BusinessDay 04 Sep 2019 by BusinessDay

Condemnation trails xenophobic attacks on Nigerians ... as fears of strain in Nigeria, SA relationship rise ...MTN, DSTV sue for peace … protesters lay siege on Shoprite outlets in Lagos Tony Ailemen & Innocent Odoh, Abuja, Temitayo Ayetoto, Lagos

ederal Government on Tuesday pleaded with Nigerians against carrying out retaliation against South Africans and

their interests in Nigeria over serial attacks on its citizens. But many fear escalated strain in the diplomatic relationship between the two countries going forward, despite the pleas. Nigeria’s Minister of Foreign

Affairs, Geoffrey Onyeama, after meeting with President Muhammmadu Buhari, ruled out reciprocal actions against the current attacks targeted at the lives and livelihoods of Nigerians living in South Africa, and huge destruction of

their property. The Foreign Affairs Minister stood on assurances by South African government to strengthen measures that would forestall any future attacks against Nigerians in South Africa.

“We don’t believe that two wrongs make right. I think in terms of revenge on those kind of attack is not what we are looking forward to, the South African government

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Influx into Lagos shows Nigerian states in precarious situation L-R: Oladeinde Nelson-Cole, acting company secretary; AbdulWasiu O. Sowami, chairman; Olumide Adeosun, chief executive officer, and Moshood Olajide, executive director, finance and risk management, at the 40th annual general meeting of Forte Oil plc, held yesterday at the Bespoke Event Centre, Lekki, Lagos.

Five things learnt from Nigeria’s disappointing Q2 GDP LOLADE AKINMURELE

sides needing to grow 7 percent in each of the third and fourth quarters of 2019 to attain the Federal Government’s

4.5 percent full-year target, there are four other implications of Nigeria’s disappointing second quarter GDP numbers. Nigeria faces impossible ERGP target after disappointing Q2

MARKETS Afr ica’s larg est e conomy slowed to 1.9 percent in the second quarter of 2019 from a revised 2.1 percent growth in the

first quarter, the state-statistics agency, National Bureau of Statistics (NBS), said Tuesday. The Q2 performance turned out worse than expected and

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… experts suggest creation of more viable economic hubs JOSHUA BASSEY & ISAAC ANYAOGU

he high influx into Lagos of young Nigerians escaping hardships from their original states of abode speaks to the urgency to create economic hubs that will drive development and create survival opportunities across Nigeria. In search of economic opportunities, some 123 young Nigerians from Jigawa State, with 48 motorcycles loaded in an open truck

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Inside

Unified Payments appoints new directors

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news Condemnation trails xenophobic attacks... Continued from page 1

has assured us that they are doing everything possible to address the situation; that they are equally exasperated by the whole event,” he told State House Correspondents after the meeting.

L-R: Segun Omidele, director, First Ally Asset Management; Felix Johnson, managing director, First Ally Asset Management; Biodun Arokodare, chairman, First Ally Asset Management; Bola Onadele, managing director/CEO, FMDQ Securities Exchange plc; Ebenezer Olufowose, group managing director, First Ally Capital, and Okey Nwuke, director, First Ally Asset Management, at the recent listing of the First Ally Asset Management Money Market Fund on FMDQ Securities Exchange plc.

Xenophobia: How SA scrubs off Nigeria’s contribution to apartheid fight from its history ISAAC ANYAOGU

fter every attack against black Africans in South Africa, Nigerians wonder how the country could forget its contributions in freeing it from apartheid. But in reality many young South Africans are unaware because their leaders have scrubbed off any mention of Nigeria’s support from their history. A recent visit to the Apartheid Museum in Johannesburg indicates just how pervasive this ignorance is. Since 2001, the Apartheid Museum offers an emotional insight into the period of state-sanctioned racism and segregation that lasted from 1948 to 1994, but nowhere did it mention contributions by Nigeria. The museum, which is one of Johannesburg’s must-visit

attractions, painstakingly documents the struggle of the South African people to overcome apartheid. It has 22 individual exhibition areas, all of which use a combination of artefacts, photographs, film footage and information panels to document the rise and fall of apartheid, giving visitors an idea of what it was like to live in South Africa at the time. The museum experience begins at the entrance, where guests are arbitrarily divided into “whites” and “non-whites” and made to enter through separate doors—indicating how people were grouped into four racial categories and treated accordingly. Four prominent themes inside the exhibition halls are “Apartheid,” “The Turn to Violence,” “The Homelands” and “The Truth and Reconciliation Commission.” The

first explores the social and political factors that led to the creation of the apartheid regime and features a list of apartheid laws as well as photographs of the forced relocations that took place under the Group Areas Act of 1950. “The Turn to Violence” documents the ANC and the PAC’s decision to form underground-armed wings in the wake of the Sharpeville Massacre in 1960. ‘The Turn to Violence,’ also captured support received by the ANC from African countries with pictures of military training in Tanzania and an entire wall devoted to Algerian support. Nelson Mandela co-founded the ANC’s military wing Umkhonto weSizwe in December 1961 after he found protests insufficient. He visited troops of the FLN in Morocco earlier in 1961 during a tour of Africa designed to establish Umk-

honto weSizwe as the armed wing of the African National Congress (ANC). When this reporter asked his tour guide, a highly cerebral corporate executive who was schooled in South Africa and the United States, why there was no mention of support from Nigeria, he said: “We have no official record of any support by Nigeria to the fight against apartheid.” This ignorance is so pervasive even among college professors and government officials. Museum officials, ranking South Africans and regular people, especially under 35 years, say they are unaware of any financial support given to the ANC by Nigeria. 65 percent of South Africans are between 15 and 65 years, and at least over half were born after 1994.

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Unified Payments appoints new directors

igeria’s premier payments and technology firm, UP (Unified Payments) has appointed three new directors to lead key Directorates in the company. The new directors are Isa Omagu – director, Marketing and Sales, Titilayo Olubiyi - director, Financial Institutions, and Ochanya Dan-Ugo – director/Group Chief Risk officer. The appointments, according to Agada Apochi, MD/ CEO of UP, are in line with UP’s growth strategy. Isa Omagu – director, Marketing and Sales Isa was a general manager in Guaranty Trust Bank and later chief operating officer of GLO Mobile Ghana. Isa who started his work career at Coopers & Lybrand, has also handled Senior Management roles at Equatorial Trust Bank, FSB Plc, NAL Bank

plc, and as a Non-Executive Director at Guaranty Trust Bank (Sierra Leone) Ltd. Isa holds an MBA from IESE Business School, Spain, Master of Development Finance from University of Stellenbosch, South Africa, and he is also an alumnus of Ahmadu Bello University, Zaria and University of Lagos where he bagged a BSC degree in Chemistry and MSC in Economics respectively. He has, in the course of his career, attended many courses in Ivy League institutions within and outside Nigeria. Ochanya Dan-Ugo – director/ Group Chief Risk Officer Until her latest appointment, Ochanya was the Chief Risk Officer (CRO) for UP, and prior to joining the company in 2005, she was a Chief Superintendent of Narcotics and a Principal Staff Officer, Records Management (Intelligence), National Drug Law Enforcement Agency. A www.businessday.ng

Isa Emmanuel Omagu Ochanya Dan-Ugo

Certified Risk and Compliance Management Professional (CRCMP), she has been serving as a member of Visa Risk Executive Council for the sub-Saharan Africa since 2012. Ochanya holds a Bachelor of Arts Degree from the University of Jos; Post Graduate Diploma, Education & a Post Graduate Degree in Humanitarian and Refugee Law from the University of Lagos. She has attended several notable trainings within and

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Titilayo Olubiyi

outside the country including American Bankers Association, School of Bank Card Management, Emory University, Atlanta USA, the Metropolitan School of Business and Management, United Kingdom, IESE Business School, Barcelona, and Lagos Business School, Nigeria. Titilayo Olubiyi – director, Financial Institutions Titilayo has over two decade hands on experience in Marketing, Sales, Channel management and General management.

Despite such a sentiment by the Nigerian government, an irate group of protesters late Tuesday laid sieged to the Shoprite outlets at Circle Mall, Jakande, Lekki, Lagos, in retaliation to the xenophobic attacks. The protesters practically disrupted regular flow of business, leading to the shutdown of the store, a video posted on Twitter by @TheViralTrends shows. There were signs of heavy smoke sprouting from possible burning of tires within the vicinity of the Mall. Earlier on Tuesday, a lady with the Twitter handle @MegRicketts staged a one man protest at the Shoprite outlet on Adeniran Ogunsanya, in Surulere, a suburb of Lagos, calling for an end to the killing of Nigerians. But there have been wide condemnations, following days of looting and attacks on foreign nationals and their businesses in Gauteng, South Africa this week. The allegedly co-ordinated attacks have seen residents going on the rampage, looting foreign-owned businesses in Tembisa, Alexandra, Hillbrow, Cleveland, Jeppestown, and the Johannesburg Central Business District since Sunday. The violence continued on Tuesday, spreading to other areas including Germiston on the East Rand. Videos posted on social media showed people pelting those described as “Nigerians” with stones and hounding them out of their hiding places as they pleaded for mercy. President Muhammadu Buhari, on Tuesday through his Special Adviser on Media and Publicity, Femi Adesina, expressed deep concerns over the reported attacks on Nigerian citizens and property in South Africa since August 29, 2019. Buhari also directed Onyeama to summon the South African High Commissioner to Nigeria to get a brief on the situation, express Nigeria’s displeasure over the treatment of her citizens, and also get assurance of the safety of their lives and property. The President also announced he was dispatching a Special Envoy to meet with the South African President Cyril Ramaphosa on Thursday. Onyeama said two key demands would be pursued by the envoy including; “the compensation payment and security mechanism to be put in place to forestall future attacks. “We need to have a viable mechanism in place. Like I have said one of the possibilities that we are proposing is to have some Nigerian security operatives working with the South African police and at-

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tached to the Nigerian High Commission in South Africa,” he added. Vice President Yemi Osinbajo, also condemned the attacks describing it as “careless and reckless.” “It is unfortunate because Nigeria and Nigerians invested a great deal in the pulling down of apartheid. Besides, these acts of bigotry are entirely contrary to the very ideals that all the great South African leaders, including the present President, fought for, and for which many gave their lives,” Osinbajo said while speaking from Kano. “Mr President has already spoken about this; and obviously we are very concerned and certainly intend to take this up with the authorities in South Africa in order to ensure that this sort of thing does not repeat itself. This is absolutely unacceptable and unconscionable.” The leading South African telecoms operator MTN also strongly condemned xenophobic attacks against Nigerians and other foreigners in South Africa after days of unrelenting mobs visited mayhem on immigrants there. “We strongly condemn prejudice and xenophobia and we reiterate our unequivocal condemnation of any and all violence. As a leading panAfrican telecommunications company with operations in 21 countries, MTN believes in the potential of an Africa whose nations pursue deeper trade, integration and co-operation. “We actively encourage the dialogue necessary to maintain peace and sustain strong relationships and urge all our customers and stakeholders to support and defend the principles of human rights, diversity and inclusion and an integrated collaborative Africa.” Pay television service giant, MultiChoice (owners of DSTV) also condemned the ongoing violence against foreign nationals in some South African cities, saying it is counter-productive to the efforts of African leaders and well-meaning organisations to unite the African continent. MultiChoice made its position known in a statement issued in Lagos yesterday. Signed by John Ugbe, Chief Executive Officer, the statement said: “We advocate equality and condemn all forms of discrimination. The ongoing violence in South Africa against foreign nationals is against the spirit of Africa and counterproductive to the decades of work done by African leaders and well-meaning organisations to unite the continent.” O n Monday evening, ANC secretary-general, Ace Magashule called for peace and stability, saying: “We condemn this violence irrespective of whatever reasons people want to give.”

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Food security and Agrijournalism SMALL BUSINESS HANDBOOK

EMEKA OSUJI

he Centre for Leadership in Journalism (CLIEJ) of the Pan-Atlantic University (PAU) has been at the forefront of the promotion of agricultural journalism in Nigeria. Its recent seminar for journalists across the country who cover the agriculture sector has shed light on some of the key issues in the fight for food security in Nigeria. The country is without doubt under pressure to feed her citizens and efforts are being made at different levels of government to achieve food security. Some states even have commodities branded in their names. Anambra rice is one such example of a state trying to positively impact rice production within its borders. However, the impact of these efforts is yet to significantly reduce the threat of food insecurity in Nigeria. The practice of farming, which includes the cultivation of the land, rearing of animals and other products, has been man’s preoccupation since he began a settled life and changed from being a hunter. The history of the economic development of nations is strewn with stories of how agriculture acted

as the pivotal industry in driving industrial revolution. No country has effectively developed without a rise in its agricultural production, preceding or following its development. This is so because food security is an element of state power. A well-fed nation can then take on the world. The role of agriculture in development is varied. It not only provides food for the population but also serves to provide employment. It is said that approximately 70 per cent of the population of Nigeria is engaged in the agricultural sector, most are engaged in small and subsistence activities. In addition, agriculture provides a basis for industrial activity. A steady and reliable supply of raw materials from its many colonies was an essential ingredient of the Industrial Revolution in Britain. Agriculture also serves as a source of national revenue. According to some statistics, the contribution of agriculture in Nigeria has fluctuated over time but reached 40 per cent of the Gross Domestic Product in 2012. It however declined to about 20.8 per cent in 2017, and probably much lower currently as insurgency and banditry prevent meaningful agricultural activity especially in the rural areas. Agriculture employs a large proportion of the country’s population. It is the largest economic activity in the rural area where over 50 percent of Nigerians live. The importance of agriculture to the economy highlights the importance of communication – among farmers and between farmers and with other stakeholders. The media

has been a vital agent in the development of agriculture since the first newspaper appeared in Europe in the 17th century. Some countries have been upfront in using the media to advance agricultural activity. In India, the first agricultural periodical appeared as early as 1837, under the name of Transaction of the Agricultural and horticultural Society of India. Today there are over 50 radio stations with heavy focus on agriculture in that country. The media is an enabler, both in the agricultural and other fields of human endeavour. Information on modern research output is communicated through the media to the farmers. They promote the adoption of modern agricultural practices and propagate information on new technology. Sadly, many countries do not realize the role of the media in promoting agriculture. Agrijournalism, which is the collection, processing and disseminating, in a timely manner, useful information on agriculture, is not yet well established in Nigeria. We are yet to see newspapers, radio stations or television stations fully dedicated to agriculture. Even the requisite skill set for effective agrijournalism is not there yet. To be effective in “Reporting Agriculture as a Business,” which was the theme of the recent workshop organized by CLIJ at PAU, the reporter must have the necessary understanding of the agricultural sector. It is a specialised sector of the mainstream journalism profession that requires its own skill set. It is commendable that CLIJ is driving this process of developing

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To report agriculture as a business means that we must change our view of it, from mere food producer to reflect the real value of agriculture. It means that we should report agriculture with a view to creating wealth for all its stakeholders Poverty reduction, food security and the essence of Agrijournalism

Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emekaosujii

Nigeria faces an impending debt crisis, you should be worried

uch ado has been made about an impending global economic crisis, as the major economies of the world continue to falter amid increasingly tense economic relations between the US and China. Less attention has been paid to the impending economic crisis in Nigeria. There is no gainsaying that the Nigerian economy is yet to fully recover from its 2016 recession. The lingering impacts of the slump in global oil prices in 2015 and the subsequent failure to address structural issues in the macroeconomy continue to ensure that the nation remains highly susceptible to fluctuations in the global economy. Furthermore, structural and policy challenges, particularly the nation’s large infrastructure gap, governance and institutional weaknesses and continued foreign exchange restrictions also continue to dampen long-term economic outlook. None of these are unlikely, however, to trigger the impending economic crisis, but its growing public debt levels. Following the aforementioned oil price crash which decimated Nigeria’s revenues, the government resorted to incurring debt to make up for its revenue shortfalls and finance its expenditure. Since assuming office in 2015, President Buhari’s administration has added considerably to the nation’s debt stock, which is now over $80 billion. Taking up debt is not bad, particularly when it remains within acceptable limits and used to finance economically viable infrastructure, but Nigeria’s current debt profile leaves much to be desired. To get a clear picture of the situation, it is

essential to go back in time to examine the nation’s history with public debt. Prior to 2005 when Nigeria benefited from massive debt relief as part of a programme coordinated by international finance institutions, Nigeria was Africa’s most indebted nation with $36 billion in external debt. Calls by local and international organisations for debt relief for the nation had gone largely ignored due to flagrant corruption and human rights abuses prevalent under the country’s military dictatorships. After years of lobbying, the Obasanjo administration in October 2005 was able to secure debt relief worth $18 billion and an overall reduction of Nigeria’s debt stock by $30 billion. Following the debt relief, the long-term challenge for Nigeria was to consolidate the gains from the debt deal by pushing forward with economic reform and ensure long term debt sustainability. Sadly, Nigeria has been unable to live up to this challenge as less than 15 years after the debt relief, the nation is back where it started with no tangible economic progress to justify its huge debt levels. The authorities’ supporting argument for incurring such debt is that the nation’s debts remain within acceptable limit based on the debt-to-GDP metric. Based on this measure, it would be easy to conclude that there is no cause for alarm as Nigeria’s debt stands at 20 percent of GDP which is lower than the internationally defined threshold for Nigeria’s peer group. Unfortunately, the debt-to-GDP ratio is not the most appropriate indicator for a

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country like Nigeria. Instead, the debt-torevenue ratio and the share of debt service as a proportion of revenue are better indicators as they reflect the country’s realities. Neither of these two indicators paints a good picture of Nigeria. With the nation’s debt stock valued at N25 trillion and N3.96 trillion in revenue as collated from the CBN in 2018, Nigeria’s total debt-to-revenue ratio stands at approximately 600 percent against an international recommended threshold of 250 percent. To put this in context, the Eurozone debt crisis was precipitated by similar debt-to-revenue ratios. Furthermore, the debt service to revenue ratio for the year 2018 stands at almost 66 percent, a figure almost three times the recommended threshold for Nigeria’s peer group. In clearer terms, this implies that for every naira the government generated as income in 2018, more than 60 kobo went to servicing the nation’s debt, leaving little to build badly needed infrastructure and fulfil other obligations. In absolute terms, Nigeria spent N2.2 trillion in servicing outstanding loans in 2018 compared to N1.68 trillion on infrastructure, according to data released by the CBN. The official rhetoric is that the government deliberately grew the country’s debt profile in order to foster a stronger economy by funding capital projects. However, this is only partially true. While it is incontrovertible that debt has been incurred to fund capital expenditure, significant portions of the incurred debt have also been used to

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a crop of Nigerian journalists to fill this lacuna. To report agriculture as a business means that we must change our view of it, from mere food producer to reflect the real value of agriculture. It means that we should report agriculture with a view to creating wealth for all its stakeholders by highlighting the business opportunities in it. This implies that reporters should move agriculture news from its present sideline position to headline news. Most news on agriculture are reported as subtopics and tucked away on the sidelines. It definitely requires the reporter to understand properly the agriculture value chain. The term value chain describes the full range of value-adding activities required to bring a product or service through the different phases of production, including procurement of raw materials and other inputs to the consumer. An effective Agrijournalist must understand the links in the agriculture value chain to be able to properly expose the inherent opportunities in the chain, to both farmers and investors. The role of the journalist is to link farmers to best practices in the field and connect them to markets. It also includes linking them to financiers and technology. Provision of timely information on the weather, soil, seeds and chemicals, including sources of effective pesticides and fertilizers, enhance the possibility of turning agriculture into real money-making business.

OLANREWAJU RUFAI fund recurrent expenditure, in particular civil servants’ salaries. Therefore, not only do the debt-to-revenue and debt service to revenue ratios ring alarm bells, it is apparent that these debts are not being used to fund economically viable projects. The nature of the debts even gives additional cause for concern. While most developing countries take advantage of concessionary financing from international finance institutions, Nigeria’s debt profile is now increasingly made up of commercial debt, a situation which makes the Nigerian economy especially vulnerable to external shocks, such as a sustained drop in oil prices. All of these do not paint a good picture of the economic future of Nigeria. The nation is currently expending bulk of its revenues on debt servicing, thereby leaving nothing for infrastructure development which in turn leads to the government taking on more debt to fund projects. Furthermore, the International Monetary Fund (IMF) estimates that if left unchecked, debt could rise to almost 36 percent of GDP by 2024 and interest payments could make up 74 percent of revenue. This does not bode well for the future of the nation and we only need to look at countries like Venezuela, Greece, and Zimbabwe to see how dangerous a public debt crisis can be. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Twitter - @LanreRufai_

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COMMENT Yes, we need a nudge

CHARACTER MATTERS WITH DAPS

DAPO AKANDE

hen placing people in a situation where they need to make a choice from an array of options it’s often wise and beneficial to offer a default mode among those options. The purpose of this is to subtly nudge people in the direction you desire them to go without taking away their right to freely choose one’s choice. Statistics have shown that more times than not, there’s a tendency for people to settle for the default mode as it puts less of a demand on them to think. The more choices you provide, the more you’re taxing them to weigh multiple options as they rack their brains to assess the pros and cons of each. As much as we all love the idea of being given as many choices as possible so we can make the best decision, in reality, too many options quickly exasperate us. Like Richard Thaler insightfully pointed out in Nudge, a book he co-authored with Cass Sunstein. There is a tendency for people to believe there’s an implicit endorsement of the default option by the default setter. This often leads them to leave it as it is. Why? So as not to risk losing out on any potential benefit. The decisions we make as human beings on a daily basis are often subconsciously driven by our aversion to incurring loss, hence the need to be safe. Instead of the government giving

commands which often trigger resistance from people, it is smarter to simply nudge us in the right direction. This is particularly pertinent in a society where every move of those in authority is viewed with suspicion, especially when the move appears on the surface to be beneficial to the public. Subtle and not so subtle manipulation of the people for selfish interests over the years has made us all cynical. The average man believes the primary goal of anyone lucky enough to find himself in public office is to serve his interest fully as such an opportunity may only present itself once in a lifetime. Only when he has gorged himself to the point of vomiting will he then turn his attention to the public’s interest. By cleverly utilising a harmless looking nudge, we’re far more likely to “comply” with a smile on our face - proud of ourselves that we did the right thing on our own volition. . A strategy Lee Kuan Yew learned to use. Nudge enough people in the right direction; once you have a critical mass, you can then enact a law to whip the recalcitrant few into line. To this end, no one will bat an eyelid. It makes for a happier and more peaceful society when people feel pleased with themselves for “voluntarily” doing the right thing than when there’s a pervasive atmosphere of coercion. The long term results are often poles apart. I recall my secondary school days in Oxfordshire where there was a boy who just refused to behave – he wasn’t a bad person – but he just didn’t see the need to behave responsibly. Okay, I’ll admit here that we were a unique group of boys in that class. We had such a penchant to be naughty. The teachers loved us for our prodigious talent in diverse fields and for our unmistakable self-

assurance. But we were so naughty that the headmaster instructed us not to sit with other students during meal times “so not to contaminate others”. And yes, though I later became a Prefect, I was still one of the naughty ones. I won’t lie. Anyway, George Howarth, just defied all attempts by the teachers to crack. Thinking of new punishments had become a headache and a punishment for the teachers themselves. The punisher had become the punishee as the intended target appeared not to feel a thing. So the teachers came up with a strategy. They made him the class captain. A masterstroke. A responsibility, a sense of ownership and a boost to self-esteem succeeded where countless lashes of the cane had failed. He became a different person almost overnight; a model citizen. From that moment on he did all he needed to do to live up to his new responsibilities. He had no intention of letting the teachers down. He had no intention of letting himself down. Which sane man burns his house? ? Nigerians can be nudged to become more patriotic if given reasons to be so. Treat them well, provide the amenities for which they voted for you , do all to make life meaningful and push for equal distribution of resources, make them feel they matter. , These will work wonders where force has failed. You cannot compel people to love their country enough to safeguard its collective interest. To do that, they must see it as their duty and obligation to do so. A sense of ownership in the Nigerian project must be evoked within them otherwise selfish interest will continue to have the day. You must get them to the point where

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Nigerians can be nudged to become more patriotic if given reasons to be so. Treat them well, provide the amenities for which they voted for you , do all to make life meaningful and push for equal distribution of resources, make them feel they matter

they regard letting their country down as letting themselves down. By putting adequate infrastructure in place and implementing much needed social reforms, Nigerians can be nudged into pay their taxes. Providing the right facilities (accompanied by a good media campaign), they’re more likely to place a premium on keeping their environment clean. Retraining and reforming, making good provision for police welfare, they’re less likely to use the people as their alternative source of income. All of this, and more, will propel an average Nigerian to treat his country with dignity and respect. Following revelations of Nigerians in the US arrested by the FBI for advance fee fraud and cybercrime has got people to speak up more about the desperate need to rediscover or perhaps upgrade our value system. When I read on social media the comments of some of our youths who try to equate obvious criminal activity to entrepreneurship, it sickens and saddens me deeply. “It’s their hustle” they say. Such shameless support of crime is reflective of just far we’ve sunk as a society. But then, have ruling political parties in the last 20 years not made it the norm to treat financial crime perpetrated by their members as a “family affair”? The common man simply follows their lead that crime pays, if you can get away with it. We need a nudge to be better. Results don’t change until people change. Changing the nation...one mind at a time. Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

Where Power Stops, by David Runciman

ate in this book of biographical essays, David Runciman discusses how Barack Obama took consolation from the thought that each of us is but a blip in human history. Runciman finds this “a little disappointing”. I would go further — it is a devastating thought that even a man bestowed with such gifts as the former US president might search world history for comfort in his own triviality. What was it all for? It is also a well-chosen insight in a book full of them, and captures nicely its overall theme: what gnaws at those at the top are not the bad decisions but a stifling sense of impotence. As US President Harry Truman said of his successor, Dwight Eisenhower: “He’ll sit here, and he’ll say, ‘Do this! Do that!’ And nothing will happen.” In Runciman’s words: “the power they had imagined was illusory”. As a recently departed adviser in Downing Street, these words cut deep. When I took the job, a former colleague teased me about the lack of levers I would have to pull. I spent two years learning what he meant: outside of war, no politician can just order their policies into existence. There are layers of people, laws, money and custom to wade through before anything starts to change. When you take power, you think the point is to have smart ideas; when you leave, all your praise is for the rare officials

who just know how to get things done. So I picked up the book eager, like Mr Obama, for some comforting perspective on failure. Standing above all is the question of character. With a 10,000-year stare, maybe politics can be subsumed into massive impersonal forces but, up close, it is all about personality. This is why political biographies are so avidly read — to find the character flaws behind the events of the day. Runciman, a professor of politics at Cambridge university with a popular podcast, has read and reviewed many himself. Ranging across leaders from Lyndon Johnson to Donald Trump, he gnaws away at the theory of character as destiny. His book is relentlessly iconoclastic, determined to puncture myths about its subjects’ characters. For example, former British prime minister Margaret Thatcher, far from the unswerving possessor of timeless principles, was made of rather supple stuff, as shown by how quickly she ditched monetarism in the face of a spiralling recession. The lady who claimed she was “not for turning” in fact wobbled between fear of the inflationary disease on one side, and hatred for the high interest rate medicine on the other. Frequently, our political leaders are found to be in denial about their own virtues. Tony Blair kids himself that he

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achieved a mastery of delivery in government; the cerebral Gordon Brown, that being bad at Twitter cost him popularity. Even the virtues themselves are doublesided. The legendary intelligence of Bill Clinton led him into pointless explorations of energy deregulation or the minutiae of Israeli elections. Mr Obama’s coolness under pressure morphs into a world-weary acceptance of defeat in the face of a rising populist tide. Ultimately, the book fails as a dissection of impotence. The author is an unforgiving critic — there are no heroes in these pages — but nevertheless does not display enough failure to sustain a theory. Between LBJ and Mr Obama, Harold Wilson and David Cameron, we saw the civil rights act, the defeat of inflation, the privatisation revolution, a doubling of spending on the UK’s National Health Service, a Great Depression averted and Osama bin Laden dispatched. This was not all dumb luck. One might pick any number of lenses through which to view the personalities involved, but “people who could not get things done” would be an odd choice. But this is a niggle in what is otherwise a fantastic read. Furthermore, readers have the benefit of hindsight to judge essays that were written over 10 years. Our standards have shifted in that time. Now, the impotence these politicians felt looks more

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GILES WILKES

like a noble failure of high expectations. The people in these pages, until the last chapter, were mostly trying to do the right thing, and sometimes they succeeded. By the standards of today, facing a pointlessly ruinous Brexit on one side of the Atlantic and a needless trade war on the other, that is pretty good. FT

Wednesday 04 September 2019

BUSINESS DAY

EDITORIAL The cost of traffic gridlock in Lagos metropolis PUBLISHER/CEO

Frank Aigbogun EDITOR Patrick Atuanya

DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

recent study indicates that at least three of every ten years spent in Lagos is lost to traffic. It means Lagosians spend an average of seven hours 20 minutes in traffic every day. The long hours spent daily in traffic with its attendant economic as well as health, emotional and relational costs is colossal. For a potential megacity and the economic hub of the country it shows the incapacity and lack of visionary leadership, despite media campaigns and allusions to the contrary. Lagos is the commercial, economic, as well as financial capital of Nigeria accounting for over 50 percent of Nigeria’s industrial and commercial establishments, as well as 70 percent of manufacturing activities. In addition, it has the most active stock exchange in West Africa; its four ports collectively handle about 75 and 90 percent of the country’s

imports and non-oil exports by weight respectively. Even more, its international airport handles about 80 percent of airborne exports and imports and 80 percent of passenger movements in and out of the country. The state’s population has continued to grow rapidly – put at between six to eight percent per annum – and is a dragnet for school leavers and other economic migrants from other parts of the country. It is projected that the population of the city will grow to 36 million by 2020. Despite its huge population and importance, road is the city’s most common and available means of transport. Rail and water transportation are relatively under-developed in Lagos. Years of military rule, underinvestment and poor maintenance of existing transport infrastructure has seen Lagos lag behind other major cities in the utilisation of efficient public transportation system such as urban rail system and modern high capacity buses.

As at 2006, it was estimated that the city’s transport infrastructure and services were at levels that supported a population of six million some 20 years ago. In 2006, the government developed a transport master plan to integrate road, water, rail, and cable-car transport to provide one of the most efficient systems of transportation in a megacity. Shortly after, in 2008, the Bus Rapid Transit (BRT) was launched as a stop-gap measure while seven train lines were planned to link all parts of the states and even Ogun state with light rail. However, due to paucity of funds, only the contract for the blue line (the 27-kilometre Badagry line running from Okokomaiko to Marina via Iddo) was awarded at the colossal cost of $1.2 billion (compared to similar projects in other parts of Africa awarded for just a fraction of that amount) to be completed in 2011. It was projected others will be awarded subsequently and the entire master plan will be completed in 2020.

The absence of a modern transport infrastructure in Lagos and the consequent heavy traffic gridlocks on the roads comes with huge costs to the city and its inhabitants, the state, the country and the economy. Sometime in 2015, the governor revealed that the state loses over N250 billion to traffic annually. This is besides the billions of naira lost to businesses and families daily due to the excruciating traffic jam; commuters spend four or more hours in a 30 minute journey. The economic, health, emotional and relational cost of traffic in Lagos is unacceptable. Worse is when the state allows the few roads to deteriorate without repair or fails to maintain law and order on the roads. While we clamour for the development of other means of transportation, we call on the government to learn to efficiently manage the few roads and infrastructure available to ease the suffering on hapless Lagosians.

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Wednesday 04 September 2019

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Our leaders: Beware the Ides of March!

FRANKLIN NGWU

issatisfied with his governance style including the fear of overthrow of the Roman Republic to establish a monarchy, Roman senators led by Marcus Brutus, Decimus Brutus and Cassius Longinus conspired and killed Julius Caesar on the 15th of March 44BC. Interestingly, a soothsayer had forewarned Caesar based on observations and deductions of actions and inactions of Caesar and other Roman leaders of their time. While it is about 2063 years that Caesar was killed and we do not wish, pray or support any killing or violent approach, it is important that our leaders pay utmost attention to demands and expectations of the citizenry as things are really falling apart. Five recent developments further affirm my fear that there is increasing local and international dissatisfaction with the governance of Nigeria. First is the increasing insecurity situation in the country that is now receiving condemnation even from ardent supporters of government. Second is the attack on Senator Ike Ekweremadu in Nuremberg Germany and the threats of more attacks and protests within and outside Nigeria. The third is the Process and Industrial Development Limited (P & ID) contract that has resulted in a $9.6 billion fine. The fourth is the retaliatory increase in visa fees by the US. The fifth is the preference

of Ghana to Nigeria by Toyota to set up their $180 million car production plant. Without a doubt, all the above and many more can be directly attributed to deep and increasing failures of leadership not only at the federal level but also at the state, local and other levels. While there is no doubt that the federal government controls the security agencies, the fact remains that every state governor can significantly increase or reduce the insecurity situation in his state through his actions or inactions. Kebbi state is relatively peaceful and in the same region as Zamfara, Katsina, Yobe, Bornu and other ravaged states. The question is, what is Abubakar Bagudu is doing that other northern governors are not doing? For instance, why didn’t other northern states make about N150 billion from rice or other crops in 2017 as Kebbi did? While almost all the states in Nigeria continue to complain about lack of funds, the truth is that most of them are not thinking for their states. They lack innovation and genuine interest in the development of their states. Are our governors aware that each state can annually generate over N200 billion just from planting and maintaining cash crops such as coconut, orange, avocado and palm trees? It is that simple. In 2017, Netherlands a country of about 17 million people exported potatoes worth about N792 billion ($2.2billion), while Plateau state with the best comparative advantage to produce potato in Nigeria is struggling. With an average global price of about $200 per metric ton, it means that Plateau state can generate over $100 million from potato alone every year if it can produce up to 500,000 metric tons. While $100 million is about N36 billion, the total internal

‘

Our leaders should ask themselves why Toyota chose Ghana, a market of about 30 million people, for its car plant rather than Nigeria, a market of 200 million people

generated revenue of all the six North Central states in 2018 was about N53billion. In the same vein, while we all condemn the attack on Senator Ike Ekweremmadu, South East leaders especially our governors should note that the youths are angry due to pervasive poverty, unemployment and insecurity caused by poor leadership and governance. With the absence of genuine and committed leadership, Nnamdi Kanu emerged to fill the vacuum and as a result, the increasing popularity and influence of IPOB. While the state capitals of five states in the South East should be about an hour drive from each other, they remain limitedly connected due to bad roads. Given the small land area of the South East, there is no reason why the region should not be adequately connected to open up the region for economic prosperity and growth. Imagine if all the five governors can purchase and dedicate fifty bulldozers for inter and intra-state expansion of agricultural access roads. This will help in turning the forests to farmlands. It is a better way of addressing insecurity than the ineffective employment of idle youths as forest guards and the use of a deceptive phrase that ‘Enugu State is in the Hands of God’ as currently preached in Enugu state. How do you explain that we are now demanded to pay a fine of $9.6bn for a contract yet to be executed? Due to inept leadership the fine has increased from about $800 million in 2015 to $9.6bn in 2019. This is also the case with the US visa fees that we had 18 months to settle. Moreover, on what basis are we increasing fees for Americans? How many of them come to Nigeria as compared to Nigerians trooping to America.

Our leaders should ask themselves why Toyota chose Ghana, a market of about 30 million people, for its car plant rather than Nigeria, a market of 200 million people. With this development and the selection of Ghana as the headquarters AfCFTA and Africa’s aviation hub, is it not clear that we are ready for and thus will be disadvantaged under AfCFTA. While the turn of events might be surprising to PMB, governors and the governments, to many Nigerians it is not. Nigerians who warned them for four years just as they warned PDP for sixteen years with their cries, hardship, insecurity, joblessness, unprovoked killings and destruction of property. We are now the poverty capital of the world with about 91 million Nigerians living in extreme poverty. It should not be glossed over, rather, it should alarm us and trigger concerted short, medium and long term commitment and actions of the federal, state and local governments. That about 21 million Nigerians, our brothers and sisters are unemployed is a very serious issue that should not be treated with levity. Those are the voices of the people that must be heard and genuinely addressed for any party or government to remain in power. No amount of accusation and counter-accusation will save any party or government for long. Nigeria is at a tipping point and our leaders should beware the Ides of March!

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mailfngwu@lbs.edu.ng,

How does Kagame do it?

ith 12 million people, barely $2 billion in total annual government revenues, not much more than a billion dollars annually available for capital expenditure, and a per capita GDP below $800, it’s quite easy to see that Rwanda is a decidedly low income country; with significantly constrained public sector resources available for development. Yet, this small, landlocked, densely populated country, located as it is in an incredibly challenging geopolitical postcode has managed over the past 25 years to triple per capita income, achieving “high growth (which) has raised income levels and reduced poverty, (although) incomes and labor skills are still catching up to peers,” according to IMF’s latest review of the country’s economic performance.. By any measure (and despite some valid criticism of its statistical methods), a historically important economic miracle has been pulled off in Rwanda since the horrific its crisis in 1994– average annual public and private sector investment levels consistently higher than 20 percent of GDP per annum points to one of the more important sources of that growth. Much energy has been expended in examining the political model that produces these outcomes (a very important area for consideration, and long may it continue), but that vital debate need not detain us today. My particular area of interest and

expertise is in exploring the principles of economic governance that made these kinds of development outcomes possible. Financing large infrastructure projects in Rwanda (Africa Finance Corporation has funded a power plant that is nearing completion, and we are now working on a new airport for the future) provides a vantage point from which to observe the approaches and principles that drive economic development and attract investment into the country. How does Kagame do it? This is without a doubt, a deceptively simple question that is impossible to answer comprehensively in any kind of summary manner. Keeping aside the question of politics and state security (areas with evidently very little room for compromise), some common themes are easy to observe. The first is a systematic approach to attacking development problems. It is impossible to overstate the importance of this seemingly innocuous original step. In the area of public infrastructure delivery in Africa, there are quite simply, no simple problems. Taking the time upfront to scope out the multiplicity of interconnected factors that prevent or delay success in the implementation of a project (or a series of projects in any sector) is invaluable best practice. Often, a comprehensive and well-documented technical, commercial, legal and regulatory assessment will be the most proper instrument for achieving this.

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Next, for each developmental challenge or objective, a carefully thought-through institutional framework is conceived of, with all the required parties for a solution mapped out. In practice, this will often lead to the creation and promulgation (or more often, when they exist already, restructuring and amendment) of appropriate institutions and legislation required for an effective intervention by the state. Extensive consultation with private sector, donor and development partners will also take place at this point in time. Finally, it will not be unusual to observe that incredibly smart, typically quite young and very often female, citizens have been identified, recruited, trained and handed sufficient responsibility for driving the desired solution, within the context of an already well laid-out framework. From here on, development tends to take on a life of its own. The results are clear to see: remarkable public sector accomplishments and large private investments in the areas of education, technology, healthcare, tourism, manufacturing as well as infrastructure, combining to deliver the enviable and much-talked-about economic growth and poverty reduction. More can be done evidently (this is still a poor country, with up to 40 percent of the population living below the poverty line according to some of the more critical, non-government analyses). And Rwanda is a small country with a peculiar history

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of its own, so caution is always necessary in reading results across to other African countries. Critically, a major area of concern is in the area of sustainability, and the extent to which outcomes depend entirely on the currently applicable political system and leadership. But if our objective is to learn from economic development everywhere we encounter it, then there is a great deal of pedagogic value that must be taken from the work that has been done in Rwanda. Some ambitious ideas for infrastructure development lie in the future of Rwanda. In particular, establishing communication by rail with important regional trading locations, and ultimately with a deep-water seaport on the coast would be a transformative development for the country’s economy. Already, the same energy and discipline that I have tried to describe above is being applied to this challenge, and with a lot of luck, more successes lie ahead. Fagbule, is Senior Vice President, Africa Finance Corporation. His Twitter handle is @folafagbule

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Wednesday 04 September 2019

BUSINESS DAY

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Brazil, Egypt point way for Nigeria to spur agribusinesses growth Stories by JOSEPHINE OKOJIE

or Nig er ia to dr ive sustainable growth in its various agricultural value chains and create millions of jobs, experts say the country must adopt the Brazilian coffee and Egyptian cotton models. The experts say that the country must capture more value for the production of its various agricultural commodities by promoting local consumption and enforcing quality. The experts who spoke at the First Bank 2019 Agric Expo with the theme ‘Agricultural Value Chain: Spotlighting Opportunities and Managing Risks’ say with more concentration of investments in the higher value chains the country will be able to hedge against price volatility and generate employment. “We ne e d to adopt the Brazilian coffee model and the Egyptian cotton model to grow our agricultural commodity value chains. We need to create markets that can sustain the industry for decades,” Babaunde S h o d i p e, s e n i o r m a n a g e rexport development financing, African Export-Import Bank (Afreximbank), said in his keynote address. “The government and the private sector should learn how Brazil grew its coffee production by stimulating local demand for the product and value addition,” Shodipe who represented Bernard Oramah, president and chairman Afreximbank.

Emmanuel Ijewere, vice president, Nigeria Agribusiness Group; Gbenga Shobo, deputy managing director, First Bank of Nigeria Limited; Sabo Nanono Minister, Federal Ministry of Agriculture and Rural Development; Adesola Adeduntan, chief executive officer, First Bank of Nigeria Limited; Uche Nwankwo, executive director, Wilbahi Investments Limited and Abdullahi Ibrahim, executive director - public sector group, First Bank of Nigeria Limited at the third annual FirstBank Agric Expo held recently in Lagos.

He noted that more value is captured in the value chains that are closer to the consumers, saying that processing to retailing accounts for 80 percent of the entire profits in the agricultural sector. Brazil was able to grow its coffee production by targeting consumers that were not taking coffee. Brazil educated her citizenry of the health benefits in the consumption of the crop and introduced it to the public schools across the country. The initiative, which was championed by the Brazil’s Coffee Association, spurred local consumption of coffee while also boosting production. To d ay , B raz i l i s t h e to p

global coffee producer and with processing of the commodity and local consumption the country is able to hedge against price volatility of the crop. Brazil’s coffee boom is posing huge challenges for coffee farmers in other countries. T h e e x p e r t s s ay Ni g e r i a can adopt the model to drive cocoa and other commodities consumption in which the country has a comparative advantage by introducing it into the school feeding programme. This they say will stimulate local consumption and investments in value addition as well as hedging farmers against cocoa price volatility. The Egyptian cotton has the

‘Farmers must increase fertiliser usage to attain food security’

n expert has said that increasing Nigeria’s food production in a sustainable way would be possible only with a balanced and rational use of fertilisers by farmers. Caleb Usoh, countr y manager, OCP Africa said this during his participation at the just concluded African Farming Second Edition Agribusiness Summit held in Abuja. Usoh said there was a need to boost food production to keep up with the country’s rapidly growing population. As part of the broader OCP Africa vision, he said there was a plan to help Nigeria reach self-sufficiency in fertiliser production. To do so, he said OCP Africa planned $1 billion i nv e s t m e nt s t o b o l s t e r Nigeria’s fertiliser production capacity. He said the plant would

also ensure a decrease in Nigeria’s imports of NPK fertilisers, which is a combination of the three macronutrients: Nitrogen, phosphorus, and potassium. Through the plants, he said OCP Africa had set ambitious goals to reach more farmers in the country. He noted that farmers would be trained in modern agricultural techniques to drive up yearly output. He added that the fertiliser giant has initiated a number of projects that have massively upgraded the farmers’ practice in terms of sustainable agriculture and food security. In its bid to work handin-hand with farmers and contribute in the unlocking Africa’s vast agricultural potentials, Usoh said the company launched its ‘Agribooster Offer’ aimed www.businessday.ng

at boosting food production in the country. The ‘Agribooster Offer’ initiative for food crops provides farmers with support for every aspect of the agricultural value chain. Through this OCP Africa connects farmers to financing and insurance, working with local extension agents to train them on proper fertiliser use, collaborating with other providers to ensure they have the right fertilizers and other inputs. OCP Group, which holds 75 percent of the world’s phosphate reserves, is one of the leading exporters and producers of raw phosphate, phosphate-based fertilizers, and phosphoric acid in the world. The company develops precision agriculture techniques to help farmers improve the quality and yields of their crops.

reputation of being one of the most luxurious cotton globally, making its premium high. The experts attributed this to the creation of standards and enforcement of quality by the Egyptian government for its cotton. “Nigeria must create value addition that is about quality and standards which must be met and maintained by key actors. Without quality, our produce cannot compete and get a fair price,” Shodipe said. Also speaking at the event, Adesola Adeduntan, CEO of First Bank of Nigeria Plc, identified policy flip-flop and low understanding of the sector by the banking industry as some of the

risks associated with financing the sector. “We have found out that policy has not been sustained because the support for agriculture is not short-term but long-term and this becomes a challenge when the policies are not sustained,” Adeduntan said. He said that agricultural financing has been and still remains a core part business of First Bank, adding that the bank has supported 118 projects out of the total 509 projects supported by all banks put together in the country under the Commercial A g r i c u l tu re C re d i t S c h e m e (CACS). “We are als o supp or ting re s e a rc h a n d d e v e l o p m e nt through the endowment of professorial chairs in Agriculture in some Nigerian Universities. We have als o provide d infrastructure to support learning and development in Agriculture and associated fields in Nigerian universities,” he said. Mohammed Sabo Nanono, Minister of Agriculture and Rural Development, in his goodwill message said that the country cannot grow its agricultural value chains sustainably without reviving the agro-allied industries. Nanono added that development in the sector cannot be done without investments in research. This he stated that his administration intends to change in the next four years. “We cannot develop agriculture if the research institutes are not adequately funded. This is what I intend to change as the minister of agric,” he said.

Nigerians can tackle malnutrition with regular fruit juice intake – Dietician

lusola Malomo, a food and nutrition expert with the Lagos State Government, has said that regular intake of fruit juice can end micronutrient deficiency in the country. He says that the shortage of micronutrients in diets is as life-threatening as common health challenges. Malomo said this at the August edition of his healthy living dialogue, a programme supported by Chi Limited as part of its ‘no-added sugar’ campaign, which kicked started last year. He note d that fr uit juice contains essential micronutrients, which are deficient in most foods consumed especially by u rba n d w e l l e rs, say i ng absence of such nutrients could incapacitate human system and lead to serious health challenges. “Fruit juice contains

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a combination of macronutrients, micronutrients, phytonutrients and minerals. An array of micronutrients found in fruit juice contributes immensely to the ability of the body to fight free radicals and maintain a healthy status,” he said. “As a result, micronutrient deficiency poses equal, if not more serious, challenge as deficienc y in macro nutrients,” he further said. He classified fruit juice product to not-fromc o n c e nt rat e a n d f ro m concentrate category, stressing that 100 percent fruit juice is as good as whole fruit. The expert was reacting to what he called wrong perception that no juice is as healthy or nutritious as whole fruit. Speaking on the ‘science of fruit juice’, he said “the ripe fruit is harvested and goes @Businessdayng

straight to the factory where it is then washed, squeezed and rapidly pasteurised before it is then packaged. This is a typical process of fruit juice processing”. The nutritionist clarified some distinction between fruit juice ‘not f ro m c o n c e n t ra t e’ a n d ‘from concentrates’ saying fruit juice processed from concentrate only takes a few more stages. “ L i ke i n t h e ca s e o f Chivita, the fruit juice is packed using aseptic method to help protect its natural nutrients and quality without the use of any preservative,” he explained. The Chivita ‘no-added s u ga r ’ ca mp a ig n s e e k s to support the sharing of unbiased information on the relevance and nutritional value of 100 percent fruit juice by independent efforts of experts.

Wednesday 04 September 2019

BUSINESS DAY

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Hibiscus export opens opportunity for farmers, traders JOSEPHINE OKOJIE

s Nigeria seeks for ways to diversify its economy and earn foreign exchange, experts say that Hibiscus export could play a vital role in this regard. Hibiscus is one horticultural crop that is no just earning foreign exchange for Nigeria but also creating wealth for communities. Hibiscus an important perennial herb is fast booming in the Nigerian market as exporters are now exporting a larger percentage of the crop to Mexico, United States, Europe and Asia. Agro allied firms such as AgroEknor are making huge investment in the hibiscus value chain in Nigeria owing to the ever increasing global demand for the flower. Nigeria is the natural habitat for five varieties of hibiscus and among the world’s top producers and supplier of the crop, experts say. In 2017, Nigeria exported 1,983 containers of hibiscus to Mexico alone, earning $35 million in nine months, according to the Association of Hibiscus Flower Exporters of Nigeria (AHFEN). Hibiscus scientifically

called Hibiscus sabdariffa and commonly known as Roselle, grows in many tropical and sub-tropical countries and is one of highest volume specialty botanical products in international commerce, the Food and Agricultural Organisation (FAO) says in its postharvest report. The hibiscus plant is drought tolerant, relatively easy to grow, not suitable for mechanised harvest, labour intensive to process, and can

be grown as part of multicropping system. Prices and country production volumes are not tracked like a conventional agricultural commodity and this is why the global industry currently does not have adequate data. The extracts from hibiscus flowers and leaves have many uses and benefits, either medically or in industrial production. Its antihypertensive and

food colouring properties have continued to attract the attention of food and beverage manufacturers and pharmaceutical industry for the commodity globally. D r y h i b i s cu s f l ow e r, locally known as Zobo, can be processed into hot and cold herbal beverages, jellies and confectioneries, among others. The leaves are used extensively for animal fodder and fibre. Me d i c a l e x p e r t s s ay

consumption of Zobo made from the leaves aids detox ification. It helps reduce high blood pressure, cholesterol levels, as well as blood sugar levels. It also helps in darkening hair colour and slows aging as it contains anti-aging properties. It induces sleep and has antidepressant properties as well as helping in the treatment of flu. All these numerous health properties have made it one of the key raw materials in the global confectioneries industry. “My father takes hibiscus drink daily to control his blood pressure,” Bimbo Ademola, a buyer purchasing the flower at Ketu market in Lagos says. “The hibiscus flower has been working effectively on my father since he started d r i n k i n g i t . Hi s b l o o d pressure which was high is now normal,” Ademola says. Hibiscus tea is rich in antioxidants minerals and vitamin C and several studies have found that the tea lowers both systolic and diastolic blood pressure. The uses of the flower show the huge opportunity in the subsector for potential i n v e s t o r s. W i t h s t ro n g

global population growth, particularly amongst children and young people, consumption of hibiscus products has been on the increase in recent years. Mexico is the most prominent destination for Nigerian hibiscus – account for 85percent of the exported crop from the country, but in 2015, it improved checks on Nigerian hibiscus exports, alleging adulteration. Since 2017 Mexico had enforced a ban on Nigeria’s hibiscus export owing to standards and quality issues. As a result, the country is losing billions of dollars it would have earned from Mexico since it was enforced. This further slowed the traction the crop was gaining in the country. “A lot of people go into the exporting of hibiscus without actually knowing the nutty gritty of the business and that is what is responsible for the Mexican ban,” Adesanya who was earlier quoted says. To address the issue of standards, experts say Nigeria needs to set up standard sanitary and phyto-sanitary labs, as well as increase processing to earn more foreign exchange through value adding.

Heart &Capital restates commitment IITA, YIIFSWA train farmers on areoponics to capacity-building for agripreneurs technology to boost production SIKIRAT SHEHU, Ilorin

eart and Capital Niger ia Limited has reinstated its commitment towards creating diverse opportunities through agriculture to create employment and wealth. Umar Adelodun, cofounder and CEO of the company, who stated this at the official commissioning and unveiling of the firm’s logo recently, revealed that the company had trained over 4,000 youth agripreneurs on various agricultural value chains. Adelodun stated that the company re cently embarked on ‘Cassava Proxy Farm’ project to create jobs and help individuals diversify their income. He added also that the initiative was in support of the Federal Government’s policy direction to reduce the country’s reliance on crude oil which is no longer reliable as its price has continued to dwindle over time, and

to further support the United Nation’s sustainable development goals. He noted that having re a l i s e d a g r i c u l t u re ’s potential of growing the economy, Heart and Capital was further committed to building wealth for incoming generation. Speaking on the firm’s cashew processing project, he said: “We have over 200 hectares of cashew planted but we want to scale up production in such a way that our processing facilities, without outsourcing from anybody can sustain us for a while.” “ We a re g o i ng i nt o operational and technical partnership with partners in agric processing mill. We are strongly looking at value chain and processing,” he further said. Adelodun identified infrastructural deficit as the major challenge and appealed to government for provision of crucial infrastructure to boost productivity and reduce production cost. www.businessday.ng

In his response, Kayode Alabi, deputy governor, Kwara State assured of his administration’s support in creating an enabling business environment while calling on the youths to embrace agriculture to ensure food security. According to him, education and farming were the future and key to the development and progress of the country. Alabi, however, charged youths to be determined, a d d i n g t hat t h e s t at e government would support progressive initiatives aimed at taking the state to the next level with agriculture. He stated that the state could feed the nation with its abundant human and natural resources, calling on the people to key into the various agricultural potentials in Kwara. He commended Heart &Capital, imploring the company not to be discouraged as they would reap the fruits of their labour in due course.

IDRIS UMAR MOMOH, Benin

s part of efforts to boost seed yam production in the countr y, the International Institute for Tropical Agriculture (IITA), Federal Ministry of Agriculture a n d Ru ra l D e v e l o p m e nt in conjunction with Yam Improvement for Income and Food Security in West Africa (YIIFSWA) have trained fifty yam farmers on modern seed yam multiplicity and storage technology in Edo State. The farmers drawn from the three senatorial districts in the state were trained on how to multiply seed yam with the aid of aeroponics technology. Addressing the farmers at a one-day training programme in Benin City at the weekend, Iyere-Usiahon Perpetual, head , root and tubers division, Federal Ministry of Agriculture and Rural Development, Abuja, said the training was geared towards exposing the farmers to new technologies in producing seed yam and develop a better understanding of existing methods. Perpetual, who is also the focal person, advocacy and resource mobilization of YIIFSWA project, disclosed that the training would also expose

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farmers to different products from yam for income generation through its value chain. Also listed as objectives includes: exposing youths and women to opportunities in yam value chain, encouraging government to assist yam sector/ investors, and provision of a budget line for yam in the state as it is being done at the federal level, among others. She said the YIIFSWA, which is a $12million, five-year project, seeks to develop and establish a functional, commercial seed yam system in Nigeria and Ghana to benefit smallholder farmers through timely and affordable access to high quality seed yam tubers and improved varieties. She explained that the target of the project was to provide 1000 minisets of targeted varieties to national programmes responsible for the production of pre-basic seed in Nigeria and Ghana for use as “nuclear” stock for the production of pre-basic seed and other seed classes. On his part, Malachy Akoroda, YIIFSWA advocacy consultant, said Aeroponics technology was geared towards the production of improved varieties of seed yams that are affordable, sustainable and boost the income of farmers as well as enhance food security. @Businessdayng

Akoroda, a professor of Agronomy in plant breeding and seed production at the University of Ibadan, said the establishment of the Aeroponics plant would boost quality seed yam production in the state as well as in the South-South region and parts of South- East, SouthWest and North-Central. The professor, who noted that the establishment of the Aeroponics plant was about N25million, called on the Edo State government to facilitate its establishment in the state through Public-Private Partnership (PPP). In his remarks, Wellington Omoragbon, Edo State director, federal ministry of agriculture and rural development, said the training programme would afford farmers in the state an opportunity to explore the yam value chain and create wealth from yam farming as a business. Omoragbon said the programme was in line with the policy of President Muhammadu Buhari’s administration for agriculture. He said the policy was to work with key stakeholders to build an agribusiness economy capable of delivering sustained prosperity by meeting domestic food security goals, generating exports and supporting sustainable income and growth.

Wednesday 04 September 2019

BUSINESS DAY

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Wednesday 04 September 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

OIL & GAS

Oil & Gas firms’ abysmal share performance reminds Nigeria of pending reforms …as sector is worst performer on NSE SEGUN ADAMS & ISRAEL ODUBOLA

il is liquid gold, but not for investors on the Nigerian Stock Exchange who have dumped shares of listed oil companies the most amid a rout in the market in dire need of reforms. Confronted with myriads of challenges ranging from weak corporate governance to government over-regulation, the sector has seen investor appetite weakened; Oil and Gas firms have returned 34 percent loss to shareholders since January, the worst among five sectors tracked by BusinessDay. To put in context, on the average, a million naira invested in Oil and Gas stocks in January would have resulted in a capital loss eroding initial investment to about N747, 000 as on Monday. The equity market yearlong has returned 12.42 percent losses to investors, making it one of the worst performers globally. Industrial goods sector is the lone sector that outperformed the market albeit with a 9.84 percent loss. Not until the fiscal authorities come up with market-driven reforms such as the implementation of Petroleum Industry Governance Bill (PIGB), removal of subsidies on petroleum resources, revamp of local refineries and adoption of flexible exchange rate system, the equity market might not see any significant upside in medium to long-term,

experts say. The industry continues to suffer over the non-implementation of PIGB which is meant to establish a framework for the creation of commerciallyoriented and profit-driven entities, to ensure value addition and internalization of petroleum industry through the creation of effective and efficient governing institutions with clear and separate roles for the industry. Industry stakeholders have raised eyebrows over government’s huge spending to subsidize premium motor spirit (PMS) otherwise known as petrol, which is gulping billions of naira and also squeezing the fiscal position of Africa’s top crude

producer. Nigeria’s petrol at N145 regulated price is the cheapest in the West African region, making it unprofitable for marketers to import the commodity as the real market price is way above the official price. Figures from the Nigerian National Petroleum Corporation (NNPC) revealed that the Federal Government spent N650.2 billion to subsidize petrol between April 2018 and February 2019. But the sum would have benefited the economy more if channeled towards developing key infrastructures to stimulate growth. Players in the industry experienced an awful midyear period as profitability

weakened in the six months through June 2019. Total Nigeria, the country’s fourthlargest oil firm on the exchange, saw profit plunged 98 percent to N130 million, following N5.67 billion recorded half-year 2018. Oando’s half-year 2019 net income pared 8.5 percent to 7.2 billion from N8.5 billion last year. Mobil saw profit plunged 23 percent to N4.2 billion in the review period, from N5.4 billion a year earlier. On the flip-side, Forte oil recorded a surge in net income to N5.5 billion midyear 2019, from N367 million, thanks to a huge increase in its finance income. Also, Seplat, an upstream player,

saw profit ballooned to N37.5 billion in the review period, from N14.8 billion last year, due to a significant cut in finance cost. Compounding woes, the inability of Nigeria to refine adequate petroleum products locally to meet domestic demand continues to expose downstream players to foreign exchange shocks, especially for petroleum independent marketers. Given the country’s lack of capacity to refine its crude and pending the completion of Dangote Refinery, Nigeria would continue to rely on crude for oil swap deal at least in the next three years. Mele Kyari, managing director of state-owned NNPC,

said Nigeria would make efforts to revamp its dysfunctional refineries and support others to boost the country’s domestic refining capacity. “Ultimately, by 2023 we should be a net exporter of petroleum products, assuming we’re able to get Dangote refinery at full capacity and we’re able to fix our refineries,” Kyari said recently. Total traded flat at N100/ share Monday, bringing its year-loss to some 51 percent, while Seplat remained flat at N397.7/share, about N38 percent less than it opened for the year. Mobil and Oando have seen share price erode by some 15 percent and 21 percent respectively since January.

MARKETS

Portfolio flows to emerging markets near 3-year low on gloomy global outlook ISRAEL ODUBOLA

merging markets (EMs) securities suffered their worst outflows in 34 months over the escalation of trade dispute between United States and China combined with heightened fears of global economic slowdown. Investors pulled out $13.8 billion from EM assets in August compared with $24.3 billion that made way to the said markets in the preceding month, according to data by the Washington-based Institute of

International Finance (IIF). August flows are the lowest since November 2016. Unlike previous outflow cycles, where the dynamics between debt and equity flows were clearly different, August saw both equity and debt securities experience large outflows. According to the global finance body, EMs recorded negative flows in 18 of 21 trade sessions last month. And while China’s equity flows gained $1.5 billion, fears of a global recession and the trade conflict translated to $15.6 billion outflow for non-Chinese equities.

Big central banks have embraced monetary accommodation by slashing policy rates to spur global growth, depressed by the on-going trade dispute, geo-political tensions and Brexit-related uncertainties. However, analysts at American-based investment bank, Morgan Stanley, say neither monetary nor fiscal stimulus is sufficient to prevent the next global recession. Their argument being that the combination of low interest rates, escalating debt levels and trade-policy uncertainty has created an environment that neutral-

izes the potency of monetary policy. “Declining natural interest rates have meant that monetary policy by itself won’t be enough to raise aggregate demand and lift inflationary expectations.” They asserted. Morgan Stanley further posited that fiscal stimulus including payroll tax cut and deficit financing employed by some advanced economies to stimulate growth may print disappointing result. EM attracted just $300 million debt flows last month, 75 percent less than $1.2 billion attracted in July.

Outlook for non-China EM looks bleak given the large amount of hot money that has already gone to EM in recent years, which IIF said it has resulted in a structural drag on new inflows. The negative outcome was uniform across all regions, with the Asian region suffering the most equity outflows of $7.6 billion, while African and Middle East recorded most debt outflows ($1.9bn). There are expectations that capital flows to EMs might rebound to positive territory in September as China have unveiled intention to halt retaliation and

resume talks with US. Meanwhile, Nigerian stocks recorded a two-day bullish run Monday with 0.14 percent gain, cutting year-to-date losses to 12.4 percent. Yields on Nigeria’s 10year benchmark bond remained unchanged at 14.31 percent Monday, on buy interest from local investors in short to medium term debt notes coupled with waned selloffs by foreign investors. The local debt market is expected to mirror the bullish trend in Treasury bill market on the back of improved system liquidity.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh

Wednesday 04 September 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

HEALTHCARE

PharmAccess, CarePay partner to adopt digital technology to boost UHC

TEMITAYO AYETOTO

he PharmAccess Foundation, i n p a r t n e rship with CarePay Nigeria Limited, has adopted digital technology, particularly mobile, in facilitating support to various states in implementing Universal Healthcare Coverage, (UHC), some of which include health insurance schemes and identifying the underprivileged. T h i s p l a t f o r m c u rrently supports the Lagos State Health Management Agency (LASHMA) and facilitates the seamless implementation of the Lagos State Mandatory Health Scheme. This exchange platform connects scheme stakeholders administratively and financially while also improving transparency, operational efficiency and decision-making. As of today, the CarePay platform has enabled the enrolment of over 200,000 enrolees by LASHMA with a target to enrol over one million by December 2019.

As part of advocacy efforts, the USAID Digital Financial Service team visited Subol hospital on 16th of August 2019, to view a demonstration of the CarePay platform presented by LASHMA at Subol Hospital, one of the pilot hospitals for the Lagos State Health Scheme. During the visit, Amani M’Bale, who led the USAID team, stated that “health stakeholders should consider adopting the digital platform for efficient and transparency.” According to Njide Ndili, the Country Director, PharmAccess Foundation, “digital and mobile technology remains a game changer and provides a pathway to accelerate access to UHC. The priority remains with the government to adopt existing, tried and tested innovations to achieve UHC ; PharmAccess Foundation simply remains the enabler.” PharmAccess Foundation is also supporting the Adamawa State Ministry of Health in establishing a social register through its Multi-Method Household

Poverty Screening Tool. The tool was designed to support the implementation of the state health insurance scheme and the roll out of the Basic Healthcare Provision Fund at both National and State level (State Health Equity Fund)—to equitably provide health services to the poorest households. PharmAccess Foundation is a Dutch-based entrepreneurial organization focused on making health markets work through digital innovations. As countries and states continue to strive towards attaining Universal Healthcare Coverage, (UHC) technology has been identified as a key component that would not only accelerate the process, but also ensure a more effective and efficient system of operation for various financing mechanisms. More importantly, it is generally agreed that any technology adopted must be as lean as possible and reduce the cost of administration, thereby making more funds available for care.

L-R: John Obaro, MD, SystemSpecs; Achenyo Obaro, founder, MitiMeth; Peter Rufai, Tournament ambassador, Remita Corporate Champions; Ademola Adebise, MD, WEMA Bank, and Deremi Atanda, executive director, SystemSpecs, at the grand finale of the 2019 RC3 Tournament in Lagos

L-R: Sarah Agha, portfolio manager, national premium brands, Nigerian Breweries Plc; Micah Richards, Manchester City ambassador; Emmanuel Oriakhi, marketing director, Nigerian Breweries Plc, and Tom Boyle, head of partnership marketing (EMEA), City Football Group, at an exclusive event for Manchester City›s Global Tour stop in Lagos, courtesy of Star Lager Beer.

TRANSPORT

GAC Motor deepens reach in market, launches Port-Harcourt regional showroom

n its conscious and strategic effort to go closer to its esteemed customers, the GAC Motor has opened a showroom in Port Harcourt, Rivers state Nigeria. Located on 44 Old Aba Road, the Port Harcourt Regional Showroom is the latest addition to the CIG Motors list of showrooms across Nigeria. The showroom which was launched on Thursday on 29th August, 2019 features a full representation of GAC Motor offering to

its customers, from sales to after sales support services. The attendees of the launch event witnessed first-hand the GAC Motor models available for immediate purchase and have the opportunity to enjoy spot discount of 10 percent, which is subject to applicable terms and conditions. Speaking during the launch, Diana Chen, CEO of CIG Motors said, “The desire to always be supportive of customers experience is exactly what makes the GAC brand unique and we will

continue to champion the development of our showroom network across Nigeria”. Since debuting in Nigeria in 2014, the GAC brand has been expanding its share of the Nigerian new vehicle market. As one of the hosts and the official vehicle provider of the 2017 Nigeria-China Governors’ Trade and Investment Forum in Guangzhou, China, GAC Motor has been greatly expanding sales of its classily elegant, durable and reliable vehicles all across Nigeria.

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L-R: Darlington Igabali, area marketing manager, Kellogg’s; Ijeoma MbahMunachi, and her husband Chigbogu Mbah, both residents, and Omotayo Azeez-Abiodun, public relations manager, Tolaram Group, at the Kellogg’s Big Family breakfast exercise in Lagos.

R-L: Basirat Yussuf, assistant chief administrator, Gbagada General Hospital, Gbagada; Nathaniel Ligbago, marketing and communications manager, Equipment Hall; Terae Onyeje, CEO, WOWBii Interactive, at the donation of medical equipment in celebration of Equipment Hall and WOWBii Interactive #WOWDay2019.

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Wednesday 04 September 2019

BUSINESS DAY

BANKING Banking sector financial soundness gain acceptance of MPC members HOPE MOSES-ASHIKE

n July 2019, the financial soundness indicators showed that the Nigerian financial sector had remained sound. For instance, the banking industry Non-Performing Loans (NPLs) entered single digit at 9.36 percent after five years, an indication of improved soundness of the sector. The decline of the NPLs was a good signal that Central Bank of Nigeria’s policies in relation to NPLs were effective. The Capital Adequacy Ratio (CAR) stood at 15.26 percent which was slightly above the prudential requirements of 15 percent. This compares favourably with Nigeria’s peers, such as South Africa, Malaysia and Turkey with CARs of 16.4, 17.3 and 18.1 percent, respectively. Similarly, the liquidity ratio (LR) in June 2019 improved year-on-year and higher than that of peer countries. The performance of the banking sector in terms of both Return on Equity (ROE) and Return on Asset (ROA) pointed to a healthy position of the banking sector. “Key major risks and vulnerabilities identified in the Nigerian banking were slow economic growth, high inflation, growing debts sticky NPLs; Security and insurgency challenges,” Balami, Dahiru Hassan, member of the MPC said in his personal statement. Aishah Ahmad, deputy governor of the

Central Bank of Nigeria (CBN) in charge of financial system stability, noted that several months of low credit to the private sector amidst burgeoning treasury securities activity prompted the CBN policy statement on July 3, mandating Deposit Money Banks (DMBs) to build up their minimum loan to deposit ratio (LDR) to 60 per cent over a three-month period, with additional incentives (150 per cent weighting) for new Small and Medium Enterprises (SMEs), retail, mortgage and consumer loans. Broad money (M3) grew by 4.97 per cent in June 2019, compared with a growth

of 4.55 per cent in May 2019, while credit to the Government continued to crowd-out the core private sector. Joseph Nnanna, deputy governor, said with the recent regulatory measure of loan-to-deposit ratio of 60.0 per cent, it is expected that commercial banks will enhance lending to the real sector. The CBN had given the banks September 30 deadline for the commencement of 60 percent loan to deposit ratio, which was targeted at increasing credit to the real sector of the economy. Godwin Emefiele, governor of the CBN

LAPO Microfinance Bank expands services beyond lending

APO Microfinance Bank Limited, the leading micro lender in the country, which has the capacity to disburse N152 billion this year is much more than a credit lending institution. It is a development-oriented organization with a priority focus on poverty alleviation, economic empowerment, environmental protection, education and an advocate for a good quality of life. LAPO was a product of deliberate thought. It was initiated in the late 1980s. “As a young man, I conceptualized poverty as an octopus with the tentacles of material deprivation, poor health and social exclusion,” Godwin Ehigiamusoe, managing director/CEO said. Currently, the bank has a little above 4 million Nigerians who are currently on its list, accessing loans and depositing modestly. Through its loan services, many more have moved on to higher social status as the bank provides capital for their businesses, stabilize enterprises and strengthened their families, economically. “In addition, we have equally provided more than 7,000 direct employment opportunities. And in Nigeria, for everyone that takes his or her salary on or before 25th of the month, there is always a dependent or up to four or five persons attached to the remuneration”. LAPO has issued 3000 fully-funded free education scholarships to the children of its

customers including Vocational training for almost 400 beneficiaries. Currently, “we are opening a Multi-Million massive Healthcare Facility Centre in Benin for quick access to qualitative diagnostic and medical treatment for people especially women, this is in furtherance of our commitment to improving

Godwin Ehigiamusoe, managing director/CEO, LAPO, Microfinance Bank www.businessday.ng

lives,” Ehigiamusoe said. “We have also been investing in renewable energy, through the provision of cleaner energy, gas, for cooking, thereby discouraging huge deforestation by the women who otherwise depend heavily on firewood to cook on a daily basis and also, the provision of solar lamps to encourage the switch from kerosene lanterns. Interestingly, one way to also assess our social impact is in knowing the number of loans that LAPO has provided vis-à-vis the deposit it has received. For instance, in 2013, we celebrated the issuance of naira equivalent loan of $1billion! And the amount keeps growing yearly. Last year, we disbursed N137billion. A year before, that was 2017, we did N126billion. As of December 2018, we have produced over 10, 000 Homeowners under the Affordable Housing scheme, this is in response to the housing deficit in Nigeria”. “Apart from the 900 plus other licensed microfinance banks in Nigeria, there are hundred more informal financial lending institutions in existence. And as their most viable marketing strategy, some of them have chosen to latch on the reputation of the most credible leader in the industry. Ironically, LAPO Microfinance Bank happens to be that. There have been instances where even national dailies have wrongly attributed some irregular activities of other lending institutions to us.”

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had at the last Monetary Policy Committee (MPC) meeting in July explained that the core role required of the banks is to act as financial intermediaries to provide credit to the private sectors of the economy. On his part, Obadan, Mike Idiah, MPC member, said the financial system soundness indicators generally reflect improvements. The banking industry’s assets and total deposits indicate consistent growth. But total credit has continued to decline year-on-year since June 2017. Loan deposit ratio also declined between 2018 and 2019. And the number of new credits each month in 2019 is lower than the amount for December, 2018. However, the good news is that credit to the manufacturing sector increased endJune 2019 compared to end-June 2018. Also, credit to the agricultural sector has trended upwards since September, 2018. This he said was not unconnected with the CBN interventions. Importantly, the CBN’s recent measures relating to the Standing Deposit Facility and raising the loan-deposit ratio target for banks will most likely boost credit delivery to the private sector. The CBN at the last MPC meeting in July, held the benchmark interest rate at 13.5 percent. The 11 members present also voted to retain the Cash Reserve Ratio (CRR) would be retained at 22.5 precent, Liquidity Ratio at 30 percent as well as the Asymmetric Corridor around the MPR at +200/-500 basis points.

Customers can own Smartphone device through Access Bank’s financing scheme

ustomers can now own smartphone devices and be able to effectively transact business online through Access Bank’s digital finance solutions. The bank continues to lead the way in innovative economic digital finance solutions, providing more Nigerians with access to credit as it unveils the Device Finance scheme, a scheme designed to provide salaried customers with the opportunity to purchase smartphones of their choice and pay over a period of twelve months. Speaking on the initiative, Victor Etuokwu, executive director, retail banking, said Access Bank has taken the initiative to lead the digitization of lending in Nigeria and wants every customer to benefit from the modern connected lifestyle. “Through our revolutionary and groundbreaking credit schemes such as device finance, we will see more Nigerians get connected to do more in business online and enjoy social lifestyle of their choice. And that is the kind of change that we want to see,” he said. Device Finance he said is designed to finance the purchase of devices under a contract arrangement. The financing scheme currently includes smartphone devices, where customers can enjoy additional benefits with an optional monthly airtime bundle, which can also be converted to data.

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Wednesday 04 September 2019

BUSINESS DAY

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Wednesday 04 September 2019

BUSINESS DAY

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Wednesday 04 Seprtember 2019

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Ports & Cargo orders four harbour cranes worth over $18m Euros to support growth ...As SIFAX Group embarks on infrastructural expansion AMAKA ANAGOR-EWUZIE

orts & Cargo Handling Services Ltd (PCHL), an indigenous terminal operator in Nigeria, has concluded arrangements to acquire four new harbour cranes to support business growth and enhance discharge of vessels calling the terminal. PCHSL, a subsidiary of SIFAX Group, is also investing in the acquisition of new reach stackers and forklifts to aid service delivery at the terminal and enhance turnaround time of vessels. Speaking at its midyear media conference held last week in Lagos, Adekunle Oyinloye, group managing director, SIFAX Group, said the company has set a 5-year strategic growth plan that will generate a 300 percent increase in

L-R: Aamir Mirza, managing director, West Africa Container Terminal (WACT); Gabriel Okonkwo, chairman, Association of Registered Freight Forwarders of Nigeria (AREFFN), Onne Port Chapter, and Okey Okoro, chairman, National Association of Government Approved Freight Forwarders (NAGAFF), Onne Port Chapter at the commissioning of new terminal trucks and reach stackers acquired by WACT at Onne Port, Rivers State recently.

turnover. “A key part of the plan is massive investment in equipment and facilities across our companies.

More harbour cranes, reach stackers, haulage trucks, forklifts, baggage tow tractors among others, have been acquired

Onne Port gets boost as WACT acquires more trucks, reach stackers AMAKA ANAGOR-EWUZIE

ne month after the commissioning of two new Mobile Harbour Cranes worth $10 million at the Onne Port Complex, Rivers State, the West Africa Container Terminal (WACT) has again acquired four additional specialised terminal trucks and two reach stackers. The acquisition, which is geared towards meeting the growing business demand, will also ensure WACT remains the gateway to East Nigeria and beyond, and brings the number of specialised terminal trucks it acquired this year to 14. Aamir Mirza, managing director of WACT, said at the commissioning last Thursday that the additional investment is aimed at improving ship turnaround time and cargo delivery at the terminal. He said Eastern shippers do not need to bring in their cargoes through Lagos because they can get quality services and faster delivery

of their boxes at Onne Port. “In February this year, four specialised terminal trucks were air-freighted through Port Harcourt International airport using one of the world largest cargo planes, Antonov 124. With the two reach stackers and four terminal trucks that we commissioned today, it is basically the end of the first order that we placed,” Mirza said. According to him, “The investment is about $4 million in all while the cranes are worth $10 million meaning that we have spent $14 million this year. There are more equipment coming because we will be getting man-lifter used to repair Mobile Harbour Cranes and 10 more trailers.” He noted that WACT has been investing in manpower development, processes and equipment to effectively compete with terminals in or outside Nigeria. He listed the modern cargo handling equipment in WACT to include two Mobile Habor Cranes; 18 reach stackers, four empty handlers, nine forklifts and 26 www.businessday.ng

specialised terminal trucks acquired to give shipping lines, importers and agents, highest level of service. Mirza, who commended the Federal Government and the Nigerian Ports Authority (NPA) for encouraging private sector investment at the port, said WACT has actualised the objectives of the port concession programme. Al-Hassan Ismaila, port manager, Onne Port, said WACT has exhibited high level of commitment in running of the facility, which has led to improvement in service delivery. “This is another milestone and we appreciate WACT. First, it was forklifts. Second, it was terminal trucks and we were also here for the crane commissioning but today, we are here for the reach stackers,” said Ismaila, who was represented by the traffic manager, Yohana Izam. He gave the assurance that the NPA would continue to explore avenues to increase patronage of the Eastern ports while also ensuring safety and security of vessels coming through the region.

to match our ambition to become the market leader in all the sectors we operate,” he said. According to him, SI-

FAX is expanding its facilities as it has acquired two new off-dock locations in Lagos to improve cargo evacuation from the port and provide options for its clients to clear their consignments with less stress. Stating that the new vision of the company necessitated bringing a new management team on board to drive the group’s business, he added that SIFAX also acquired 25 new trucks to facilitate door-to-door delivery of cargo to the importers. John Jenkins, managing director, PCHSL, said the acquisition of the new equipment will not only aid the terminal to deliver quality services to its clients, but will position the terminal for future growth. He said the company’s container throughput for the first half of 2019 stood at 130,000 twenty-foot equivalent units (TEUs) while its general cargo

volume was in excess of 100,000 tonnes. “We are expecting our throughput for 2019 to be in the region of 280,000 to 290,000 TEUs on the back of an improved port access road. Already, we have crossed the 130,000 TEUs mark for the first half of the year. This figure is 275 TEUs less than what we achieved in 2018,” he stated. O y i n l oy e h o w e v e r, pointed out that the major challenge that confronted the company’s business in the period under review was the traffic gridlock caused by the poor access roads around the Lagos ports. He commended government for the ongoing construction on ApapaOshodi Expressway, but called for a more sustainable solution of linking the ports with a functional rail line to complement the road infrastructure.

BPE scores APM Terminals high over N126bn investment in port devt AMAKA ANAGOR-EWUZIE

ollowing its investment in port development worth over N126 billion, the Bureau of Public Enterprises (BPE) has commended the management of APM Terminals for its compliance with the post-acquisition plan. APM Terminals Apapa, which took over the concession of Apapa Container Terminal in 2006, has invested $350 million to develop infrastructure, acquire modern cargo handling equipment, modernised the terminal, installed IT hardware and software systems, and additional capacity. The investment has resulted in significant improvements in productivity, with zero waiting time for vessels berthing, and doubling of container volume. In 2016, it acquired four additional Rubber Tyre Gantry cranes (RTGs), bringing the total to 14, and is presently the highest owned by any port operator in Nigeria. In 2013, the terminal restored a regular rail service,

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running three times per week to the inland cities of Kaduna, 730km (455 miles) and Kano, 960km (600 miles). In 2014, the terminal was named the “Most Environmentally Conscious Port Operator at the Lagos Port Complex” by the Nigerian Port Authority’s Environment Department of the Health, Safety and Environment Division and it has maintained the standards. Yusuf Adamu, director in charge of Post Privatisation Department in BPE, said after monitoring the activities of terminal operators in Apapa Port, that the investments and revenue contribution by port concessionaires like APM Terminals to government in the last 13 years, has been massive. “Before concession, this place was like a market, with uncontrolled movements of people leading to rampant thievery. Some of the quay walls served as residential places. Today, we see the level of investments made by concessionaires which is in millions of dollars, and these facilities will eventually revert to government at the end of the agreed period,” said Adamu, @Businessdayng

who also commended other concessionaires in Apapa Port. According to him, concessionaires have been paying annual throughput and lease fees without default since 2006 and it runs in millions of dollars. During the tour, APM Terminals and other operators at the Apapa port briefed the BPE team on their investments in line with the Post-Acquisition Plan, and equally conducted them round for verification and clarification of issues. Martin Jacob, managing director of APM Terminals Apapa, assured of the company’s commitment to supporting the growth of the Nigerian economy. He also expressed support for the Federal Government’s non-oil export drive. According to Jacob, in addition to meeting international security requirements outlined by the International Ships and Ports Facility Security Code (ISPS Code), APM Terminals Apapa, also abides by its global safety requirements. It operates a truck safety programme that provides designated and physically protected areas for drivers conducting operational activities outside of their truck cabs.

Wednesday 04 September 2019

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NIMASA aims for sustainable solutions to insecurity, illegalities in Gulf of Guinea region AMAKA ANAGOR-EWUZIE

he Gulf of Guinea (GoG), which houses West African waterways including Nigerian territorial waters, has remained the world’s most dangerous spot for pirate attacks, sea robbery, terrorism, unregulated fishing, oil theft and other forms of illegalities. The development, no doubt, has posed serious economic concern to the nation’s shipping community following the high level of sabotage on international trade as oceangoing vessels do business in Nigerian ports now have to impose war risk insurance on cargoes coming to Nigeria. BusinessDay findings show that in shipping business, safety is very critical. However, due to piracy, shipping business in countries within the GoG region has been surrounded with tension such that some shipping companies are now forced to rent security officials, pay them millions of dollars to secure the cargo on transit. Boss Mustapha, the Secretary to the Government of the Federation (SGF), confirmed recently in a forum held in Lagos that the situation compels some foreign shipping companies to request for government’s approval to enter Nigeria’s territorial waters with armed security personnel onboard. This, he said, was why Nigerian government has not taken the issue

of safety and security in the maritime sector lightly because maritime domain must be protected to attract foreign investors and also preserve Nigeria‘s territorial integrity. “ The treasures for our future growth and development lie in an improved shipping environment where safety and security of goods, services, seafarers and the shipping community is guaranteed,” he said. To deal with maritime insecurity, which is an organised crime, Mustapha pointed to the need for the Federal Government to collaborate with other countries to develop an integrated maritime security strategy in addressing the challenges of insecurity. Maritime domain is vulnerable and ensuring its security is certainly beyond the capacity of one country, thus, the need for countries in the region to

come together under one umbrella to developed a lasting solution to maritime insecurity. In line with this suggestion, the Nigerian Maritime Administration and Safety Agency (NIMASA) has perfected plans to bring countries in the region together under the Global Maritime Security Conference (GMSC) 2019, a high-level Maritime Security Conference to be hosted by Nigeria. The 3-day conference, which aims to build an understanding of the challenges of maritime security in the region, also hopes to develop tailored solutions as well as coordinate efforts at strengthening regional and international collaborations to extinguish maritime threats in the region. NIMASA listed the objectives of the conference to include defining the precise nature and scope of coordinated regional

responses to maritime insecurity vis-à-vis intervention supports from external actors/partners. It will evaluate the relevance and impacts of the various interventions initiated already to tackle maritime insecurity in the region with a view to revising and adapting them to address the current challenges. In addition to tackling threats to maritime security, strategising alternative approach to prevent cyber security attack and other forms of emerging maritime security threats, is also the aim of the conference. It will also advocate for deeper global commitment to deployment of resources for ending maritime insecurity within the region. The event is expected to have 11 panel sessions as well as intensive and interactive sessions designed to expand, address and deliver a workable framework to tackle key

issues around the safety and of the waterways. The Conference will be held at the International Conference Centre, Abuja, from the 7th – 9th of October 2019 while President Muhammadu Buhari will present the keynote address. Personalities such as ECOWAS President, ECCAS President, chairperson of African Union Commission and secretary general of the International Maritime Organisation (IMO) are expected to grace the event. Pundits believed that the conference would help to promote sustainable shipping in the region, if strategic collaboration and partnerships are built among countries in the region. Dakuku Peterside, director general of NIMASA, who pointed out that the Gulf of Guinea plays importance role to food security, stated that the region must be properly

secured to avert illegal activities that may hamper food supply. He said that the region, which is a major shipping route, must be properly guarded if the countries in the region are to properly harness the blue economy for economic growth. “We must do everything to safeguard the region from illegal fishing, piracy and other activities that may affect the food chain.” He further said that NIMASA knows the importance of the region to the African continent and that was the major reason the Agency has continuously championed collaborations among member states to develop the continent’s blue economy through sustainable shipping. Recall that in Nigeria, NIMASA has entered into a contract with Home Land Security International (HLSI), an Israeli firm to build an Integrated National Security and Water Protection Infrastructure in Nigeria under the Deep Blue Project. This project entails the provision of security infrastructure and training of personnel for the protection of Nigeria’s maritime domain. It is envisaged that this project will comprehensively address the emerging cases of insecurity in the maritime industry and restore investor confidence. It also involves the acquisition of new platforms and other logistics required to enable the Agency perform its statutory functions of securing the Nigerian waters in conjunction with the Nigerian Navy.

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Wednesday 04 September 2019

BUSINESS DAY

cityfile Coalition of civil society group at a peaceful protest against the $9.6 billion judgement against Nigerian Government in favour of process & Industry developments Ltd (P&ID) at the British Embassy in Abuja. Pic by Tunde Adeniyi

Lagos-Ibadan road closure: Oyo deploys 100 traffic managers REMI FEYISIPO, Ibadan

yo State government has deployed 100 traffic managers to the Lagos-Ibadan Expressway to direct traffic and make the road less congested for users following the resumption of construction work on Kara-Berger portion of the road. Executive chairman, Oyo State Road Traffic Management Authority (OYRTMA), Akin Fagbemi stated this while briefing journalists on the efforts being made by the state to ease the burden of travelers on the road. The Lagos-Ibadan ex-

press road is the only major road connecting the seaport and international airport in Lagos to the rest of the country and had suffered intermittent neglect for over ten years. Fagbemi said his officers would be on ground along the expressway, especially around areas where the construction work is taking place to avoid congestion, saying that commuters could get in touch with the men of the agency on +2348114390097 to lodge complaints or seek help. “The road connects the two states and have great economic impact on the whole nation. If we allow the partial closure to be without giving technical support to

the contractor in the area of maintaining smooth traffic at the points of diversion and turnings, the road may be blocked totally. “The essence of government at all level is to make living conducive for the people and we will not shy away from doing our best to serve the people. “The portion of the road to be closed to traffic is from Kara Bridge inward Berger and from Berger inward Kara Bridge which amounts to about 1.4 kilometers of the 127.6 kilometers. However, alternative routes have been mapped out with contributions from our sister agency, the Lagos State Road Traffic Management Authority (LASTMA),”

he said. Alternative routes for road users include LagosAbeokuta Expressway from Abeokuta connecting Lagos-Ibadan Expressway, Sagamu--Ikorodu Road from Sagamu Interchange to Lagos-Ibadan Expressway. Others include IjebuOde- Itoikin Road from Ijebu-Ode to Lagos-Ibadan Expressway. Recall that Julius Berger, the construction company handling part of the road had previously announced plans to close the road in August but the closure was postponed due to the Muslim Eid-el-Kabir celebration and other religious activities scheduled around the period.

Coconut trees may go into extinction in Lagos- Official

oconut trees may soon go into extinction in Lagos State, if residents failed to desist from cutting the trees without replanting, Olayiwole Onasanya, permanent secretary, ministry of agriculture, has warned. According to Onasanya, the Lagos State may end up seeing coconut trees in calendar in the next 50 years. He spoke on Monday during the World Coconut Day Celebration organised by the African Coconut Heritage Initiatives in Badagry, Lagos. The theme for the 2019 celebration is “coconut for family wellbeing”. Coconut holds great significance for the people and residents of Badagry, a coastal town in the Badagry

local government area of Lagos. Besides, once being a money-spinner for people of this community, edged in between Lagos and Seme border, Benin Republic, history has it that the community’s affinity with the fruit dates back to 1845. This was when the first set of white men established the first coconut plantation in the town. For years, the fruit has been synonymous with the community since it enhances both its cultural heritage and the people’s economy. Onasanya, represented by Dapo Olakulehin, the general manager, Lagos State Coconut Development Authority (LASCOwww.businessday.ng

DA), said that Marina was full of coconut trees in 1960 and 70s, “but now, there is no coconut tree in that place again’’. “So, if we don’t want anything like that to happen, we must rise up and start planting coconut tree now. He described as worrisome the rate at which people cut down the trees. According to him, if a coconut tree is not producing up to 100 nuts in a year, this means it has outgrown its usefulness; they can cut it, but not the ones still producing. “What we are saying is that if you cut one plant one back. If some people did not plant the one that you cut, you cannot get the one you are cutting. So, plant another one for the

generation that will come,” he said. Also, Setonji Koshoedo, a former member House of Representatives, urged the state government to give out coconut tree seedlings free to people to encourage planting of the tree. Koshoedo said some farmers could not afford N1, 000 per seedling, the rate at which government was selling them. Doheto Mesi, president, African Coconut Heritage Initiatives, an NGO, said that Nigeria was ranked 17th coconut producer in the world. According to Mesi, Nigeria produces about 348,000 metric tonnes of coconut yearly out of one million tonnes, creating a deficit of 616,000 metric tonnes.

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Three arrested for robbing, strangling driver

he police in Niger State have arrested three suspecte d a r m e d ro b bers for allegedly robbing and strangling a commercial vehicle driver. Spokesperson of the police in Niger, Muhamm a d u A b u b a k a r, d i s c l o s e d t h i s i n Mi n n a , Monday. He said that the suspects were nabbed on August 31, by a team of police from GRA division through information from the public. Abubakar explained that the suspects confessed to have chartered a Golf car with registration

number JJJ 247 AX from Bauchi to Kano under the guise of being militar y personnel from Shadawanka Barrack. While on transit along B i r n i n Ku d u - Hu g u m a road in Jigawa state, the suspects ordered the driver to stop in order to ease themselves. “O n disembarking from the vehicle the suspects strangled the driver to death and zoomed off with the vehicle,” he said. He said that the suspects were arrested by the police after several attempts to sell the vehicle in the metropolis.

Motorists lament collapse of Auchi-Okene road

otorists and commuters plying the Auchi-Okene highway have appealed to the Federal Government to ease the gridlock experienced daily in the bad portions of the road. The road has become a nightmare for commuters as long vehicular queues often stretching from the Omega Fire ministry axis to Jattu junction, following the worsening condition of the road. One of the portions needing urgent intervention is the NNPC axis of the road that has become widened, leading to big gullies on its shoulders. The situation is such that two vehicles from opposite directions can hardly drive through at the same time. Worst hit is the Auchi Polytechnic hostel gate axis of the road, where articulated vehicles have broken down on one sec-

tion, daily causing heavy gridlock. A motorist, Johnson Olaede, said, “driving within the section has become terrible following the challenges of the rainy season. Another motorist, Francis Ojiefo, blamed the bad portions of the road to the poor job done by the contractor handling the dual carriageway. “The bad sections of the road can be traced to its poor handling by the contractor; this road was done last year but as you can see, some port i o n s o f i t a re a l re a d y bad,’’ Ojiefo said. A commuter, who identified himself as Mohammed, appealed to the authorities to urgently mobilise the contractor handling the road to return to site and save commuters and motorists from the harrowing experience to meander through the bad sections of the highway. NAN

Sylva’s community butchers giant whale Samuel Ese, Yenagoa

he people of Okpoama community in Brass local government area of Bayelsa State have butchered a giant whale that was grounded on their beach, a reliable community source told Cityfile. The whale described as humpbacked and measuring about 50 feet was found dead on the beach on Sunday night and com@Businessdayng

munity folks believed that it swam into the area at high tide, but was left stranded when the tide receded. A community source told Cityfile on phone that a similar incident had occurred in the community 40 years ago in 1979 when a whale was found dead and stranded at the beach. Pictures of villagers butchering the dead whale with hack and cutlasses had gone viral on social media platforms.

Wednesday 04 September 2019

BUSINESS DAY

PENSION today

In Association With

Micro pension plan as tool for financial inclusion in Nigeria Pius Apere, an actuarial scientist and chartered Insurer is the managing director/CEO, Achor Acturial Services Ltd. In this article gives an insight into implementation of the pension industry micro scheme and how this can support federal government’s effort towards financial inclusion.

Introduction here is no universally accepted definition of financial inclusion(FI) and thus, each countryhas its unique way of interpreting financial inclusion depending upon the stage of its development.In Nigeria,CBN’s National Financial Inclusion Strategy (NFIS) launched in October 2012definedfinancial inclusionas being“achieved when adult Nigerians have easy access to a broad range of formal financial services that meet their needs at affordable costs”.The overall target of NFIS is 80 percent financial inclusion (FI) foradult Nigerians by 2020. For pension as afinancial product,the NFIStargets 40 percentfinancial inclusion (FI) foradult Nigeriansby 2020. However,the 2018 FI report by EFInA revealed that only 8 percent FI has been achieved inthe pension sector. Furthermore, the pension penetration rate (PPR), the ratio of pension assets to GDP, is 6.69 percent in 2018. The micro-pension plan launched in March 2019 is expected to cater for the informal sector workers thereby achieving the pension industry’s strategic objective of covering 30 percent of the working population in Nigeria by 2024. Thus, this paper critically examines the opportunities and challenges in implementation of the regulatory Guidelines forMicro-pension Plan designed by PenCom to achieve the industry’s objectives. Micro-pension Plan (MPP) as Financial Inclusion (FI) Tool Section 1.2 ofmicro-pension guidelines defines“micro-pension plan as an arrangement for the provision of pensions to the self-employed and persons operating in the informal sector”. Opportunities in Micro-pension Plan (MPP) Measures to encourage participation in MPP The following measures would encourage a high proportion of the population of informal sector to participate inMPP: • Flexibility of contributions encourages contribution of small but frequent amounts resulting in high transaction costs and low benefit payouts.“Micro-pension Contributors may make contributions daily, weekly, monthly or as may be convenient to them provided that contributions will be made in any given year”, Section 6.3 (a) of MP Guidelines. • Allowing for withdrawals before retirement creates incentives. The MP Contributor may withdraw the total balance of the contingent portion of his/her RSA including all accrued investment income thereto, making the first withdrawal 3 months after the initial contribution and subsequent withdrawals once in a week from the balance of the contin-

Pius Apere, MD/CEO Achor Acturial Services Ltd

Aisha Dahir-Umar, acting director-general, PenCom

gentportion of the RSA, section 6.5.2 (i) – (iii) of MP Guidelines. • Develop vesting policies suitable for retirees.“The Micro-pension (MP) Contributor shall be eligible to access pensions upon retirement and attaining the age of 50 years or on health grounds..”, section 6.5.3(i) of MP Guidelines. • The Government sponsored empowermentprogrammes should support and/or encourage participants to save for their old agethrough theMPP.Thus,PenCom needs to liaise with Government Agencies with modalities to ensure that MPP would help maintain the long-term sustainability of benefits of the programmes for the participants. • The MP contributor is eligible to convert from MPP to Mandatory Contribution if he secures employment in an organization with three (3) or more employees, section 6.6.1(a) of MP Guidelines. However, can all such eligible MP contributors and their employers afford the mandatory contribution rates? Prevention of old age poverty People living in the informal sector have an increased risk of old age poverty andthey will need more self-supportbecause the traditional family structures no longer prevail. MPPwould therefore createthe culture of long term savings to secure financial future towards the prevention of old age poverty. Impact on nation’s economy There is no doubt that significant participation in MPPwould make the long-term investment funds in the private sector available tothe government for critical infrastructure development(e.g. infrastructure bonds), diversification of the economy andcontributing to the country’s GDP, thereby increasing the pension penetration ratio. Unique selling proposition (USP) The entitlement to guaranteed minimum pension (GMP)for Micro-pension (MP) Contributors, see Section 6.5.3 (ix) of MP

Guidelines,will create a unique selling proposition (i.e. marketing message) for the PFAswhich is likely to increase the number of MP contributors significantly, as they would like to benefit from GMP(a social safety net to enhance decent standard of living in retirement). On the other hand, the criteria for disqualification from GMP, see section 6.5.3 (x) of MP Guidelines,may not necessarily deter the uptake of the MPP provided the USP is marketed effectively by the PFAs. However, the non-implementation of GMP by PENCOM since the inception of CPS is a major concern likely to affect sales. Possible Challenges of Micro-pension Plan (MPP) Alternative ways of meeting retirement needs One of the major challenges to MPP is that potential MP contributors may already have other ways of meeting their retirement needs: • Self-employed (e.g. women)accumulate small amounts until they buy gold, land and property that they use as collateral for loans or resell them when the need for cash arises. • The culture of reliance on children for old age support is rampant in developing country. However, this has graduallybroken down because of economic hardships. • Employees in the informal sector may have other investments generating income over the long term (e.g. dividends). Consumer education and awareness There is possible low uptake of MPPbecause of its voluntary nature, current low public awareness and negative perceptions (lack of confidence) about pension products and fund management resulting in low pension benefits payable(e.g. reasons for payment of enhanced pensions). There is an urgent need for public enlightenment and sensitization on the immense benefits ofMPPby both the PFAs and PenCom. The impact of the above on micro-pension

contributors’ appetite for savings will be adversely affected by the prevailing socioeconomic conditions in the country. Thus, the marketing should focuson financial education of old age risks and the distribution model should be very efficient and trustworthy, different from the approach adopted for the mandatory CPS.There is no doubt that the 40 percent contingent withdrawal optionis a good incentive to attract and retain MPP contributors. Administration The implementation of MPP requires a high capital investment in IT infrastructurethat is supportive of mass registration, contribution collection and database/fund management. In fact, the time limit forITdeployment by PFAs to meet the expected increase in MP contributors in the short term may be a concern. There isa high tendency for MP contributors to operate RSA as bank savings account due to over flexibility of the contingent withdrawal option, leading to administrative hassle (i.e. high processing time and administrative costs) for the PFAs.To avoid or reduce the administrative hassle, MP contributors should complete a monthly income and expenditure planat registration as aguideto how much they can conveniently safe in a month. Reputational risks The entitlement to guaranteed minimum pension (GMP) is likely to create a high expectation for all potential MP contributors, as they hope to benefit from GMP at retirement even if their RSA balances will be too low to qualify for GMP, as in section 6.5.3 (x) of MP Guidelines. The above will lead to a reputational risk for the entire pension industry as MP retirees will be aggrieved whentheir expectationsare not met due to frequent use of contingent withdrawal option prior to retirement age. Strain on pension protection fund (PPF) There is a possibility of strain on PPF being established to fund the GMP, required by section 82 of PRA 2014, because of the significant number of retirees likely to qualify for GMPthan expected due toconversion from MPP to mandatory contribution option available. This may result in additional levy being imposed on both PFAs and the regulator. Regulation The regulation for MPP needs to be simple with less documentation. Adequate periodic reviews and monitoringthe effective implementation of the MPP will be required. Theimplementation of GMPwill also help to bring confidence in the CPS. Conclusion Without MP savings for old age within the informal sector (low-income socio-economic groups)may be quickly lost due to the impact of risk of old age poverty facing them.

IS NOW RC634453

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

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This section is created to increase awareness and deepen knowledge about the Contributory Pension Scheme. If you have enquiries or contributions, send to this e-mail: accesspfcbusday@yahoo.com

Wednesday 04 September 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Why investors should put money in insurance companies’ recapitalisation Modestus Anaesoronye

uite a number of investors are asking salient questions on why they should put in money into insurance companies, particularly in the ongoing recapitalisation of the industry. Some of these people especially shareholder groups are basing their concerns about their experience with some insurance companies in the area of dividend payout since after the 2007 recapitalisation of the industry. Some of the shareholders had said there was not much to cheer about from the insurance industry recapitalisation of 2007, having seen a lot of the companies been unable to pay good dividend since that time, while a lot of their stocks have also traded at par in a certain time and below par in recent times. But industry experts believe that the sector post consolidation will have enough resources to attract quality manpower, acquire necessary skills to underwrite big ticket risks, increase retention in the local market, and be able to take advantage of untapped potentials to create shareholder value. They say that there is still much to hope for in investing in insurance as the industry holds a lot of untapped potentials that hold long term prospect for savvy investors. Daniel Braie, managing director/CEO, Linkage Assurance Plc said firstly, the Nigerian investment climate is still one of the most attractive in the world in terms of investment returns, so that in itself is an impetus for new investors. Speaking specifically about the insurance industry, Braie said the full potentials of the industry is yet to be realized when you consider that the insurance penetration ratio is still below one percent. “Look at it from the point of our population demographics, the insurance industry is a huge market waiting to be unlocked. This should be an attraction for any investor to put in money. In addition, the compulsory insurances if adequately enforced will also offer opportunities for the insurance industry to grow and contribute to the overall growth of the economy.” According to him, the lack of local capacity for certain classes of risks is still a challenge therefore with increase in capital base of insurers, it is expected that it will make the insurance companies stronger to be able to retain more of the businesses and reduce

L-R: Feyisayo Soyewo, past president, Nigerian Council of Registered Insurance Brokers (NCRIB); Bola Onigbogi, deputy president, NCRIB; Shola Tinubu, chairman, NCRIB; and Eddie Efekoha, managing director/CEO, Consolidate Hallmark Insurance(CHI) at the August Edition of NCRIB Members Evening hosted by CHI in Lagos

businesses placed abroad. “The future of the insurance industry in Nigeria is very bright given the growth opportunities highlighted earlier especially in the retail space. Because of these potentials companies like Prudential of Britain and Allianz of Germany have recently partnered with local companies in addition to those already operating in the country.” Braie also said “as stated earlier the investment climate is still one of the most attractive in the world and the insurance industry is not an exception. “So both local and foreign investors should be rest assured that returns on their investment will be very favourable.” Mayowa Adeduro of Law Union and Rock Insurance Plc said the attractions to any informed investor to put money into insurance business is first the potential of the industry. “The population of Nigeria is over 200 million people with over 70 percent below 50 years age. The industry is about N400 billion GPI in 2018 but has the potential to double that in 5 years. The infrastructure deficit means there will be increasing spending in capital projects that attracts insurance.” According to Adeduro, increasing awareness of risk and insurance means more premiums to the industry. Better regulatory and governance environment creates opportunity for growth.” Corroborating Braie, Adeduro also noted that the existing six compulsory insurance products have potential to generate N1 trillion gross premium. “The local content law,

the carbotage law, the pension reform Act and other state enactments like the Lagos State Safety Control Law will all creates opportunity for insurance to thrive.” “As an operator, I foresee improvement in returns on investment after the recapitalization exercise because companies will likely acquire efficient distribution of products model leveraging on technology. Management cost and other /overhead cost will go down significantly including Reinsurance expense as the companies would have acquired higher underwriting and retention capacity.” “Post recapitalization, there will be lower participants and higher entry barrier, so i expect more collaboration and cooperation among remaining underwriters. I see an industry collaborating with banks for facilities, project financing, and investment returns will dramatically improve, Adeduro stated. Tola Adegbayi, executive director, General Business at Leadway Assurance Company Limited has this to say, “I would think that the potential for insurance is great for our country. The general banter is about population size and the bulk of this relates to the lower income groups where we have the most vulnerable part of our population, thus speaking to the potential for micro insurance.” According to Adegbayi, the core for insurance is then the middle income persons, SME business owners who desire financial freedom and security. “Insurance provides that freedom to aspire and the needed security should anything happen; meaning that any

investor needs to look at the market potential of this group.” While Adegbayi believes that the potential is huge, she was honest in her position that investment is choice when all variables have been considered because there also the rough side. “There are no guarantees in business. An investor must look at potentials being presented and make an informed decision on budgeted outcomes and what things are fundamentally required to achieve a targeted level of success within the medium to long term. Insurance is not a business for any investor with a short term focus, in my opinion. With a long term focused investor, the potential, looking at the fundamentals of low penetration and essential needs for financial security, is great, Adegbayi noted. The National Insurance Commission (NAICOM) had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion to N20 billion. According to the Commission, the minimum paid-up share capital requirement shall take effect from the commencement date of the circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than 30th June 2020.

Consolidate Hallmark Insurance pays out N11.4bn claims in 11 years Modestus Anaesoronye

nderwriting firm, Consolidated Hallmark Insurance (CHI) Plc has reaffirmed its commitment to meeting consumer obligations when they arise, even as the firm had paid out claims to clients amounting to N11.3 billion over the last 11 years. The claims payment ran from 2007-2018, underscoring its prompt claims payment culture testified by its teaming broker clients. Eddie Efekoha, managing director/CEO

of CHI made the disclosure during the Nigerian Council of Registered Brokers (NCRIB) Members evening hosted by the underwriter in Lagos. Efekoha who was represented by Mary Adeyanju, executive director, Operations at CHI said the company has consistently improved on its capabilities to deliver superior service experience to the insurance brokerage community. He further disclosed that CHI has recorded a consistent growth in premium over the years, at a compounded annual growth rate of 10.52 percent, and this stable performance he noted has been driven by the inwww.businessday.ng

creased confidence on the company by broker partners and customers. To its teaming shareholders, CHI has paid out N1.38bn in dividend in the past 12 years, making it one of the investment hot spots in insurance industry that attract shareholders interest. The company parades a management team of highly skilled individuals with many years of work experience in the insurance industry, having the capabilities necessary to drive an exponential growth in the company Assuring its broker partners on the future of the company, Efekoha said “we are

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committed to meeting the new capital requirement and plans to continually deliver value through technology, improvement in customer satisfaction and product diversification to further deepen insurance penetration”. “We shall continue to focus on technology investments to optimize core operations (Policy generation and claims; revamped and technology-driven customer service unit to improve client satisfaction; as well as investments in product innovation to develop tailored products that help solve more client problems.”

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Wednesday 04 September 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Soft landing proposed for insurers that may not scale recapitalisation hurdle Modestus Anaesoronye

nsurance regulator, the National Insurance Commission (NAICOM) has been urged not to throw away companies that will not meet the new minimum capital requirement for underwriters in the industry. The regulator is therefore urged to help such companies’ transit to micro insurance providers, rather than liquidating them. Pius Apere, managing director/CEO, Achor Actuarial Services Limited gave the recommendation during the 2019 NAIPCO National Conference held in Lagos. Apere said that the current capital requirement for micro insurance license put between N15million to N200 million for life business, and N25 million to N400 million for general business, depending on the coverage area and space is small and not enough to deepen penetration, or even become profitable companies. “The above capital is not enough to acquire the necessary infrastructural technology and hire and train large number of sales agents to sell the products, so converting few existing conventional insurers with their already developed infrastructure and human

capacity will make the miracle, Apere said. While noting that the premiums may be small, the risk remains the same and could wipe away little capital. NAICOM had early last year given June 30, 2018 deadline to non-life insurance companies to unbundle microinsurance products for standalone license. The Commission was said to be avoiding creating a vacuum, since conventional insurance companies were reluctant to take fresh license, and want to remain as micro insurance windows. At the moment, only two stand alone applications have been approved, which according to expert are not sufficient to achieve the strategic intent of the micro insurance project, which is to reach the mass uninsured and increase penetration. An industry source had said late last year that NAICOM may have to engage operators again, because operating as micro insurance window is not working and not serving the purpose of the project. May be the time has come with the recapitalization. The Revised Microinsurance Guideline which became effective 1st January, 2018 further stated that, “No person shall commence or carry on any class of Microinsurance business

without being registered or authorized by the Commission. Section 10, sub section 1 and 2 of the revised Microinsurance guidelines released by NAICOM said “Existing Conventional microinsurers shall wind down their window operations for non-life classes within 18 months from the effective date of this Guidelines and in not later than 24 months transfer the life classes to a dedicated microinsurance company.” It added that, ‘no policy shall be renewed or new one issued with an expiry date beyond the date stated above.’ According to the guideline, the following capital requirement shall obtain for the different business structures: Unit Microinsurer: The Company’s Minimum Capital Base is N40 million (General: N25 million & Life: N15 million). It is to operate only in anyone (1) location within a local community and the Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the location within a reasonable time frame. The Commission shall grant a state microinsurer licence to a unit microinsurer upon application following 36 months of successful business operation and ap-

R-L: Ken Aghoghovbia, deputy managing director/COO, Africa Reinsurance Corporation (Africa Re) receiving award on behalf of Africa Re as the NAIPCO 2018 Insurance Market Development Promoter of the Year from Mohammad Ahmad, chairman of the 2019 NAIPCO National Conference held in Lagos

proval by the Commission. Sta te Mic ro in s u re r : The Company’s Minimum Capital Base is NI00 million (General: N60 million & Life: N40 million). It is to operate only in anyone (1) State of the federation (for this purpose Abuja is regarded as a State) with at least 3 branches or office locations, each in a different Local Government Area. The Company shall prove to the Commission through their business plan that

Chioma Ejikeme resumes duty as executive secretary of PTAD

hioma Ejikeme, the newly appointed executive secretary of Pension Transitional Arrangement Directorate has assumed duty after official handover was made by the immediate past executive secretary and Minister of State for Environment, Sharon Ikeazor. The handover was made in the presence of management and Staff of the Directorate at PTAD Headquarters, Abuja. Ikeazor used the occasion to commend PTAD staff for their support and hard work which has turned the Directorate for better. She enjoined the staff to continue to maintain the high operating standard already set and cooperate with the new Executive Secretary for

the upliftment of the Directorate. She enumerated the successes recorded and the challenges faced by the Di-

Chioma Ejikeme www.businessday.ng

rectorate during her term. She encouraged the Executive Secretary to be courageous and work assiduously

they are going to access the low income earners spread across the state within a reasonable time frame. The Commission shall grant a national microinsurer licence to a state microinsurer upon application following 60 months of successful business operation and approval by the Commission. National Microinsurer: The Company Minimum Capital Base is N600 million (General: N400 mil-

lion & Life: N200 million). Its operation is nationwide with presence in at least 6 states within 3 geopolitical zones of the federation. The Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the country within a reasonable time frame. Registered Insurance Companies shall be granted national micro insurer licence upon application.

AIICO celebrates Edwin Igbiti as he bows out for the welfare of pensioners for her tenure to be remembered for good. Chioma N. Ejikeme, the ES appreciated the Hon. Minister and the entire PTAD staff for the good job they have been doing. She promised to build on the solid foundation laid by Sharon Ikeazor. She vowed to uphold the rights and welfare of the pensioners and welfare of the staff. She appealed for total commitment and loyalty from the management and staff of the Directorate. Babagana Kaigama, director, Corporate Services Department pledged the support and commitment of the management and staff of the Directorate to the Executive Secretary.

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IICO Insurance Plc has celebrated, Edwin Igbiti, its retired managing director/ CEO after 27 years of meritorious service in the company. The event was attended by members of the Board of directors and Executive Management team of AIICO Insurance Plc; top executives of AIICO’s subsidiaries; Igbiti’s family, friends, colleagues and stakeholders in the industry. Oladele Fajemirokun, accompanied by his amiable wife, Edith Fajemirokun, as special guest at the occasion appreciated Igbiti for his commitment to excellence while in service at the company and @Businessdayng

pronounced blessings upon him as he moves on. AIICO Insurance Plc., a leading composite insurer in Nigeria, commenced operations in 1963. AIICO provides life insurance, health insurance, general insurance, wealth management and pension management services as a means to create and protect wealth for individuals, families and corporate customers. Among those present were Tope Smart, chairman, Nigerian Insurers Association, NIA)’ YetundeIlori, director general; Eddie Efekoha, president, Chartered Insurance Institute of Nigeria, CIIN; Richard Borokini, director general, CIIN among many other dignitaries.

Wednesday 04 September 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

The big idea: The elements of a good company apology SANDRA J. SUCHER AND SHALENE GUPTA

or a company to win back lost trust, it’s important to grasp a fundamental truth: Sometimes apologizing is not the best strategy. If an apology is warranted, companies must then answer three key questions to properly craft a response: Do we tell the truth? On whose behalf are we acting? How do our actions benefit those who trust us? To help executives be better prepared to speak to stakeholders in difficult moments, we explain this process below. DETERMINE WHAT YOU’RE APOLOGIZING FOR Determine what exactly you’re apologizing for: an issue of competence, or one of integrity. A competence problem involves a failure of reliability: The product or service either didn’t work or didn’t live up to its promise. An integrity problem involves a failure of responsibility: A company fails to treat stakeholders fairly or doesn’t take responsibility for the results of its actions, whether those actions were intended or inadvertent. Peter Kim of the University of Southern California and his colleagues found that apologies were effective in restoring trust for problems of competence, but denial was the better strategy for integrity problems — if, and we can’t stress this enough, the company really did act with integrity. It turns out that competencebased problems are easier to forgive, because people understand that even the most competent companies and individuals can sometimes make mistakes. A well-constructed apology for a competence problem indicates that the individual or company recognizes that they did something wrong, understands and communicates exactly what was wrong and can convince stakeholders that they will change their behavior in the future. Integrity-based trust problems are much harder to overcome, because a breach of in-

tegrity is assumed to reflect a person’s true character. In the mind of the public, an integritybased trust issue happens because the individual or company’s leadership is fundamentally immoral. In these cases, Kim and his team found that a denial can challenge people’s automatic assumption of guilt. It can be beneficial to convince others that, as a person of integrity, you would never do the act you are accused of. (However, a cautionary note: If there’s clear evidence of fault, the researchers found that denial is never successful in winning back trust.) MAKING AN APOLOGY WORK Leaders then need to understand what makes an apology work. Social psychologists Roderick Kramer and Roy Lewicki reviewed prior research and found that an effective statement meets three criteria: It’s credible; it works to restore the goodwill of those who receive it because it is clearly meant to work in stakeholders’ best interests; and it assumes responsibility for correcting the problem over the long term. While this research specifically examined excuses, these three criteria link to three questions we’ve developed in our research, which companies

can use to clarify their motives as they consider how to make an effective apology. — CREDIBILITY: Do we tell the truth? — GOODWILL: On whose behalf are we acting? — RESPONSIBILITY: How do our actions benefit those who trust us? By focusing on these questions, CEOs have a better chance of delivering an apology that will start the long process of recovering trust. Here’s a breakdown of each question. 1. DO WE TELL THE TRUTH? Apologies can help win back trust in the face of a competence-based problem, but only if they are truthful, can show an understanding of what went wrong, and offer an account that corresponds with other publicly available information about the incident in question. Let’s look at each step. — BE TRUTHFUL: A statement must be factually true, both in terms of what happened and what the company is doing about it. This is crucial for convincing stakeholders that they can believe the company’s statements both now and in the future. A good apology also takes into account the context that gives a company’s assertions

credibility — or serves to discredit them. — EXPLAIN WHAT WENT WRONG: It’s vital to provide a full account of what the company did wrong. Kramer and Lewicki found that, when apologizing for a competence problem, a detailed account of actions committed by a company is much more persuasive than one that, for example, attributes the problem to factors outside the company. Details show a level of understanding of the mistakes that were made, helping concerned parties trust that the company knows what it did wrong. — ACKNOWLEDGE INFORMATION THAT’S ALREADY OUT THERE (OR MAY BE SOON): Leaders should disclose facts they know are in the public domain, or may be revealed by investigative reporters or whistleblowers. In our era of 24/7 information flows and social media, companies are not alone in explaining what went wrong. Accepting — rather than denying, glossing over or failing to disclose material facts that have been unearthed — reinforces that the company embraces a truthful account of its actions. 2. ON WHOSE BEHALF ARE WE ACTING? To help win back trust, apolo-

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gies should prominently feature the people who have been harmed — and in whose name the company pledges to do better in the future. This demonstrates that leaders understand and care about the impact their company’s errors have had on people’s lives. To do this effectively, we offer three guidelines: — FOCUS ON THEM, NOT ON YOU: It’s natural for any leader to feel a sense of guilt and responsibility in the wake of a tragedy; it’s also normal to worry about not only the public but shareholders and employees as well. However, your public apology should focus on those who suffered harm. — BE DETAILED: Make sure to include personal information about those who were harmed to show that you recognize the true cost of your company’s error. — APOLOGIZE QUICKLY: Don’t worry that you may not have all the facts yet, though you should be forthright about the facts you do have. What is important is to show that as a company you are aware of, and deeply sorry for, the harm that was caused. 3. HOW DO OUR ACTIONS BENEFIT THOSE WHO TRUST US? Once the facts are laid out, and it’s clear whose interests the company is acting in, this last question helps the company communicate exactly how its future actions will benefit these stakeholders. After all, an apology is just words if the company can’t show stakeholders that it will offer reparations or ensure that the situation will never happen again. A final note: Leaders also should recognize that even a perfect apology is just the first step. The greater the harm, the more difficult it will be to earn back stakeholders’ trust — no matter how eloquent the apology. • Sandra J. Sucher is a professor of management practice at Harvard Business School, where Shalene Gupta is a research associate.

Wednesday 04 September 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

Service jobs should be — and can be — middle-class jobs ZEYNEP TON

MONEY

merica is losing its once-healthy middle class and desperately wants it back. But how? Some say reviving manufacturing jobs. Some say redistributing existing wealth. Some say a universal basic income. Academics are fond of upskilling. Even U.S. CEOs are now saying they need to create more higher-paying jobs. But what almost no one talks about is how we can improve the low-wage jobs — mostly in the service sector — that already exist. Last year, nearly 42 million Americans, almost 30% of the workforce, had jobs in retail, food service, personal care, health care support, and cleaning and maintenance — all with a median hourly wage below $15. For 10 years, the largest occupation in the U.S. has been retail sales, with a median hourly wage in 2018 of only $11.33. It’s expected that between now and 2026, two of the fastest-growing job titles will be home health aide and personal care aide — with median hourly wages of only $11.63 and $11.55.

These workers struggle to pay for rent and health care, and are rarely able to save for retirement or emergencies. Many have unstable schedules, which affects not only their income but also their children’s education and their family’s health. Many are assumed by their employers to be, as one retail worker told me, “a dime a dozen, just human robots.” Many of these dead-end jobs could be good jobs, offering living wages, better benefits, sane schedules and better opportu-

nities. How do I know? Because several successful retail chains have already figured out how to do it. At QuikTrip, a convenience store chain, a full-time associate in Tulsa, Oklahoma, starts at over $42,000. The average hourly wage in Costco’s U.S. warehouses is slightly over $23. QuikTrip and Costco design their operations to respect and leverage employees’ time, knowledge and capabilities. Yes, it’s a big investment of money and ef-

fort in the front-line labor force, but with an even bigger return in productivity, customer loyalty and adaptability. If the Business Roundtable, the American association composed of the nation’s leading CEOs, is serious about companies serving their employees and communities and not just their shareholders, members operating in low-wage sectors need to prioritize raising wages, and respecting their workers and the work they do. Company

boards and investors need to give these CEOs their support. Change isn’t easy, but it can be made if CEOs prioritize it. From 2014 to 2017, Mud Bay, a pet-supply retail chain in the northwestern U.S., raised wages by about 30%, implemented an employee stock-ownership plan, increased the percentage of employees working over 30 hours a week (and hence receiving benefits) from 65% to 82% and made many changes to work design. The results were impressive: a 35% reduction in employee turnover, increased productivity and a nearly 50% increase in samestore sales growth. Over the past 100 years, many manufacturing jobs have been transformed into wellpaying, desirable jobs. A similar transformation is now possible and badly needed in the service sector. If the opportunities are seized, we will see not only a stronger middle class but also stronger companies with a workforce that is prepared for the challenges that new technologies and new competitors are sure to bring.

• Zeynep Ton, a professor at MIT’s Sloan School of Management, is president of the Good Jobs Institute.

What people hate about being managed by algorithms, according to a study of uber drivers MAREIKE MÖHLMANN AND OLA HENFRIDSSON HAPPINESS ompanies are increasingly using algorithms to manage their remote workforces. Called “algorithmic management,” this approach has been most widely adopted in gig economy companies. For example, ride-hailing company Uber substantially increases its efficiency by managing some 3 million workers with an app that instructs drivers which passengers to pick up and which route to take. Being managed in this way offers some benefit to self-employed workers as well: For example, Uber drivers are free to decide when and for how long they would like to work and which area they would like to serve. But our research — a multi-method study of Uber drivers in New York and London — reveals that algorithmic management is also frustrating to workers, and their resentment can lead them to harm their companies. We collected data by interviewing 34 Uber drivers, observing drivers in action, analyzing more than 1,000 online forum posts and reviewing media coverage of Uber in several waves between December 2015 and

September 2018. We found that Uber drivers have three areas of consistent complaints related to their working “for” algorithms: — CONSTANT SURVEILLANCE: When drivers are logged into the Uber app, it tracks their GPS location, speed and acceptance rate of customer requests. If they diverge from the app’s instructions, they can be penalized or even banned from the platform. Drivers regard performance evaluations in the form of customer ratings particularly frustrating. — LITTLE TRANSPARENCY: Uber drivers find the underlying logic of the complex algorithms vexing, believing it to be an unfair www.businessday.ng

system that subtly manipulates them. (Indeed, Uber has previously admitted to drawing on insights from behavioral science to nudge drivers to work longer hours.) — DEHUMANIZATION: Uber drivers feel lonely, isolated and dehumanized. They don’t have colleagues to socialize with or a team or community to be part of. They lack the opportunity to build a personal relationship with a supervisor. Drivers feel disempowered enough that they are finding creative ways to make their displeasure known. For instance, drivers are gaming the system by artificially causing surge pricing.

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They are also getting political and organizing. To address the challenges of algorithmic management in an ethical way we suggest the following strategies: — SHARE INFORMATION: It may not be possible to share the algorithm itself with workers, but company leadership can and should share with them the data and goals that informed it. — INVITE FEEDBACK: Get workers actively involved in discussions about the design of algorithm-driven systems. — BUILD IN HUMAN CONTACT: Develop formal, supportive communities where workers feel like members. Add a human @Businessdayng

element to the way workers are managed. — BUILD TRUST: Implement benefits that improve workers’ welfare, such as financial support in case of illness, or better sick pay and maternity leave. Regulators across the globe are already seeking to implement some of these ideas. In 2017, it was ruled that Uber will need to pay U.K.-based drivers a minimum wage and provide sick and holiday pay. As more companies manage their labor force algorithmically, it becomes that much more incumbent upon them to take some of these steps on their own. • Mareike Möhlmann is an assistant professor at Warwick Business School. Ola Henfridsson is a professor of business technology at the University of Miami Business School.

Wednesday 04 September 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Ghana’s first assembled Toyota vehicle ready 2020 ... We are motivated by good economic climate - CEO Stories by MIKE OCHONMA Transport Editor

ith the Nigerian government rejecting assent to the National automotive policy bill, news coming from the Toyota Motor Corporation (TMC) says that, Ichiro Kashitani, President/CEO of Toyota Tsusho Corporation (TTC), has assured Nana Addo Dankwa Akufo-Addo the President of Ghana, to expect the first Toyota assembled in Ghana to be outdoored by August 2020. Thanking the government of President Akufo-Addo for its help and support towards the realization of this project, Ichiro Kashitani stated that “we consider the project of the assembly plant a marriage. It lasts for life, and it is a long-term project.” The CEO of TTC said this last recently when the Ghananian government and TTC signed a Memorandum of Understanding (MoU) for the establishment of a Toyota and Suzuki assembly plant in Ghana. During the meeting, Imai Toshimitsu, chief operations officer Africa division of Toyota Tsusho noted that, thedecisiontosetupinGhanahasbeen necessitated by the favourable economicclimateprevailinginthecountry. “We are willing to participate in the automotive industry in Ghana. I am very happy that we have reached the consensus and principal agreement to start the Toyota and Suzuki assembly plants. We are planning to kick-off the project immediately, and, hopefully, we will have the first car made in Ghana this time (August) next year. Thank you very much for your support,” he added. Imai Toshimitsu stated that, details of the work to be undertaken in Ghana, including the volumes and models of the vehicles to be

produced, are contained in the MoU. “The products to be assembled include the Toyota Hilux pickup, which is already popular in Ghana. Since it will be locally produced, I hope it will be more popular. We are also planning to introduce small passenger cars, with two Suzuki brands,” the Toyota COO explained. The decision to assemble Suzuki vehicles in Ghana, follows the acquisition of a 4.9% stake in Suzuki by Toyota Tsusho, thus making Toyota a “principal shareholder” in Suzuki. “So, Suzuki products will be assembled and sold here. The cars which will be produced fere are our core models for Africa and Ghana customers,” he stressed. On his part, President AkufoAddo stated that the signing of the MoU with Toyota Tsusho falls in line with the vision of making Ghana an automotive hub for West Africa and the larger African market. With the coming into force of the

African Continental Free Trade Area (AfCFTA), the President noted that “Ghana is the base to reach this larger African market”. He continued, “We are attaching a great deal of importance to the initiative and development. We want to assure you that, whatever it is we can do on the side of the Ghana government to provide you with the necessary support and assurance that the investment you are going to make in our country will be worth your while, you can count on us to do that.” Last March, officials from Toyota Tsusho Corporation, Suzuki Motor Corporation, and CFAO announced a joint venture arrangement to assemble and distribute vehicles in Ghana. During a courtesy visit, the general manager for Middle East and Africa of Suzuki Motor Corporation, Koyote Suzuki, told President AkufoAddo that “our next phase of growth will come from Africa, but we need to find the right partner in Africa for

manufacturing and distribution after sale of our vehicles.” He stated that “we came to know from Toyota that the Ghanaian government is planning to roll out a new automotive policy. We heard this from Toyota executives who paid a visit here last month. We are highly interested in participating in this initiative by the Ghanaian government. We wish to start production here, grow it and expand it.” In his remarks, Masafumi Yamashita TTC, noted that Toyota Corporation and CFAO have the largest automotive distribution network in Africa, and have an ambition to contribute to and support further development in African countries. “Our vision is with Africa and for Africa. This time, we commit to work together with Suzuki Motor Corporation for the future development of the automotive industry here in Africa, as a strategic partner”. He added.

Betacar assures ‘Tokunbo’ car buyers of affordable prices

etacar a new integrated ecommerce automotive platform has come into Lagos to solve key issues for buyers while at the same time making sure that getting a quality ‘Tokunbo’ car is simple and affordable for every buyer. The platfor m which was launched recently has deployed innovative technology that would disrupt the automotive industry, and provide convenience to customers who desire quality cars at affordable prices. According to Lou Odunuga, the CEO, “Betacar has come to raise the bar in the automotive industry using technology and every customer will be treated with utmost respect and quality service. Our goal is to become Nigeria’s most preferred destination for used cars,”. Ifeoluwa Dare-Johnson, head of marketing, Betacar, said that the company is keen on delivering services that put the customers first. Users can find quality certified cars at best prices from the comfort of their digital gadgets anywhere they are. “The company has come to give power to the buyer by ensuring they choose quality and affordability at the same time. We do not always have to compromise one for the other.” She said in a statement. Customers on the platform are promised total convenience in car buying through the interactive platform which makes buying simple. The platform also provides value added services such as quality checks and diagnostics reports. This will boost buyers’ confidence and ensure they are getting value for their money. Nigerians can start shopping on website to access quality used cars for sale in Nigeria. The platform lists a range of cars at different budgets, making it the ideal option for every buyer.

Mitsubishi Eclipse Cross in strings of global awards

arely one year of winning the outstanding design award during the 2018 Nigeria Auto Journalists Award, has the Mitsubishi Eclipse Cross once again continued its strings of global prestigious awrads. At the recent national “Car of the Year in Russia – 2019” award ceremony, the Eclipse Cross was named as the best “Compact SUV” in one of the most highly competitive categories. “Car of the Year in Russia” is judged by a public vote and is the largest survey of its kind in the world, with more than a million people voting for their favourites. The votes are independently verified by research company IpsosComcon. It is not just the public who are impressed; the Eclipse Cross crossover SUV was selected as the “RJC Car of the Year 2019” run by the Automotive Researchers’ & Journalists’ Conference of Japan (RJC). It is a strategic model designed by the Japanese automaker, Mitsubishi Motors to join its global line-up of crossover SUVs: the ASX compact SUV and the Outlander.

Since launch in 2018, the model has been sold in over 100 countries and has gained international recognition with nine awards. The impressive array of global honours is due to its technical abilities, design, and safety features. In 2018, the car earned the highest safety rating according to the independent European organization Euro NCAP and was also awarded by the Nigeria Automotive Journalists Association (NAJA) as the Outstanding SUV design of the year. In Nigeria, Massilia Motors general manager (Sales), Tunji Itiola explained: “The SUV is equipped for the local market with a 2.0 liter Continuously Variable Transmission (CVT) petrol engine that allows seamless gear interchange, giving the smoothest driving experience within its category’’. ‘’Not only is the Eclipse Cross a stylish fusion of a sharp coupe and a compact SUV, it has high rough road performance and well-balanced dynamics, due to Mitsubishi’s unique Super All-Wheel Control (S-AWC) four-wheel-drive system.’’ Itiola said. It is an upscale model with super www.businessday.ng

exciting features which include, the adaptive cruise control, which maintains a selected distance between a vehicle and the car ahead using radar. It reduces driving stress, especially during traffic jams on highways and assures better safety. Another award-winning safety

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feature is the lane departure warning intelligent sensors placed all around the vehicle that monitors your surroundings and provide active warnings to alert you of possible danger. For instance, if your car is drifting from its lane while the turn signals are not operating. To top it all, the most unique in@Businessdayng

novation of this beauty is the HeadUp Display (HUD), which conveys information above the dashboard for easy viewing. Mitsubishi Motors Corporation (MMC) is a global automobile company based in Tokyo, Japan, which has a competitive edge in SUVs and pickup trucks, electric and plug-in hybrid vehicles. MMC launched the i-MiEV – the first mass-produced electric vehicle in 2009, which was followed by the Outlander PHEV in 2013 – a plug-in hybrid market leader in Japan and Europe. Pajero/Montero Sport, Triton/ L200, Ooutlander and Xpander play a major role in achieving its growth. MMC is listed on the Tokyo Stock Exchange. Massilia Motors is the joint venture of the CFAO group and the Chanrai group uniting forces to deliver customer satisfaction. With operations run by CFAO, Massilia Motors is the sole distributor of Mitsubishi Motors in Nigeria. Lineup includes the ASX, Eclipse Cross, Outlander, Pajero, Pajero Sport and the L200 pick-up.

Wednesday 04 September 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

to Nigeria Ford ‘Poor stakeholder understanding cause of NAIDP rejection’ Relief owners over extended

Following President Muhammadu Buhari’s rejection of Nigeria’s Automotive policy bill, BusinessDay’s MIKE OCHONMA and Transport Editor has been gauging the heartbeat of industry stakeholders on the turn-out of events. One of such strong voices is LUQMAN MAMUDU, former director of policy & planning, National Automotive Design & Development Council (NADDC) and automotive industy expert. He fielded questions on this and a number of critical issues.

resident Buhari rejected assent to the Nigeria Automotive Industry Development Plant Fiscal Incentives Guarntees Bill.What is your reaction to this. I am not suprised because of events leading up to the rejection. Upon submission of the bill to the Presidency for assent, as usual, the president will request advice from relevant quarters to inform decision. One of the agencies consulted was NIPC which outrigthly advised the president not to sign because certain aspects of the bill unnecessarily incurred into the existing investment act. I wonder were NIPC was during public hearing on the bill. This notwithstanding, the aspects objected to by the agency were not very central to its core purpose which is to ease Nigeria Customs Service aministration and engenderinvestir confidence. I think, it is more of insufficient understanding of the bill intent that caused the NIPC’s wrong advice. I also thought at the time that NIPC aught to have consulted NADDC before advising the presidency because its concerns could easily have been adressed through an Executive bill for amendment If the President was allowed to sign. My advice at this point is for NADDC, NIPC and other relevant agencies to amend the bill and quickly resubmit to the National Assembly for consideration as an Executive bill. The rejected bill was privately sponsored .This is very important because the rejection by the president will be misinterpreted

Luqman Mamudu, former director, policy & planning, National Automotive Design and Development Council, (NADDC).

by the global investment community as a rejection of policy. This definitly is not government intention. The bill should be reintroduced fast to remedy the situation.with inputs from NIPC and others. I am sure that the president will sign if done correctly. It’s just that the legislative process is usually long but with the right push, this can happen very quickly. I know we all crave to diversify the economy and the automotive industry offer a very golden chance. What is the implication of this

especially with Nigeria as signatory to AfCFTA As a signatory to the African Continental Free Trade Agreement (AfCFTA), it will amount to investment suicide if commitment to automotive industry is not demonstrated by some level of legislation. The Original Equipment Manufacturers (OEMs) will simply locate in more welcoming countries and flood this country with all sorts of old and new automobiles. What can you say are the reasons for the silence by some CEOs

of local auto assembly plants on the rejection of assent to the automotive policy bill by the Federal Government They are probably not suprised on account of the lackluster attitude of the policy administrators. To renew a license alone can take up to eight months. This is a license with one year lifespan. Most of their goods are stuck at the ports while most are hesitant to open Letter of Credits (LCs). As I speak, some of the applications for renewals are still at the Federal Ministry of Finance unattended. The CEOs of these companies that have made huge investments are already sufficiently frustrated, this one is really nothing. They are probably confused. What do you feel will be the mindset of OEMs right now sir The OEMs will be waiting to see the next line of action and this is why a bill should be quickly re-introduced with a call for public hearing. What do you think will happen to the investments of local assemblers The investment will not physically be affected as the policy is neither scrapped nor suspended. It is only the quest to reassure investors which is the aim of the bill that has a temporary setback. And it is because of Nigeria penchant for policy summersalt that we encouraged it in the first place. In other climes you really dont need an act to pursue an automotive program. It can be achieved administration as is currently ongoing even if with stifling bureaucracy.

CIG Motors expands to grab S/South market share … As former Stallion CEO becomes GMD

n what industry watchers would describe as a fresh to grab a slice of the automotive market share of the south-south region, CIG Motors Co. Limited, authorized distributors and marketers of GAC range of automobiles, last week, inaugurated the Port-Harcourt showroom in realization of the company’s cardinal objective of intensifying the brand and getting its services closer to its growing customers across the country’s six geo-political zones. An internationally recognized and award winning automobile brand, It would be recalled that, GAC Motors made a debut in the passenger car and Sport Utility Vehicle (SUV) segments five years ago, when it launched series of Chinese engineered vehicles that apparently increased its share of the keenly competitive Nigeria vehicle market. Currently adjudged one of the leading Chinese vehicles in Nigeria, GAC seeks to grow its share of the automobile market, promising to woo oil majors and servicing companies in the Niger Delta region

as the South-South region joins the growing lists of emerging GAC showrooms in Nigeria.The GAC brand ranks among choice automobiles of the Nigeria Police and other establishments such as the Dangote Enterprise. Meanwhile, Parvir Singh, the former managing director of Stallion automotive group who resigned couple of months ago from the automobile group has been appointed as the new group managing director of CIG Motors. Speaking during the formal opening of the new showroom in the Rivers State capital, Parvir Singh said that, the desire to always enhance customers’ experience, while helping vehicle enthusiasts optimize the value of their GAC vehicles influenced the inauguration of the Port-Harcourt showroom. “We will continue to champion the development of GAC showrooms across the country’s geo-political zones’’. He said. He described GAC range of vehicles as remarkable and superbly engineered automobiles with unwww.businessday.ng

L-R: Jubril Arogundade, general manager; commercial, Parvir Singh, group managing director, Valentine Ede of Auto Renovo, Pankaj Bohra, general manager in charge of after sales and Kayode Adejumo, general manager, southern region 3 all of CIG Motors Co. Ltd, and at the opening of the GAC Motors showroom in Port-Harcourt recently.

precedented premium features that could turn heads. Amon the those who were present at the event includes company executives and representatives of oil companies who came around to witness the unveiling ceremony of the GAC showroom, where an on-the-sport 10 percent discount was extended to willing customers to initiate purchases. The GAC group maanaging director also said that the opening of the Port-Harcourt GAC showroom/

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service centre would further help customers optimize the value of the brand and make value-driven decisions. According to him; “At GAC Motors, we understand the growing need for customer-dealer relationship and we won’t stop at doing anything possible to make owning and driving GAC vehicles a cinch”. All the GAC range of passenger cars and sport utility vehicles including the latest GS8 were showcased at the event. @Businessdayng

warranty

xclusive Ford distributor; Coscharis Motors has announced an improvement in the warranty period of new Ford vehicles to 3 years or 100,000km for owners in Nigeria . This new warranty is only applicable to 2017 models and upwards and the Ford vehicles included in campaign are the Figo, Focus, EcoSport, Edge, Escape, Everest, Explorer and the F-150 Ranger Pickup models. Company sources say this package is another way it is responding to the yearnings of numerous Ford customers in Nigeria, some of whom are long distance travellers who cover more than 60,000 kilometers within the given three years warranty period. Warranty coverage on Ford vehicles in Nigeria used to be for a period of three years or 60,000km, whichever comes first.” says Abiona Babarinde, general manager in charge of marketing and corporate communications at Coscharis Motors. Ford customers whose vehicles are currently under warranty can enjoy either of two offerings, premium care or premium maintenance plan. Premium care or warranty extension is available to all customers whose vehicles are currently under warranty, which can now be extended from three years/60,000km to six years/160,000km from the warranty commencement date. Customers who have the premium maintenance plan (PMP) are qualified to extend it from four years/120,000km up to six years/160,000km from warranty start date, giving customers a total of up to 21 free scheduled maintenance/service visits. Ford customers whose Ford vehicles are currently out of warranty can utilize a special package called flexible maintenance plan (FMP). The flexible maintenance plan is available for customers with 2009 model year Fords. The plan is effective from date of purchase, irrespective of their current mileage, and is valid for four years/80,000km. It will cover 10 service visits with maintenance coverage which includes 1 set of front brake pads and one set of rear brake pads only when required from the date of purchase of the contract. “This initiative is part of Coscharis’ ongoing campaign that aims to make motorists aware of the benefits of having their vehicle serviced by certified technicians using genuine parts. We are committed to delivering quality service to our customers,” said Babarinde. Coscharis remains one of the biggest vehicle dealers and service centres in Nigeria with a network of 17 after-sales service centres as well as Certified Parts Wholesale Dealers (CPWD) partners and Ford-backed Quick Lane Tyre and Auto Centres. All the technicians working at the Ford dealerships are factory-trained and Ford-certified. Only genuine Ford or Motorcraft replacement parts and approved lubricants are used when servicing vehicles at Coscharis Ford Service Centres. Genuine parts and approved lubricants are also available through CPWD outlets.

Wednesday 04 September 2019

BUSINESS DAY

tax issues Revenue accountability in Nigeria: The role of Federal Inland Revenue Service Adefisayo Awogbade

Introduction evenue derivable in Nigeria can broadly be categorised under Oil and Non-Oil revenue. The Nigerian economy had for many years been dependent upon revenues derived from Oil and Gas hence the infamous economic meltdown led to the decline in the revenue generated from petroleum resource from the early 2000 till date. Following the recession that ensued, alternative sources of revenue generation particularly from the non-oil sector, became the focus of the Federal Government. Tax Administration The Federal Inland Revenue Service (“FIRS”) by virtue of Section 8 (1) of the Federal Inland Revenue Service (Establishment) Act, 2007 (“FIRSEA”) provides that the FIRS shall be responsible for assessment, collection, rendering of account and enforcement of payment of taxes as may be due to the Federal Government or any of its agencies; and they shall also collect, recover and pay to the designated account, any tax charged under any provision of the FIRSEA. Consequent upon this, the FIRS has the sole responsibility of administering Federal taxes like the Value

Added Tax (VAT), Personal Income Tax (PIT) as restricted under the Act, Companies Income Tax (CIT), Stamp Duties, Capital Gains Tax, Petroleum Profits Tax, and National Information Technology Development Agency Levy. While the FIRS only has control over non-oil revenue from taxes collected, Oil revenue collection figures are subject to more external forces such as the price of oil in the

international market, which itself is subject to a myriad of factors beyond the control of local fiscal policy and jurisdiction. The Nigerian National Petroleum Corporation (NNPC) has the sole responsibility for upstream and downstream developments, and is also charged with regulating and supervising the oil industry on behalf of the Nigerian Government. Between 2012 and 2014 oil revenue accounted for 57.28percent

while non-oil revenue accounted for 42.72percent, whilst for the period between 2016 and 2018 oil revenue accounted for 40.65percent while non-oil revenue accounted for 59.33percent of collected revenues. It is pertinent to note that the fall in price of crude oil and reduction in crude oil production were traceable to vandalisation of pipelines and the effect of the recession on the economy in the second quarter of 2016, which slowed down general economic activities in the country. However, tax revenue grew as the economy recovered in the second quarter of 2017. Conclusion The Chartered Institute of Taxation of Nigeria notes that FIRS has severally adopted unique innovative strategies and initiatives in the collection of VAT during the period (2015 – 2017) that led to approximately 40percent increase over 2012 – 2014 collection figures. The various initiatives included ICT innovations, taxpayer education, taxpayer enlightenment and evaluation, etc. CITN, as the only tax professional regulatory body in Nigeria, has keenly observed that since August 2015, the FIRS target for two major non-oil taxes were increased by 52percent for VAT and 45percent for CIT. This period has not only wit-

nessed increase in absolute collection figures, but has more than ever increased tax payers base and has brought tax compliance consciousness to the Nigerian populace amongst others. There has never been a time in the modern history of Nigeria that taxation has become a serious issue for conversation. As part of our tax review mechanism, our Institute exudes confidence that the current strategies and initiatives will improve revenue collections and meet the expectations of the Government. It is hoped that with the adoption of more tax compliance strategies, the tax base will experience further widening to include more people, sectors and businesses into the tax net for enhanced revenue generation. The FIRS has done credibly well and needs to be commended for these great giant steps by government and all well-meaning Nigerians. The job of Tax collectors is a tough one as tax payers do loathe them. We are convinced that we have made some progress but yet to reach our objectives as regards taxation in Nigeria. We urge the FIRS to join hands with CITN in its avowed quest to make taxation the foremost driver of our revenue generation in Nigeria. Adefisayo Awogbade is the Registrar/Chief Executive, Chartered Institute of Taxation of Nigeria

The need for a business-friendly exchange rate policy

ince 2016, the Central Bank of Nigeria (CBN) has kept its official rate for the naira at 305 against the US dollar — almost 20 percent stronger than the rate at the Investors and Exporters’ foreign exchange window, also known as the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) rate. This rate is used to supply cheap foreign exchange to companies in key sectors of the economy including fuel importers, as well as government departments. Back in August 2017, the CBN weakened the Nigerian Foreign Exchange Rate Fixing (NIFEX) - the rate at which it sells US dollars to the majority of local companies by roughly 10 percent, bringing it closer to the NAFEX. At this point, both the NIFEX and NAFEX were already converging towards the naira’s black-market value of N360/$. Today questions remain as to why the CBN did not take advantage of the gradual convergence of both the NIFEX and NAFEX to unify all rates. In May 2019, the Head of the Nigerian Investment Promotion Commission, Yewande Sadiku, publicly stated that the CBN was in talks with other agencies to establish a single

rate for the naira. In the same month, the CBN revised the official rate on its website classifying it as ‘market determined’. This prompted speculation that the CBN was moving towards a unified rate. The website has since been updated to reflect the original rate; however, there was an adjustment in the custom duty rate from N305/$ to N326/$. Investors have long called on Nigeria to merge its multiple exchange rates. This has been further echoed by analyst firms including Citigroup and Renaissance Capital, who argue that the current exchange rate system is opaque and a deterrent for foreign investment. They prefer a single rate and a freer-floating currency. The International Monetary Fund (IMF) is equally critical of multiple exchange rates, arguing that the absence of a single exchange rate creates confusion and discourages foreign investment. On 10th June 2019, the IMF announced it was reviewing its Multiple Currency Practices (MCP) policy for the first time in almost 38 years. In a statement, it said, “The multiple-currency practices policy aims to promote orderly exchange arrangements and a stable system www.businessday.ng

of exchange rates.” It further stated that it is putting in place transitional arrangements to provide adequate time for member countries to adjust their policies, after which the revised MCP policy would become operational.” Surprisingly, Nigeria is one of only two emerging markets in its coverage that has a multiple exchange rate system. According to Jeremy Greenwood, Fellow of the Econometric Society and Professor of Economics at University of Pennsylvania, a dual-exchange system in the longer term will cause inflation. It engenders the government to incur a loss

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in foreign currency transactions, resulting in the central bank printing more money in an attempt to counteract this. Ultimately, if there is no policy driven government intervention the long-term trend will be significant inflation. This is precisely what Nigeria has been going through for years – a steady economic decline resulting from the erroneous use of a multiple exchange rate system. In the same vein, the Director of the Africa Department at the IMF, Abebe Aemro Selassie, is lobbying for Nigeria to move to a single unified foreign-exchange rate.

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According to Selassi, “We noticed that the gap between the parallel market and the official market has reduced significantly, so that’s a movement in the right direction, but there are still several foreign exchange rates. Even though the gap is narrower, the country would strongly benefit from having a unified and liquid single foreignexchange market”. Evidently the market is calling for an almost immediate rate unification to enable Nigeria to benefit from the ability to efficiently settle foreign exchange transactions. Once this convergence happens, we can expect to see price stability for exporting firms and cost reduction for importing firms. This is precisely why the Chinese Yuan has been fixed against the US dollar for nearly 20 years; it has created a stable economic environment for Chinese manufacturing. Should Nigeria converge its multiple exchange rates, investor confidence will certainly be strengthened. By providing a single exchange rate, companies will be able to plan strategically and therefore be likely to invest more. Above all, a unified exchange rate regime will jump start the economy.

BUSINESS DAY

Wednesday 04 September

FINANCIAL INCLUSION

& INNOVATION

Creative Associates boosts financial inclusion in north with mobile phones ENDURANCE OKAFOR

he closest banks to some Northerners in the rural areas are miles away and may take several hours to complete the round trip. Creative Associates International, an organisation that provides outstanding, on-the-ground development services and partnerships to deliver sustainable solutions to global challenges has sought to find a local financial technology solution that leveraged the mobile phone to bridge the access in Northern Nigeria. As part of the USAIDfunded Northern Education Initiative Plus (NEI), Creative Associates International and its partners are strengthening the ability of Bauchi and Sokoto states to provide greater access to basic educationespecially for those affected by conflict- and to improve reading outcomes for school-aged children and youth. To support them, the project pays Learning Facilitators a stipend of

10,000 Naira per month (approximately $27). Due to the lack of formal banking institutions, the Learning Facilitators finds it hard to access financial services and get paid for their work. It’s a challenge facing an innovative education project in two Nigerian states. Through its non-formal learning centers, NEI Plus

provides learning opportunities to children and youth who are not able to attend the formal school system. They are taught by Learning Facilitators, 87 percent of whom live in rural areas. To ensure payments make it to these financially underserved educators facing this access gap of traditional banking chan-

nels, Creative is leveraging mobile phones. Mobile phone ownership in Nigeria is relatively high (83 percent according to the World Bank), giving NEI Plus the option to build upon the already established mobile money channels. The NEI Plus collaborated with the company eTranzact to provide a customized,

tailored payment solution. As they were financially underserved, the majority of Learning Facilitators had never used mobile money before. To ensure sufficient uptake of the product for the project use case and beyond, the NEI Plus designed and deployed mobile money training for the educators. The training included sections relevant to their uses: digital financial literacy, mobile money uses, mobile savings, and mobile value-added services. Recent survey revealed that the Learning Facilitators enjoy receiving their stipends via mobile money. One facilitator noted that he liked having his stipend immediately available on his phone so that he could choose what to do with it, another noted that he liked the security provided via mobile money. The mobile money deployment was also new for this region of Nigeria. “For example, the mobile money infrastructure (mobile money agents, etc.) that was rolled out to support our disbursements was the first to be deployed to

both Bauchi and Sokoto states – an important first step for further financial inclusion,” Creative said. The use of mobile money by the Initiative comes at a critical time in the development of financial inclusion in Nigeria. The Government of Nigeria, via the Central Bank of Nigeria, is supporting mobile money operators to expand throughout the country, but predominantly in the northern areas. Through their involvement in this Initiative, eTranzact is now well-positioned to future work with the Central Bank. The apex bank rolled out a Shared Agent Network Expansion Facility that aims to onboard 40 million low-income, under- and unserved Nigerians into the formal financial system, including increasing financial access points (mobile money agents, ATMs, etc.) from the current 50,000 to 500,000. eTranzact was certified by the Central Bank as one of 10 mobile money operators and super agents to rollout additional agent locations within the next 24 months.

How NAICOM, PenCom plan to capture 36.6m Nigerians, spur inclusion ENDURANCE OKAFOR

n the quest to achieve its 80 percent financial inclusion target, the Federal Government is leveraging the National Pension Commission (PenCom) and National Insurance Commission (NAICOM) to deliver simple, easy to understand, and affordable micro products targeted at the informal sector. Industry stakeholders at the 4th National Insurance and Pension Correspondents (NAIPCO) Conference which held recently in Lagos were of the opinion that majority of Nigerians in the informal sector are yet to be aware of the numerous benefits in embracing financial services products. To this effect, PenCom, plans to extend pension coverage to 30 million contributors by 2024, with the aim to ensure 40 percent

of Nigerian adults are included in the scheme. In March 2019, the Mohammadu Buhari led-administration launched the micro pension scheme to provide the informal sector with a veritable means of securing old age income. According to Aisha Dahir-Umar, the Acting Director General (DG) of PenCom, the implementation of the Micro Pension Plan (MPP) would yield positive results for Nigerians and the pension industry, adding that it would assist greatly in reduction of old age poverty in the country where about 152 million people live on less than $2 a day. “The commission has put in place requisite infrastructure to facilitate seamless implementation of MPP. The Enhanced Contribution Registration System (ECRS) has been deployed to facilitate seamless operations of the MPP. This

system has so far aided the smooth registration of micro pension contributors,” she disclosed. According to the latest figures by PenCom analysed by BusinessDay, the number of workers on the pension scheme stood at 8.63 million as at first quarter of 2019, 158,837 higher when compared with the 8.47 million reported in the fourth quarter of 2018. But as at the end of May 2019, the scheme membership is at a record high of 8.87 million. According to Agusto & Co, a Lagosbased research and credit rating agency, the employers in the formal sector has been the major driver of the scheme. “The survey findings reveal that the influence of employers remains the biggest driver of enrollees’ decision in selecting a Pension Fund Administra-

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tor,” the agency said in its recent report. At the current level, PenCom is about 58 percent behind its 20 million workers targeted to be enrolled in the scheme by the end of 2019. If the industry regulator is to achieve its goal, it would have to include 11.6 million new workers to the pension scheme in less than five months. Checks by BusinessDay revealed that only about 12.2 per percent of the working population in Africa’s most populous nation have keyed into the contributory pension scheme. “We also observed an increasing level of enrollee dissatisfaction, with over 50 per cent of respondents indicating the possibility of switching PFAs when the transfer window is open,” Agusto & Co said. As at December 2018,

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EFInA’s recent figures revealed that 36.8 percent or 36.6 million Nigerian adult populations are outside the financial service net. With the current level, Nigerian apex bank would have to close the 16.8 percent inclusion gap to achieve the 20 percent exclusion target by next year. In October 2012, the financial service regulator in partnership with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) with the aim to ensure it include 80 percent of Nigerian adult population into the financial cycle by 2020. The deadline is now less than five months. In the quest to contribute its quota, Sunday Thomas, the Acting Commissioner for Insurance, said the insurance commission has issued some guidelines to ensure that those @Businessdayng

not in the formal sector embrace financial services. The acting commissioner, who was represented at the 4th NAIPCO National Conference by Leo Aka, the Director, Governance Enforcement and Compliance, said it required collective efforts to ensure that Nigerians in the informal sector embrace financial services. Looking at the demography of Nigeria, Thomas said one would notice that unemployment rate in Nigeria is quite high, adding that this was a signal that the industry needs to move fast to capture the people in the informal sector. He added that while establishing the micro insurance guidelines, the commission ensured that the micro insurance products are very simple, easy to understand, affordable, valuable in that it should be able to address needs and remain efficient.

Wednesday 04 September 2019

BUSINESS DAY

GDPSPECIAL

ECONOMICS

Strong GDP growth requires fiscal reform stimulus … Monetary easing alone not sufficient, say analysts … Oil GDP recovery may not be sustainable HOPE MOSES-ASHIKE

he disappointing GDP growth result as announced on Tuesday by the National Bureau of Statistics (NBS) has attracted the attention of analysts within and across the country who believe that firmer GDP growth requires stronger fiscal reform stimulus. “A disappointing GDP result yet again for Nigeria, with growth decelerating to 1.9 percent year/ year in second quarter (Q2-2019, from a revised 2.1 percent y/y in first quarter (Q1) said, Razia Khan, Chief Economist, Africa and Middle East, Global Research, Standard Chartered Bank, who also said “although Q2 disappointed our expectation, weak growth itself should not have been too much of a surprise.” Although oil GDP posted a healthy growth rate (rising 5.2% y/y from a contraction in Q1, likely driven by increased production), this was insufficient to fully offset

weak non-oil GDP growth. Agriculture appears to have been a key factor dragging down non-oil GDP growth, despite an expansion in crop production. Other sectors of the economy also experienced weakening momen-

tum, following the ‘lift’ provided by elections in Q1 2019. Khan said with Nigeria’s government only inaugurated at the end of May, Q2 represented something of a lost, post-election quarter, as policy certainty will only have

crystallised with the eventual appointment of a new cabinet. She said the recovery in oil GDP looks promising. However given softer oil prices in subsequent quarters, this pace of growth (driven also by output expansion)

may not be sustained. “While the authorities announced a more pro-growth policy stance, with the CBN putting in place measures to encourage bank lending, external pressures, and pressure on the NGN each time we see a risk-off environment globally, highlights the limits to Nigeria’s plans for any sustained monetary stimulus,” Khan added. Also responding to the development, Ayodele Akinwunmi of FSDH, said Nigeria growing at 1.9 percent is not the kind of growth to be celebrating. He noted that some critical sectors of the economy performed poorly. For instance, the real estate exited depression in the first quarter but entered contraction in the Q2. According to Akinwunmi, oil and gas driving economic growth is not sustainable, growth not impressive, not inspiring. “Efforts need to be made to ensure we stimulate economy,” he said.

Agriculture

HEALTH

Late planting, armed banditry slow Agric growth by 1.79%

Health sector growth hits five-quarter high

BUNMI BAILEY

he late planting season and continuous disruptions of farming activities by armed bandits may have led to the marginal decline of 1.38 percentage points to 1.79 percent in the second quarter of 2019, analysts say. Gross Domestic Production (GDP) Figures released by the National Bureau of Statistics (NBS) on September 3, indicates that the agricultural sector recorded negative growth of 1.38 percentage points to 1.79 percent in the second quarter(q) of 2019 from 3.17 percent reported in q1 2019. But it grew marginally by 0.6 percentage points on a on a year on year basis. “We believe this stemmed from disruptions to farming activities in April and May by armed bandits in the North which invariably led to shortage of crops and increased food prices in both months as evidenced in inflation numbers. Nonetheless, recent updates from these regions shows there’s been improvement in recent months,” a report by ARM Research stated. Abiodun Olorundenro, Operations Manager, Aquashoots Nigeria said that farmers in the major food producing states like Taraba, Benue, Kastina and others had to run away from their farmlands which had an impact on food production. “Also, the late rains played a part to it. The rains did not come early so farmers planted late. What deter-

mines planting season is weather condition. For example in the northern part of the country where stable foods are planted, the rains are just starting now,” Olorundenro further said. In Nigeria, there are two distinct seasons namely; rainy and dry season. While the rainy season starts in April and ends in October with generally lower temperatures, the dry season starts off in November and ends in March. And also planting season varies in the country. In the Northern part, it starts around July-August while the Southern region, it starts around ending March- April. Earlier in the year, the Nigerian Meteorological Agency (NIMET) which undertakes Seasonal Rainfall Prediction (SRP) predicted that the country is expected to experience below normal- to-normal rainfall season. “The 2019 Seasonal rainfall prediction by NiMet is based on a warm ENSO phase (El Nino year) as predicted by the international ENSO prediction centres,” “Since there is a very high probability of a warm phase persisting from January to July-August-September season, it is expected that the predominant warm phase will moderately suppress rainfall in the country during this period particularly in the North while normal rainfall is expected from the predicted neutral phase towards the end of the season from September 2019,” the www.businessday.ng

Agency stated in its website. The sector contributed 22.82 percent to total GDP in real terms, lower than the contribution in the second quarter of 2018 but higher than the first quarter of 2019 which stood at 22.8 percent and 21.89 percent respectively. “The security issues is still affecting that sector, there has been a lot of kidnaping in that sector. People are afraid to go their farms,” Ayo Akinwunmi at FSDH Merchant Bank said. “And also even though we had delayed rains in that period, it is still no excuse as we should be able to have enough sufficient irrigation systems in the country. We are not the only ones facing the late weather conditions,” Akinwunmi further added. There are four sub-activities that make up the Agric sector are Crop production, Livestock, Forestry and Fishing. Forestry contributed the most, followed by crop production, fishing and livestock. Crop production sector grew by 1.94 percent in Q2 2019 from 3.27 percent in Q1 2019 and 2.48 percent in Q4 2018. Livestock contracted by -0.01 percent in Q2 2019 from 0.88 percent in Q1 2019 and 2.35 percent in Q4 2018. Forestry grew by 3.23 percent in Q2 2019 from 2.19 percent in Q1 2019 and 1.73 percent in Q4 2018 and Fishing grew by 1.09 perecnt in Q2 2019 from 7.09 percent in Q1 2019 and 1.97 percent in Q4 2018.

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Temitayo Ayetoto

fter three consecutive quarters of contraction, the human health and social service sector staged a rebound in the second quarter of 2019, growing the most in more than five quarters. The sector rose by 0.72 percent points to 1.13 percent in 2019 second quarter from 0.41 percent in the same quarter of 2017, according to the National Bureau of Statistics secondquarter report. However, its contribution to real gross domestic product (GDP) was almost unchanged at 0.71 percent but slightly higher than 0.68 percent recorded in 2016. Quarter on-Quarter, this sector grew by 6.77 percent. Contraction in the sector was prolonged largely by underfunding in critical areas of infrastructure, medical research, human capital development and poor welfare for healthcare practitioners among issues, stakeholders say. According to the World Health Organisation, inequitable distribution of quality healthcare stem also from lack of planning leading to overproduction of some categories of health workers and commercial pressures in the private sector that lead to poor quality work. Nigeria’s health expenditure as a percentage of the GDP in 10 years averaged 3.4 percent between 2007 and 2016, compared with peers South Africa 6.5 percent and Kenya 4.5, according to World Bank data. As of 2018, only 3.9 percent (N340.45 billion) was devoted to health sector from the total budget of N8.6 @Businessdayng

trillion, meaning N1, 888 was allotted to save each Nigerian from the pangs of sickness. Despite the meagre size of funding for population nearing 200 million, the substantial chunk of the health budget, N269.34 billion, flowed in the direction of recurrent expenditure including operations, wages and salaries, purchases of goods and services, and current grants and subsidies. N71.11 billion was saved for capital expenditure. Unlike Nigeria, emerging market peers like Brazil, for instance, was able to raise health spending up to 9.8 percent of its budget in the decade. Sodipo Oluwajimi, vice-chairman Medical Guild believes strongly that increase in health funding on the path of the government will be critical to sustaining the necessary development lacking in the health sector. Better funding will, directly and indirectly, impact the country’s capacity to respond to expanding health needs and encourage competent medical expert to stay back as opposed to taking the next opportunity to jet out of the country. The growth pattern is also envisaged to be sustained on long term healthcare vision that will enable the government to focus priority areas of need and increase access to quality health service for all and sundry. On the private sector front, health initiatives have been receiving attention from investors including EchoVC Partners, a Lagos-based venture capitalist; 54gene, a genomics company focused on African DNA, MDaas Global, a start-up focused on providing diagnostics services; and Founder’s Factory Africa (FFA), an investment firm.

Wednesday 04 September 2019

BUSINESS DAY

GDPSPECIAL OIL & GAS

Oil sector jumps after four quarters of contraction

than output recorded in Q1 2019 (1.99mbpd-revised from 1.96 mbpd). In Q2 2018, crude oil prices averaged approximately $70 against $60 in same period of 2019. Also, when compared with growth in oil price in both periods, while in oil price rallied by 18.37 percent in Q2 2018, there was an inverse movement in Q2 2019 as price dipped 3.56 percent. “The non-diversification of the Nigerian economy makes it vulnerable to these cyclical ups and downs that are completely out of the control of the country’s economic managers,” Charles Akinbobola, energy analyst at a Lagos-based energy firm Sofidam Capital said. Despite decades of attempts to diversify, Nigeria remains dependent on oil for 90percent of its

export earnings, which owes partly to the fact that almost two-thirds of the economy remains in the informal sector. The large informal sector also causes the country’s tax to be remarkably small as tax revenue last year was less than ten percent of GDP. What’s more, economic growth has remained sluggish despite a rapidly growing population. “Nigeria’s GDP growth of 1.94 percent was an underwhelming performance which just reflected the fact that there is still need for urgent and fiscal reforms to accelerate the pace of growth to eliminate the rhetoric about poverty, unemployment can be resolved,” Ologunro told BusinessDay. Experts in the oil and gas sector ranked reforming fiscal and regulatory terms by passing into law a competitive petroleum

industry bill as the most urgent task needed to make an oil sector record a two digits growth rate. Next is domesticating the value chain and also ensuring the oil and gas sector provides linkages across the economy. Nigeria’s oil and gas industry, remains it’s most lucrative and viable investment opportunities as stakeholders believe that the oil and gas sector offers consistent opportunities in solving Nigeria’s dwindling revenue. Today, Nigeria is only capable of pumping some 2.5 million barrels of crude oil per day despite sitting on more than 40 billion barrels of proven reserves with its mid-stream and downstream infrastructure are arguably in worse shape than upstream production. “In the past, the executive left the industry bill to the legislature, they need to show more interest this time around,” Taiwo Oyedele, head of Tax at PwC Nigeria said. Since 2008, Nigeria has been attempting to pass the Petroleum Industry Bill (PIB), which seeks to incorporate and update 16 different laws that regulate the sector and enable the government reform its oil and gas legal framework. The non-passage of the PIB has continued to create uncertainties that have delayed billions of dollars in potential investment in this sector. The National Assemble has now split the Bill into five sections and passed it as the Petroleum Industry Governance Bill (PIGB), which is expected to be ratified by the Presidency.

dicates that critical sectors of economy recorded a negative growth. While agriculture sector grew by -4.81 percent, manufacturing sector was reported at -4.41 percent. Chukwu lamented the decline recorded in the critical sectors of the economy stressing that even those that are not on the negative have barely marginal growth which is quite disheartening to note. “We need to check the economic policies we have, are they strong enough to support a 3.1 GDP growth rate as planned in the 2019 budget. The results that we have today are saying otherwise, because they are what we use to measures the plans and policies of the government”. “These figures should make us to look into our policies and point

out what works and what does not”, he added. Auwal Musa Rafsanjani, Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), told BusinessDay that all economic indicators in the country show that Nigeria could be approaching another period of recession, especially considering the continuous economic growth declines more often. He said “This decline in GDP growth is a serious issue, I wish the government can be more serious with economic issues. We need a more competent economic management team to ensure the growth that we desire.” Rafsanjani is further concerned that the Nigeria’s economic frame work is too weak to promote the desired economic growth. Poor management of public fund is also

a factor to be considered, according to him. “Investors are easily drawn to any economy that has the capacity to which is not the case of Nigeria, we have both local and foreign investors moving out in numbers and the government’s effort is barely seen of felt”, he said. He also stressed that the government should ensure adequate and effective use of public funds to provide basic amenities as well as work towards moderate reduction in the cost of governance. Tosan Adewale, an economic analyst in Abuja, said that the Experts say that there is need for the government to increase effort towards ensuring a more conducive environment for business to thrive as the uncertainties of the nation’s economic growth poses threat to the investors which further has effects on the overall GDP.

DIPO OLADEHINDE & DAVID IBIDAPO

hanks to a combination of relative higher oil production and favourable average oil price of $70 in second Quarter of 2019, Nigeria’s oil sector finally snapped four consecutive quarters of negative growth. According to data from National Bureau of Statistics (NBS), Nigeria’s oil sector grew by 5.15 percent quarter on quarter against -1.46 percent in Q1 2019.This is the first and biggest growth recorded since Q1 2018 were the sector recorded a GDP growth of 14.02 percent. Gbolahan Ologunro, a research analyst at Lagos-based CSL Stockbrokers said the growth recorded in Q2 2019 was driven more by environmental stability, relative peace in Niger delta and mild increase in oil production. “No major export pipeline was shut down due to leakages or maintenances which also aided production during the period,” Ologunro told BusinessDay. Ologunro noted that in the absence of any major shock in price or production Nigeria will likely sustain this trend of growth in the remaining quarters of this year. Although the oil sector had improved quarter on quarter since Q3 2018, Q2 2019 however improvement can be termed ‘significant’ when compared to prior periods at 6.61 percentage points from -1.46 percent q/q. Adeola Martins, research analyst at Caritas Capital said the relative calmness in Nigeria’s

export terminals, peace in Niger delta and increase in indigenous oil production is responsible for the improved performance. “How can we sustain and build on this momentum is the major challenge,” Martins asked. In Q3 2018, the oil sector recorded a negative growth of 2.91 percent, an improvement by 1.04 percentage points (pp) from previous negative growth of 3.95 percent; Q4 2018 improved by 1.29 percentage points while Q1 2019 improvement slowed by 0.16 percentage points to -1.46 percent. In Q2 2019, Nigeria recorded average daily oil production of 1.98million barrels per day (mbpd), or 7.6percent higher than the daily average production of 1.84mbpd recorded in the same quarter of 2018 but slightly less

Policy

Weak GDP shows poor government policies Cynthia Egboboh, Abuja

he second straight decline in Nigeria’s Gross Domestic Product (GDP) is a show of poor economic policies of government and raises fears of a possible second economic recession if concrete and urgent actions are not taken by government to ramp up growth, experts say. According to the National Bureau of Statistics (NBS), the struggling economy slowed to 1.94 percent second quarter of 2019, from 2.10 percent recorded in previous quarter and 2.38 recorded in the last quarter of 2018. The Federal government has projected a 3.10 percent GDP growth for 2019, but experts say this is unrealistic going by the trend and particularly do not see any effort that suggests that this

is possible. Economic experts who spoke with BusinessDay have said that the continuous decline recorded indicates that the Nigeria economy is being driven on poor economic policies which may hinder the achievement of the 3.1 percent GDP growth as projected in the 2019 budget. Johnson Chukwu, CEO, Cowry Asset management told BusinessDay that the low trend should be a wakeup call for the government to look into the sets of its economic policies. “We need to consider the growth of the underlying sectors that contributes to the overall growth of the GDP, currently we see that these sectors are all declining, we see trade declining, we see manufacturing sector declining,” he stated. The NBS Q2 GDP report inwww.businessday.ng

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Live @ The Exchanges ‘Fintech will enable Capital Market Operations’ Mary Uduk, Acting Director General, Securities and Exchange Commission (SEC) spoke to journalists at the second quarter Capital Market Committee (CMC) meeting held recently in Lagos. Iheanyi Nwachukwu brings you the excerpts of her responses to some questions. What were some of the issues discussed at the CMC? he market was informed of the success recorded at the Lagos State Probate Registry and it was intimated of the need to extend it to Probate Registries across the Country. Recall that the Commission had earlier required Capital Market Operators (CMOs) to register with their relevant trade groups, to ensure compliance to this directives, SEC also requires proof of registration with these trade groups as a perquisite for operators to carry out transactions or make any submission at the Commission. The Commission noted the challenges posed to the market over the uncertainty around the collection of stamp duties between Federal Inland Revenue Service (FIRS) and NIPOST, we informed the market operators of the SEC and Capital Market Master Plan Implementation Council (CAMMIC) engagements with the office of the Vice President and the Federal Ministry of Finance to resolve this issue. We expect this to be resolved very soon as well as our request to exempt equities transactions from VAT payments. The Commodities Trading Ecosystem Committee informed the meeting of the round roundtable on the Commodities Ecosystem with key stakeholders slated for October 3, 2019.The Committee also reported the commencement of a quarterly bulletin by the Commission focusing on issues on the Commodities Market. It further raised the collaboration of SEC and other relevant stakeholders to develop the certification frame work for collateral managers. Secondly, The Financial Literacy Technical Committee reported on the success of the collaboration between the Capital Market Committee and the Education Research Development Council (NERDC).Two weeks ago, a workshop was organized to infuse the earlier stand lone contentment into the curriculum of primary and Secondary Schools. The Committee also developed enlightenment video and publication to be disseminated via social media. Other market operators were also urged to develop same. On Non – Interest Finance Committee, we learnt of the on the ongoing conversation with the African Development Bank to issue Sukuk under an existing issuance programme. The Market was also informed of the existence of an Islamic Finance Forum portal where operators could visit to obtain necessary information on financial products. The Committee is also in discussion with the Debt Management office on the possibility of issuing short term Sharia compliant paper as part of the periodic Ni-

Mary Uduk

gerian Treasury bill issuances. Was there any update from the Multiple Subscription Committee? The Multiple Subscription Committee informed the meeting that the Committee of heads of banking operations had agree to collaborate with the Commission to display banners in banking hall all over the country sensitizing the public on the regularization of multiple subscription of shares. Company secretaries of listed Companies also agree to display similar information on their website and offices. So far the regularisation exercise recoded the consolidation of 3.4 million units of shares. Any other report? The Identity Management Committee; gave update of it meeting with National Information Technology Development Agency (NITDA) on the implications of the Nigerian Data Protection Regulation on Capital Market Operations, the Committee also stated its plan to develop a standardise data form which seeks to consolidate registration and access to processes in the Capital Market by investors. What were some of the resolutions taken at the meeting? Some of the resolutions are: SEC to invite National Information Technology Development Agency (NITDA) to the next CMC meeting to make presentation on the impact of the Nigerian Data Protection Regulation on the Capital Market. The Commission is to engage CBN to include e-Dividend Mandate Management System (eDMMS) charge in guideline for bank charges. Trade groups report to the Commission on the level of compliance by their respective members as to the directives that all CMOs must register with their respective trade groups. Also, it was agreed that Brokers and registrars are to make available to the Committee on Multiple Subscription Committee on a periodic basis number of regularised accounts and the SEC to engage relevant stakeholders on e-Dividend and multiple subscription account concerning the following: Ensuring that

complete data are transferred amongst operators such as brokers, registrars and CSCS, Discouraging unclaimed dividend from building up from securities of listed companies and developing the modalities for validating register of members where the registrars are furnished with incomplete information such as missing account numbers. Where are we now on Fintech? You will also recall that the Commission had in November, 2018 constituted a Committee to develop a FinTech road map for the capital market committee; I am delighted to inform you that the road map was presented to the Capital Market Committee at this CMC. The report highlighted the current application of FinTech in the market, opportunities, challenges and recommendations. The report will be made available on the Commission’s website for input, comments and given the importance of the recommendations of the FinTech road map Committee and the need for timely implementations, the Commission will be setting up a FinTech road map working group to drive the implementation. This new Committee will be headed by Ade Bajomo. We also used the platform of the meeting to reiterate our support for FinTech in the Capital Market. The Committee was briefed of the effort to engage and guide FinTech startups that seeks to operate in the Nigerian Capital Market. Capital Market operators were therefore urged to embrace FinTech not as a competitor but as enablers to their existing operations and processes. What is SEC doing in regulating the existing fintech companies? The SEC has been engaging the FinTech community, we set up a FinTech committee to come up with a road map for the Nigerian capital market in general, that report and the road map was presented yesterday at the CMC meeting, secondly in the Commission there is a FinTech division that engages with the FinTech community, we also have a form on our website to invite “would be” FinTech organizations that want to operate in the capital market to complete those forms to enable us understand the area that they are interested in and about 42 or more completed the form and we have been engaging them. Some of them are ripe to be registered and admitted as full capital market operators. We also are building capacity as a Commission to understand FinTech. FinTech has come to stay, we are embracing FinTech even in IOSCO FinTech is discussed.

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news Influx into Lagos shows Nigerian states... Continued from page 1

arrived Lagos, Nigeria’s economic hub on Friday, August 30, 2019. During interaction with newsmen, they said they had

to migrate because “there is nothing to do in Jigawa State” as they have their families to fend for. While the unduly large number may have drawn the attention of the public, the influx of people from other states of the federation into Lagos is a daily occurrence. According to Babatunde Adejare, a former commissioner for the environment in Lagos, an average of 6,000 people enter into Lagos every day, as the state which Internally Generated Revenue (IGR) averages N34 billion monthly, remains a centre of attraction. Timothy Olawale, directorgeneral of Nigeria Employers’ Consultative Association (NECA), attributes this to the failure of most Nigerian states to create economic opportunities for their citizens and highlevel poverty in the country. “That Lagos has remained the economic hub of the nation is a known fact. The unfortunate reality is that rather than most states replicating the economic success story of Lagos, they have remained unattractive,” Olawale says. In March 2019, the Brookings Institute declared Nigeria the poverty capital of the world, with about 91 million Nigerians living below $1.90 per day. Nigeria’s literacy rate is about 59%. There are about 13.2 million out-of-school children in Nigeria, with 69 percent in Northern Nigeria, where some states have known terrorism for a decade. According to figures from the Nigerian Bureau of Statistics (NBS), over half of Nigeria’s extremely poor are in the northern part of the country ravaged by insurgency and unfavourable environmental disasters. Last month, no fewer than six persons were killed and over 600 others were displaced during heavy rainfall in Jigawa State, according to Sani Yusuf, executive secretary, Jigawa State Emergency Management Agency (SEMA). According to the SEMA boss, four local government areas were affected after a downpour including Kirikasamma, Kafin Hausa, Guri, and Birninkudu. “But no matter what the arguments might be, at the root of poverty lies the deprivation of people’s access to basic necessities such as food, healthcare, and sanitation, education, and assets,” says Muhammad Sani Abdullahi, a development economist and chief of staff to the Kaduna State governor in a note to World Economic Forum. Of Nigeria’s over 13 million out-of-school children, around half are girls. This is hardly coincidental or surprising that

the country with the world’s highest number of out-ofschool children is home to the highest number of people living in extreme poverty. Two-thirds of this population is concentrated in Nigeria’s highly populated north-west and north-east regions, both of which have been ravaged by the terror group, Boko Haram, resulting in an educational emergency affecting about 2.8 million children. The 2018 Global Multidimensional Poverty Index (MPI) of the Oxford Poverty and Human Development Initiative best presents this picture. The poorest parts of Nigeria had the worst education indicators (school attendance and years of schooling) and these constitute the biggest percentage contribution to the MPI, followed by nutrition and child mortality – all issues that affect women. Olawale believes that to address the problems, there is a need for state government and federal governments to collaborate in creating economic hubs across the country. According to him, this will take commitment, political will and stakeholders’ engagement. “In order to actualise this, we suggest that government should, through engagement with the organised private sector, identify states for this purpose. “The business community would, then, be encouraged through the provisions of infrastructure, business-friendly policies, appropriate tax incentives, adequate security, among others, to establish their presence in those states. The Federal Government, he further stated, must rise to the occasion by facilitating the needed economic environment that will make all the states to be viable and deliberate efforts must be made to ensure that each state utilises their endowed resources for the development of their states rather than the usual cap-inhand trips to Abuja for monthly allocation. “Micro and Macro-economic policies that will attract and retain both local and foreign investors to the States of the Federation should, as a matter of urgency, be formulated and implemented,” said Olawale. Gbenga Omotosho, Lagos commissioner for information and strategy, said the government was, however, not averse to migration into Lagos, as this is guaranteed under the constitution but emphasised the importance adhering to laws especially as it concerns commercial motorcycles. Omotosho explained that the Lagos State Traffic Law 2012 prohibits operations of motorcycles on highways and bridges, a position of the law he insisted must be strictly adhered to, stressing also that the state government was committed to the safety and security of the citizens. www.businessday.ng

L-R: Joseph Makoju, GMD/CEO, Dangote Cement plc; Adeniyi Adebayo, minister, industry, trade, and investment, representing President Muhammadu Buhari; Benedict Oramah, president/chairman, AfreximBank/guest speaker; Aliko Dangote, president, Dangote Group of Companies/vice president, Manufacturer Association of Nigerian Large Group, and Ahmed Mansur, president, Manufacturer Association of Association (MAN), at the Manufacturers annual lecture/presidential luncheon, with the theme “Improving the Value chain in the Manufacturing Sector for Competitiveness and Job Creation” in Lagos, yesterday. Pic by Olawale Amoo

Five things learnt from Nigeria’s ... Continued from page 1

now means the economy must grow by 7 percent in Q3 and another 7 percent in Q4 to achieve the 4.5 percent full-year target set by the Federal government in the Economic Recovery and Growth Plan (ERGP).

Analysts laughed off the chances of meeting the target, not when it’s barely four months to the end of the year, where if anything, the economy could fare worse in subsequent quarters this year. “We are already in the last month of Q3 and there is nothing to suggest the economy performed better or that we can achieve the lofty target set in the ERGP,” said Wale Okunrinboye, a chartered financial analyst and head of investment research at Lagosbased fund manager, Sigma Pensions Limited. The economic targets in the ERGP have often come under criticism for lacking the fundamentals to support it. The below par economic performance in the first half of the year, heaps more negative light on a plan that has always looked like wishful thinking. It would appear the government is developing a penchant for failing to meet set targets whether it be revenue or oil production. Downside risks to growth The lower than expected Q2 report is beginning to spur a full-year downgrade for the economy from a consensus estimate of 2.5 percent to around 2.0 percent, in what deals a blow to already fickle investor confidence. The 1.9 percent Q2 growth rate is lower than the 2.2 percent consensus estimate of 15 economists polled by Business Day. “With the disappointing Q2 numbers and the bleak expectation for the rest of

the year, Nigeria looks nailed on for a full-year growth downgrade,” said Tajudeen Ibrahim, head of research at investment bank, Chapel Hill Denham. A growth downgrade deals a blow to investment confidence in Nigeria, which could do with new investments to boost growth and create jobs for its teeming population. Many analysts expected higher oil production to combine with consolidation in the non-oil sector in providing GDP print north of 2 percent, but that fell through. Lower oil prices, exacerbated by the trade war between the US and China, and the outlook for trade following the abrupt boarder closure and FX ban on food imports will also weigh on growth this year, making it nearly impossible for Nigeria to escape a growth downgrade. “We think beyond numerical downgrades to 2019 growth estimates closer to 2 percent, market expectations for the economy are likely to gravitate from prior calls for V-shaped recovery to a Wshaped one,” Okunrinboye of Sigma Pensions said. A dilemma of old returns The central bank cut interest rates to 13.5 percent in March 2019, to stimulate economic growth. The rate cut appears to have had little impact going by the Q2 numbers. The global and domestic environment has changed since that cut, with oil prices trending lower and global growth projections lowered on the back of the trade spat between the US and China. Foreign portfolio investors are demanding more from Nigeria to invest in debt securities from Bonds to Treasury Bills. That has

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seen interest rates push up since then and the naira has marginally weakened at the market-reflective Investors and Exporters window. At subsequent monetary policy committee meetings, the CBN will be faced with the pressure to cut rates and stimulate economic growth or raise them to attract foreign portfolio inflows. A similar scenario played out in 2016, where the CBN sided with its core mandate of price stability over economic growth. In terms of policy responses, the CBN would continue to bear the burden of adjustment as the fiscal side, amid its heavy debt service burden, continues to constrain policy wriggle room by refraining from taking bold measures on reform: privatisation, subsidy rationalisation, etc. In all likelihood, the weak growth number is likely to raise the incentive for the CBN to deploy initiatives, which seek to boost credit growth either directly from its balance sheet or indirectly via policies such as the minimum loan-deposit ratio to get banks to raise loan origination. Though it may fuel calls for monetary policy accommodation, a less favourable oil price picture and likely FX pressures ahead continue to cap the scale of any dovish intentions. High-flying Telecoms shows gains of liberalisation The telecoms sector was one of the shining lights of the quarter and its influence on the Services sector was telling. Telecoms grew 11.34 percent in the second quarter compared to the previous year. Analysts say the sector is a shiny example of the gains of liberalisation. The performance of the @Businessdayng

sector should encourage the federal government to liberalise other sectors for the benefit of better economic growth. Spurred by improved activities in telecoms, the Services sector expanded 2.9 percent compared to the same period last year. Subscriber growth observed from both the data users (29.5 percent compared to last year) and voice calls (7.3 percent year-on-year) fuelled the momentum with total subscribers at the end of Q2 19 printing at 173.8 million. Slow non-oil growth exposes sluggish diversification The Non-oil sector expanded by 1.6 percent compared to last year, while oil sector expanded by 5.2 percent. The non-oil sector recorded a higher contribution to the GDP (91.18%), advancing by a marginal 1.64 percent compared to last year. Its performance was driven by the 2.10 percent growth in the industrial sector, which contributed 23.21 percent to GDP during the period. The agricultural sector which contributes about 22.82 percent to GDP, also expanded by 1.79 percent, as against the 1.19 percent in the second quarter of 2018, while the financial services sector (3.18%) and the manufacturing sector (9.10%) contracted by 2 .24 percent and 0.13 percent, respectively. After a brief quarter of growth, the real estate sector also contracted by 3.84 percent. There was also a relapse in trade in the second quarter, as it slipped back into contraction, while a deepening recession in financial services was disheartening. In the light of recent border closures and moves to restrict FX supply to certain import items, it could only get worse for trade.

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World Bank to partner Abia to rehabilitate roads, tackle erosion in Aba GODFREY OFURUM, Aba

he World Bank is to partner Abia State government to rehabilitate roads in Aba, the commercial centre in Nigeria’s southeast, to improve livelihood in the city, says Izuchukwu Onwughara, Abia State coordinator, Nigerian Erosion and Watershed Management Project (NEWMAP). Onwughara, a guest on a live radio programme, explained that the project, expected to start in October 2019, would also tackle flooding currently ravaging Aba and its environs. Some of the flooding hotspots to be tackled include Obohia Road, Uratta axis, Ngwa Road and some axes Port Harcourt Road, which he said are in the first phase of the project, while Omuma and Ohanku Roads are in the second phase. Onwughara stated that the World Bank would largely fund the projects with the Abia State government expected to provide counterpart fund, as a partner in the project. The coordinator, who said the project had a lifespan of 30 months, called on the residents of Aba, to support the project. “We are at the last leg of preparation of the project. A lot of consultants came in to do some socio-economic studies, environmental and social management and resettlement action plan for a project of such magnitude. “The entire soil investigation has been done. We prepared a design that is of world-class standard, by deploying global best practices. The designs have

gone through layers of approval from here to Washington and came out cleared,” he said. Declaring that the job was big, he said there was a decision to split it into two units, with the project planned to start with Uratta and Umuagbai. This will cover sections of Port Harcourt, Obohia, and Ngwa Road. On the selection of contractors for the job, he said that the advertisement had been done to pick contractors for the project, adding that the valuation of the bid had been concluded, while the report had been forwarded to the World Bank. “We are using this period to sensitise our people to prepare and get ready for the project. Everyone along the corridors of this project has been consulted and we urge them to cooperate with us on this project,” he noted. On the speculation that politicians could hijack the contracts, Onwughara observed that the project was serious and too big for politicians to hijack. According to him, this project was devoid of that type of political interference, because the World Bank was investing heavily into it and would not want to see its funds go down the drain. “We wouldn’t want to experience another white elephant project in the state. World Bank’s best practices in procurement were adopted. It passed through developing bid documents with global standards. “The World Bank worked with the procurement team of the project, to develop the document and because of the large volume of the project, it is called ‘a prior review project.

DHQ panel concludes investigation on Taraba killings ... as Army vows to deal with indicted officers Stella Enenche, Abuja

he seven-man panel set up to investigate the killing of three police officers attached to the IGP Intelligence Response Team, and two civilians has submitted a final report to the Chief of Defence Staff (CDS), General Gabriel Olonisakin. BusinessDay recalls that the three police officers - Inspector Mark Edaile, Sgt. Usman Danzumi and Sgt Dahiru Musa - were allegedly killed by troops of 93 Battalion, stationed at Ibi area of Taraba State. The officers were part of a team sent to Ibi in Taraba State to arrest an alleged kidnap kingpin, Hamisu Bala Wadume, who was wanted by the Police. Consequent upon the killing, President Muhammadu Buhari directed the CDS to set up an investigative panel, a directive that was promptly carried out. The Chief of Army Staff (COAS), Lieutenant General Tukur Buratai, made the disclosure on Tuesday at the combined second and third COAS conference in Abuja. Addressing senior officers at the conference, Buratai vowed to deal with any personnel found culpable in the August

6 incident. “Unfortunately, incidents such as the recent one at Ibi in Taraba State, which generated intense media comments, are not healthy for the smooth cooperation and operation of our security forces. “Investigations of the incident have been concluded, and decisive actions will be taken to ensure that it never happens again”, Buratai said. While recalling other acts of misconduct by soldiers in Ondo and Abia states not too long ago, Buratai charged commanders to educate their personnel on the need to adhere to rules of engagement at all times. This was even as he called for enhanced reorientation of officers of junior cadres across law enforcement agencies, in a bid to avoid further ugly incidents. “Similarly, the recent case of alleged by a soldier in 34 Brigade (in Ondo State)... and the shooting of a motorcyclist by another soldier in UmuokerekeNgwa community of Abia State, are examples of sad and unwarranted events, which we must guard against. “Nigerian Army will not condone any form of indiscipline, or actions that will tarnish its good image. www.businessday.ng

L-R: Sale Mamman, minister of power; Abdullahi Umar Ganduje, governor, Kano State; Vice President Yemi Osinbajo, guest of honour; Muhammad Yahuza Bello, vice-chancellor, Bayero University, Kano, and Damilola Ogunbiyi, managing director/ CEO, Rural Electrification Agency (REA), during commissioning of 7.1MW largest Off-Grid Solar Hybrid Power Plant in Africa, a Federal Government’s Initiative under the Energising Education Programme (EEP) at Bayero University, Kano, yesterday.

MTN gains N30.5bn as investors shrug off fears of xenophobic revenge ENDURANCE OKAFOR & OLUWASEGUN OLAKOYENIKAN

tock investors did not price in fears of possible reprisal attacks on South African businesses in Nigeria, particularly MTN Nigeria Communications plc, on the hills of concerns over the killings of Nigerians residing in Africa’s second-largest economy. MTN Nigeria, Nigeria’s largest listed company by market capitalisation and a subsidiary of South Africa’s MTN Group, rose 1.08 percent on the Nigerian Stock Exchange (NSE) Tuesday to add more than N30.5 billion to its shareholders’ wealth. Shares of the company, which shed 1.77 percent of its market value on Monday to close at N138.50 per share, had remained unchanged in the early trading at the local bourse on Tuesday. However, the stock rose to N140 after the firm condemned attacks on Nigerians in South Africa.

… condemns attacks on Nigerians

“Whenever there is bad news in the market, it creates uncertainties in the minds of investors and in some cases, investors sentiments tend to be influenced by their level of perception of such bad news,” Gbolahan Ologunro, research analyst at Lagos-based CSL Stockbrokers, said. Some South Africans attacked Nigerians residing in some parts of the country following speculations that the drug dealer who allegedly killed a taxi driver in Pretoria was a Nigerian. As a result, Nigerians took to social media to express their displeasure over the killings, hinting on possible retaliation on South African companies domiciled in Nigeria. “Investors are not bothered with what happens in SA, MTNN is doing business in Nigeria. Although it’s a South African company, I don’t see the Nigerian Government sanction-

ing MTNN because of that and so yes, investors are not pricing in the xenophobic attacks in SA,” Ayorinde Akinloye, a Lagos-based research analyst told BusinessDay. According to a statement by MTN Group, the telco is committed to a united Africa in the pursuit of progress, peace, and prosperity. “We reiterate our unequivocal condemnation of any and all violence. As a leading pan-Africa Telecommunications Company with operations in 21 countries, MTN believes in the potential of an Africa whose nations pursue deeper trade, integration and cooperation,” MTN Group said on Tuesday morning. The Johannesburg-based service provider added that it actively encourages the dialogue necessary to maintain peace and sustain strong relationships and “MTN is an international

company and as at now Nigeria has a lot of investments in the firm. So yes, investors are not pricing in the recent issues because they know it is temporary,” Paul Uzuma, managing director of Halo Nigeria Capital Limited, said. The telco also said in a testament that it urged all its customers and stakeholders to support and defend the principles of human rights, diversity and inclusion and an integrated collaborative Africa. “We believe the only way forward as a continent is through collaboration and the unequivocal condemnation of violence.” Following the successful award of a Super-Agent License, Y’ello Digital Financial Services, “YDFS,” a subsidiary of MTN Nigeria recently announced the launch of its super-agent network service named ‘MoMo Agent’.

NNPC says significant progress recorded in frontier basins exploration HARRISON EDEH, Abuja

roup managing director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, says significant progress has been made in the ongoing exploration of inland basins, adding that the target of growing the nation’s reserve to 40 billion barrels by 2023 was realistic and achievable. Kyari made this submission when he received the leader-

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ship of the Nigerian Association of Petroleum Explorationists (NAPE) at the NNPC Towers, Abuja. Ndu Ughammadu, group general manager, Group Public Affairs Division, stated that the Corporation was revving up exploration activities in all the frontier basins to achieve the 3 million barrels per day crude oil production target within the shortest possible time. Kyari stated that his management’s focus on Trans-

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parency and Accountability with Performance Excellence (TAPE) was geared towards transforming the NNPC into a

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global company of distinction, stressing that the Corporation was the window to the Nigerian oil and gas industry.

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news Edo exco members commit to deliver on mandates, laud insights at retreat … as state again leads APC states in developmental initiatives

embers of the Edo State Executive Council (EXCO) say they would work assiduously to deliver on their sector-specific mandates in the realisation of the vision of Governor Godwin Obaseki, especially as regards improving the lives of Edo people. They made the submission at the end of a day retreat as orientation for new members of the exco held at Government House, Benin City, during which they were charged to ensure effective service delivery. Head of Service, Isaac Ehiozuwa, commended the governor for putting resources together to equip his cabinet members with the right orientation to action his marshal plan for the state. The retreat has given them a sense of direction as the lectures delivered will help them in discharging their day-to-day activities as government executives, Ehiozuwa said, adding, “We all needed this workshop to have a sense of direction in our different Ministries, Departments and Agencies. Abiding by what was taught, we will not have any cause for regrets. We will join in moving Edo forward.” He also commended the resource persons for the robust lectures, noting that the lectures would serve as reference materials to the new executive members. Special adviser to the Governor on Special Duties, Yakubu Gowon, said the retreat

was an orientation course for new members and a refresher course for old members of the state executive council. Gowon said the different lectures, which focused on anti-corruption, leadership, procurement, among others, were insightful and exposed them to a better approach to governance. Commissioner for Youths, Damian Lawal, said knowledge gained from the retreat would help to implement their sectorspecific mandates in tandem with the mission and vision of the governor. “We are aides of the Governor and are assisting him to deliver on good governance to citizens of the state,” he said. However, owing to the depth of thinking, consistency and spread of Governor Obaseki’s reforms and projects across the state, Edo alongside Gombe and Kano, led other states controlled by the All Progressives Congress (APC) in terms of development for the month of July. The ranking was put together by the Progressive Governors Forum (PGF), in its July 2019 Progressives Strides – Tracking Developmental Initiatives in APC States, a monthly ranking of development initiatives in states controlled by the APC. Edo has consistently maintained the top spot for three months consecutively, outshining the other APC States, including those with far more resources at their disposal.

Council tackles imposition of surcharges on African shipment AMAKA ANAGOR-EWUZIE

orried by the constant imposition of extra charges on imports coming into countries in West and Central African states by foreign shipping lines, the Union of African Shippers’ Councils (UASC) has adopted measures to fight against surcharges imposed on shipments. At the just concluded meeting of UASC held in Abuja, participants said African countries cannot afford to fold their hands while foreign ship owners continue to rip off shippers through arbitrary charges. Therefore, the Council reached a consensus to take the matter up with foreign shipping lines in the upcoming Global Shippers Forum (GSF) in London. Vice President Yemi Osinbajo, who was represented by the Minister of Transportation, Rotimi Amaechi, frowned at the process of introducing surcharges he said lacked transparency. According to Osinbajo, the surcharges amount to huge sums of capital flight from Nigeria and the other West and Central African countries. Hassan Bello, executive secretary, Nigerian Shippers’ Council (NSC), who spoke on arbitrary increase in charges and introduction of new nomenclatures by

shipping lines, called on member states to insist that cargo owners must be consulted before new charges were imposed on them. Bello, who doubles as the chairman of the Standing Committee on Trade and Transport, urged cargo owners to study and ask questions on the components of the charges being presented to them before making payment. He enjoined Shippers’ Councils in the sub-region to resort to legislation if the foreign ship owners continue to impose extra charges without negotiation, adding that being part of the decision making before new charges were introduced would provide shipping lines the opportunity to explain the reason for such charges. “If foreign ships owners insist that we cannot be part of the negotiation, we use legislation. We need to consider the negative effect of the surcharges on our individual economies and fight against them,” he stated. According to Bello, these charges are affecting African economies through inflation owing to the fact that all the charges are passed to the final consumers. He pointed out that such extra charges and subsequent rise in inflation results to poor standard of living because rise in market prices of goods would make them unaffordable to many.

L-R: Chidi Ajaere, executive chairman, GIG Group; Abimbola Olashore, director, Lead Capital Group; Kayode Falowo, president, Nigerian-British Chamber of Commerce (NBCC); Atedo Peterside, founder/chairman, ANAP Business Jets Limited; Dan Agbor, senior partner, Udo Udoma and Belo-Osagie, and Tara Fela-Duroye, founder/CEO, House of Tara International, at the NBCC September breakfast meeting in Lagos, yesterday.

Investors upbeat on Nigeria’s real estate prospect amid sluggish recovery … huge population, supply-demand mismatch spur appetite ISRAEL ODUBOLA

oreign investors are bullish about the long-term growth prospect of Nigeria’s real estate industry amid the sluggish recovery of the broader economy, as they believe the country’s rapidly growing population and mismatch between supply and demand hold opportunity in the long term. They envisage growth of Nigeria’s economy, which stood at 1.94 percent in the second quarter of the year, to return to pre-recession level in the next decade, foreseeing a boon for the sector, given that it mirrors the trend in the macro-economy. “The Nigerian market determines the fate of the entire African market. If Nigeria won’t be successful, it will be same for Africa,” said Derick Roper, CEO

at South African-based Novare Equity Partners at the recently held African Real Estate Conference in Lagos. Roper said Nigeria’s huge population of about 200 million was what had been driving his firm’s decision to continue investing in the country. “In the next five to 10 years, Nigeria will provide opportunities for future-minded investors, albeit it requires long-term planning,” he said. A recent report published by the United Nations titled ‘World Population Prospects’ puts Nigeria’s population at 402 million by 2050, noting Nigeria will unseat the United States as world’s third most populous nation. But Nigeria’s population growth currently at 2.6 percent continues to outperform economic growth for four years run-

ning. And it is expected to quadruple by 2050 without enough amenities and employment to sustain such a huge figure. According to Kevin Teerovengadum, a co-founder of Proptech Africa, the mismatch between supply and demand is what makes Nigeria his choice market for investment. “If we were to go by the ease of doing business, we won’t establish in Nigeria. But the gap between supply and effective demand is enough incentive for us,” said Teeroovengadum at the conference. “It all boils down to your market strategies, and keeping it consistent,” he posited. Nigeria’s real estate sector contracted 3.8 percent in the second quarter, after a marginal 0.93 percent expansion in the preceding quarter.

The market is currently facing a glut of commercial real estate, particularly prime office buildings amid weak demand due to squeezed purchasing power of consumers. But experts say a period of economic downturn or gradual pick-up is the best time to invest to leverage value appreciation prior to market boom. The efforts of the Federal Government to deliver affordable housing units have not paid off, as over 50 percent of Nigerians are yet to become homeowners. This is because of the high mortgage rate of over 20 percent, rigorous process in mortgage application and oversupply as well as low liquidity for funding. Little wonder the housing sector contributes abysmally to the broader economy.

NAFEST: Benin gets facelift as Runsewe NUPENGASSAN urges FG to rejig assures of rebranded festival in Edo security architecture

s Edo State government gears up to host the National Festival for Arts and Culture (NAFEST) in October this year, director-general of the National Council for Arts and Culture, Segun Runsewe, has assured tourists of a rebranded festival to be filled with exciting offerings including royal touch. Runsewe disclosed this in an interview with journalists where he spoke on the viability of the festival in bolstering Nigeria’s image through culture. The streets in Benin City have received a facelift in preparation for the festival as major artworks in the city centre have received some restorative touch. The major artworks in Ring Road and other parts of the city are being repainted while bronze casters at Igun Street are excited. Speaking on the 2019 NAFEST, Rusewe noted, “Nigerians should look forward to a rebranded festival. Don’t forget that the festival will coincide with the anniversary of the Oba of Benin, which means we are going to have some royal events like Royal Nite and Royal Splen-

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dor, among others, to propagate what the Oba of Benin means to his people.” He added that the plan is to transform the popular Igun Street in Benin, into a festival site, noting “Igun Street, where the bronze and artworks are made will be transformed into an arena that is going to be active for the duration of the festival. We will get more people to go there, buy more items and appreciate what is being done in Edo State.” Recall that Governor Godwin Obaseki in a statement by his Special Adviser on Media and Communication Strategy, Mr. Crusoe Osagie said, the state is set to boost its inbound tourism figures with the planned host of the NAFEST. He noted, “Tourism is one of the priority sectors currently receiving the attention of the Obaseki-led administration. We have huge tourism assets that the state government is committed to developing and NAFEST will offer us the opportunity to parade these assets to investors and tourists.

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JOSHUA BASSEY

orkers in the oil and gas sector on Tuesday raised the alarm over the spate of insecurity in Nigeria, saying it was becoming increasingly difficult for members of their families to travel as they had become easy target of kidnappers, robbers and bandits. The workers, under the joint umbrella body of National Union of Petroleum and Natural Gas Workers and Petroleum and Natural Gas Senior Staff Association of Nigeria (NUPENGASSAN), stated this at a media briefing in Lagos, as they called on the Federal Government to immediately rejig the nation’s security architecture. Ndukaku Ohaeri, president of PENGASSAN, who addressed the media alongside Williams Akporeha, president of NUPENG, lamented the recent killing of an oil and gas worker along Owerri-Okigwe road by bandits, warning that unless drastic measures were @Businessdayng

taken to stem the tide, the unions might be forced to “review its position” as against just appealing. “For us as concerned relevant stakeholders, it has become necessary and expedient for us at a time like this to urgently alert the Federal Government of the grave dangers that the current situation is posing on the image of our country and the multiplying impacts on the livelihood of the citizenry; we therefore call on the government and those saddled with the responsibility of securing lives and properties to rise to the occasion and stem the tide of insecurity and other emerging crimes in order to protect and stabilise our overall socio-economic and political interests,” the unions said. While, however, acknowledging the roles played by some patriotic security officers, they pointed out the need for security agencies to purge themselves of the bad eggs among them.

Wednesday 04 September 2019

BUSINESS DAY

news In new AfCFTA support, Afrexim Bank offers $500m to Nigerian manufacturers Gbemi Faminu

frican Export-Import Bank (Afreximbank) has made provision to boost productivity in Nigeria’s manufacturing sector by offering accessible loan worth $500 million to the members of the Manufacturers Association of Nigeria (MAN). This was made known at the 47th Annual General Meeting (AGM) of MAN by the president of (Afreximbank), Benedict Oramah, who said that limited access to funding has constrained the potential of the manufacturing sector in fostering economic growth and development. Oramah said “the loan facility is being a made available to Nigerian manufacturers in order to support them in dealing with financial challenges and also provide trading facilities for them. “Enriching the economy will provide an avenue for a rapid inflow of foreign direct investment in the country and Africa as a whole.” The loan is part of the $1 billion African Continental Free Trade Area (AfCFTA) Adjustment Facility to enable countries adjust to the sudden significant tariff revenue losses expected as a result of the implementation of the agreement. Aside from the loan, Oramah declared that series of programmes had been made available for Nigerian manufacturers to improve productivity in the sector and expand trade relationships, as well as to pro-

vide a competitive advantage in the global market. Nigerian president Muhammadu Buhari, while speaking at the event, stated that his administration was committed to providing an enabling environment for the manufacturing sector to thrive, adding that it was one of the fastest channels to economic growth and development. The president, who was represented by the minister for industry, trade and investment, Adeniyi Adebayo, said the government had developed and implemented policies to diversify the economy and create jobs in the country. Adebayo said in supporting the manufacturing sector, the government was implementing policies to support and encourage patronage of locally made products. He called on the key stakeholders in the private sector to collaborate with the government in order to achieve a prosperous economy. Mansur Ahmed, MAN President, in his remarks, commended the present administration for the various policies that revived the economy that was heavily dependent on imports for its consumption and revenue. Relating to the theme of the AGM, “improving the value chain in the manufacturing sector for competitiveness and job creation”, he said that for the country and Africa in general to achieve beneficial free trade, there must be a sustainable value chain especially in the manufacturing sector, which cuts across other countries.

CIBN leads banks to maximise benefits of AfCFTA … holds banking conference September 24-25 HOPE MOSES-ASHIKE

hartered Institute of Bankers of Nigeria (CIBN) is leading the banks and other financial institutions to maximise the full benefits of the African Continental Free Trade Area (AfCFTA) agreement, the country recently became a signatory to. President Muhammadu Buhari signed the AfCFTA, which aims to increase trade between African countries, in July 2019 at the African Union (AU) summit in Niger Republic. In consideration of the potentials of the trade agreement, the Institute has chosen “African Continental Free Trade Agreement : Role of Nigerian Banks and Other Stakeholders,” as one of the seven business sessions to be featured in the forthcoming 12th Annual Banking and Finance Conference holding on September 24-25, 2019 in Abuja. “The African Free Trade Agreement is a very important development. We as a country need to sit down, dimension its implication and prepare ourselves to take maximum benefit of that agreement,” Adesola Adeduntan, managing director/CEO, First Bank Nigeria and chairman of the conference, said. According to Adeduntan, prominent bankers, major

economic players, captains of industries, regulators, policy makers, members of the academic community, millennials and other stakeholders in the banking and finance industry will gather in Abuja to brainstorm on strategic issues that are critical to building a sound and sustainable financial system and economy. The theme of the Conference, “The Future of the Nigeria Banking Industry - 360°” is structured to offer direction to Nigerian Banks and other Financial Institutions on how to reposition the Industry for relevance in the new world order, by leveraging on digitalization, a phenomenon that has brought about a lot of unprecedented disruptive innovations in the Industry. Speaking with journalists in Lagos, Uche Olowu, president/ chairman of council, CIBN, said, “There has been disruption globally. The dialogue in the global space is the future of the financial services industry. The technology space has redefine what banking is.” Responding to issues regarding the recent directive by the Central Bank of Nigeria (CBN) that banks should increase their loan book by 60 percent, Olowu said credit was very critical for any economy because banking and bankers were very pivotal to economic development and growth.

L-R: Seye Awojobi, registrar/CE, Chartered Institute of Bankers of Nigeria (CIBN); Uche Olowu, president, CIBN; Adesola Adeduntan, chairman , conference consultative committee on the 12th annual banking and finance conference, and Chijioke Ugochukwu, executive director, shared service/product, Fidelity Bank plc, at the press conference on the 12th annual banking and finance conference in Lagos, yesterday. Pic by Pius Okeosisi

Lagos earmarks N4bn to boost small businesses JOSHUA BASSEY

… as Sanwo-Olu hands over 110-bed MCC

agos State government has set aside N4 billion as grant under the Lagos State Employment Trust Fund (LSETF) to empower more Nigerians resident in the state with ingenious business ideas. About 600 people are billed to benefit from the fund that is in collaboration with Access Bank plc, with 50 percent of the would-be beneficiaries being women, Gbenga Omotosho, the state commissioner for information and strategy, said at a news conference, Tuesday, ahead of the 100 days in office of Babajide Sanwo-Olu’s administration. Also, about 1,700 people have been shortlisted to benefit from a World Bank assisted agricultural programme with each of the beneficiaries receiving N2 million.

This was also as the governor inaugurated a 110-bed Mother Child Maternity (MCC) at Ajah, aimed at reducing mother/child mortality in the state. The new facility, which sits on a four-floor edifice and fitted with facilities such as intensive care baby unit, first stage labour room, recovery room, operating theatre, emergency resuscitation room, is the eighth delivered in Lagos from the administration of Babatunde Fashola till date. It is majorly targeted at reducing incidence of mother/child mortality in the state. Sanwo-Olu also commissioned a block of 14-classrooms donated by the Redeemed Christian Church God (RCCG) also in Eti-Osa, where he commended the church and called for stron-

ger partnerships between his administration and the private sector. Sanwo-Olu believed that the health facility would provide accessible and affordable healthcare to the people of the state, especially mother and children. The state commissioner for health, Akin Abayomi, speaking at the event, said an estimated that out of every 100,000 pregnant women, 576 of them die at childbirth while that for Lagos is currently estimated at 555. He also disclosed that for every 1,000 live births in Nigeria, 77 don’t live to make it to their first birthday while for Lagos that figure is 45. “While Lagos is marginally better than the rest of Nigeria, we still have a long way to go. This MCC is therefore designat-

ed to serve the local community and contribute to improving Universal Health Coverage for the good people of Lagos State,” Abayomi said. Among other facilities slated for commissioning in the state, according to Omotosho, are the Lateef Jakande Garden; Igando, And to promote public security, the governor, the commissioner said, would also be handing over 120 patrol vehicles and 35 motorcycles for the use of security operatives in the state on Thursday, September 5. “It is important to highlight that the donation of the patrol vehicles and motorcycles also speaks to pillar 4 of THEME which is making Lagos a 21st century economy. This is in view of the significance of security to the socio-economic wellbeing of the citizenry,” said Omotosho.

FG- hikes Savings Bonds rates to hunt for more retail investors … begins auction of September 2019 FGN Savings Bonds OLUWASEGUN OLAKOYENIKAN

ollowing two consecutive months of abysmal subscription levels in the Federal Government of Nigeria (FGN) Savings Bonds on the back of reduced interest rates, the government has raised, for the first time in 4 months, its proposed rates for September 2019 Savings Bonds. This is in a move to boost retail participation at the Savings Bonds auction and to replicate elevated yields on short-tenored benchmark FGN Bonds and the Nigerian Treasury Bills in the secondary fixedincome market. “When the treasury yield curve is being elevated, the DMO would have to adjust to be within market reality,” Nnamdi Olisaeloka, fixed income analyst at Lagos-based Zedcrest Capital Limited, said in a telephone interview. In a notice released by the Debt Management Office (DMO) on Monday, the FGN said it commenced an auction for the

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subscription of a two-year and three-year savings bonds for the month with interest rates at 11.15 percent and 12.15 percent per annum, respectively. These rates correspondingly compare with 10.301 percent and 11.301 percent offered on the bond instruments in the previous month, and indicate the debt agency’s first rate hike on the securities since May 2019. “What we do with those bonds is pricing,” Patience Oniha, Director-General of DMO, had said while explaining the rationale behind the rate hike in an exclusive chat with BusinessDay in May. “We look at what our benchmark bonds are trading at FMDQ, and we apply that, so that’s essentially the basis for the increases.” Checks by BusinessDay reveal that allotments to successful bidders across the two-year and three-year tenors plunged by more than a quarter to N78.72 billion and N198.96 billion in July 2019 and rose marginally to N81.03 billion and N243.37 billion in August 2019, respectively. The average yield on short-

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dated benchmark bonds closed at 14.24 percent at the last trading session in August, while the average discount rate on benchmark Nigerian Treasury Bills stood at 12.96 percent. With the increased rates, though lower when compared with those at the secondary market, the DMO could attract more retail investors at the auction owing to the accessibility of the instruments. FGN Savings Bonds are fixedincome instruments tailored to retail investors and issued monthly to deepen the savings and investment opportunities. The bond is also targeted to enhance financial inclusion in the country as income earned from it is exempted from taxes. With the FGN Savings Bond, low-income earners can save and earn more interests than regular bank savings. The two-year tenor would be due on September 11, 2021, while the three-year savings bond would mature on September 11, 2022, according to the DMO. Interested investors are expected to bid for the instruments at the @Businessdayng

auction, which commenced on Monday, September 2 and expected to end on Friday, September 6, with a settlement date of September 11, 2019. The bonds are offered at N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million. The state-owned debt agency assured that the bonds are backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of the country, implying there is no risk of default. Furthermore, the debt office guaranteed a bullet repayment of the principal on the maturity date with quarterly interest payment dates of December 11, March 11, June 11, and September 11. Bondholders can use their investment as collaterals to obtain loans, while those who do not wish to hold on to the securities till the maturity date could trade their investment at the secondary market such as the Nigerian Stock Exchange and the FMDQ Securities Exchange.

Wednesday 04 September 2019

BUSINESS DAY

POLITICS & POLICY Atiku condemns attacks on Nigerians in South Africa, calls for probe INIOBONG IWOK

tiku Abubakar, presidential candidate of the People’s Democratic Party (PDP) in the last general election, has condemned the continuous attacks on Nigerians in South Africa, saying that such attacks were capable of erasing the shared history between both nations. Atiku, who was a former vice president of Nigeria, stated that both nations shared a long history and brotherhood, urging citizens of both nations to refrain from further actions that could jeopardise the already tense situation. In a statement to the media, Tuesday and personally signed by him, Atiku said though the days of military rule in Nigeria and Apartheid in South Africa may be over, both countries still needed each other in the quest to realise their economic potentials. Atiku, however, took a swipe on the governments of both nations for not doing enough to curtail the attacks and killings, while calling for a probe into the attacks to bring all perpetrators to face the law. According to him, “It is perhaps the most disturbing development in the turn of the century that Nigerians who live in the Republic of South Africa have consistently been victims of xenophobic violent attacks. Unfortunately, both countries have not done enough to reduce the spate of those attacks.

L-R: Akin Abayomi, commissioner for health; Babajide Sanwo-Olu, Lagos State governor; Ibijoke, his wife, and Oba Adetunji Akinloye, the Ojomu of Ajiran Land; during the commissioning of 110-bed Maternal and Child Centre (MCC) at Eti-Osa, yesterday.

“Both Nigeria and South Africa share a history of brotherhood and camaraderie at different times in our difficult times and it is very important that we do not allow this ugly development cause a blot in our shared history. “While I will recommend that both countries press all available diplomatic buttons as fast as possible, it is equally important to impress on citizens from both sides to see ourselves as brothers and never as adversaries. “True, the days of Apartheid in South Africa and military rule in Nigeria are far behind us, we still both have a common enemy, and that is in expanding the space for economic prosper-

ity to a large range of our peoples. “The new battle is economic in nature and it will be delusional for both Nigeria and South Africa to think that it is a battle we can win in isolation of each other. Neither and never can victory in the economic battle come by the way of turning daggers at each other. “For Nigeria to realise her economic potentials, we must be ready to welcome and protect South Africa investments on our soil, and ditto for South Africa to welcome and protect Nigeria’s investment in capital and manpower.” According to Atiku, “There are no short cuts. The only path to success in the battle

against poverty and lack of economic empowerment to our peoples will require Nigerians and South Africans to soldier on as brothers and sisters. It must involve governments from both ends to rework our bilateral trade agreements and statutes to respond to the realities of this time. “Meantime, our mission in South Africa should open its doors wide open for all humanitarian support that could be required of them from Nigerian victims of these attacks. Also, it will be a good take off ground for solution to this problem for the South African government to cause a probe into the attacks and bring all perpetrators to book.”

Omo-Agege condemns brutal attacks on Nigerians, calls for decisive action INIOBONG IWOK

enator Ovie OmoAgege, deputy president of the Senate, has described the latest attacks on Nigerians living in South Africa by its citizens as callous, cowardly, inhumane and a dastard act that should be condemned by all. Omo-Agege, who said he was personally appalled by the glaring debasement of humanity with the gross bestiality displayed in some video clips of the attacks being circulated on the social media, said he is pleased that the Federal Government is taking a tougher stance on what seems to have become a routine by some elements in South Africa who randomly inflict pain, anguish and death on foreigners, especially Nigerians.

He further noted that the “Senate is without question in support of necessary steps by President Muhammadu Buhari to save Nigerians in South Africa and resolve the totally unacceptable pattern of extrajudicial killings of our innocent citizens”. A statement signed by Yomi Odunuga, special adviser, Media and Publicity to the Deputy President of the Senate, quoted Omo-Agege as saying that “as a believer in the application of the law in tackling any act of criminality”, he was never against the security forces in the country deploying the instrumentality of the law to track and punish offenders. He however, emphasised that irrespective of simplistic official explanations now being advanced by South Africa, what happened on Monday was a clear case

of demeaning xenophobia and a display of hatred for a particular set of people for no justifiable reason. “I’m still shocked by the level of violence on display by a set of people presumed to be our brothers not just because we are from the same continent but also because we have a shared history. “Nigeria, it must be said, played crucial role and made great sacrifice towards the emancipation of South Africa from the firm grip of apartheid. I wonder how things got this bad that law-abiding Nigerians living in that country have suddenly become prime targets for killings, arsons and destruction. No doubt, Monday’s fresh attacks cannot be allowed to go the way of others since it appeared past efforts at interrogating the horrific visitation of violence on Nigerians yielded

no positive result in curbing the mindless horror. “The strong message that should be sent to the South African government and its people is that the life of every Nigerian matters and Nigeria would no longer tolerate the violence being visited on our people under whatever guise or excuse. Those behind the latest killings must be fetched out and punished while due compensation should be paid to the families of the victims,” he said. “While I commiserate with all those who lost loved ones and valuable properties during the violence, I urge the Federal Government to seize this moment and stand up, as it has always done in the past, for its citizens’ rights regardless of wherever they may be in the world. This abuse must stop and it must stop now!” Omo-Agege further said.

100 days: Sanwo-Olu’s impact already been felt –Lagos APC INIOBONG IWOK

he Lagos State chapter of the ruling All Progressives Congress (APC), Tuesday said the administration of Governor Bbajide Sanwo-Olu had done much to put the state on the path of progress in the last 100 days. The party equally attacked the main opposition, the People’s Democratic Party (PDP) in the state over comment by its Lagos State chapter Publicity Secretary, Taofeek Gani, that the 100 days of Sanwo-Olu was a waste, describing it as an expression of crass ignorance. The APC stated this in a statement issued to journalists in Lagos by the Assistant Publicity Secretary of the party, Abiodun Salami. Salami said the governor was fulfilling his electoral promises of a better Lagos, adding that residents were already feeling the great impact of the SanwoOlu administration. According to him, the last 100 days of the Sanwo-Olu administration have been very eventful; the governor has worked so hard to justify the mandate of the people. ‘’He is working in line with the wishes of the people; he is fulfilling his electoral promises. Lagos is getting better under Sanwo-Olu, residents should expect more of these better days,’’ he said. Highlighting the achievements of Sanwo-Olu in the

last 100 days, Salami further said the present administration had taken practical steps to improve infrastructure within the period. He added that the government was fixing many bad roads across the state in order to ease movements of residents. ‘’The Sanwo-Olu administration is fixing roads across the state in order to address the problem of gridlock and ease movement of residents in the state. ‘’The Lagos-Badagry Expressway is getting attention, the Pen Cinema bridge is getting attention, so many impactful projects are getting accelerated attention by the Sanwo-Olu administration. ‘’The governor is working and the APC and residents are proud of what he has done in the last 100 days,” he added. Salami stressed that the present administration had made great interventions in the health, education, transportation and other sectors in the last 100 days. Speaking on PDP criticism of the administration, he said the PDP was known for failure and that it should not surprise anyone that they had failed to see the many achievements of Sanwo-Olu. Salami said the 16-year rule of PDP at the national level was characterised by crass corruption and maladministration and that it would be difficult for the party to appreciate positive governance.

House of Reps chooses national budget as first stage of reforms JAMES KWEN, Abuja

he House of Representatives has chosen National Budget Reform as the first stage of its reforms efforts to ensure greater accountability, improve budget implementation and achieve some level of certainty in the process. The Green Chamber emphasised that the government’s intention to deliver on the promise of infrastructure development, meet the challenges of insecurity, provide the citizens with quality education and reposition economy for growth, will not be met until stakeholders succeed in developing and implementing a budget framework that adheres to the best practices of effective budget policy. Speaker of the House, Femi Gbajabiamila, who stated this Tuesday in his remarks at the Pre-inauguration Dialogue Session of the National Budget Reform Roundtable in Abuja, said reforming the appropriations process is an important component of the agenda of the 9th House of Representatives. Gbajabiamila, represented by the Deputy Speaker,

Ahmed Wase, explained that, the National Assembly Reform Roundtable (NARRT) is one of the platforms the House intend to use to drive the process of reform across critical sectors from healthcare to education and the economy, national security to social justice and social welfare. He observed that reform efforts, no matter how well-meaning or well-intentioned, would often fail when there is insufficient support from the stakeholders and from the wider community. According to the Speaker, NARRT exists amongst other reasons to serve as a vehicle for consensus building, driving engagement and collaboration so that the reforms proposed in the House can get the support of the stakeholders. He stressed that without the stakeholders, all efforts at passing the plan into law, and subsequent implementation, would fail. “The power of the purse, the right and responsibility to manage government expenditure through the appropriations process is the central power of the legislature. It is this power that makes all else possible.

Wednesday 04 September 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

ANJLI RAVAL IN ABERDEEN, ANDREW ENGLAND AND ARASH MASSOUDI IN LONDON AND SIMEON KERR IN DUBAI

hen Saudi Arabia’s ambitious crown prince Mohammed bin Salman wanted something done, his energy minister was often on hand. Khalid al-Falih was tasked with stabilising the oil market after the 2014 crash and helping to diversify the kingdom’s economy. But the veteran adviser has now been eased aside in delivering a project on which many of Prince Mohammed’s broader ambitions for Saudi Arabia hinge: the longawaited flotation of Saudi Aramco. On Monday it emerged that Yasir al-Rumayyan, head of the Public Investment Fund, the country’s sovereign wealth fund, had replaced Mr Falih as chairman of the kingdom’s state oil giant. Installing Mr Rumayyan, a former local investment banker, as chairman of Saudi Aramco underlines the PIF’s growing muscle. A once sleepy fund, PIF has already been charged with developing a number of ambitious multibilliondollar mega projects in the kingdom, forging new industries from scratch and snapping up stakes in companies including ride-hailing app Uber. “The PIF seems to be running the show,” said one person familiar with the listing process. Initial preparations for an IPO, long touted as the world’s biggest, were handled by Saudi Aramco but ground to a halt last year amid concerns about legal risks and doubts over whether it would achieve the $2tn valuation sought by the crown prince.

Saudi wealth fund grabs the controls of Aramco IPO

New chairman’s appointment to state-backed oil company underlines PIF’s power

Yet, as Prince Mohammed seeks to give the initial public offering new momentum, Mr Rumayyan faces an uncertain backdrop for oil demand, fragile stock markets and deepening worries that Saudi Aramco will be used as a cash cow by the government.

US manufacturing contracts for first time since 2016 Stocks fall after data show how US-China trade war has weighed on the industrial economy MAMTA BADKAR IN NEW YORK

he US manufacturing sector contracted for the first time in three years, data on Tuesday showed, as the US-China trade war weighed on the industrial economy and added to fears about slowing domestic growth. The Institute for Supply Management’s index fell 2.1 percentage points to 49.1 last month, missing expectations for a reading of 51.1, according to economists surveyed by Thomson Reuters. This marked the first time since August 2016 that the index fell below 50, indicating a contraction, and its lowest level since January 2016. The data “will undoubtedly add to fears that more weakness is ahead”, said Jim O’Sullivan, chief US economist at High Frequency Economics. The details of the report were ugly, with new orders, production and employment sub-indices all contracting last month. New export orders contracted for the second consecutive month and fell to their lowest since April 2009, when global trade was hit follow-

ing the financial crisis. “Respondents expressed slightly more concern about US-China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders,” said Timothy Fiore, chief of the ISM manufacturing business survey committee. “Respondents continued to note supply chain adjustments as a result of moving manufacturing from China.” Wall Street had already been lower on Tuesday amid uncertainty over the next steps in USChina trade negotiations as the latest batch of tariffs imposed by the world’s largest economies took effect on Sunday. Stocks extended their losses following the manufacturing data, with the S&P 500 down 1 per cent, while Treasuries extended their rally. The yield on the US 10-year fell 6.2 basis points to 1.4439 per cent, while that on the two-year slid 7 basis points to 1.4360 per cent. Yields move inversely to price. Uncertainty around trade relations between Washington and Beijing has sharpened concerns about global growth. www.businessday.ng

Even before Monday’s official announcement, Mr Rumayyan had stamped his mark on the preparations. Over the past two months, he has taken a leading role in discussions such as where Saudi Aramco should list, how much of it should be sold, which advisers need hir-

ing and when it might happen, five people informed on the listing process said. He now runs a government committee overseeing the flotation, having replaced Mohammed al-Jadaan, the finance minister, in recent months, two of these people said.

The reshuffle will see Mr Falih, a Saudi official with international recognition given his high-profile role as the de facto leader of Opec, retain his influential post as energy minister. People close to the government say there were longstanding concerns that the scope of his responsibilities, which until last week spanned oversight of industry and mining, left him overstretched. “People feel Falih’s greatest value-add was managing the global audience on energy — it was less about the domestic system,” said one of the people close to the government. “But there was some frustration that his portfolio scope became so big, he became fragmented, not enough things happened.” In a tweet on Monday, Mr Falih wished Mr Rumayyan success in his new role, saying it was an important step to prepare the company for an IPO. It had long been thought that Mr Falih would not be able to maintain his dual roles as energy minister and chair of Saudi Aramco as the company pressed ahead with a listing. What is clear is that advisers and ministers are now taking Mr Rumayyan’s remarks as an articulation of Prince Mohammed’s views and that he is following orders from the crown prince, people familiar with the matter say.

Will the US follow Germany and Japan below zero?

Investors are preparing for the possibility of negative 10-year Treasury yields COLBY SMITH IN NEW YORK

ome US investors are girding themselves for the onceinconceivable prospect that the 10-year Treasury yield could be headed towards zero, as this year’s giant rally in bonds shows few signs of easing. In a world awash with roughly $17tn of negative-yielding government debt — meaning buyers are guaranteed to get back less than they paid, via interest and principal, if they hold to maturity — America’s government bond market has long offered refuge to investors seeking higher returns. German government bonds maturing in 10 years now yield minus 0.70 per cent, while Japan’s 10-year debt yields minus 0.27 per cent. In that context, the 1.5 per cent yield on the 10-year Treasury looks attractive. But roughly a month ago the 10year note was yielding about 2 per cent. The tight timeframe of that 50 basis-point slide has caught investors by surprise, leading some to put the prospect of further heavy falls on their radars. “We could see zero,” said Nick Maroutsos, the co-head of global

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bonds at Janus Henderson in Newport Beach, California, noting that any sell-off in bonds so far, causing yields to rise, has been met with immediate buying. “The probability is increasing, particularly as we drop so rapidly.” However, while he expects 10year yields to break 1 per cent before long, he is more cautious on putting a timeframe on a move through zero. For one thing, he points out that the policy likely to turbocharge the move downwards — negative short-term interest rates from the US Federal Reserve — seems a very remote prospect. “While central banks in Europe and Japan have put all their eggs in one basket to use negative interest rates to stimulate growth, [and] the Fed is watching closely . . . we’re not at the point yet where the US is going to fully embrace that unless they see some real-life concrete examples of it working,” Mr Maroutsos said. The European Central Bank’s deposit rate currently sits at minus 0.4 per cent, having been set below zero since June 2014. Japan’s central bank adopted a negative benchmark interest rate in 2016, and it now charges commercial banks 0.1 per cent interest for some of the reserves @Businessdayng

they keep on deposit. In the face of gloomy global growth and the US-China trade dispute, both the ECB and Bank of Japan have signalled a willingness to lean more heavily on this negativerate policy. The US central bank has also left the door open for additional stimulus, but its target policy rate is well above zero, aiming at 2 to 2.25 per cent. Moreover, the relative strength of the US economy means there is resistance to pulling too forcefully on this lever. For these reasons Bill O’Donnell, a rates strategist at Citigroup, said that while the 10-year note was headed to zero, it could be some time before it reached this level. “One thing that is very clear to me in the midst of all of this cacophony of headlines is that there is absolutely no indication that rates are set to rise from here,” he said. But, he added: “Right now stocks are still not far from their record highs, the labour market looks to be in really solid condition and the US economy is still doing fine.” Steve Major, global head of fixed income research at HSBC, has a similar view. “To jump from here to zero is a long way,” he cautioned.

Wednesday 04 September 2019

BUSINESS DAY

NATIONAL NEWS

Oil veteran Gary Ross lifts lid on the art of price forecasts Relationships spanning Saudi Arabia, the US and Russia informed his best bets DAVID SHEPPARD, ENERGY EDITOR

hen Gary Ross heard reports of an oil tanker accident off the coast of Alaska, he picked up the phone. “I call the pilot of the port of Valdez and basically asked him, ‘Can you tell me what’s going on?’,” the Brooklyn-born founder of Pira Energy says of the Exxon Valdez disaster. “He said, ‘There’s so much oil, I’ve never seen anything like it in my life — miles and miles of oil!’,” said Mr Ross, mimicking the panicked voice on the other end of the line. Mr Ross breaks into a broad grin. “I said, ‘Thank you very much’.” As 11m gallons of crude seeped out of the Exxon Valdez’s shattered hull, he began calling his clients. “I told them: the price is going to go up.” They would be some of the first to hear about the magnitude of the 1989 disaster, which eventually coated 1,300 miles of once-pristine Alaskan coastline, giving them the chance to place early bets on rising prices. The ruthless pursuit of information defines Mr Ross’s near 50-year career in the oil industry, which made him one of the most influential oil analysts of his generation. For Andy Hall, a star oil trader at Phibro and Citigroup, who relied on Mr Ross’s advice throughout his career, the Pira boss has “unparalleled experience . . . strong convictions . . . supported by an extraordinary roster of industry connections”. Pira would end up with 550 of the world’s top oil producers and traders as clients. Mr Ross’s network of contacts includes Stanley Druckenmiller, the US hedge fund manager who helped George Soros “break” the Bank of England; Scott Sheffield, T Boone Pickens and John Hess, titans of the US oil industry; and a roster of former and current government officials spanning the US, Russia and Saudi Arabia. He would become a trusted friend and confidant to all sides, sometimes acting as a peacemaker in an industry beset by rivalries and mistrust. And along the way he would glean the information that would help his clients, and him, become rich. The Pira business was ultimately sold to S&P Global Platts in 2016 for an undisclosed sum, one of the few things Mr Ross will not reveal, beyond saying it made him “tremendously” wealthy. He now lives in a luxury apartment block in New York City, with floor-toceiling views over Central Park and lower Manhattan. Former General Electric chief executive Jack Welch once lived in the penthouse. While it is more than a year since Mr Ross left Pira, he remains intimately involved in the market with his own hedge fund Black Gold Investors LLC, where his son is the top trader. Now, aged 71, he wants to open up about the story behind some of the oil market’s most pivotal moments of recent decades.

Vodka and an Obama toast with Igor Sechin In late 2008, when the world was in the grip of the financial crisis, Mr Ross was encouraged by Saudi Arabia to persuade Russia to co-operate in stabilising oil prices. Igor Sechin, one of Russian President Vladimir Putin’s closest allies, who has served as the country’s deputy prime minister, energy minister, and latterly chief executive of its state-backed oil champion, Rosneft, was the key person to get on board. In Russia, his detractors have nicknamed Mr Sechin “Darth Vader” for his menacing demeanour and history of rivals coming unstuck. Mr Ross was summoned to dinner with Mr Sechin in Vienna on the eve of an Opec meeting in March 2009, when the cartel was trying to make overtures to Russia after oil prices had collapsed from above $145 a barrel to below $30 a barrel in 8 months. “He had a translator and a bottle of vodka was on the table. It was just the two of us. And I started the meeting by pointing my finger at him saying, ‘I’m going to tell you not what you want to hear, but what you have to hear’. And he pointed his finger at me and said, ‘I’m going to tell you the same thing’. I got a better appreciation of who he was later on. I was a little concerned.” Mr Ross gave a presentation to Mr Sechin entitled “Protecting Black Gold”, arguing that Russia would be foolish not to join Saudi Arabia in working to prop up the price. By Mr Ross’s account it was a good-natured affair with lots of drinking. The member of Mr Putin’s inner circle even offered a toast to the election of President Barack Obama, Mr Ross says. But Mr Sechin was not sold on the plan. “He told me his vision,” Mr Ross says. “He said we [Russia] would never co-operate with Opec, they can’t take the pain, we can, they will always cut, we will never have to cut. They will always cut before we have to.” A spokesman for Mr Sechin said Mr Ross’s recollection was “a cheap fable”. “First of all, Igor Ivanovich Sechin does not drink vodka. All the other so-called statements in this anecdote are of the same kind.” Mr Sechin, in his role as Rosneft chief executive, has continued to oppose Russia’s co-operation with Opec to this day, even as Riyadh and Moscow have become more closely aligned over the past three years. Saudi plan for full-scale price war goes awry In 2014, when the oil market had been trading above $100 a barrel for much of the past six years, Mr Ross went a long way to cementing his reputation as the best-connected analyst in the oil industry. The rise of the US shale industry had unnerved Saudi Arabia, which feared this new source of supplies would force them into an endless cycle of production cuts to prop up the price. Saudi Arabian energy minister Ali al-Naimi started considering a different strategy — strangle US shale by raising the kingdom’s own output. www.businessday.ng

Hassan Rouhani: ‘When we talk about negotiations [with the US] it means all sanctions should be lifted [first]. Our stance is clear. Our strategy is based on two principles of domestic resistance and active diplomacy’ © Reuters

Iran renews threat of increase in nuclear activity

Rouhani warning comes as France steps up efforts to resolve crisis with talks on credit line

NAJMEH BOZORGMEHR IN TEHRAN, ANDREW ENGLAND IN LONDON AND MICHAEL PEEL IN BRUSSELS

ran has vowed to further increase its nuclear activity this week beyond limits agreed in its 2015 deal with world powers unless European cosignatories deliver the promised economic benefits. The warning from Iranian president Hassan Rouhani comes as France steps up diplomatic efforts to resolve the crisis with discussions on setting up a credit line — mooted to be $15bn — to help the Islamic republic withstand crippling US sanctions. Mr Rouhani told the Iranian parliament on Tuesday that “in the coming days” the country would take a third step to exceed limits set on its nuclear programme. “It could further complicate the problem . . . but we will continue our negotiations even after the next step is taken,” he said. Friday will mark the expiration

of a 60-day deadline set by Iran for European signatories — France, Germany and the UK — to find ways to help the Islamic republic counter the impact of the US sanctions. Iran announced in May that it would start violating the limits set on its nuclear programme every two months in protest at the other signatories’ failure to help shore up its economy. It has already taken two retaliatory steps by enriching uranium beyond the agreed purity level of 3.67 per cent. Mr Rouhani’s comments came after an Iranian delegation visited Paris on Monday to discuss the French initiative. The new diplomatic push is being spearheaded by French president Emmanuel Macron, who hosted US president Donald Trump at a G7 meeting in Biarritz last month and raised the possibility of a meeting between the Iranian and US leaders. Mr Macron also met Mohammad Javad Zarif, Iran’s foreign minister, on the sidelines of

the G7 meeting. Diplomats say Mr Macron’s proposal to create a credit line has momentum and could help reduce tensions between Tehran and the west. It is not yet clear how the initiative would work and the US’s position is expected to be critical. Pekka Haavisto, Finland’s foreign minister, said in an interview that Mr Macron had made a “very brave move” by inviting Mr Zarif to the G7 summit. Mr Haavisto said the French initiative showed Europeans were “serious about this issue” and did not dispute suggestions that possible elements included a $15bn credit line to Iran and permission for the country to export up to 700,000 barrels of oil a day. Tehran has repeatedly told the European signatories that to save the nuclear deal they have to find ways to help Iran export its oil, the lifeline of the economy. The republic’s exports have plummeted from about 2.8m b/d in May last year to less than 500,000 b/d.

China acts on ‘major political task’ of high pork prices African swine fever results in 25% rise in cost of the meat in just one month TOM HANCOCK IN SHANGHAI

piralling pork prices caused by African swine fever threaten to undermine the image of China’s ruling Communist party and economic stability, a top official has said, as one city began selling rations of the meat at discounted prices. Prices of pork, which accounts for more than 60 per cent of China’s meat consumption, rose more than 25 per cent in August from July, with hog prices surpassing a 2016 record of Rmb21 a kilogramme, according to consultancy Shanghai JC Intelligence. Increasing pork production is a “major political task”, Hu Chunhua, a Chinese vice-premier and member of the politburo, told top officials

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at a meeting late last week, according to a transcript of his comments seen by the Financial Times. “This is a military-style order from the party central committee,” he added. The size of China’s pig herd has fallen by more than a third over the past year due to dozens of outbreaks of the disease, which is not harmful to humans, but lethal in pigs. Pre-emptive culling of pigs kept meat supplies high at first, which meant prices only began to surge from June. Mr Hu warned that pork prices threatened to spoil 70th anniversary national day celebrations planned for October 1. Rises would “affect the joyful and peaceful atmosphere to celebrate the 70th anniversary of the founding of New China”, he said. @Businessdayng

Failure to control prices “will seriously affect the effectiveness of building a comprehensively well-off society and undermine the image of the party and government”, Mr Hu said, adding that rising prices could affect “economic stability”. Policies proposed by Mr Hu include more financial support for pig farmers and giving targets for production to each province. Sichuan province in south-west China said last week it would set targets for pig production for each city under its jurisdiction. “Prices have already surpassed the historic record set in 2016, so the government is very worried about the impact on the economy especially of low-income people,” said Feng Yonghui, an analyst at pork consultancy Soozhu.

Wednesday 04 September 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Lego to open 160 stores as other toy retailers suffer Danish group looks to profit from collapse of outlets including Toys R Us RICHARD MILNE, NORDIC AND BALTIC CORRESPONDENT

ego is rapidly increasing the number of its ownbrand stores and investing heavily into ecommerce as it seeks to navigate the turmoil in the toy industry. Niels Christiansen, Lego’s chief executive, said on Tuesday it would open more than 160 new stores this year — an increase of almost 40 per cent, as the Danish toymaker draws the lessons from the collapse of Toys R Us and the Nordic region’s biggest toy retailer Top Toy. “We want to ensure that we stay really relevant even though there will be changes in the retail landscape. We still need kids to discover Lego. It’s about making sure we have the right access to kids,” he added. Family-owned Lego has become the world’s largest toymaker by sales and profits as much of the rest of the toy industry has struggled to combat the rise in popularity of digital devices. It has overcome its own dip in 2017 when sales and profits fell for the first time in more than a decade. The Danish group said on Tuesday that it had increased its revenues in the first half of the year by 4 per cent to DKr14.8bn ($2.2bn). Mr Christiansen said Lego had taken “the active choice” to bring down operating profits by 16 per cent to DKr3.5bn to invest more. “We have the ambition of getting to as many kids as we can around the world, and getting to that means we have to keep gaining market share. We would rather

do the investments upfront to be leading that change,” he added, underlining Lego’s strong balance sheet and long-term planning. Lego’s reduced operating profit compares with $164m in the first half for Hasbro, maker of My Little Pony and Transformers, and a loss of $182m at Mattel, owner of Barbie and Hot Wheels. The Danish toymaker is making a big push in Asia and is on track to have 140 stores in China in 35 different cities by the end of the year. It will also open an office in India as part of an attempt to crack the country. “Within 10 years, there will be 100m kids in India living in middle-class families. They are strong into education and products like Lego are very high on the wish list. The idea would be to get on some kinds of journey like we are on in China,” Mr Christiansen said. Lego is also investing more in new products, particularly focusing on the blend between physical toys and digital play experiences. It recently launched the Hidden Side series, with both physical sets and an augmented reality app. “Kids want to play with what they have seen. It’s never just about the physical products, it’s about the entire experience. It’s one of the things we are investing behind . . . It’s extremely important we stay relevant and cool,” Lego’s chief executive added. Mr Christiansen said Lego was “investing heavily in e-commerce”, updating its online platforms and ensuring its VIP loyalty programme worked across its websites, including Legoland, the theme park part-owned by its family owners.

Italy’s Five Star polls party members on coalition with centre left Online consultation expected to underline divisions within the anti-establishment party MILES JOHNSON IN ROME

n online poll of about 100,000 activists of Italy’s Five Star Movement will today decide the fate of a tentative deal for a new Italian coalition government on the anti-establishment party’s “direct-democracy” web platform. The Five Star Movement moved closer over the weekend towards forging a political pact with the centre left Democratic party (PD) — for years its avowed enemy as a longtime pillar of the Italian political system — as a way of blocking the ambitions of its previous coalition partner, Matteo Salvini’s far-right League. The online vote, which will begin on Tuesday morning on the Five Star’s “Rousseau” platform, will ask members whether they want their party to form a coalition with the PD, led by Giuseppe Conte, who would be reappointed prime minister after resigning last month in the wake of a vote of no confidence called by Mr Salvini.

Mr Conte on Monday appealed to Five Star members to support the new government in the online vote, calling the deal with the PD “an opportunity for the country we want”. A Five Star coalition with the PD has divided the Five Star Movement, with some activists and parliamentarians arguing it is a betrayal of the party’s radical roots. It would mark a radical departure for a party born out of an online protest movement against Italy’s political “caste”, fronted by comedian Beppe Grillo and coordinated by the now deceased Milanese web entrepreneur and techUtopian Gianroberto Casaleggio. Francesco Galietti, founder of risk consultancy Policy Sonar in Rome, said that the online vote would test whether the Five Star activist base would be willing to support its parliamentarians in joining forces with the PD. While many Italian political commentators have viewed the passing of the Rousseau as a formality, he said that its structure made it unpredictable and a “yes” should not be seen as a certainty. www.businessday.ng

China gives full onshore debt access to Deutsche Bank and BNP Decision marks country’s latest effort to open its financial sector as trade war bites HUDSON LOCKETT IN HONG KONG

eutsche Bank and BNP Paribas have become the first foreign banks to gain Beijing’s approval to lead underwriting for all kinds of onshore debt in China — the latest high-profile reform this year aimed at opening the financial sector of the world’s secondlargest economy. China’s National Association of Financial Market Institutional Investors, which regulates the interbank bond market, said in an announcement dated Monday that the two banks had been granted type-A licences, allowing them to underwrite all varieties of renminbi-denominated debt for both local and foreign companies. The licences grant greater access to China’s Rmb93tn ($12.9tn)

domestic bond market, the latest move by Beijing to counteract a trade war with the US and concerns locally over hidden risks in the Chinese banking system. Previously, BNP, HSBC and Standard Chartered had been granted type-B licences, which permit lead underwriting for offshore renminbi issuance, known as panda bonds. Deutsche Bank, Citigroup and JPMorgan, meanwhile, had underwriter licences allowing them to participate but not lead on domestic deals. Foreign institutions have long been confined to the panda bond market, which still encompasses only a sliver of the debt issued by Chinese entities. While last year’s panda bond issuance of $5.8bn was a record high, it was less than 1 per cent of the $843bn issued onshore, according to data from Dealogic.

Reforms further opening China’s financial sector have come steadily this year. In January, S&P became the first and only global rating agency to win a licence to operate in China, and it awarded its first local rating in July. In August, JPMorgan’s asset management arm won an auction to purchase a majority stake in its Chinese joint venture, making it the first foreign business to take control of a local asset management JV. Chang Geng Lai, chief executive of BNP’s China arm, said the licence was “recognition of our work to develop and deepen foreign expertise in Chinese capital markets”. Haitham Ghattas, head of AsiaPacific capital markets at Deutsche Bank, said the licence would allow the bank to expand its underwriting for Chinese companies.

US braces itself for Hurricane Dorian as storm batters Bahamas Emergency declared in four states while officials order mandatory evacuations MATTHEW ROCCO IN NEW YORK

mericans are bracing themselves for the arrival of Hurricane Dorian as the powerful storm slowly makes its way across the Atlantic and toward the US coastline, after it brought “catastrophic” winds and a storm surge to the Bahamas. Dorian, which has been downgraded to category 3, was “stationary” just north of Grand Bahama island with maximum sustained winds of 120mph and higher gusts, according to an update on Tuesday morning from the US National Hurricane Center. The storm is expected to begin moving north-northwestward towards the eastern coast of Florida

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later on Tuesday morning, leading to a prolonged period of devastating effects in the region. Hubert Minnis, the Bahamian prime minister, said there had been five confirmed deaths in the Abaco Islands, in the northern part of the Bahamas, as Dorian continued to hover over Grand Bahama. The storm destroyed or severely damaged as many as 13,000 homes in the Bahamas, according to the Red Cross. The NHC said a life-threatening storm surge and dangerous winds were expected along portions of the Florida and Georgia coasts, regardless of the exact track Dorian takes. It also said the risk of these effects continued to rise for the Carolinas. The governors of Florida, Georgia, @Businessdayng

North Carolina and South Carolina declared states of emergency, and officials ordered mandatory evacuations affecting millions of Americans. President Donald Trump, who cancelled a planned trip to Poland to remain in Washington, has far approved emergency declarations for the three southernmost states, freeing up federal resources to co-ordinate and assist with relief efforts there. In Florida, as evacuations began, governor Ron DeSantis said highway patrol officers would escort fuel trucks to help maintain supplies at petrol stations. By Monday afternoon local time, roughly a third of stations in the Gainesville, Miami-Fort Lauderdale and West Palm Beach-Fort Pierce areas were out of fuel, according to the website GasBuddy.

Wednesday 04 September 2019

BUSINESS DAY

ANALYSIS

FT Hurricane in the Bahamas is a harbinger of our future

The islands combine extreme affluence and deep poverty with vulnerability to climate change ADAM TOOZE

or the government of the Bahamas, the devastating hurricane that struck the Abaco Islands is a national emergency. Around the world it has unleashed a wave of solidarity. But the hurricane also exposes the unequal and dissociated social structure of an archipelago, shaped through the centuries by successive waves of globalisation. Dorian is both a historic shock and a harbinger of the future. In a world of accelerating climate change, the grim videos beamed from the cell phones of people fleeing the floodwaters in Marsh Harbour and Grand Bahama are a trailer for storms to come. And if that footage is alarming, we are reminded that there is something even worse: the blackout that follows the comprehensive destruction of fragile infrastructure. If natural disasters reveal a hierarchy of risk exposure, what comes to the fore in their aftermath is a hierarchy of communication and representation. In the bullseye of Dorian on the most remote outer islands were gated communities catering for a clientele of “ultra-high net worth” individuals — resorts such as Baker’s Bay on the north end of Great Guana Cay, one of the prestige projects of high-end developer Discovery Land Company. Residents there enjoy a helipad, yacht moorings complete with private customs office, golf courses and multi-million-dollar homes. This summer, Baker’s discreetly hosted Rafael Nadal and the Kardashians. As the hurricane moved on, these enclaves of extreme affluence, with their hardened buildings and sophisticated satellite

communications, were the first to break the silence and broadcast news of the devastation on the outer islands facing the Atlantic. Within 36 hours their professional staff were already preparing to ship in containers of materials to begin rebuilding paradise. Meanwhile, dotted along the beaches are the second homes of hundreds of prosperous Americans and Europeans, including my own seaside cottage, its ravishing views of turquoise lagoons framed by palms now transformed into a scene of havoc. Having left the islands before hurricane season began, owners scattered from Europe to the west coast of the US are glued to their mobile phones, desperate for news of beloved places, local friends and staff. Meanwhile, 70,000 native inhabitants of the Abaco Islands and Grand Bahama were caught in the eye of the storm. Divided since the days of colonial slavery between black and white, they sustain a middle-income island economy largely based on tourism and agriculture. Ahead of the storm, there were calls to evacuate. But where were the Abaconians or the inhabitants of Grand Bahama to evacuate to? An island nation offers no hiding place from a storm of the size and ferocity of Dorian. In the aftermath, with docks blown out to sea, power lines down, airports inundated, the government in Nassau will face a bill that may rise as high as $8.1bn. This will be a huge burden for an economy rated by the IMF at only $12.45bn. The demands on creaky and inefficient utility companies, stifled by bureaucracy and exorbitant shipping costs, will be immense.

Hong Kong chief Carrie Lam wanted to ‘quit,’ according to recording Chief executive struggles to retract comments in leaked audio recording of private meeting NICOLLE LIU AND ALICE WOODHOUSE IN HONG KONG, AND CHRISTIAN SHEPHERD IN BEIJING

ong Kong’s chief executive has struggled to retract private comments in a leaked audio recording suggesting she regretted causing havoc and wanted to resign. Carrie Lam told reporters at a press conference on Tuesday that the comments were made at a lunch with industry and social leaders and that it was “unacceptable” that they had been shared with the press. She insisted she had “never tendered any resignation” to Beijing. “For a chief executive to have caused this huge havoc to Hong Kong is unforgivable,” Ms Lam was heard saying in a recording published by Reuters. “If I have a choice, the first thing is to quit, having made a deep apology, to step down.” She added in the recording that her room for manoeuvre was limited because the issue had been elevated to a “national level” in Beijing and that the US-China trade

war had complicated matters. The Financial Times reported in July that Ms Lam had offered to resign on several occasions but Beijing had refused to let her step down. Hong Kong has been wracked by demonstrations for more than 12 weeks after Ms Lam tried to pass a law that would have allowed criminal suspects to be extradited to mainland China for the first time. The bill has been suspended but the protests have intensified, with increasing calls for greater democratic rights that have plunged the territory into its worst political crisis since its handover from Britain to China in 1997. More than 1,100 protesters have been arrested since the start of the demonstrations in June. On Monday, tens of thousands of high school and university students boycotted classes and riot police were deployed at subway stations in the city. The student strike continued on Tuesday, with some students holding separate assemblies in schools to discuss the protests. www.businessday.ng

China’s industrial heartland fears price of green policy Beijing’s push to build a more environmentally friendly economy comes with costs LUCY HORNBY IN BAIYANGDIAN

ntil a few years ago, business was good even if the air was bad in Dazhang village, a town deep in the Baiyangdian wetlands of northern China that has long prospered from one main industry: processing duck feathers for use in clothes and pillows. Residents had access to water from the marshes and cheap coal to fuel rudimentary boilers. Luxury cars threaded through rutted streets. But since 2013, as regulators have introduced measures to reduce air and water pollution, the area around the village has become a test ground for Beijing’s ambitious plans to make the economy greener amid popular discontent over environmental degradation. Near Dazhang, President Xi Jinping has sought to turn hundreds of square kilometres of wetlands into an “eco-city” called Xiong’an, putting additional pressure on the area to clean up. This pet project is supposed to run on renewable energy and to eventually attract some $300bn in high-tech investment. For now, however, it is no more than a collection of billboards and hastily assembled offices in soggy wheat fields. Meanwhile, climate campaigners worry that the country’s economic slowdown is creating a renewed incentive for bureaucrats to look the other way on the environment. “There’s an internal debate [within the government] about climate change, and the Chinese side is looking at their options,” said Li Shuo, climate change campaigner for Greenpeace in Beijing. “In that context, the slowdown is cited as a reason to not do more.” Chinese regulators have come down hard on polluting industries. Around Hebei province the impact of Beijing’s industrial reorganisation is profound. Small towns like Dazhang village are now surrounded by shuttered and partially dismantled factories.

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Chained gates and idle yards line the streets. The tension between China’s slowdown and its climate ambitions has global implications, as world leaders prepare for a 2020 deadline for new international targets to reduce emissions that contribute to global warming. But after two decades of near double-digit expansion, gross domestic product has slowed to 6.2 per cent growth in the second quarter — the weakest official pace since the early 1990s. If China, the world’s secondlargest economy, does not get tough on its emissions, other countries might not be willing to either. Chinese negotiators did not offer to cut carbon emissions at the landmark international climate summit in Paris in 2015, but they pledged to rein in their growth. To do so, regulators set about tinkering with the industrial structure of the north China plain, where millions of chimneys belched smoke into the sky. Suitcase manufacturers, a top local employer in the wetlands, were ordered to move hundreds of kilometres away. Brick kilns have been dismantled. In Dazhang village, the duck feather industry will be the next to go. Migrant workers have left town, and even some locals have gone to look for work elsewhere despite a wave of subsidy spending designed to prop up household incomes. “The streets are cleaner,” says one cafeteria owner. “But I don’t get many customers any more.” To meet air quality standards, factories paid tens of thousands of dollars to switch from coalfired boilers to natural gas. Then came new regulations on water discharge. That equipment cost Rmb1m to Rmb5m, forcing those that could not afford the upgrades to close. The same process has been repeated across industries. Hebei province officials estimate that forcing smaller mills to upgrade or close has cut about 25 per cent of steel capacity. The anti-pollution campaign

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claimed an estimated 170,000 small factories in Hebei over the past two years, with job losses partially offset by a rise in government subsidies. As Beijing’s air improved, so did China’s emissions. Between 2014 and 2016 global emissions flatlined. Environmentalists cheered, and urged China to do more. But another factor contributing to the lower emissions was a cyclical downturn during those years, which wiped out private businesses across China. To keep growth figures up, panicking local governments approved infrastructure investments including $135bn in coal-fired power plants and tens of thousands of apartment towers built far from any city. “During the last cycle . . . local governments tried to support growth by building infrastructure but paid less attention to transforming industrial structure,” said Nicholas Zhu, senior credit officer at Moody’s Beijing. When the economy reignited, China’s emissions crept back up, pitting businesses against regulators with a mandate to keep skies blue. Environmental regulators showed up for inspections with armed escorts to back them up. In the winter of 2017, a campaign against coal burning in Hebei province left homes without heat and factories without power. Businesses cried foul. “Some local governments and some companies argue that it’s already much better. Now we can see blue skies and white clouds, so isn’t it time to relax a bit?” said Yang Fuqiang, senior adviser at the Natural Resources Defense Council in Beijing. “If there aren’t new models or new policies, China could backslide,” he added. By many metrics the economy was worse around 2015, but official GDP figures stayed strong inflated by loans for new projects. These numbers created political space for regulators to push through radical policies. Now the trade war with the US makes bureaucrats more jittery about making further commitments.

Wednesday 04 September 2019

PRIVATEEQUITY &FUNDRAISING MONTH

BUSINESS DAY

PRIVATE EQUITY DEALS IN 2019

ACQUIRER/FUND MANAGER

ACQUIREE

SECTOR

JAN

ACCESS BANK

DIAMOND BANK

BANKING

200

JAN

CARLYE GROUP

WAKANOW

AVIATION

JAN

VecIs and AGL

LEVENTIS

CONSUMER GOODS

JAN

ADVANCED FINANCE and INVESTMENT GROUP (AFIG)

NEM INSURANCE

INSURANCE

JAN

COCA-‐COLA

CHI LIMITED

CONSUMER GOODS

JAN

CDC Group plc

CCAGF

FMCG/AGRIC

JAN

GeneraIon Investment Management (GeneraIon IM)

ANDELA

TECH

100

JAN

STAKE

AMOUNT ($ Million)

12 29% 100%

500

ABRAAJ GROUP

ABRAAJ group

FIN SERVICES

MARCH

SIEMENS LIMITED

DRESSER-‐RAND

AUTOMATION

600

MARCH

VEROD CAPITAL MANAGEMENT

DAYSTAR POWER

ENERGY/POWER

MARCH

COX VENTURES ET AL

FARMCROWDY

AGRIC

MARCH

LENDABLES

ONE FINANCE (OneFI)

FIN SERVICES

MARCH

QUANTUM CAPITAL

TEAMAPT

FINTECH

MARCH May

THEMIS Rise Capital, Adventure Capital, IC Global Partners, First MidWest

KINGLINE GoKada

POWER TRANSPORTATION

5.3

JUNE

Consonance Investment Managers

Mdaas

HEALTH

June

NORTFUND and FINNDUND

STARSIGHT POWER UTILITY LTD

POWER

June

BREAKTHROUGH ENERGY VENTURES, NORTFUND

ARNERGY

ENERGY/POWER

June

IGNITE INVESTMENTS and COMMODITIES

FORTE OIL

OIL

235.8

JULY

IDG Capital, Sequoia China, Source Code Capital

OPAY

TECH

InsuResilience Investment Fund

Royal Exchange General Insurance

INSURANCE

JULY JULY

CANAL+

ROK TV

ENTERTAINMENT

AUGUST

OLAM INTERNATIONAL LIMITED

DANGOTE FLOUR MILLS

FMCG/AGRIC

AUGUST

GOLDMAN SACHS, NIGERIAN COMM BANKS

KOBO360

LOGISTICS

100

331.3 30

Norfund’s Sundry Foods deal gives Silk Invest partial exit MICHAEL ANI

he Nor wegian Investment Fund for Developing Countr ies (Norfund) has invested in Sundry Foods, an integrated food services company operating in the Quick Service Restaurant (QSR), Bakery and Catering Services sectors in Nigeria. The investment marks one of Norfund’s first investments in Nigeria. Headquartered in Port Harcourt and with regional offices in Lagos and Abuja, Sundry Foods currently has close to 50 outlets consisting of restaurants, bakeries and

catering units spread across 11 states in Nigeria. Its brands include Kilimanjaro, Pizza Jungle, Kilishawarma, Nibbles, Suncrust and Sundry Foods Services. Today, Sundry Foods is one of the top QSR brands in Nigeria by market share. The firm plans to increase its footprint in underserved regions and expand its product offering to meet the growing demand for food services. With this expansion, the company will substantially increase its current employment base of over 1,600 staff. “This investment by Norfund is a testament to the hard work we have put into building Sundry Foods into

a formidable business in Nigeria’s food services industry over the last 15 years,” Ebele Enunwa, Founder and CEO of Sundry Foods, said. “We like to think of it as an endorsement that we have done something right. With Norfund and our other investors, we are better equipped to pursue the next phase of our growth story. We will be working together to build Nigeria’s premier food company based on the highest levels of systems, food standards and business ethics,” Enunwa said. Norfund expects to add value to Sundry Foods by supporting the company’s expansion plans and its on-go-

ing work on achieving global standards, and by contributing increased expertise and focus on the environmental, social and governance fronts. Norfund will partner with management, the company’s Board of Directors and Silk Invest to achieve those plans. Naana Winful Fynn, Regional Director for West Africa for Norfund, said: “We are excited to partner with Sundry’s leadership team, its Board and its investors including Silk Invest. We will work with these stakeholders as an active owner and contribute to creating the premier food company in Nigeria, which will continue to offer nutritious, healthily-prepared local

and contemporary food to its customers; to attain the company’s growth and expansion ambitions and to create jobs for many Nigerians during that journey.” Silk Invest African Food Fund, a Luxembourg-domiciled private equity fund managed by UK-headquartered Silk Invest, who invested in 2012, will be partially exited through this investment. At the time of its investment, the company had only seven outlets. Today, Sundry has one of the two leading fully company-operated QSR brands in Nigeria. Silk Invest remains committed to Sundry Foods and

will continue to co-manage a minority stake in Sundry Foods. Zin Bekkali, CEO of Silk Invest, said: “Sundry Foods was from day one a great fit with our objective to support authentic African consumer brands backed by committed entrepreneurs. Its leadership team has over the years consistently delivered, and we hope to continue contributing to its growth journey together with Norfund.” “The investment team of Norfund has proven over the last months to share common ground in many areas, and we are looking forward to further developing our partnership.”

Actis raises $1.2bn for first emerging markets infrastructure fund MICHAEL ANI

c t i s ha s ra is e d $1.23bn (€1.34bn) for its first emerging markets-focused infrastructure fund. The said amount raised for the Actis Long Life Infrastructure Fund (ALLIF), together with co-investment, gives the fund up to $2bn of investable capital, the firm said. ALLIF’s investor base is comprised of institutional investors from North America, Europe, Latin America, Middle East and Asia.

ALLIF is a complementary strategy to Actis’ successful Energy business, which committed more than $5bn to 34 investments across 25 countries - generating 25GW and providing electricity to nearly 90 million customers. ALLIF will originate operating infrastructure assets across Latin America, Africa and Asia while driving operational improvements over a long term hold period. The resultant stable contractual cash flows will make these highly attractive assets for investors seeking stable cash yields over time.

Torbjorn Caesar, Senior Partner at Actis, said: “Actis is uniquely positioned to deliver the ALLIF strategy - it is entirely complementary to the experience and reputation we have amassed in our existing Energy business, now in its fourth vintage. ALLIF provides an attractive risk-reward profile to invest longer term in a sector and in markets that we know extremely well. It is fantastic that our investors share our vision for the strategy which I believe will be a significant part of Actis’ future.” The ALLIF business is led

by Glen Matsumoto, who joined Actis in 2016 having previously been one of the three founding partners of EQT’s infrastructure business. Matsumoto is supported by partner Adrian Mucalov, who moved across from the Actis Energy business, and a team of investment and operational professionals based on the ground in Actis’ markets. Glen Matsumoto, Partner and Head of the Actis Long Life Infrastructure Fund, said: “I joined Actis because I saw a compelling opportunity to

build on the firm’s unrivalled expertise and experience in the Energy Infrastructure sector. I am proud to be part of our world-class team and I am humbled and gratified that such prestigious and judicious investors are backing the ALLIF strategy to deliver on the opportunity.” ALLIF has already identified and prioritised an executable pipeline of approximately $8bn and has committed to investments, which include a 100MW solar PV plant in the Atacama region of Chile which sells power to the Santiago Metro

transit system and 137MW of operational wind generation assets located in Brazil. Neil Brown, Partner and Head of the Investor Development Group at Actis, said: “Actis has always been a pioneer in mobilising capital to invest in the growth markets. I am enormously proud that we have brought such thoughtful investors on-board for the first vintage of ALLIF - the deep engagement during the fundraise and the appetite for co-invest is a real testament to the strength of the team and the strategy.”

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 04 September 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 03 September 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 238,153.01 6.70 3.08 127 55,140,635 UNITED BANK FOR AFRICA PLC 217,166.33 6.40 3.23 242 9,515,836 ZENITH BANK PLC 551,008.47 17.50 -0.28 353 14,244,222 722 78,900,693 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 168,707.88 4.70 2.13 217 3,715,697 217 3,715,697 939 82,616,390 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,849,631.83 140.00 1.08 134 3,491,221 134 3,491,221 134 3,491,221 BUILDING MATERIALS DANGOTE CEMENT PLC 2,692,400.17 160.00 -1.25 70 662,827 LAFARGE AFRICA PLC. 231,146.87 14.35 0.35 53 9,051,855 123 9,714,682 123 9,714,682 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 234,024.40 397.70 - 14 13,614 14 13,614 14 13,614 1,210 95,835,907 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 39,682.66 41.60 -0.36 58 488,609 PRESCO PLC 44,800.00 44.80 - 1 500 59 489,109 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,260.00 0.42 - 6 266,919 6 266,919 65 756,028 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 688.30 0.26 - 2 359 JOHN HOLT PLC. 217.92 0.56 - 1 64 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,054.47 1.01 -2.88 81 26,539,146 U A C N PLC. 13,253.96 4.55 1.11 186 15,712,570 270 42,252,139 270 42,252,139 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,486.00 18.55 - 2 1,053 ROADS NIG PLC. 165.00 6.60 - 0 0 2 1,053 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,130.68 0.82 -6.82 19 61,664,029 19 61,664,029 21 61,665,082 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 10,804.71 1.38 - 4 38,500 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 1 1,000 GUINNESS NIG PLC 90,681.85 41.40 - 27 103,937 INTERNATIONAL BREWERIES PLC. 94,554.48 11.00 10.00 19 142,969 NIGERIAN BREW. PLC. 411,840.46 51.50 - 57 264,199 108 550,605 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 100,250.00 20.05 -4.52 58 1,095,018 DANGOTE SUGAR REFINERY PLC 102,000.00 8.50 2.35 111 1,294,625 FLOUR MILLS NIG. PLC. 55,355.12 13.50 -1.46 60 2,818,668 HONEYWELL FLOUR MILL PLC 7,930.20 1.00 -1.96 14 228,980 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 34,442.70 13.00 - 16 248,410 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 259 5,685,701 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,467.28 9.30 - 15 94,798 NESTLE NIGERIA PLC. 1,030,453.13 1,300.00 -1.44 45 197,909 60 292,707 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 1 100 VITAFOAM NIG PLC. 5,366.12 4.29 - 10 90,762 11 90,862 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,425.81 5.90 - 29 142,128 UNILEVER NIGERIA PLC. 169,190.41 29.45 - 20 2,257,772 49 2,399,900 487 9,019,775 BANKING ECOBANK TRANSNATIONAL INCORPORATED 141,291.54 7.70 5.48 39 1,195,127 FIDELITY BANK PLC 45,780.18 1.58 -1.25 72 2,308,094 GUARANTY TRUST BANK PLC. 791,698.72 26.90 -0.19 302 52,002,371 JAIZ BANK PLC 11,196.41 0.38 -2.56 17 1,058,058 STERLING BANK PLC. 66,217.96 2.30 -8.00 21 2,323,211 UNION BANK NIG.PLC. 203,845.27 6.60 -5.71 22 171,213 UNITY BANK PLC 8,182.54 0.70 - 7 61,418 WEMA BANK PLC. 22,758.93 0.59 -1.67 31 3,819,341 511 62,938,833 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,435.33 0.64 1.56 16 1,205,971 AXAMANSARD INSURANCE PLC 18,900.00 1.80 - 6 20,227 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 0 0 CONTINENTAL REINSURANCE PLC 16,907.57 1.63 8.67 6 303,000 CORNERSTONE INSURANCE PLC 3,682.38 0.25 8.70 4 378,555 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,050.56 0.28 -6.67 17 1,757,304 LAW UNION AND ROCK INS. PLC. 1,675.57 0.39 - 2 10,200 LINKAGE ASSURANCE PLC 3,840.00 0.48 - 4 105,000 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 4.76 1 520,000 NEM INSURANCE PLC 10,032.96 1.90 - 17 162,630 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,637.45 0.49 2.08 2 548,271 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 1 6,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 2 355,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 100,000 WAPIC INSURANCE PLC 5,085.44 0.38 - 15 108,187 94 5,580,345

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MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,583.90 1.13 - 0 0 0 0 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,260.00 3.63 - 51 524,811 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 - 11 68,427 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 30,694.20 1.55 -1.90 56 2,044,803 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,029.07 0.20 - 3 101,500 STANBIC IBTC HOLDINGS PLC 389,141.01 38.00 - 19 15,668 12,000.00 2.00 -1.96 69 2,235,205 UNITED CAPITAL PLC 209 4,990,414 814 73,509,592 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 817.22 0.23 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 9,388.62 4.50 - 0 0 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 8,909.28 7.45 - 20 63,670 MAY & BAKER NIGERIA PLC. 3,450.47 2.00 - 19 295,797 949.58 0.50 - 1 162 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 40 359,629 40 359,629 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 4 505,400 4 505,400 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 534.60 4.95 - 2 6,048 TRIPPLE GEE AND COMPANY PLC. 282.12 0.57 -9.52 4 122,007 6 128,055 PROCESSING SYSTEMS CHAMS PLC 1,127.05 0.24 - 11 720,472 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 1 1,000 12 721,472 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 5 5,502 5 5,502 27 1,360,429 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 4 3,650 CAP PLC 17,325.00 24.75 - 11 56,116 228,696.92 17.40 - 49 228,099 CEMENT CO. OF NORTH.NIG. PLC MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 1 4,403 1,156.20 9.40 - 0 0 PREMIER PAINTS PLC. 65 292,268 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,730.05 1.55 3.33 20 315,850 20 315,850 PACKAGING/CONTAINERS BETA GLASS PLC. 29,873.33 59.75 - 2 21,134 GREIF NIGERIA PLC 388.02 9.10 - 0 0 2 21,134 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 2 50 2 50 89 629,302 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 1 3,000 1 3,000 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 1 200 1 200 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 4,675 1 4,675 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 0 0 0 0 3 7,875 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 24 5,306,597 24 5,306,597 INTEGRATED OIL AND GAS SERVICES OANDO PLC 48,482.51 3.90 -1.27 34 853,098 34 853,098 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 25 54,258 CONOIL PLC 11,658.40 16.80 - 14 46,550 ETERNA PLC. 3,651.61 2.80 - 18 60,497 FORTE OIL PLC. 21,425.81 16.45 - 77 611,287 MRS OIL NIGERIA PLC. 5,729.98 18.80 - 0 0 TOTAL NIGERIA PLC. 33,952.18 100.00 - 40 58,004 174 830,596 232 6,990,291 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 1 20 1 20 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,387.46 4.05 - 11 48,260 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 0 0 11 48,260 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,972.68 1.43 - 4 14,600 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 4 14,600 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 211.68 0.35 - 0 0 LEARN AFRICA PLC 1,072.32 1.39 - 6 7,265 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 487.49 1.13 - 11 200,781 17 208,046 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 530.46 0.32 - 0 0 0 0

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Thebigread Argentina: How IMF’s biggest ever bailout crumbled under Macri

BUSINESS DAY

Wednesday 04 September 2019 www.businessday.ng

...with the Peronists waiting in the wings, the country is struggling to avoid a ninth sovereign default Michael Stott and Benedict Mander in Buenos Aires

he decision to seek what became the biggest bailout in the IMF’s history took only a few minutes. A loss of faith in Argentina’s reform programme had been visibly demonstrated by a two-week run on the peso in spring last year. President Mauricio Macri had few options left. A long-mooted contingency plan went into action. “When it came to it, we had discussed it so much, for Macri it was no problem,” says one senior government official recalling the events of last May. “The decision took five minutes . . . back then, Macri was fine and he was very happy with the agreement . . . after all, we had managed to get $50bn.” Fifteen months later, the giant bailout has become a millstone around Mr Macri’s neck. Voters angry at the continuing recession delivered a stinging rebuke on August 11, handing a big victory to his Peronist rival Alberto Fernández in a primary vote. The contest is regarded as a reliable barometer for the election in October and its result panicked investors because it spelt disaster for Mr Macri’s chances. Following days of market chaos in the wake of the vote, Mr Macri’s government bowed to the inevitable last week and asked creditors for more time to pay back Argentina’s $101bn of foreign debt, including the IMF money, as Buenos Aires struggled to avoid the country’s ninth sovereign default — and the third this century. Currency controls were imposed on businesses on Sunday after it lost an estimated $3bn in reserves in just two days last week. With the record-breaking bailout veering off track, questions are being asked about why the IMF, which has overseen 21 bailouts to Argentina, including one that ended in a historic default, lent so much money to support a programme that is crumbling after little more than a year. “It’s another black eye for the IMF in Argentina,” says Benjamin Gedan, who leads the Argentina project at the Wilson Center in Washington. “They were caught up in the same euphoria as investors . . . They thought the number two economy in South America was embracing the Washington consensus.” Having already disbursed $44bn of the bailout to Buenos Aires, the fund now faces a difficult choice: whether to stick with the programme and hand over

Argentina’s president Mauricio Macri with his old friend Donald Trump another $5.4bn later this month to Mr Macri’s government or cut its losses and wait to deal with the next president. The IMF said in a statement issued after officials visited Argentina last week that it was assessing the impact of the proposed debt measures but would “continue to stand with Argentina during these challenging times”. Its decision on the bailout’s future will be taken without the person who was instrumental in winning approval for the rescue: Christine Lagarde, who has stepped down from the IMF’s top job to lead the European Central Bank. Ms Lagarde is unapologetic about her leading role in lending to Argentina. “We were the only game in town,” she told the Financial Times in July. “There was nobody else at the time to invest in the recovery process through which the government had decided to engage, and given the size of the challenge, we had to go big.” The last 70 years of Argentina’s history have been punctuated with regular economic crises, and Mr Macri’s inauguration in December 2015 was no different. His Peronist predecessor, Cristina Fernández de Kirchner, had emptied the government coffers, signing decrees to increase spending by an extra $27bn in her final days in power. Inflation was running close to 25 per cent, foreign exchange reserves were dangerously low and generous subsidies for utilities and transport were draining the budget. The new president seemed well equipped for the challenge. The multimillionaire scion of an Italian immigrant who made his fortune through lucrative gov-

ernment contracts, he projected an image of cool competence, business savvy and sober realism which came as a relief to investors after the chaotic populism of Ms Fernández. “I really believe that finally we have learnt from our mistakes,” Mr Macri told the Financial Times in September 2016, when asked about his economic programme. “There is no other country in the world with as much upside as Argentina.” Something Mr Macri was keen to avoid if at all possible was being forced to seek help from the IMF, a perennial bugbear for Argentine leaders. Buenos Aires’ troubled history with the fund stretches back six decades. Most notorious was the 2001 economic collapse, which ended with what was then the biggest debt default in history, bank runs, widespread civil unrest and the president fleeing by helicopter from the roof of the presidential palace. Nearly a generation later, the bitterness remains. A poll last year by the Wilson Center found that 56 per cent of Argentines dislike the IMF, the worst ranking of any international organisation surveyed. The centre’s Mr Gedan compares the organisation to Superman’s arch enemy: “In Argentina, the IMF is like Lex Luthor,” he says. “Historically whenever the IMF swoops into Argentina, it leaves brutal budget cuts and economic chaos in its wake.” So Mr Macri opted for a gradual approach to fixing the economic mess left to him by Ms Fernández, hoping to avoid another cycle of IMF-imposed austerity and political crisis.

“Macri’s political team told him he couldn’t start his term with a big [austerity plan],” says one source close to the administration. “That would be a typical rightwing government, which would end up with him leaving the presidential palace by helicopter when it failed.” Mr Macri, who was also handicapped by his lack of a majority in congress, avoided big cuts to public spending and hoped that steady growth and restoring access to international borrowing would dig the economy out of its hole. For a couple of years, the plan seemed to work. But the big deficits needed a constant stream of foreign money to fund them. High interest rates pushed up the value of the peso, meaning more dollars needed to be borrowed to fund the deficit. When a loss of market confidence triggered last year’s run on the peso, Mr Macri had to turn to the IMF. Claudio Loser, who ran the IMF’s western hemisphere division at the time of Argentina’s 2001 crisis, says the main problem was excessive borrowing. “They were overconfident about their ability to continue borrowing significant amounts while adjusting [the economy] slowly,” he says. “That was the mistake.” Kenneth Rogoff, a former chief economist at the IMF and now professor of economics at Harvard University, agrees. “Argentina made a lot of mistakes,” he says. “The general principle their programme violated was that when markets overshoot, policy has to overshoot. They didn’t do that — they tried a policy of gradualism.” Yet despite the early mis-steps, Mr Macri secured a big IMF loan

relatively quickly. Helping to smooth the way was his warm personal relationship with Donald Trump, president of the country with the biggest share of the votes on the IMF board. “I’ve been friends with Mauricio for a long time, many years . . . we knew each other very well,” Mr Trump told reporters when he visited Argentina in 2018. “I actually did business with his family.” Mr Trump was referring to his purchase of a prime New York site for $95m in 1984 from Mr Macri’s father, Franco. “Macri caught the ear of Trump,” says Hector Torres, a former senior IMF official now at the Centre for International Governance Innovation, a Canadian think-tank. “He got Trump to believe he needed a hand and he started [lobbying] via the [US] Treasury before going to the IMF.” “Sure we spoke to the Treasury,” says the former senior Argentine official. “The situation was so delicate that it required a rapid response and the fund is so bureaucratic that it can’t act quickly enough.” The fund’s initial bailout for Argentina, announced in June 2018, pledged $50bn, much more than expected. Ms Lagarde said the money would “bolster market confidence”. But only two months later, markets had lost confidence in the peso and Argentina went back to the fund again. A key flaw in the first deal, say former Macri officials and economists, was the IMF’s insistence that the peso float freely, which led to a fresh bout of selling as markets tested the currency. “It was the chronicle of a death foretold,” says the former senior Argentina official. “The first agreement with the fund was inflationary and therefore bound to cause a recession. A depreciating currency forces you to raise interest rates and that cools down the economy.” Following weeks of negotiations Ms Lagarde announced last September that the IMF would stump up an extra $7bn, bringing the Argentina bailout to a record $57bn, and allow the money to be spent faster. She was confident the revised plan would be “instrumental” in restoring market confidence. This time, the IMF allowed Argentine authorities a limited amount of scope to intervene to defend the peso. But the restrictions on when and by how much it could step inwere too much for the central bank chief Luis Caputo, who resigned.

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