the money that went to Etete was eventually passed on as bribes to top Nigerian government officials, most of whom, including Jonathan have insisted they did no wrong.

But Italian authorities disagree and have filed a case in Italy against Shell and Eni for facilitating bribe to Nigerian officials.

At the Milan Palace of Justice in Italy, three senior Judges on Wednesday listened to testimony from Jonathan Benton, former joint-head of the UK’s International Corruption Unit who gave detailed account of how former president Jonathan, former head of Economic and Financial crimes commission Ibrahim Lamorde, Former Attorney General Mohammed Adoke and Umar Bature a former House of representative member acted as lead actors in various stages of the much controversial OPL 245.

Jonathan Benton recounted to the court how an incident occurred in 2012 when Jeffrey Tesler, a Briton Who had previously been successfully prosecuted by the United States Department of Justice in 2011, walked into a north London police station with a suitcase containing £378,000 wrapped in bundles which prompted an undercover operation.

Jonathan Benton told the court how a covert operation at the Cavendish Hotel in London where a man who acted as a courier was arrested handing over a bag with £70,000 in cash to another man.

Benton describes how the courier had collected cash from two western union money changers

in London, when the police later served orders requiring western union to show details of the transaction, there was no trace of where this money had come from, which was very unusual.

According to Barnaby Pace, anti-corruption campaigner at Global Witness, Benton described the recipient of the bag of cash as Umar Bature, a former House of representative member representing Sokoto state. He tried to use diplomatic protection when he was arrested, and had $50,000 cash in his room. The police eventually pursued civil forfeiture of the money.

Jonathan Benton further explained how then head of the EFCC, Ibrahim Lamorde told him that the investigation into OPL 245 would not be sanctioned from above, implying that his boss, the then Attorney General Mohammed Adoke under Jonathan Administration, would not allow the case to proceed.

Benton said he turned down a meeting in London with Adoke when Lamorde informed him that Adoke will like to meet him. It was a very strange request as the Attorney General meets ministers or senior law officers, not ordinary police officers looking at corruption. He declined to meet Adoke in London.

But Benton said months later, he was forced to see Adoke in Nigeria without first being told he was coming to see him. Benton said Adoke told him the OPL 245 deal was settled and Nigeria was not going to open an investigation into the case as the decision was above him, implying that he did not have the authorisation of former President Jonathan to order an investigation into the matter.

Benton was asked about the investigation into former Nigerian oil minister Diezani Alison Madueke. He said that the investigation which began secretly at Scotland

Nigeria could earn $7.5bn from October oil...

Continued from page 1

currency last month compare to $1.5bn in August.

Nigeria’s daily oil production is at 1.73m barrels a day and there is a good chance this could go higher to around 1.88mbd before the end of this month.

Rewane spoke Wednesday at the monthly CEO breakfast meeting of the Lagos Business School.

Oil prices have climbed above $85 a barrel for the first time in nearly four years as renewed worries about US sanctions on Iran and optimism over global economic growth propelled the market higher.

Hedge funds and other money managers have flocked to the benchmark Brent crude oil futures market in recent weeks on concern that Iran’s looming supply curtailment, along with production shortfalls in Venezuela, could rapidly deplete stockpiles just as global demand hurtles towards 100m barrels per day.

Sentiment received a further lift on Monday after Canada

reached a deal with the US to replace the longstanding North American Free Trade Agreement with a new accord, averting a full-blown trade war and raising expectations for oil demand across the continent.

Brent crude, the international marker, jumped as much as 3.3 per cent to $85.45 a barrel late Monday, the highest level since early November 2014. West Texas Intermediate, the US benchmark, advanced 3.4 per cent to as high as $75.77 a barrel, also the strongest level in almost four years.

Underlining the mood, funds have added more than 100m barrels equivalent over the past month to their net bullish position in London’s Brent futures market.

US sanctions on Iran’s oil exports are set to take effect on November 4, following US president Donald Trump’s withdrawal from an international deal over its nuclear programme.

The renewed sanctions raise the likelihood of less supply.

Frantic deal making by Asian buyers at an annual oil conference in Singapore last week was

L-R: Amme Saad, GM, Hawthorn Suites By Wyndham; Farouk Aliyu, MD, Shelter Suites and Hotels, and Udedeh Olakpe, project director, Shelter Suites, during a world press briefing ahead of the grand opening of Hawthorn Suites By Wyndham in Abuja, yesterday.

Pic by Tunde Adeniyi

Yard and has since expanded “it is a huge investigation” he said without explaining further.

Last month a court in Italy sentenced two middle aged men Nigeria’s Emeka Obi and Italian’s Gianluca Di Nardowere to four years in imprisonment for helping to arrange a payment between the multinational oil companies Shell, ENI and the Nigerian government.

The raging scandal over the OPL 245 oil block began in 2011 when Jonathan administration approved the purchase by Shell and Agip-Eni from Malabu Oil and Gas Ltd., a suspected briefcase firm with ties to Dan Etete, a convicted criminal who was Nigeria’s petroleum minister from 1995 to 1998.

The Jonathan administration officials who participated in the negotiation preceding the controan indication of concerns of scarcity among physical crude traders, analysts said.

“The market is incredibly tight,” said Amrita Sen, founder of consultancy Energy Aspects, who noted that financial players were just realising the severity of the impact of Washington’s sanctions.

“People are distracted by various comments from [European] governments trying to set up alternative payment mechanisms, but the refiners and other companies dealing directly on the oil markets are saying it’s not worth the risk,” she added.

Higher crude oil prices are lifting petrol prices. In the US, the world’s biggest petrol consumer, prices at the pump were above $3 per gallon in parts of the country, up 12 per cent from a year before, the Energy Information Administration said on Monday.

“Investors and market participants are struggling to understand how sustainable the current sanctions policy will be in the face of a $90 price range,” said Michael Cohen, oil analyst at Barclays.

versial sale of the massive oil block included Adoke, Attorney-General at the time; and Alison-Madueke, who was petroleum minister.

Jonathan himself was named by investigators as being involved in the alleged fraud, but the former president strongly denies the charges.

In the first hearing of the case on September 26, the court heard about how the $1.1bn paid for OPL 245 went through London, failed an attempted transfer to a Swiss Bank, before it was filtered through Nigerian banks and companies

back into and out of Europe.

The next hearing of the case has been fixed for October 10, during which the FBI is expected to present its own evidence into the scandal which is now being investigated globally. Investigations are currently going on in the case in the US, UK, Switzerland, Nigeria and Italy with detectives carrying out surprise raids, wiretaps and money tracing. The outcome of the case is expected to have a significant impact on how oil companies interact with the Nigerian government going forward.

Confusion over Lagos PDP primaries … as Agbaje, Dorherty in supremacy battle for guber ticket Iniobong Iwok

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here seems to be confusion over the date for the gubernatorial primaries of the Lagos chapter of the People’s Democratic Party (PDP).

The gubernatorial primaries was initially slated to hold last week Saturday, but was shifted to the next day Sunday, the party cited lack of logistic as reason for a change of date.

But a source in the party who spoke with BusinessDay last night said the date for the gubernatorial primaries had not been decided, adding that it might however hold later in the week.

A chieftain of the party in the state told BusinessDay that the House of Representative and House of Assembly primaries would be conducted on Wednesday, while the gubernatorial primaries would be held before weekend.

However, two top politicians, business mogul, Deji Dorherty and Jimi Agbaje, are expected to slug it out for the gubernatorial ticket of the party.

The two notable politicians have long been political rivalries in the PDP in the state, and had previously contested for the party’s governorship ticket in 2011 and 2015.

Though, in 2014, Agbaje had against all odds defeated Dorherty and former Minister of State for Defence, Musiliu Obanikoro, at the party’s primaries to emerged the PDP candidate, but subsequently narrowly losing the governorship election to incumbent, Governor Akinwunmi Ambode of the APC. Agbaje had polled 659,738 votes to Ambode’s 812, 390 votes.

Speaking recently on his ambition and reasons for picking the party’s nomination form, Agbaje said he decided to contest due to pressure from his teeming supports across the state, stressing that he was confident that the party’s leadership would create a level playing ground for all the aspirants.

“It is true that initially I did not want to re-contest, but I had so many people urging me to run. I bought and submitted my nomination form shortly before it closed. I will be part of the PDP Lagos governorship primaries”.

“Our primaries have always been open, fair and free for all.

This is what we are known for, and that is the way I expect it to be,”.

“It is the people of Lagos State that will decide. The issues in the party will not impart negatively on votes. Most Nigerians now vote for individuals rather than party.”

Thursday 04 October 2018

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External reserves now $40.0bn as CBN injects $210 into FX market HOPE MOSES-ASHIKE

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igeria’s external reserves have dropped to N40.0 billion as of October 2nd, 2018, according to the figures obtained from the Central Bank of Nigeria (CBN).

Meanwhile, the CBN on Wednesday injected the sum of $210 million into the interbank foreign exchange market, which helped to shore-up the value of the naira at various segments of the foreign exchange market.

Figures obtained from the CBN on Wednesday, October 3, 2018, indicate that authorized dealers in the wholesale segment of the market were offered the sum of $100 million, while the Small and Medium Enterprises (SMEs) segment received the sum of $55 million. Similarly, customers

requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were also allocated the sum of $55 million.

The nation’s currency on Wednesday gained N0.10k as it closed at N363.78k per dollar from N363.88k/$ traded the previous day at the investors and exporters forex window.

While confirming the figures, the Bank’s Director, Corporate Communications Department, Isaac Okorafor reiterated the CBN’s commitment to continue to boost interbank foreign exchange market to ensure liquidity in the market and sustain stability in the market.

It will be recalled that on Friday, September 28, 2018, the Bank injected the sum of $210million into the interbank foreign exchange market.

Nigeria’s political economy as...

Continued from back page

ling, especially in contexts where, because of hidden information, asymmetric information or cost of monitoring, agents have strong incentive to act in their own interest (moral hazard), as in principal-agent problems, solution is usually realised by setting up of a proper incentive compatibility constraint — give the agent a deal that he has no reason to reject or deviate. Such a mechanism is called incentive-compatible (IC) if every participant can achieve the best outcome to him or herself just by acting according to his or her true preferences.

It is the appeal to selfregarding actions of selfinterested individual economic agents that generate the spontaneous order of self-enforcing exchange mechanism that sustains the liberal market capitalist system propounded by both Adam Smith and Frederick Hayek and their offspring.

Such is the fundamental basis and the archetypal pillar of the capitalist system. Because people are utterly concerned about their own, specific and individual welfare, they unwittingly “led to promote an end which was not part of his intention.”

Adam Smith referred to this self-enforcing order, unmediated by any dirigiste system of deliberate human contrivance (such as found in communism) as “the invisible hand” which is simply the result of methodological individualism. This is found in the liberal market economy in which the co-ordination of the aims and purposes of countless actors, who cannot know the aims and purposes of more than a handful of their fellowcitizens, is achieved by the mechanism of prices. In the Hayekian tradition, a change in the price of a commodity is simply a signal which feeds back information into the system enabling actors to ‘automatically’ produce that spontaneous cor-ordination

which appears to be the product of an omniscient mind.

The repeated crises in dirigiste systems are in essence crises of information since the abolition of the market leaves the central planner bereft of that economic knowledge which is required for harmony.

Capitalist systems, in spite of their shortcomings, leverage the congenital predisposition of human beings, as thinking and rational beings who seek first for their own very good.

This behaviour can be associated with the primordial instinct of self-preservation and survival as biologists observe in most living things. Cosmologists see this instinct as the first law of nature. There is no doubt therefore, that a mechanism design in the nature of an economic, social or political system that violates or doesn’t leverage on the self-interested inclination of people or that legislates it out of human behaviour must be antithetical and in opposition to human nature. Human beings will invariably resist it. If such a mechanism were to survive for a time, the only way possible would be for human beings to be coerced into simple and irrational automatons that are mechanically determined and controlled. Such must be a zombie system where people can no longer exercise rational human agency and the freedom of choice is constrained.

Other than delimiting liberty and incarcerating the habit of free thought, creativity and ingenuity, such a system, as antithetical to the evolution of the spontaneous order guaranteed and sustained by the isolated self-interested pursuit of disparate individuals that create the mechanism of selfenforcing exchange relations, must sooner or later engender its own antithesis that must autocatalyze the system’s own truncation. Such a system must upend itself. Coordination without command is the elan vital of liberal capitalist systems.

•To be Continued next week

L-R: Muda Yusuf, director general, Lagos Chamber of Commerce and Industry (LCCI); Shameem Ahsan, Bangladesh high commissioner to Nigeria; Babatunde Paul Ruwase, President, LCCI, and Mohammad Shah Ekramul Hoque, third secretary and head of chancery, Bangladesh High Commission, Abuja, during a courtesy visit of the high commission of Bangladesh to Nigeria in Lagos.

Much ado about ...

Continued from back page

thorised dealer is not clear about any issue in relation to a foreign exchange transaction, the foreign exchange manual requires the authorised dealer to seek clarification/approval from the CBN. The seeking of such clarification is entirely for the authorised dealer to do - or not do as the case may be. It is clear from the Nigerian case law on the subject that whatever an authorised dealer does, pursuant to its delegated authority, is done for and on behalf of the CBN. This was the position of Nigeria’s Supreme Court in the case of Ondo State University v. Folayan where the late Justice Coker said: “It is a trite principle of Administrative Law that where a power has been delegated, the delegating authority will be bound by the decision of its delegate and will be therefore incapable of rescinding that decision.”

The law: Agency The relationship between the CBN and authorised dealers also has elements of agency, in the sense that the CBN can be regarded as a principal and the authorised dealers as its agents. This is consistent with the decision of the Supreme Court in the case of Tunde Bamgboye v.

University of llorin&Anor., where Justice Onu stated that: “An agent, in my view, means more or less the same thing as a delegate …” Under the Nigerian law of agency, a person or entity that has been disclosed by an agent to be the agent’s principal, (a “disclosed principal”), is bound by any decisions made or contracts entered into by the agent on the prin-

cipal’s behalf.

Although not expressly stated in these terms by the FEMM Act authorised dealers are, in our opinion, the agents of the CBN in relation to dealings in foreign exchange and the CBN is a disclosed principal. We have arrived at this conclusion after considering whether the key characteristics of agency are present in the relationship between the CBN and an authorised dealer. Such characteristics include: (a) the fact of the agent providing a service or doing an act on behalf of its principal; (b) the fact of the agent representing its principal; and (c) the creation, by an agent, of legal rights and liabilities on behalf of the principal. These principles have been considered by the Supreme Court in cases such as Niger Progress Ltd v. N.E.L. Corp, where the court held that agency is a relationship which exists between two persons, one of whom expressly or impliedly consents that the other should represent him or to act on his behalf and the other of whom similarly consents to represent the former or so to act. It does not matter that the parties have not described themselves or their relationship as that of principal and agent but, rather, a determination as to whether the relationship of agent and principal exists will depend on the true nature of the agreement between agent and principal and on the exact circumstances of the relationship between the alleged principal and the alleged agent.

The law: Delegation has been confirmed by the CBN But forget about legal theories, opinions and Supreme Court decisions! The good news is that the CBN itself has confirmed that it del-

egated its decision-making powers to authorised dealers, particularly in relation to the issuance of CCI’s. This was confirmed by the CBN in a press release dated 19th September, 2018, where the CBN stated that: “…the delegation of the issuance of Certificates of Capital Importation (CCI’s) to commercial and merchant banks some years ago was done to instill confidence in the investor community and encourage the flow of foreign direct and portfolio investments into the Nigerian economy.”

The CBN also confirmed in the same press release that: “…the integrity of the CCI regime remains sacrosanct and there shall be no retroactive application of foreign exchange rules and regulations.”

Where does that leave foreign investors?

Foreign investors have only two obligations. The first is to ensure that the bank they are dealing with is an authorised dealer - an easy obligation to satisfy since the banks that are authorised dealers are well known. The second obligation is to ensure that they provide the authorised dealer with all the supporting documents that the authorised dealer requires in order to issue the CCI. •Foreign investors have no obligation under the FEMM Act, the Foreign Exchange Manual, or other relevant regulations to take steps to ‘verify’ that the CCI’s issued to them are genuine or valid, or that the authorised dealers have first complied with all the conditions stipulated by the CBN before issuing the CCI’s. They are entitled to assume that such authorised dealers are validly exercising the authority

conferred on them by the CBN. •As we have indicated elsewhere in this note, the CBN is bound by decisions taken by authorised dealers on its behalf pursuant to the authority conferred on them by the CBN. As the Court of Appeal rightly held in the case of F.G.N v. Shobu (Nig.) Ltd., “he who does an act through another is deemed in law to do it himself”.

•Foreign investors and other third parties are legitimately entitled to rely on steps taken and documents issued by authorised dealers.

Where an authorised dealer incorrectly or improperly issues a CCI, through no fault of an investor, the investor cannot, lawfully, be made to bear the consequences of that action.

•If an authorised dealer has in some way exceeded its authority, or breached the regulations applicable to the issuance of CCIs and dealings in foreign exchange transactions, the Nigerian courts will not allow a foreign investor to be punished for what is, in effect, a breach by the CBN itself - albeit through its delegates / agents.

•We are not saying anything new or novel. This is the law. This has been the law since 1995. Nothing has changed!

Conclusion In closing we shall again quote Shakespeare who said, in “Measure for Measure”, that “Our doubts are traitors, and make us lose the good we oft might win, by fearing to attempt.”We hope we have been able to clear the doubts of foreign investors in relation to CCI’s andthat, as regards their past or prospective investments in Nigeria, foreign investors will “fear no more”.

Thursday 04 October 2018

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FINANCIAL TIMES Wirecard’s meteoric rise prompts questions

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Inside Danske’s €200bn ‘dirty money’ scandal

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World Business Newspaper

Italy’s budget fight: the next steps for Rome and Brussels

Market pressure expected to force state’s hand more than any outside political forces MILES JOHNSON AND JIM BRUNSDEN

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s Italy’s populist coalition government prepares to submit its draft budget to the European Commission this month all eyes are on the possibility of a dangerous confrontation with Brussels and financial markets.

While Luigi Di Maio, leader of the Five Star Movement, and Matteo Salvini, leader of the League, have said they will resist outside attempts to change their plans, senior European figures have warned Rome that their expensive policies are likely to be in breach of budget rules. All this has unnerved investors enough to push Italian 10-year borrowing costs to the highest level since 2014.

What happens next?

The Italian government must release full details of its spending plans and send them to the Italian parliament for review. Then a draft budget plan will be sent to the commission by the middle of October, which is likely to be the next possible flashpoint in any fight between Rome and Brussels.

The Italian government said last week that its plans will see the country’s budget deficit for next year rising to 2.4 per cent of gross domestic product. But the economic assumptions behind this deficit figure are likely to be as important in deciding the commission’s reaction as the figure itself.

Giovanni Tria, Italy’s technocratic economy minister whose

attempts to curb spending were overrun by Mr Di Maio and Mr Salvini, has said economic growth of 1.6 per cent next year will help fund the plans while allowing Rome to reduce its debt. The government has said it will raise money from a tax amnesty and cutting wasteful spending.

Brussels has good reason to believe these assumptions may be unrealistic. Italy grew at a rate of around 1 per cent in the first half of this year on an annualised basis, and the commission has forecast 1.1 per cent growth for next year.

If Mr Tria’s growth forecasts and revenue assumptions are wrong than the headline deficit could in reality easily climb higher than 2.4 per cent — and potentially above the 3 per cent level that is in outright breach of EU rules.

Italian president Sergio Mattarella over the weekend reminded the government in public that the country’s constitution required ““balanced budgets and the sustainability of debt”. Mr Mattarella does have the power to reject the budget and send it back to Italy’s parliament — but it is unclear if he would be willing to risk what could easily explode into a constitutional crisis.

What is the chance that the European Commission vetoes the Italian budget?

The commission has never rejected a draft national budget.

Brussels has warned that the Italian plans — as they stand — would break the EU’s stability and growth pact but has also emphasised that it wants a dialogue with Rome to prevent a confrontation.

Donald Trump speaking on the trade deal. Under new rules, manufacturers will have to increase the amount of parts sourced from the US, Mexico or Canada © Getty

Liberia central bank says $104m in new cash is not lost after all Notes are found in vaults after popular outrage but some remain sceptical NEIL MUNSHI

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iberia’s central bank said it did not lose $104m in newly printed cash — the equivalent of 5 per cent of gross domestic product — contrary to previous government statements that spurred thousands to protest in the capital and calls for internationally monitored investigations.

Nathaniel Patray, central bank governor, said in a statement that an internal audit found that notes, which Liberia prints abroad because it does not have a mint, were indeed in the bank’s vaults. This was despite an announcement last month by the information minister that two shipments totalling nearly 16bn Liberian dollars had disappeared over the previous two years.

The scandal sparked outrage in Liberia and provoked a political firestorm for President George Weah. Last week, more than 30 central bank officials, including the bank’s former governor, Milton Weeks, and current deputy governor, Charles Sirleaf, son of former president Ellen Johnson Sirleaf, were barred from leaving the country. In the

statement, Mr Patray requested that the travel ban be lifted.

Rodney Sieh, editor of Front Page Africa, a Liberian media outlet, said in an editorial published on Tuesday that the sudden announcement from the central bank “smells a bit fishy”, particularly given that the bank and its employees are subjects of the investigation.

“Here lies the government’s predicament: [the many] contradictions has made it difficult for most Liberians and international partners to believe any explanation at this point,” he wrote.

Last week, thousands of outraged Liberians took to the streets of the capital Monrovia to protest, while the hashtag #BringBackOurMoney began trending on social media.

“People say it’s 5 per cent of GDP — but it’s also 15 per cent of the national budget. This is a huge amount of money that could make a real impact in the lives of people,” said Taa Wonga, a senior adviser to a leading opposition politician. “To put it in perspective, this money [could be used to create a] massive change in our infrastructure, a massive change in our education system,

a massive change in our social development.”

The ministry of justice has submitted requests to the UN, the Economic Community of West African States (Ecowas) and the African Union for assistance with the investigation. It could have significant repercussions, given the recent change in government and questions over when exactly the money went missing: either under Mr Weah, a former international football star who took office early this year, or Ms Sirleaf.

Ms Sirleaf, a Nobel Peace Prize laureate, has been lauded for stabilising her country after her election in 2005 following two devastating civil wars. She recently won the $5m Mo Ibrahim Prize for leadership in Africa.

But at home she was blamed for the weak performance of an economy hit by falling commodity prices and an outbreak of Ebola in 2013. She was also criticised for alleged nepotism after two of her sons, including Charles, were appointed to senior positions.

Liberia, one of the poorest countries in the world, has an annual GDP per capita of $729, according to the IMF.

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NATIONAL NEWS

FT Can Russia stop using the US dollar?

US sanctions companies linked to Japanese yakuza

After years of US sanctions, Moscow says it can de-dollarise its economy. But its rhetoric may be easier than reality

Washington aims to disrupt global financial infrastructure of criminal organisation LEO LEWIS AND HUDSON LOCKETT

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HENRY FOY

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resident Vladimir Putin’s government says it is working on plans to de-dollarise Russia’s $1.6tn economy and wean its biggest industries off the US currency, following four years of US sanctions against the country and its expectation of new restrictions.

The US Senate is considering proposals, aimed at penalising Russia for alleged US election interference and international aggression, that would in essence cut off Russia’s biggest banks from the dollar and deny Moscow access to foreign debt markets.

US sanctions have in effect have barred Russia’s defence industry and some of its largest corporate groups from using the greenback, and have dramatically reduced the ability of the country’s big oil and gas players to borrow in dollars.

A plan by Andrei Kostin, the head of Russian bank VTB, for banks and companies to convert dollar settlements into other currencies, has the backing of the finance ministry, central bank, and — Mr Kostin said this week— Mr Putin.

In addition, the Kremlin has sought to strike deals with major trading partners to use the Russian rouble for imports and exports.

That push has been welcomed in countries such as China and Turkey where relations with the US are similarly strained.

“More and more countries, not only in the east but also in Europe, are beginning to think about how to minimise dependence on the US dollar,” said Dmitry Peskov, Mr Putin’s spokesperson. “And they suddenly realise that a) it is possible, b) it needs to be done and c) you can save yourself if you do it sooner.”

But rhetoric may be easier than reality. Russia relies heavily on exports of commodities and energy — markets where the dollar is overwhelmingly the currency of choice. And the Kremlin is unlikely to convince its western partners to trade in the volatile Russian currency.

Analysts are divided over just how painful four years of sanctions have been for Russia’s economy, but the impact on its currency and bond markets has been significant.

After the US Treasury announced its strongest-ever measures in April — which cut off major businesses, including the country’s aluminium industry, from the dollar and from doing business with US citizens — the rouble fell as much as 18 per cent against the US currency.

Threats from Washington to extend similar curbs to the country’s state-run banks and to ban purchases of Russian sovereign debt have also sparked a $7.5bn sell-off by foreigners of the country’s bonds, known as OFZs. Russia is a major exporter, with a trade surplus of $115bn last year.

Its metals, grain, oil and gas are consumed around the world, and remain in high demand in the west, despite the souring of relations between Moscow and many western capitals.

Markus Braun: ‘Over the next decade, our organic growth will be significantly higher than . . . in the past 10 years’ © AFP

Wirecard’s meteoric rise prompts questions Controversy dogs payments company that has a valuation of more than 40 times next year’s expected earnings OLAF STORBECK AND DAN MCCRUM

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arkus Braun’s business model — and his personal wealth — is highly dependent on the decline of cash, yet the chief executive of German payments company Wirecard admits he still cannot live entirely without physical money.

“I try to live as cashless as possible but still have a very limited amount on me,” said Mr Braun, who is also the largest shareholder of the high-flying tech group.

Yet when it comes to tipping, even the man whose grand vision is to make “payments invisible” still uses cash.

Wirecard’s share price has more than doubled this year, as it has upped its guidance several times. This has catapulted the company with its €1.5bn of sales and 5,000 employees into the Dax index, the elite club of Germany’s 30 biggest quoted companies.

Commerzbank, Germany’s second-biggest listed bank, was bumped out of the Dax to make way for Wirecard, which has also surpassed the market capitalisation of Deutsche Bank, Germany’s biggest lender.

Wirecard, which is based in Aschheim east of Munich, authorises and processes payments for about 250,000 merchants, issues credit and prepaid cards and provides technology for contactless smart-

phone payments. Clients include German discounters Aldi and Lidl, as well as close to 100 airlines.

Barclays analyst Gerardus Vos calls it “a laser-focused company with a fantastic track record”.

In the first half of 2018, transaction volume grew 48.5 per cent to €56.2bn.

Yet its rise has been dogged by controversy. The company, which started in the late 1990s as a billing provider for online gambling and adult entertainment sites, has been the target of short sellers — who trade in stock that they believe will fall — several times.

It has faced short sellers’ accusations relating to money laundering. Its shares plunged by more than a fifth at one point in 2016, following publication of a highly critical report of its oversight and controls designed to prevent money laundering. The company vehemently denied the accusations, and neither criminal prosecutors nor financial watchdogs took action.

Investors have also raised questions about inconsistencies in its accounts as the company expanded by buying little-known businesses, while analysts have reported difficulties in finding evidence of businesses in Asia that would justify the large sums Wirecard spent there. “None of the various allegations made against Wirecard in the past were substan-

tiated,” said Citi analyst Josh Levin.

Mr Vos stressed that “based on the publicly available information, I have no reason to doubt Wirecard is a fit and proper company.”

One area of concern for sceptics has been Wirecard’s global acquisition spree. Over the past decade, it has spent €1.3bn on more than 20 companies.

Its biggest deal was the €340m purchase of a group of Indian payments businesses in 2015.

Yet a year before, the founders of those businesses had failed to raise funding in a process that would have valued the key asset at just €46m.

Mr Braun rejects the idea that the Indian acquisition was too costly, arguing that even lossmaking Indian payments providers are fetching valuations of around €1bn.

He also said the era of big, strategic dealmaking for Wirecard ended with the purchase of Citi’s North American prepaid card business in 2016. “We achieved our strategic goal of entering the US market,” adding that his focus is “now on organic growth”.

Still, some continue to struggle with the company’s financial reporting, which Citi’s Mr Levin criticises as “opaque”, due to a lack of granular information about individual business units. “It’s hard to understand what precisely the sources of Wirecard’s growth are,” he said.

Turkey’s inflation rate soars to almost 25% Collapse this year in the lira has placed strong pressure on prices LAURA PITEL

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urkey’s inflation rate soared to almost 25 per cent in September as the impact of a recent currency crisis ignited a boom in prices across the economy.

Consumer prices jumped 24.5 per cent from the same period in 2017, according to data from the Turkish Statistical Institute. It marked a sharp rise from 17.9 per cent in the previous month and 11.2 per cent last September.

The lira fell 1.44 per cent following the worse-than expected figures, which also showed that inflation accelerated 6.3 per cent compared to the previous month. Economists polled by

Reuters had forecast a 3.6 per cent rise.

The spike in consumer price inflation was driven by huge rises in transportation costs, which rose 37 per cent year-onyear, as well as food prices that were up 28 per cent. Miscellaneous goods and services rose 31 per cent.

In a signal that inflation is likely to rise further still in the months ahead, producer prices climbed 46.2 per cent year-onyear.

The hefty price increases follow an August currency crisis that saw the lira suffer volatile swings after a row with Donald Trump exacerbated underlying fears about the health of the Turkish economy.

The currency has lost around 37 per cent of its value against the dollar since the start of the year, pushing up the cost of fuel and other imports.

Turkey’s central bank sharply hiked interest rates last month as it sought to get runaway inflation under control.

But the bank may have limited room to further increase rates given the strong opposition of Recep Tayyip Erdogan, the Turkish president.

He has lambasted the bank for failing to control inflation and repeated his view that high interest rates cause rather than slow inflation. Speaking after last month’s hike, Mr Erdogan said that his patience with the institution would last “up to a point”.

he US Treasury has imposed sanctions on companies and individuals associated with the most powerful yakuza crime syndicate in Japan, accusing the group of “acting globally” in concert with criminal affiliates around the world.

The department’s Office of Foreign Assets Control announced on Tuesday that it had taken action against four individuals associated with the Yamaguchi-gumi syndicate and, for the first time, against two companies owned by the yakuza.

“By exposing this broad network of front companies and individuals supporting the Yamaguchi-gumi yakuza syndicate we intend to disrupt the global financial infrastructure of this illicit transnational criminal organisation,” said Sigal Mandelker, under secretary for terrorism and financial intelligence.

Despite their dwindling numbers, the yakuza have long been viewed by experts in international organised crime as offering key facilities to networks used for global money laundering and circulation of terrorist funds. The Treasury also identified the yakuza’s ability to profit “from nearly all aspects of sexual exploitation”.

The Treasury said the action targeted two real estate companies — Yamaki and Toyo Shinyo Jitsugyo — the first of which owns the land on which the crime group’s headquarters in Kobe stands, while the other manages the building.

Both companies are involved in real estate leasing, art sales and the management of golf driving ranges: the shareholders of Yamaki, said the Treasury, are serving leaders of the Yamaguchi gang and its subsidiaries.

The two companies could not be reached for comment.

Consultants who specialise in protecting foreign companies from the yakuza said that the Treasury’s selection of those companies was far from a coincidence. Both companies were raided by police last year and remain at the centre of high-profile efforts by local residents in Kobe and the Japanese authorities to prevent a bloody escalation of gang warfare following a split between rival branches of the Yamaguchi-gumi in 2015.

In 2017, residents living near the headquarters obtained a court order prohibiting members of the Kobe Yamaguchi-gumi from entering the building and from displaying their gang symbols on its walls. When this was ignored, the Kobe District Court said in July this year that the crime syndicate must pay a daily fine of ¥1m if members did not vacate the premises.

The ranks of yakuza, including the Yamaguchi-gumi, have thinned visibly in recent years, according to official figures from Japan’s National Police Agency. In 2017, total members and affiliates fell for a 12th straight year to a record low of 34,500.

Although part of the decline is in line with Japan’s broader demographic issues of ageing and population shrinkage, the police are keen to link it with a crackdown on activities that began in 2011. Last week, the National Police Agency ordered regional headquarters across the country to intensify its attack on yakuza-run fraud schemes. These schemes include the notoriously successful “it’s me!” telephone scam in which fraudsters call elderly people and pretend to be grandchildren in need of urgent money transfers.

Thursday 04 October

FT

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BUSINESS DAY

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ANALYSIS Fight over revamped Nafta deal moves to lawmakers Securing Congress approval could pose new hurdles to the US-Mexico-Canada trade agreement JAMES POLITI AND JUDE WEBBER

Inside Danske’s €200bn ‘dirty money’ scandal Denmark’s biggest lender is mired in problems after revelations its Estonian branch had become a pipeline for money-laundering on a vast scale

RICHARD MILNE AND CAROLINE BINHAM

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he world’s biggest moneylaundering scandal had yet to be uncovered in August 2015, but management at Danske Bank were trying quietly to close down the business at the heart of it. Russian entities and others from former Soviet states had moved €200bn through the Estonian branch of Denmark’s biggest lender since 2007, roughly 10 times the size of the Baltic state’s economy.

Then executives from Deutsche Bank, which was handling much of the cross-border payments for Danske and is itself no stranger to scandal, made an astonishing claim. They told Danske the problem was getting worse.

Despite a reduction in payments from Estonia in the previous two years, there had been an increase in the proportion of suspect cases the German lender was having to investigate from the small branch. “In [the second quarter] of 2015 alone there had been 16 cases related to such crimes as narcotics, ID stealing, etc,” state the minutes of the meeting between senior managers from both banks and seen by the Financial Times.

Deutsche later that month identified 10 Danske customers who had been involved in “suspicious behaviour”. Danske managers complained in an internal email that Deutsche was “not allowed by the FBI and DEA [Drug Enforcement Administration] to inform us about the cases with direct links to active criminal cases”.

The German bank terminated its relationship to clear US dollars for Danske out of Estonia. But it would take another three years before the story emerged of how a small branch of a mid-sized European bank became a pipeline for an enormous flow of money out of Russia, Azerbaijan and Latvia on a scale that puts other money laundering scandals in the shade.

No one comes out of it well: not Danske executives, its board nor regulators. It has cost the chief executive Thomas Borgen his job, and triggered investigations in at least six countries. And despite the bank’s own report on the scandal, published in September, much remains unknown — from the source of the money to where it ended up and just what the final damage will be to Danske and even Denmark itself. “€200bn is of a different order than anything seen thus far,” says Graham Barrow, a UK money laundering expert who has reviewed thousands of transactions from Danske and others. “It sets an unwelcome benchmark for money laundering scandals.”

Danske’s troubles began almost immediately after buying Sampo

Bank, a Finnish lender, in 2007. The Estonian branch represented just 0.5 per cent of assets in Denmark’s largest bank which would be badly hit by the global financial crisis. By 2008, the non-resident business in Estonia — which serviced customers from outside the Baltic country, especially from Russia — accounted for 8 per cent of Danske group’s DKr2.23bn pre-tax profits.

The bank’s management in Copenhagen had already received warnings. In 2007, Estonian regulators and even the Russian central bank told Danske what it had got into. “Clients of Sampo Bank permanently participate in financial transactions of doubtful origin,” the Russian central bank said, estimating that billions of roubles monthly were involved, according to the Danske report into the scandal.

In charge of the Estonia operation from 2009 to 2012 in his role as head of international banking was Mr Borgen. In 2010 he talked of “expanding slowly” the non-resident business and told other executives he had not “come across anything that could give rise to concern,” according to the lender’s report into the scandal.

That expansion saw about 6,500 nonresident customers added by Danske to the roughly 3,300 it inherited from Sampo in 2007.

By 2013 about €32bn flowed through the Estonian non-resident portfolio. JPMorgan, which handled dollar transactions for Danske in Estonia alongside Deutsche, quit in July, citing concerns about nonresident customers.

“This should have been a massive warning signal that such a large bank will not deal with you due to suspicious customers,” says one person familiar with the investigations.

At a subsequent meeting, Danske’s board discussed the JPMorgan decision and the non-resident business. Lars Morch, who had replaced Mr Borgen as head of the international business, said Danske’s non-resident portfolio was bigger than its rivals’ and “needed to be reviewed and potentially reduced”, according to minutes of the meeting seen by the FT. Mr Borgen, by then chief executive, “emphasised the need for a middle ground and wanted to discuss this further outside of this forum,” the minutes state. Danske’s own report says: “Thomas Borgen has explained that he does not recall which ‘middle ground’ he was referring to.” But a person involved in the investigation described it as a crucial moment. “This was the point at which a decision was made not to stop this business,” the person says.

Toward the end of 2013, an internal email changed everything.

Entitled “Whistleblowing disclosure — knowingly dealing with criminals in Estonia branch”, it was written by Howard Wilkinson, Danske’s head of markets in Estonia. Its content

was explosive. Detailing a “near total process failure”, he referred to a UK limited liability partnership called Lantana Trade which had opened an account at Danske in Estonia the previous year.

Its account was marked “dormant” at UK Companies House and yet it had a credit balance at Danske of $965,418 on the same date. A colleague later told Mr Wilkinson that the bank did not know who the beneficial owners were but “apparently it was discovered that they included the family of Vladimir Putin, Russia’s president, and the FSB [Russia’s intelligence service]”, according to the email seen by the FT. The claim is denied by the Kremlin: “President Putin has nothing to do with the mentioned bank,” it said.

Danske’s internal audit team was sent to investigate the Estonia operation in January 2014. Yet Mr Wilkinson complained in a further email in April that despite his warnings “no related client account has been closed by management” and “there appears to have been no attempt by management to identify the full scope of the problem of UK LLPs submitting false accounts”.

He reported that a senior executive told him “[Danske Bank] is not the police” and “[Danske Bank] has no obligation to report false client accounts to the authorities.” That same day, he resigned and sent an email to Copenhagen, signing off: “Sad to say, it seems to me that things are totally broken here.”

Mr Wilkinson is now represented by the American lawyer who helped secure one of the biggest whistleblowing payouts in history under US bounty laws.

The Wilkinson emails and a critical report from Estonian regulators were discussed by both Danske’s management and board throughout 2014 and by the end of the year it had terminated relationships with about a quarter of non-resident customers.

By late December 2015 the nonresident unit in Estonia was closed.

It was only in the spring of 2017, when the Danish newspaper Berlingske published a series of articles, that the size and scale of the problems at Danske started to emerge.

The bank was forced to launch its own investigation, recruiting Bruun & Hjejle, a law firm which had worked for it before, to produce the report published last month.

While it established a timeline of events, the report left a number of big questions unanswered. It is still not known where much of the €200bn came from. The report mentions three scandals the bank was tied up with — laundromats in Russia and Azerbaijan, scams that funnelled tens of billions of dollars out of those countries, and the alleged $230m Russian fraud uncovered by lawyer Sergei Magnitsky before his death in a Russian prison cell in 2009.

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he trade deal reached on Sunday by the US, Canada and Mexico was welcomed in all three countries as a major step towards salvaging open trade in North America. But the effort will not be complete until the agreement is ratified by those countries’ lawmakers, a potentially lengthy process fraught with hurdles that leaves some uncertainty lingering over the fate of the new pact.

“The agreement reduces, but does not eliminate, uncertainty regarding Nafta,” Alec Phillips, an analyst at Goldman Sachs who is based in Washington, wrote in a note to clients this week.

manufacturers at a disadvantage even in the new agreement.

“If this basic problem with Nafta, which goes back 25 years, isn’t addressed, relatively few Democrats will vote for it,” Mr Levin said.

“Outsourcing is a major issue about which Democrats have no hesitation to be strong on.”

Even John Cornyn of Texas, the second-most powerful Republican in the Senate, admitted the deal could face headwinds. “I know people are still going through the details but it’s not a foregone conclusion that it will get confirmation by the Senate,” Mr Cornyn said on Tuesday.

So far scepticism on the new deal seems largely confined to a

Any turbulence on Capitol Hill could have ripple effects in Mexico and Canada, especially if the US tries to amend the deal in order to assuage recalcitrant members of Congress © AP

The biggest risk for the deal is that it could be held up, or even torpedoed in the US Congress, where trade votes are often difficult for many lawmakers. Some senior Democrats have already expressed scepticism about the proposed deal, in a sign that they intend to fight or seek some changes to the agreement.

If Democrats gain control of the House of Representatives in the midterm elections this November, as is predicted by most polls, the Trump administration could well face a stand-off with Capitol Hill on the US-Mexico-Canada Agreement, or USMCA, as Nafta was renamed.

“The bar for supporting a new Nafta will be high,” said Richard Neal, the top Democrat on the House of Representatives ways and means committee, which has responsibility for trade, after the deal was announced.

“Nafta has had many critics over the years and its flaws are well-known. Like me, many of my colleagues did not support the deal originally. And those who did will have serious questions that they need answered before doing so again,” said Mr Neal, a veteran lawmaker from western Massachusetts who would be a key gatekeeper as committee chairman if Democrats take back control of the House.

In a briefing with reporters on Monday, Sander Levin, a retiring Democratic lawmaker from Michigan, said some members of his party believed that provisions tightening rules of origin in car manufacturing were insufficient, and would fail to achieve the Trump administration’s goal of bringing production back to the US. He also said labour rules and conditions in Mexico were still producing excessively low wages, putting US

segment of leftwing members of the Democratic party. The vast majority of Republican members of Congress backed Donald Trump’s trade agreement with Canada and Mexico, and some Democrats, including Chuck Schumer, the Senate minority leader from New York, offered a mixed reaction that foreshadowed possible support.

Mr Schumer, who had pushed for some concessions on dairy that Canada accepted, said the deal had taken “large steps” to improve Nafta but “any final agreement must be judged on how it benefits and protects middle-class families and the working people in our country”.

The fast-track process, known as Trade Promotion Authority, under which the USMCA will be considered, is designed to avoid any big disruptions to the deal, setting a fixed timeline for a vote on Capitol Hill, which would have to be respected even if control of Congress changes.

Although business groups are not thrilled with the substance of the new deal, they are likely to back it as a palatable alternative to a breakdown in trade ties between the US and its neighbours, putting pressure on Democrats to accept it. It is also unclear whether Democrats will want to make opposition to Mr Trump’s Nafta revamp a major flashpoint in the early stages of the 2020 presidential primary campaigns.

“You know, if the Democrats want to help working folks, they’ll go with this deal,” Larry Kudlow, director of Mr Trump’s National Economic Council, told reporters on Tuesday.

But analysts have said that in the event of trouble in Congress, Mr Trump could restate his willingness to withdraw the US from Nafta entirely in order to raise the stakes.

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‘Passage of CNI bill could change course o OSARO EGHOBAMIEN, managing partner, Perchstone & Graeys in this interview with BusinessDay’s FRANK ELEANYA discusses how to ensure sustainability in technology growth and development in Nigeria. He also explains the firm’s partnership with PEBEC in deepening the successes recorded so far in the ease of doing business initiatives.

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hat about technology in Nigeria inspired the conference?

In f o r mat i o n C o m mu n i cation Technology (ICT) plays a critical role in enabling the diversification of a Country’s economy. Nigeria has itself witnessed an accelerated socio-economic development resulting from the penetration of technology into all facets of its society. Technology is indeed the catalyst that can dr ive the s o cio-e conomic growth and transformation of Nigeria in the 21st century.

Technology does not operate in a vacuum but rather acts as an enabler for business and economic growth of every nation of the world. Technology improves business operations and also lowers considerably the cost of doing business. It allows for seamless interaction and engagement between government, individuals and businesses.

Digital services in government otherwise known as eGovernment are no doubt very critical in delivering effective and robust services to citizens.

E-Government has indeed remained the cardinal focus of this administration for driving effective and efficient public service delivery; reinforcing same with the proclamation of Executive Orders particularly Executive Order No. 0001 of 2017 on the Promotion of Transparency and Efficiency in Business Environment signed by then Acting President, Yemi Osibanjo. With the adoption and implementation of seamless e-Government system, there would be faster dissemination of government information, government will save cost, Ministries, Departments and Agencies (MDAs) of government will be more transparent and accountable.

Also, individuals and businesses can now pay for government services (e.g. registration of business and taxes) online from the comfort of their homes and offices. This would in turn enhance the ease of doing business in Nigeria.

In spite of these achievements, the e-Government project still have some challenges in that the MDAs operate in silos rather than having a coordinating agency that would ensure that implementation among them is interconnected, as it is the case in developed jurisdictions.

Therefore, it is against this background that this conference (Technology as a Catalyst for Ease of Doing Business) is being organized by Perchstone

& Graeys and Knowledge Resources Limited (in conjunction with PEBEC) with the aim of providing a veritable platform to birth solutions that will expand the frontiers of technology as a catalyst for the ease of doing business in Nigeria. More importantly, it is hoped that the discussions at the event will expose the gaps and challenges that currently inhibit this objective. The conference will also seek to spur and lead to the adoption of policy reforms with the aim of increasing foreign direct investments in Nigeria.

What is your view about technological developments in Nigeria.

Are we moving as expected?

Nigeria has recorded significant technological developments in the last 5 years. These technological revolutions are being witnessed in all sectors of the economy – education, banking, agriculture, manufacturing, Information Communication Technology (ICT), media & entertainment, e-commerce, etc.

Virtually all sectors are maximizing and leveraging technology for optimal performance.

This is seen in the financial services sector, where e-banking is now the vogue, the agricultural sector, where government allocates farm inputs through mobile phone to farmers; the consumer goods sector where online stores and e-commerce has brought incredible transformation to retail business and others.

Despite these gains, Nigeria is still lagging behind some African countries in terms of technology adoption. For instance in the ICT Development Index of 2017 published by the International Telecommunication Union; Egypt, Nambia, South Africa and even Ghana rank above Nigeria on all measurable components of the index. It is indeed regrettably that till date, Nigeria does not have legislations that regulate and protect transactions done electronically. Also, there are no single Data Protection Act that specifies the minimum guaranteed security standards for data protection and privacy; rather what we have is NITDA Guidelines on Data Protection. The absence of a comprehensive law on ecommerce regulating online transactions, often times, scares people away from transacting business electronically. Even in area of Financial Technology (Fintech) particularly payments system, what you would find here are usually guidelines and regulations issued by the Central Bank of Nigeria which

in most cases are not adequate and comprehensive enough.

What can the legal sector in Nigeria do to advance the growth and adoption of technology in Nigeria?

The legal profession has a lot to play in advancing the growth and adoption of technology in Nigeria. The legal profession should play a key advocacy role in ensuring the speedy passage into laws of these Bills – the Electronic Transaction Bill, National Payment Systems Management Bill, Data Protection & Privacy Bill - which had long been pending before the National Assembly. The passage of these Bills into law would bring about trust, confidence, transparency and certainty into e-commerce and payments system in Nigeria. These would in turn lead to greater adoption and use of e-payment channels

by Nigerians in transacting business electronically.

Tell us some of the role Perchstone & Graeys has played in this direction.

Perchstone & Graeys has been a strong advocate for policy reforms and new laws to regulate/cater for novel areas that would have positive impact on the well-being of Nigerians and/ or the business and operations of government. The firm was

instrumental to the enactment of the Secured Transactions in Moveable Assets Act 2017 (otherwise known as Collateral Registry Act). The Act allows MSMEs like artisans and barbers to access micro-credits from commercial banks and other financial institutions with their working tools as collateral.

The firm has also originated and championed some key Bills which are currently pending before the National Assembly for passage into law. These Bills – the Securitization Bill & Factoring Bill – when passed into law would revolutionize the financial sector of the economy.

In the last decade, we have annually convened a conference, the Annual Law Series (ALS), primarily concerned with creating a better understanding between the business community, leaders of government and legal community.

In June 2013, we crossed a significant frontier by becoming the first Nigerian law firm to open a pathway of engagement with the organized private sector of India when Perchstone & Graeys organized the inaugural edition of its India Africa Business Series (IABS) in New Delhi, India. In 2015, we continued our tradition aimed at expanding the commercial space for interaction between companies from India and Nigeria, by hosting the India Nigeria Business Forum (INBF) in Mumbai, India;

with unique business matchmaking opportunity to attending businesses.

In 2016, in collaboration with the office of the Vice President of the Federal Republic of Nigeria, the firm led a 25-Man Delegation (and 3 sector Ministers) to the CII-EXIM Bank on India-Africa Project Partnership, in New Delhi, India; being the 11th edition, organised with the support of the Ministries of External Affairs and Commerce and Industry, Government of India; and Nigeria as the ‘Country Partner’. In 2017, the firm hosted an Employment Law Seminar, on Labour Law and Emerging Trends, with the panel being led by Hon. Justice Benedict Bakwaph KANYIP, PhD, of the National Industrial Court.

Considering the slow level of broadband penetration in Nigeria, do you think implementation of e-Governance framework at all levels of government is feasible in Nigeria?

Relying on available statistics from the Nigerian Communications Commission, I do not think that Nigeria’s broadband penetration has been too slow although there might been some challenges (such as high cost of obtaining right of way from State Governments; high cost of constructing and installing broadband infrastructure; vandalism and destruction of fiber ducts, duplication of fiber infrastructure, etc.) inhibiting the realization of its full potential target in line with the National Broadband Policy of 2013 (the policy has a-5 year implementation roadmap). Broadband penetration plays a critical role in the increase of

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of tech infrastructure in Nigeria’ the GDP growth of any nation. Indicators are that internet is fast penetrating all sectors of Nigerian economy. MDAs are also increasingly using and leveraging information communication technologies such as WAN, internet and mobile solutions to deliver online services to Nigerians. It is reported that Nigeria has over 162 million internet users with tele-density at over 116%.

Nigeria has so far achieved 22% broadband penetration out of the targeted 30% before the end of 2018.

NITDA is now coordinating and harmonizing the effective and seamless implementation of e-Government across all MDAs of government by ensuring that e-Government projects are not executed in silos. The Lagos State Government has also significantly adopted e-Government in the delivery of services to citizens. It has also collaborated with the private sector players to commence the designing, laying and installation of fiber optics cables across key district areas of the State to generate high bandwidth and fast internet for residents and businesses in Lagos.

It should be stated that the adoption of e-Government services at the local government levels had been very poor and none of them had any functional websites or portals for e-services. The reason is not far-fetched as there is little or no penetration of broadband services in these rural/underserved areas.

However, it is recommended that the Government should take a bold lead in the adoption of internet to provide services. This would not only offer an efficient platform for improved service delivery but increase demand for broadband services and create the necessary local traffic. The future outlook of broadband penetration appears good, if the right environment is created in network roll out and demand is created for broadband access through creation of local content and e-services like e-Government, e-Learning and e-Commerce.

Are there enough local legislation that adequately protect technology innovations and infrastructures in Nigeria?

The promotion and protection of innovation and creativity are an integral part of economic development of any nation. Although we have body of Intellectual Property (IP) laws [like the Copyright Act 2004, the Patents and Design Act of 1971 (cap. 344)(1990) and the Trade Marks Act (cap. 436) (1990)] that protect IP rights in creativity and innovation; I believe these laws are overdue for reforms as some of its provisions are no longer in tandem with the World Intellectual Property Organization (WIPO)-administered Treaties. Nigeria is a Member State of WIPO which it joined in 1995.

Given that those IP laws were enacted quite long ago (with no amendments of same), they do not contain provisions that deal with the protection of IP rights arising from digital innovations. The foregoing therefore presents a serious drawback to the effective exploitation and enforcement of IP rights in Nigeria.

On the other hand, Nigeria does not

have any robust and comprehensive legislation that protect technology infrastructure (like telecom facilities and infrastructures) in Nigeria. On a regular basis, telecom base stations are shut down by either local or state government without any prior notice to telecommunication operators/service providers and this usually result in poor quality of GSM/mobile internet services in Nigeria.

More importantly, the investors’ confidence is seriously eroded when base stations are shut down intentionally and telecom infrastructures are vandalized without bringing the culprits to face the wrath of the law.

Although the Cybercrime Act 2015 treats telecoms infrastructure as a critical National Infrastructure in Nigeria it is yet to be implemented and enforced. It is the consensus of the industry stakeholders that the Nigerian government should, as a matter of urgency, pass into law the Critical National Infrastructure Protection Bill which is designed to protect telecoms installations, facilities and infrastructures in the country.

What are the current challenges to national information infrastructure in Nigeria and how best to quickly address them?

Global digital economy is built on Information Technology and telecommunication infrastructure and networks which serve as a platform for socio-economic development and growth of any nation. The contributions of Nigeria’s telecom sector to the economy have been phenomenal in the last 10 years.

However, some of the challenges to the country’s National Information Technology Infrastructure have been to provide the secured investment clime for investors to invest in critical National Infrastructure. Government should in this regard implement strategic policies that would guarantee the investors trust and provide tax holidays (for a limited period) to foreign investors in this sector.

While government and its agencies appeared to have seen these telecom operators as ‘cash cows’ through multiple taxations which have a negative impact on foreign direct investment in technology infrastructure; the operators have also decried the spate of theft and vandalization of their facilities at different parts of the country.

Vandalism of telecoms infrastructure has been described as the greatest challenge facing Mobile Network Operators (MNOs) in Nigeria. To solve the

problems of theft and vandalism, the host communities must have a sense of ownership of the sites because the infrastructure enhances their lives and businesses. Moreover, our law enforcement agencies should be proactive in preventing the theft and vandalism of these critical telecom infrastructures.

Calls have remained consistent from different quarters on the necessity of the National Assembly to hasten the passage of the Critical National Infrastructure (CNI) Bill. The bill, when passed into law, is expected to criminalize any act of vandalism against ICT infrastructures since they would then be classified as CNI.

charges across States and the bureaucratic delays that come with it.

In the end, uninformed and arbitrary levying of Telecom companies at the point of providing infrastructure will imply higher costs to the consumers due to multiple charges levied by the three respective tiers of Governments. It is suggested that these charges have to be uniform across the country, not arbitrary done, and even reviewed downwards to make any commercial sense for an operator to roll out infrastructure requiring RoW permission.

If it remains high, it acts as an inhibitor to ubiquitous Broadband roll-out.

The number of Base Transceiver Stations (BTS) in Nigeria is estimated at about 30,000. This figure is grossly inadequate to meet the communications needs of over 150 million active mobile subscribers in the country. It is reported that about 3% of Nigeria’s BTS are shut down at any point in time, due to vandalism, resulting in a loss of about $50million to $100million yearly.

Again, achieving increased broadband penetration via rollout of fibre optics infrastructure has been particularly challenging as telecommunication companies in Nigeria, weighed down by overlapping taxes and sundry levies across the 3 tiers of government, continue to grapple with daunting hurdles to improved broadband penetration, owing to lack of uniformity in Right of Way (RoW)

How well are government ministries, departments & Agencies embracing technology to enhance service delivery to Nigerians?

According to the World Bank Report, E-Governance involves the use of information and communications technologies (ICT) by governments to enhance the range and quality of information and services provided to its citizens, businesses, civil society organizations, and other government agencies in an efficient, cost effective and convenient manner, making government processes more transparent and accountable and strengthening democracy.

Put differently, e-Governance demonstrates the application of ICT to facilitate the operations and dissemination of government information and service

delivery. It therefore rely heavily on the internetwork of ICT infrastructures, internet and software applications to aid the operations of government.

Whilst it could be said that the level of e-Government adoption by some MDAs have not been very encouraging, in others like FIRS, CAC, Custom, it has been tremendous in terms of their adoption of e-Government to deliver services to Nigerians.

Going by the investigation of NITDA sometime late 2017, over 30 government agencies and Parastatals are yet to migrate from their international and local domain names to gov.ng domain. The need for government agencies and Parastatals to adopt the gov,ng domain name is in line with the drive to use ICT for efficient service delivery and improve the ease of doing business in the country.

What are the guarantees that discussions & recommendations arising from this conference would be translated into relevant policy reforms by the government?

This conference is being organized in conjunction with PEBEC. PEBEC was established as a key driver of the theme and objective of this conference which is using technology to facilitate the ease of doing business in Nigeria. Therefore, unlike other Conferences, the communiqué derived post conference will be closely monitored by the organizers (Perchstone & Graeys, Knowledge Resources, and PEBEC) for effective implementation.

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news you can trust I thursday 04 OCTOBER 2018

Opinion Bongonomics

Bongo Adi Bongo Adi, PhD is a faculty member of Lagos Business School

O

ne major reason communism was detested by many is that it was antithetical to human rationality. Although behavioural economists have worked extremely hard in recent times (and claiming two Nobel prizes in the process, one to David Kahnemann and the other to Richard Thaler) to update the neoclassical model of homo-economicus who acts to optimize his interest following the calculus of greater rewards, it still remains the gold standard and the departure point in the construction of any model of economic behaviour. This is simply because the rationalist individual, who does things because of his anticipation of reward or punishment still remains the best fit line in modelling the observed nature of human beings in dealing with scarce resources

UDO UDOMA & BELO-OSAGIE

I

t has been almost four hundred years since William Shakespeare wrote the comedy “Much Ado About Nothing” and although we have taken inspiration from its title, there is nothing even remotely funny about the recent confusion around Certificates of Capital Importation (“CCI’s”). To explain, CCI’s are issued, on application, to parties that inflowforeign currency equity or debt capital into Nigeria, and provide such parties with access to Nigeria’s official foreign exchange market for the purpose of repatriating dividends, interest, principal and capital as the case may be. This brief note is an attempt to clear the current confusion and assuage the understandable concerns of the numerous foreign investors that have made investments in Nigeria, been issued with CCI’s, and who may be wondering whether they can still rely on those CCI’s. Hopefully, this note will also assuage the doubts and concerns of prospective investors who plan to invest in Nigeria and to obtain CCI’s in connection with such investments. This note is not, however, about MTN Nigeria Communica-

Nigeria’s political economy as a communist aberration and why it must self-destruct – 1 including time. The various axioms of rationality are attempts to abstract the underlying precepts of such behaviour. Take the axiom of monotonicity for example. In deriving preferences (which also define the type of utility the consumer derives from such preferences) for what is considered to be a “good” — that which is desirable — it is typically assumed that “more is better.” Although more may not be better in some cases, but so long as something is considered “good”, more of it will always be preferred by a decision maker and not less.

There is no doubt that the typical person in regard to his self interest would always seek to attain a higher — and not lesser — level of satisfaction with what he attributes as good. If my one naira could fetch me two loaves of bread, which is desirable to me, why should I go for one? There is little doubt that this typifies human behaviour.

The second is that of convexity. For economists, when preferences are convex, it means, in a layman’s formulation, that having something of everything is better than having everything of something.

In other words, averages are preferred to extremes. Half bread is better than none.

Again, there must certainly be some exception to the rule, but if we are talking about a “good,” the fact remains that most people, most times, would prefer varieties of a good to just one, uniform good for as they say, “variety

‘

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

,

is the spice of life”. Practically put, instead of having just two loaves of bread as above, without some beverage, one would opt to give up a loaf just so to have some beverage in order to attain some balancing. This is also another unquestionable pat-

tern discernible in the choices that people make every now and then. People want the best for themselves, first and foremostly.

The third axiom is that of transitivity. If I prefer A when B is within reach and available for pick, and prefer B when C is within reach and I could have picked it as well, transitivity ensures that when A and C are available together, I will go for A. Although this may be violated in some instances to create what is called intransitive or cyclical preferences, but it ensures some sort of consistency in the choice or preferences that people make.

All these go to show that human beings are essentially and principally, self-regarding or self-interested, rather than other-regarding. Richard Dawkins wrote on the “selfish gene”. People think first and principally about their own interests and seek first for their own satisfaction.

It is often assumed irrational when people act in ways that do not discernibly increase or improve their utility condition. In the extreme, people are observed to be greedy and self-centered.

Adam Smith gave a succinct summary of this behaviour and the system it generates in his Wealth of Nations writing about the division of

labour. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellowcitizens. Even a beggar does not depend upon it entirely.

The charity of well-disposed people, indeed, supplies him with the whole fund of his subsistence. But though this principle ultimately provides him with all the necessaries of life which he has occasion for, it neither does nor can provide him with them as he has occasion for them.

The greater part of his occasional wants are supplied in the same manner as those of other people, by treaty, by barter, and by purchase.”

The greatest incentive or motive for any system of choice or preference to be considered as rational is selfinterest. The prospect for gain or loss is at the centre of the marginalist foundation of modern capitalist economic system. For the consideration of interest, a lender is willing to part with his funds and a borrower is happy to

take the same funds. Just imagine lending without interest. The financial models of interest rates, time preference and future discounting all derive from this same model of the rational economic agent whose primary incentive is to self-reward. The economic incentive for reward is the singular, most powerful enabler of capitalism: the fact that individuals can profit from their own efforts and that it is the regard to this interest that sustains the economic dynamics satisfying disparate needs through the exchange process.

In the first four of the ten principles of economics enunciated by Greg Mankiw, a foremost Harvard economist, we see the power of economic incentives. Principle number 1 says that people face tradeoffs. Number 2 says that the cost of something is what you give up to get it. Number 3 says that rational people think at the margin. And in number 4, people respond to incentives. These are principles that guide individual choices.

In all of these, a rational decision maker uses incentive as the criterion for evaluating options. Incentives certainly make economics go round.

In game theoretic model-

can beconducted, and empowers the CBN to issue guidelines to regulate the procedures for transactions in the market and in relation to such other matters as the CBN may deem appropriate for the effective operation of the market.

One of such “guidelines” is the foreign exchange manual (strictly speaking, a collection of foreign exchange guidelines issued by the CBN), which was first issued in 1990, reissued in 2004 and 2006, and updated in 2018. Section 8(1) of the FEMM Act also empowers the CBN to supervise and monitor the operation of the market in order to ensure that the market performs efficiently. In order that the CBN can effectively discharge its functions, Sections 5(1) and (2) of the FEMM Act empowers the CBN to appoint banks that have adequate resources and capacity as uthorised dealers, and to delegate to the authorised dealers such powers as may be specified by the CBN in their respective letters of appointment.

The role of the CBN under the FEMM Act is consistent with one of its powers under section 2 of the Central Bank of Nigeria Act 2007, which is to “maintain ex-

ternal reserves to safeguard the international value” of the Naira.

By virtue of their appointment, authorised dealers apply the FEMM Act, the foreign exchange manual, and other regulations issued by the CBN in relation to their dealings in foreign exchange. In doing so authorised dealers will, from time to time, have to make decisions and create

within the scope of the actual power that has been delegated. Even where an authorised dealer exceeds such powers, however, the CBN has a responsibility to affirm the approvals granted, and the transactions processed, on its behalf by its delegate. And where the authorised dealer has exceeded or wrongly exercised its delegated powers the CBN’s proper recourse is to sanction the authorised dealer, in such manner as is provided in the FEMM Act. The law: Delegation of authority A little more about the delegation of authority. As already indicated above, Section 1 of the FEMM Act empowers the CBN to regulate the procedures for transactions in the market, while Section 8(1) of the FEMM Act empowers the CBN to monitor and supervise the operations of the market in order to ensure its efficient performance.

We have also indicated that Section 5 of the FEMM Act permits the CBN to appoint authorised dealers that will operate in the market on the terms and conditions prescribed by the CBN. And whenever, in the exercise of such authority, an au-

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Much ado about CCI’s tions Ltd (“MTNN”), and the reference to the Central Bank of Nigeria’s (“CBN”) recent sanction against MTNN is mentioned below, only by way of background.

Recent events It is fairly well known that in the last week of August 2018, the CBN wrote a letter to MTNN, the operator of Nigeria’s largest mobile network, in which the CBN alleged that following an investigation carried out by the CBN on Standard Chartered Bank Limited, Stanbic IBTC Bank PLC., Citibank Nigeria Limited and Diamond Bank PLC. (‘the Banks”), it had been determined by the CBN that between 2007 and 2015, the Banks used “illegally issued CCI’s” to “illegally repatriate” US$8.13 billion to MTNN’s shareholders.

Following the above determination the CBN decided, among other things, that MTNN and the Banks had breached Nigeria’s foreign exchange laws and regulations and that the “illegally repatriated” sum of US$8.13 billion should be “refunded to the coffers” of the CBN immediately. The CBN also imposed fines totaling NGN5.87 billion on the Banks.

Are you a worried (past

or prospective) foreign investor?

If an “authorised dealer” (more on that shortly) has issued you with a CCI in the past, or the recent events have made you concerned about whether the CCI regime can be relied on, then to borrow a phrase (or more accurately: part of a phrase) used by William Shakespeare in the play Cymbeline, “fear no more…”. We shall explain why below.

The law: The FEMM act I f y o u hav e ha d a n y contact with the Nigerian banking system, or plan to do so, you will have come across (or will soon come across) the term “authorised dealer.”Quite simply, an “authorised dealer” is a Nigerian bank that is licensed by the CBN to deal in foreign exchange under the provisions of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (Chapter F34) Laws of the Federation of Nigeria 2004 (“the FEMM Act”).

A little more (‘boring’ b u t n e c e s s a r y ! ) b a c kground.Section 1 of the FEMM Act Establishes the Nigeria Foreign Exchange Market (“the market”) where transactions in foreign exchange

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Foreign investors have no obligation under the FEMM Act, the Foreign Exchange Manual, or other relevant regulations to take steps to ‘verify’ that the CCI’s issued to them are genuine or valid, or that the authorised dealers have first complied with all the conditions stipulated by the CBN before issuing the CCI’s

,

enforceable contracts with third parties - all the time while acting as delegates of the CBN. And where power has been lawfully delegated it is for the delegate to act

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