BusinessDay 05 Mar 2020 by BusinessDay

Oshiomhole’s suspension a new dawn of peace in Edo, says Obaseki IDRIS MOMOH, CHURCHILL OKORO (Benin), FELIX OMOHOMHION & JAMES KWEN (Abuja)

do State governor, Godwin Obaseki, said the court-ordered suspension of Adams Oshiomhole as national chairman of the All Progressive Congress (APC) has ushered in a new dawn in the state chapter of the party. Obaseki said with the

… Our position has been vindicated – Ojezua … APC National Working Committee to validate suspension court ruling, peace has returned to the party and the crisis rocking the party has finally been laid to rest. According to him, the court has spoken the mind of the majority members of the party that have been calling for the sack of the national chairman as he

lacked the capacity to lead the party in the country. “I had on several occasions called on the party’s national chairman to publicly disown those that paraded themselves as members of Edo People’s Continues on page 39

L-R: Jatto Adams, GM, corporate and strategic communications, Nigerian Ports Authority (NPA); Hadiza Bala Usman, MD/CEO, NPA; Frank Aigbogun, publisher/editor-in-chief, BusinessDay Media, and Ogho Okiti, MD, BusinessDay Media, shortly after the meeting with NPA team in Lagos. Pic by Pius Okeosisi

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news you can trust I ** thursDAY 05 march 2020 I vol. 19, no 513 ISAAC ANYAOGU & DIPO OLADEHINDE

ig e r ia sig n e d a Memorandum of Understanding with German energy giant, Siemens, last year to add about 25,000 megawatts (MW) of electricity by 2025. But the deal is coordinated from the office of Abba Kyari, the president’s chief of staff, whose table is overflowing with competing national issues and lacks expertise regarding the power sector. The country is yet to move the needle on the deal. In Nigeria’s north-eastern state of Taraba, after several fits and starts, the Federal Government and the Chinese will this year begin construction Continues on page 38

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Future of Nigeria’s justice system lies in complete automation – Experts P. 38

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No leadership in power sector keeps Nigerians in darkness As Presidency, NERC, TCN, Power Ministry pursue separate agenda

L-R: Lolu Alade-Akinyemi, chief financial officer, Lafarge Africa plc; Folashade Ambrose-Medebem, communications, public affairs and sustainable development director; Oscar Onyema, chief executive officer, The Nigerian Stock Exchange; Mobolaji Balogun, chairman, Lafarge Africa plc; Khaled Abdel Aziz El Dokani, chief executive officer, Lafarge Africa plc; Elenda Giwa-Amu, nonexecutive director, Lafarge Africa plc, and Adewunmi Alode, general counsel and company secretary, Lafarge Africa plc, at the closing gong ceremony at the Nigerian Stock Exchange in Lagos, yesterday.

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

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How Nigeria can lift more people out of poverty ISAAC ESOWE

ncome inequality broadly refers to an extreme disparity of income distribution with a high concentration of income usually in the hands of a small percentage of a population. The obvious gap between the rich and the poor is peculiar to developed and developing countries alike. However, there are huge disparities in how people experience poverty, it could be in the form of health, education and standard of living. Findings from the 2019 Global Multidimensional Poverty Index (MPI) shed more light on the disparities in how people experience poverty, revealing vast inequalities among countries and among the poor themselves. In Nigeria, the proportion of people who are multidimensionally poor has remained constant at over 50 per cent since the past decades. The income of the nation has grown marginally since the country crept out of recession in 2016. However, the average wealth of the populace for the past 50 years and more has not grown equally among all the groups. The country’s inequality has reached an extreme level, albeit being the largest economy in Africa and 30th in the world, according to the World Bank ranking, which was measured using the (GDP) as a key yardstick. The country’s economic diversification and strong growth, sadly, however, not much of that optimism has translated into the daily life of average Nigerian. About 399.5 million people globally live in extreme poverty and 16 per cent of the global population in extreme poverty lives in Nigeria. Across Nigeria, 95.9 million people live in ex-

treme poverty, that is, people living below the poverty line of $1.90 per day. This, however, represents 48 per cent of the Nigerian population according to the World Poverty Clock as of 3rd of March, 2020. Further analysis of global extreme poverty population reveals that 55.6 million people or 14.1 per cent of the world’s poor rural population are resident in Nigeria, while Nigeria makes up 19.8 per cent of the global urban population in extreme poverty. Poverty and inequality in Nigeria have a strong spatial dimension. Poverty is considerably higher in rural than in urban areas: 35.5 per cent of the urban population live below the national poverty line in 2020, compared to 63.1 per cent of the rural population. Poverty and inequality in Nigeria are not due to lack of resources, but to the ill-use, misallocation and misappro-

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priation of such resources. At the root, there is a culture of corruption and rent-seeking combined with a political elite out of touch with the daily struggles of average Nigerians. The irony of the Nigeria situation is that as the country gets richer only a few benefits while the major share of the population suffers from poverty and deprivation. BusinessDay Research and Intelligence Unit (BRIU) found out that poverty in Nigeria is particularly outrageous because it has been growing in the context of an expanding economy where the benefits have been enjoyed only by few individuals. The inequality gap that characterizes the nation is such that the amount of money that the richest Nigerian man can earn annually from his wealth is sufficient to lift 2 million people or more out of poverty for one year.

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In 2016, five of Nigeria’s richest men have a combined wealth of $29.9 billion (N9.1 trillion at an exchange rate of N306/$) a value that is more than the country’s national budget of N7.1 trillion for 2017. Across the states in Nigeria, poverty finds expression in the following states according to the latest publication on National Poverty Rates for Nigeria: 2003-04 which was revised 2009-10 by the National Bureau of Statistics (NBS). This was captured using the following parameters – Absolute Poverty Approach, Relative Poverty Approach and Dollar per day. The results show that the following states make up the 10 poorest states in Nigeria with Jigawa leading the chart with 88.5 per cent on poverty level, while others – Sokoto, 86.1 per cent; Bauchi, 84.0 per cent; Ebonyi, 82.9 per cent;

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Yobe, 81.5 per cent; Gombe, 81.6 per cent; Nasarawa, 78.4 per cent; Adamawa, 77.8 per cent; Katsina, 77.6 per cent, and Kebbi, 72.5 per cent. An increasing poverty level will variably translate into high crime rate. A report published by the National Bureau of Statistics (NBS) has shown that rising inequality has the tendency to push people to commit crimes. In recent past, the Nigerian crime rate stood at 68.23 per cent which was higher than the threshold of 63.94 and Safety Index of 36.06 per cent. Based on the rising level of inequality and poverty, much still needs to be done to lift the poor people from the bottom of the social pyramid to the middle-class strata. Bridging the inequality gap entails providing a means for the poor to access opportunities that will enable them to break free from the circle of intergenerational poverty and to do this requires providing basic infrastructure like power, water, access to basic health care and educational facilities, among others Secondly, the government’s programme of Conditional Cash Transfer (CCT) and access to cheap loans by artisans and traders will help to alleviate poverty and bridge the inequality gap. But the effect will be significant by better complementing it with far-reaching socio-political, economic and institutional reforms and also taking into cognizance, the impact of policies on the poorest poor. The tax system is highly dysfunctional because the rich are not been taxed enough and our redistribution system needs to be fixed too. The idea of bridging inequality in whatever guise (economic, social, political etc) entails not just taking from the rich to give to the poor but ensuring the rule of law prevails too.

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Ngige, Mind Your Sef 2 and… Micah,6:7

ik MUO

good friend of mine and a brother to Ngige, Nze PE Egwuonwu had, after reading my treatise last week, asked me: Ichie, what has Ngige done to you? And I replied him with the words of our elders (by the way, he is one of the elders) that there is no need pinching a parcel that would soon be opened up. And so, for him and others who were wandering what my “grouse” with Ngige is, here we are. In April 2019, Ngige, a medical doctor and our honourable Minister of Labour and Productivity told the whole world through Channels TV, our global broadcast octopus, that he was not worried about medical brain-drain because we had more than enough of them. All efforts made by his hosts to make him call himself to order failed as he went on to reemphasise his assertion. “Who said we don’t have enough doctors? We have more than enough; you can quote me; there is nothing wrong with their travelling out!” In this Nigeria, where some people still travel tens of kilometres to see a doctor? Of course, he came under raw fire from his colleagues, sundry organisations and public commentators. Is his assertion true? Obviously not. Should he know the true situation? Sure! Even if it were true should he have said so given his status? I doubt. For a medical doctor and Minister of Labour to say so in a country where 40,000 doctors were attending to 200 million patients left a sour taste in the mouth. I made a little comment about it then and decided to face other matters and

let Ngige be. A few days later, our dear minister of labour, who should be telling us what his ministry has done under the change agenda to improve the worrisome unemployment situation, rather told us: “you ain’t seen nothing yet!” He told his bewildered compatriots that the unemployment rate should hit 33.5% by 2020. As if that was not enough, he reminded us that we were the poverty capital of the word, a trophy which India gladly handed over to us and that Nigeria suffering from high level of crimes and criminality! If he wanted to play the prophet, he failed because we are already in 2020. But why should an official of a “next level government” tell those expecting the amoebic dividends of democracy from him and his colleagues, that more suffering awaited them? He then went on to ask no one in particular, questions, which he was (and is) in the best position to answer: “what is the government not doing right; what changes are needed in policies and strategies; why do we employ expatriates for jobs Nigerians can do or why can’t Nigerians do those jobs…” As Omawumi would say: “if you ask me, na whom I go ask?” Luckily, his doomful prediction has mercifully not materialised but even if it would have, was he the best person to make such prophecy? Obviously not. Even Lai Mohammed would not have loved to make that kind of pronouncement. Of course, if he were serious about those questions, he should have contracted Muo & Muo Consulting unlimited for fail-proof answers. I found it odd that a minister was demarketing himself, his ministry and his government, but I kept my peace. The last straw that broke the camel’s back was his advice to our teaming unemployed youths: “don’t rely on government jobs”. In other words, there is not much my ministry and this government can do for you! He based his argument on the fact that “the richest youth of the world, are not employees

of government but smart entrepreneurs…” Sure, everybody knows that governments are not meant to be the sole sources of employment. Everybody knows that the Nigerian government will not go out of its way to create jobs for the ordinary folks but will surely do so for those who are connected to those who are connected to the source. But should a minister tell his compatriots who are looking up to his ministry for succour to look elsewhere? Surely entrepreneurship is thriving and is a better source of wealth but what has Ngige and the government which he serves done to make the environment favourable for entrepreneurial exploits? In my recent outing on entrepreneurship (Ik Muo, 2018: Entrepreneurship in a changing environment, lessons from experience. Enugu, Potter Creations), only 10 percent of the sample had anything good to say of the government; the rest recounted the frustrating impact of government activities and inactivity. Is that the environment in which entrepreneurship will thrive? Ngige is a medical doctor and rose to the directorate level in federal civil service before jumping into the murky (but lucrative) waters of Nigerian politics. As a professional, a bureaucrat and a politician, he is well placed to situate things in proper perspectives; to make statements that give people hope and to optimise the science and art of diplomacy. After all, diplomacy is the art of telling people to go to hell in such a way that they eagerly prepare for the trip! It is a source of worry when a minister creates hopelessness for his constituents by saying right or wrong this at the wrong time in the wrong way. And that is why I am publicly telling him; “mind your sef” You are all my witnesses. And by the way for those who are “labourers” (labour union executives) who regularly contend with Ngige I wish to remind them of the words of our elders which has been in existence long before Ngige was born: that whenever a

‘

As a professional, a bureaucrat and a politician, he is well placed to situate things in proper perspectives; to make statements that give people hope and to optimise the science and art of diplomacy. After all, diplomacy is the art of telling people to go to hell in such a way that they eagerly prepare for the trip!

cock perches on a rope (Ngige), neither the cock nor the rope will ever be at peace; because both the cock and the rope will continue to engage in a limitless, restless “kurukere” dance. Other Matters : Micah,7:6-7; Household Wickedness We are still discussing the frightening level of household wickedness in which parents’ children and spouses are engaged in indescribable wickedness against each other. Years ago, Prophet Micah foresaw the era in which “son dishonours father; daughter rises against mother and daughter¬-in-law against mother-in-law. A man’s enemy are members of his household (Micah,7:6-7). Our Lord Jesus Christ later reiterated that prophesy (Matthew, 10.36). It did not start today. After all, in the early days of creation, Cain murdered Abel, who did not offend him in any way! Athalia murdered all her grandchildren in a desperate quest to take over the kingdom after the death of her own son. Joseph narrowly escaped death in the hands of his brothers who sold him into slavery (Genesis,37) while Absalom led an insurrection against his father. The burial of 4 kids aged 2-9, (1/3/2020) murdered by their father, due to the mothers alleged infidelity in South Africa is still fresh in our minds. It shows that this household wickedness has been take a notch far above what we ever imagined. So, what has gone wrong? Is it the end times as some of our “casting and binding” brethren have been reminding us? The family is the nucleus and foundation of the society and if the foundation be destroyed, what is the fate and future of the society (Psalm 11:3)? One Bisi Adewale recently asked all right the questions on social media and I join him/her in asking “What has come over us; where did we get it wrong; were we like this before? What is happening?” Indeed, WHAT IS HAPPENING? Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

The cause of leadership in Africa: Nigeria in perspective

frica’s greatest obstacle to attaining the global status that befits her has been the cause of leadership, a major drawback to a supposed impeccable sustainable transformation that the continent deserves. A wise man simply puts this in real terms “Common sense dictates looking both ways before crossing a street, or risk being hit by a truck”, For the leadership in Africa, they have always looked one way, no wonder the continent experiences so much setbacks at every turn. How come a continent so rich in terms of natural resources, still fails to provide her citizens basic social amenities? As the world’s richest continent which has 50 percent of the world’s gold, most of the world’s diamonds and chromium, 90 percent of the cobalt, 40 percent of the world’s potential hydroelectric power, 65 percent of the manganese, millions of acres of untilled farmland, as well as other natural resources including (crude oil), it’s unacceptable for her to remain home to the world’s most impoverished and abused people on planet earth despite all this wealth. A Japanese diplomat told me some time last year that he wishes Africans can agree to swap continents where all the people in East Asia will come over to Africa and Africans going the other way which looked odd to me. However, before I could respond, he went further to say if that was to be the case, Africans would not recognize the continent they left in 4 years.

This strikes a chord, making it abundantly clear to me that Africa leadership needs a paradigm shift on a massive scale, based on a shared purpose with a global perspective. “Leadership for the people and by the people in real terms,” meaning it is time to end this self -centered leadership style driven by greed, obsession, intimidation, oppression and power grab with massive corruptions issues and ethnic under tones which has resulted to so much blood shed because of inter-tribal wars and ethnic cleansing pitching one community or tribe against another. In relation to Nigeria, we have seen kinsmen, family members and relatives of the then candidate who were begging for transportation fair every now and then during the election campaign, become shareholders overnight in major multi-nationals in the country since he became President with no qualifications, no business experience, a clear sign of corruption yet he says he is fighting corruption. Intimidating everyone, who dares to criticize them, and even destroying the lives of peaceful agitators like my people of the south eastern Nigeria who are legitimately asking for the right to go their own way and be called Biafrans, because it is obvious that the Nigerian project is not working for everyone which in my view we were forced into in the first place by our colonial masters. We were labelled terrorist with so many killed or constantly intimidated, their means of livelihood and businesses destroyed, while the

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ones they created to drive their ethnic agenda Boko Haram and the Fulani herdsmen are been shielded, committing serious killings and carrying out ethnic cleansing in the process with no consequences for the perpetrators. Currently, a lot of communities have been sacked by these people and even renamed while the real owners are now displaced, and the security apparatus infiltrated by these folks, that is why they are hardly caught, instead the military had the greatest causality in this fight. To quote one of the top Generals in the military “Any Boko Haram member who decides to give up their evil ways has the right to become the Nigerian President of Nigeria one day.” Not to mention, the hijacking of the judiciary which is supposed to be the defender of the people. Furthermore, most recently using the resources from the south eastern part of the country (our motherland) which is crude oil as equilateral to get loans from China to develop the north at the expense of the region, What betrayal to the oath of office of the President! Besides so much insecurity across the country, the height that the country has never experienced before with so many killed, thousands, this past year, record numbers mostly those of the Christian faith by herdsmen and Boko Haram terrorist. However, instead of fixing the problem they created as a result of their policies and deliberate actions, the leaders in Nigeria just like others in the continent result to the quickest avenue to shift the narrative by blaming

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JESSY SAMUEL EJAH it on others “so called foreign influence or interference” and will be very confident to have the support from their new master China who will be ready to veto any resolution in the security council that will affect them aside other dimensions like, culture, climate and bio-geographic factors as the explanation to the why? of Africa’s problems. Quoting Nkrumah, I can confidently state that the independence of one country in the continent is meaningless unless the rest of Africa is free from bad leadership, meaning we will be running around in circles, because when one is up the rest of the bad bunch will pull them down. Our rise as a continent to being genuine influencers in the global scheme of things is long overdue and Africa deserve better. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng EJAH is the Founder and President, PEIO Global Initiatives; a Laurel X-Heights International. www.peiog.com,www.peionews.com

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Restructure Nigeria or dismantle it

Remi Adekoya

t is interesting to see Olusegun Obasanjo who in 2017 said the only thing that needs restructuring is the “Nigerian mind” now join those calling for Nigeria to be restructured. “We should not allow restructuring agitation degenerate to self-determination. There is still a window of opportunity for us to nip in the bud a possible and indeed likely agitation for self-determination that will be violent, destructive and all-empowering,” said Obasanjo last weekend. As a soldier who played a prominent role in the civil war, Obasanjo has long been a champion of the “Nigeria’s unity is non-negotiable” mantra that seeks to shut down debate over whether Nigeria makes sense as is. It is worth noting he too now sees the writing on the wall. Nigeria is now a car in reverse gear. In 1980, 27 percent of Nigerians lived in poverty, according to the National Bureau of Statistics. Forty years later, the figure is 70 percent. If that is not moving backwards, then I don’t know what is. Add growing insecurity plus a long list of seemingly intractable problems and only the truly delusional or the truly rich can believe Nigeria has a future as presently designed. The only thing the continued existence of Nigeria in its current form guarantees is the

perpetuation of human suffering. More poverty, more unemployment, more insecurity. No socioeconomic indicator or evidence on the ground suggests otherwise. Even if done in good intention, it is a crime against humanity to continue Nigeria as is. So, what to do with this colonial experiment 200 million people now find themselves stuck in? The answer cannot be given lightly for while it is easy to tap buttons on a laptop, one must always be conscious that people’s lives and livelihoods are what is at stake here. Everyone from president to plumber knows Nigeria is not working, what people are less sure about is how exactly to get out of this mess alive and with prospects for the future. Some Nigerians are unimpressed with the calls for restructuring which has also become a mantra of its own. They say any reorganisation, which would almost inevitably involve decentralisation, won’t solve the problem of corruption in Nigerian governance. In fact, all it will do is strengthen the hands of regional godfathers, making Tinubu et al even more powerful and unaccountable in their spheres of influence. Others say many Nigerian states are not economically viable and would likely end up returning, hat in hand, to the federal government, which would be forced to bail them out or risk their total collapse and ensuing chaos. These are all valid points, and no one can truly predict the results of a restructured and decentralised Nigeria. But what can be predicted with certainty is the result of leaving Nigeria as it is: more of the same. A country cannot exist merely for the purpose of existing. Countries exist as vehicles meant to transport their

citizen-passengers from point A to point B. Point A is the widespread poverty, underdevelopment and insecurity all countries in history have started from. Point B is the widespread wealth, economic development and security some countries have arrived at. But the vehicle named Nigeria is further from point B today than it was a generation ago. When post-colonial Nigeria’s ethnic cracks began to show in the 1960s, Obafemi Awolowo argued that while there was “no such thing as a Nigerian nation”, the economic potential of the country made it worth keeping together in the interests of its inhabitants. This remains a compelling argument. Nigeria could be reorganised into something resembling the European Union; an economic bloc of politically autonomous states organised on a voluntary basis. Membership in this economic bloc would entail limitations on political sovereignty just as it does in the EU. These days, all political units have to sacrifice aspects of their sovereignty for access to markets. If the southeast of Nigeria were to gain the political autonomy many of its inhabitants seem to desire, would those same inhabitants still want to be able to trade freely in and with Lagos and Kano? Of course, they would. There would be a price to pay for that in terms of adhering to certain rules within the Nigerian Union. But this time it would be a voluntary price, not one imposed by a foreign colonial power. That would bring with it a completely different psychological dynamic. No Igbo or Yoruba would be able to say they are being forced into a union with the Fulanis and vice-versa. Neither would any Yoruba, Igbo, Ijaw or Efik leader

‘ So, what to do with this colonial experiment 200 million people now find themselves stuck in? The answer cannot be given lightly for while it is easy to tap buttons on a laptop, one must always be conscious that people’s lives and livelihoods are what is at stake here

be able to blame lack of development in their areas on “Abuja” and “Fulani cliques.” In the eyes of their people, the buck would generally stop with them, increasing chances of accountability and them having to work harder to maintain popular support. Would it be easy? Of course not. But is living in today’s Nigeria any easier? Some will scoff that Nigeria would quickly descend into civil war in such a scenario. But to believe that is to believe the old colonialist argument that Nigerians and Africans in general are somehow instinctively primed for violence once the grip on them is loosened. Truth is that violence in Africa has usually been a reaction to oppression not to the attainment of freedom from it. Nigeria in its current form is built on oppression, freedom from that is more likely to yield widespread relief than widespread violence. But, as Obasanjo rightly warns, the continued lack of freedom from the oppression of the Nigerian state is likely to lead to violent agitations for self-determination that could easily spiral out of control. In effect, those resisting calls for restructuring on the premise they are doing it to keep Nigeria together are actually dismantling it by driving people apart in anger and frustration at the realities of the country. In this century, one way or the other, this poverty-producing factory will be rethought, reimagined and reconstructed. By God, let it be done peacefully. Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs, Washington Post and Politico among others. He tweets @ RemiAdekoya1

A terrorist army and state?

n December 12, 2015, some members of the Islamic Movement of Nigeria (IMN) were doing their normal procession in Zaira and blocked the convoy of the Chief of Army Staff, Lt. Gen. Tukur Burutai. After some altercations, the army promptly mowed them down and for added measure, levelled their Hussainiyya centre, brutalised and arrested the leader of the group, Ibraheem Zakzaky and his wife. To cover up the gruesome killings, the army took away the corpses of those killed, set fire on them and buried them in mass graves. When the news broke, the military attempted to lie its way through, accusing the sect of trying to assassinate the Chief of Army Staff and denying that the army massacred a large number of the group’s members. However, a panel set up by the Kaduna state government to investigate the killings finally indicted the Nigerian army for the Zaria massacre. The Kaduna state government confirmed to the panel that 347 IMN members were killed and buried in secret mass graves. Specifically, the panel indicted Maj. General Adeniyi Oyebade, the General Officer Commanding the Nigerian Army’s 1st Devision in Kaduna for authorising the operation. The Panel stopped short of indicting the Chief of Army Staff General Burutai who also bears responsibility for, and has defended, the killings on several occasions. From the videos of the encounter between the army Chief’s convoy and the sect members, it was clear the situation does not require the use of lethal force. Teargas, at worse, could have been used to dislodge them. But the army chose to massacre them, destroyed their centre and have continued to detain its leader illegally for having the effrontery to stand in its way. As the Panel rightly found out, the killings are a crime against humanity and those responsible should

be brought to justice. However, in a bizarre twist, the Kaduna state government banned the IMN from operating in Kaduna instead of pushing for the punishment of all those indicted. Also security agencies began a systematic clampdown on the group in major states in Northern Nigeria. Consequently, the group’s members have been brutally maimed and killed in Jos, Abuja, Kano, and Katsina while protesting government’s actions against the group and the continued unlawful detention of their leader, his wife and other members of the group since their arrest in 2015. Also, in May 2017, Amnesty International released a report, backed by videos, photographs and eye witness accounts showing that between August 2015 and August 2016, “the Nigerian security forces, led by the military, embarked on a chilling campaign of extrajudicial executions and violence resulting in the deaths of at least 150 peaceful pro-Biafra protesters in the south east of the country.” The report, “a product of intense investigation comprising analysis of 87 videos, 122 photographs and 146 eye witness testimonies relating to demonstrations and other gatherings between August 2015 and August 2016 consistently shows that the military fired live ammunition with little or no warning to disperse crowds. It also finds evidence of mass extrajudicial executions by security forces, including at least 60 people shot dead in the space of two days in connection with events to mark Biafra Remembrance Day.” According to the report, “this deadly repression of pro-Biafra activists is further stoking tensions in the south east of Nigeria. This reckless and trigger-happy approach to crowd control has caused at least 150 deaths and we fear the actual total might be far higher.” Expectedly, the government has kept mum on the killings and have gone ahead to declare the two groups terrorist organisations.

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If we are to accept the definition of terrorism as the use of violence or threat of violence in order to purport a political, religious, or ideological change, what is the difference then between, say Boko Haram and the Nigerian Army or state? Many Nigerian Sunnis are also silently or even publicly supporting the massacre of the Shiites. Of course, many Nigerians do not see the danger in a terrorist state and army. Neither did Germans under the Nazis. But the eternal words of Martin Niemoller ring true even today: “First, they came for the Socialists, and I did not speak out— Because I was not a Socialist. Then they came for the Trade Unionists, and I did not speak out—Because I was not a Trade Unionist. Then they came for the Jews, and I did not speak out— Because I was not a Jew. Then they came for me—and there was no one left to speak for me.” But a greater concern – and one that should worry every Nigerian - is the fact that the Nigerian army is gradually losing its fighting capability and now seems to win only wars fought with unarmed and defenceless civilians while failing spectacularly to route armed groups who have confronted it. While the army kill unarmed civilians with glee in Odi in Bayelsa, Zaki Biam in Benue, Zaria in Kaduna, Abuja, Onitsha, Aba and other places where they have been deployed to keep the peace, they have been helpless against the Boko Haram insurgents who have determinedly challenged the legitimacy of the Nigerian state now for upwards of ten years. So far, the army has only been able to technically defeat Boko Haram while the casualty figure in its ranks have continued to rise daily to the extent that the army and the government no longer acknowledge or report the casualties. The same thing happened with the more violent groups in the Niger Delta who vowed

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CHRISTOPHER AKOR

to and successfully disrupted oil exploration in the Niger Delta despite the presence of the army until the government negotiated a solution that cost the country billions of dollars in Amnesty payments. Recently, the army has been trying to cede control of lands recovered from the terrorists to the Nigerian police, whose men are vehemently resisting being sent to northeast in case they come up against Boko Haram insurgents. Yet, these same police personnel have been waging a relentless war against unarmed civilians, killing and maiming them at will with little or no response from the government. Or is it the army that fails to deal with the Boko Haram insurgents citing the excuse of inadequate personnel but have personnel to lock down Abia state over a burial of the parents of an irritant. The military is trained to face armed opponents and even in war, soldiers are prohibited from executing other soldiers who surrender or even enemies rounded up. It is shocking that an entire nation will be just fine with its armed forces daily committing war crimes, not even against foreign enemies but against its own people! Meanwhile, like I argued last week, these non-violent groups are taking notice of the fact that violence remains the only way of negotiating with the Nigerian state. We should not be surprised if more and more groups take up arms against the state.

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BUSINESS DAY

Thursday 05 March 2020

Editorial Frank Aigbogun

FinTechs pressure banks to perform

editor Patrick Atuanya

Technology and customer service are the new minimum standard

Publisher/Editor-in-chief

DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti 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

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

lot of Nigerians now pay for goods online or make a bank transfer via mobile apps and are now accustomed to handling financial affairs as easily and conveniently as they do their email or Facebook page. Excellent customer experience enabled by innovative technology is the new minimum standard in the fast-growing electronic payment space. Before financial technology (fintech) and telecommunications companies entered this space, banks provided this service from the comfort of their branches. Not anymore. Those transactions can now be done with mobile phones using apps made by fintech start-ups with no branches, less staff and other expenses that can come with running a branch. KPMG, a consultancy, in a report says that banks have never been under such pressure to perform. Technology has lowered the

entry barrier to providing a service that accounts for 30 percent of banks’ revenues in the form of service charges. Fintech companies have been able to leverage technology, bringing a basic banking service closer to customers. The ease of doing this on mobile phones coupled with better customer experience and at a lower cost is has seen the annual value of transactions surge to trillions of naira. Referring to the market in Africa, Segun Agbaje, chief executive of GT Bank, reckons “the amount up for [the banks] to fight for is $60 billion”. In the first half of 2019, earnings from electronic transaction of First Bank, GTB, UBA, Access and Zenith rose to a record high of N78.44 billion cumulatively against N45.11 billion reported in the corresponding period of 2018. With about 66 percent of the adult population in Africa unbanked, Africa fintech represents a huge opportunity to drive financial inclusion outside of traditional banking systems. Nigeria

FinTechs currently are attractive to foreign investors who see huge growth potential in the industry. Though digital retail payment remains the segment were most FinTechs are focused, they are present in digital lending and payment infrastructure. Of late, there has been an increase in the lending space and emphasis on more technological innovation. Take, Tolaram Group, the Singapore-based manufacturer of Indomie, is partnering with Tala, a US-based fintech company, to offer uncollaterised loans of between $10 (N3,600) and $500 (N181,500) to customers without traditional bank accounts or credit histories via an app. Other nonbank players in the digital lending market include OPay Okash and PalmPay. Banks will have to up their game, either by going solo or partnering with FinTechs or the Telcos who have been granted licenses to operate as payment service banks. Especially as they try to comply with the 65 percent loan-to-deposit ratio directive of

the central bank. It means banks must battle for customers in an era where digital lending prevails. To remain competitive, Nigerian commercial banks would have to intensify moves in making strong and more effective digital products while improving on customer experience. While this is good for deepening financial inclusion, the flip side for commercial banks is a lowering of lending rates to about 16 percent on the average amid sluggish economic growth, increasing the risk of loan defaults. However, to stimulate business activities in an economy, spending as to be spurred to stimulate GDP growth, hence the strong lending stance of the CBN. Overall, however, gaps remain. BCG, a consultancy, in a 2018 report for Enhancing Financial Innovation & Access (EFInA) lists “access to funding, appropriate regulation, adequate information, establishing strategic partnerships, corporate governance limitations and intellectual property rights” as some of the challenges.

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Post-oil Nigeria & the urgency of structural transformation

Chambers Umezulike

ccording to scholars of development economics, structural transformation involves changes in sectoral contributions to economic growth and industrial structure, diversification, and technological upgrading. It occurs when resources are transferred from low productivity sectors such as agriculture to high productivity ones such as industries. Nearly all developed countries were transformed through such resources transfers. As such, the main engine of structural transformation is industrialization. For Nigeria, structural transformation is mandatory, following her present macroeconomic challenges and gloomy future of oil. The global energy dynamics continues changing with its resultant implications on oil prices, and reduction in government revenues and foreign exchange earnings. With oil prices continuously nosediving following reduction in global demand for the black gold, Nigeria would find it difficult to service its burgeoning bureaucracy, and raise the necessary revenues to build infrastructure, schools and hospitals etc. In addition, with the colossal depend-

ence on oil rents for a population of over 200 million citizens, which has rendered other sectors uncompetitive, how would Nigeria ensure economic growth, raise income, ensure that its millions of unemployed youths get meaningful employment or even address poverty. Nigeria’s population is projected to become 400 million in 2050 - with recent metastasizing poverty, preponderate unemployment, and low per capita income - this is a waiting time-bomb! This is why Nigeria must structurally transform through focusing on an export-oriented and labour-intensive industrialization (EOLII) drive, so as to cushion the effect of this impending shock and place herself on the path of sustained growth. And doing this is not preposterous. Nigeria must not wait until it has built country-wide infrastructure, completely eradicated corruption, weberianized its bureaucracy, built market preserving institutions, improved governance- or be the first country on the ease of doing business ranking to kick-start its industrialization drive. In fact, the country does not have the administrative and financial resources to embark on such generic reforms, all at once. In actuality, there has never been any developed country that got developed through, by first, fixing every institutional, administrative, infrastructural and governance challenge, as a precondition to develop. Moving away from such blanket reforms and pursuits, the new economic thinking is that countries can still become industrial economies with the often-flagged firm constraining structures. How can this be done? First, focus on EOLII by coordinating investments in low end and light manufacturing industries where the

country has an inherent comparative advantage. In this light, looking at value-addition industries for its comparative advantageous agricultural products, industries that are labour intensive and less capital intensive, industries whose inputs and outputs would not have extensive transportation and electricity implications etc. Secondly, establish special economic zones (SEZ) at strategic places in the country, mostly at the coastal areas with limited transaction costs (transportation and logistical) to business for firm competitiveness. SEZ is the best mechanism to circumvent traditional firm constraints when infrastructure, power, political stability, improved governance, export promotion schemes are provided in such zones. In addition, by providing tax incentives to first-mover firms in the SEZs. When such zones have taken off, they would have a resultant multiplier effect on emerging industries and private sector growth through technology transfer, as well as on other sectors such as services. SEZs can have residential areas, shopping malls, recreational centres etc. which would all affect the overall economy positively. This is the principle behind East Asia’s growth. Nigeria must position herself to be the next destination for manufacturing in the world. Rising labour and land costs are rendering low end industries in East Asia less competitive. Nigeria should attract such industries. SEZ is the surest way to break into the global market of manufactured products for Nigeria. Thirdly, by focusing these SEZs at mostly the coastal areas, it is then critical that Nigeria decentralizes its seaport system. Nigeria is probably the only country with tens of millions of population size that has just a func-

‘

In 20 years time, oil would be history. For a postoil Nigeria, the country has to get to work, so as to cater for such projected surge in population growth, which would include a huge percentage of young people

Umezulike is a Development Governance Expert and Researcher. He can be reached through chambers.umezulike@gmail.com and on Twitter via @ Prof_Umezulike

George Etinosa Aiyudu: A life lived for others

n all my speaking and writing engagements, my charge to the Nigerian youths and leaders is to be mindful of the dash of their lives. From the date of birth to the time of death is a dash representing the measure of one’s race in life. The race of life to some is a sprint; to others is a marathon. Whether as leaders or citizens, the difference is what we use our lives for, and that’s what we leave behind after our time. It is either you are a Mother Theresa or an Adolf Hitler to people. There is no middle point to the good or the bad of your deeds. George Etinosa Aiyudu was a Nigerian whose dash started from 23rd of December 1973 and ended on 11th December 2019. From 1973-2019, though a short 46years, George Aiyudu proved Corrie Ten Boom’s quote “the measure of a life, after all, is not its duration, but its donation.” to be evergreen. George’s life justified Myles Munroe’s rephrasing of the same quote when he said the value of life is not in its duration, but in its donation. You are not important because of how long you lived; you are important because of how effective you live. George was an example of a private person whose impact exceeds any public space’s life without effect by the lives he touched and influenced. Leadership is truly a thing of the mind and not necessarily a product of position or wealth. He used his 21years topnotched and fast-paced career in the banking industry to touch some many lives and advance humanity. You need to engage with his former colleagues at Diamond bank (now Access Bank) where he served for 20years to know the pains of George’s demised and the magnitude of blessings his short life imparted

on others. After the mandatory youth corps service, Etinosa, a graduate of chemical engineering from the University of Lagos was retained by Diamond bank. At the university, he was known as the teacher where he organised a tutorial group for the Chemical Engineering Department students to help them achieved success. He lighted others with his virtue of hard work, excellence, love, loyalty, humility, and service. His 20years career time at the Diamond bank proved him to be someone who put others first and whose primary mission was to see advancement in the lives of his contacts. Within a few years, he became a household name in the bank through hard work and creativity. As an operation staff in the branch, George furthers his interest in programming with self-studies and enrolment in the courses offered by the NIIT. His creative contributions and skills paved the way for him to be redeployed into the Information Technology Department of the bank where he excelled and grew to be a leader and an essential member of the bank. Seeing programming as a platform to serve and develop, he enrolled at the University of East London for a master’s programme in Business Information Technology. Within one year of his programme, George was a teacher and known as a teacher to his course mates who were not Nigerians. I was privileged to see him helping others in a tutorial set-up at his hostel in East London during my visit to him for a piece of career advice in 2007. While on his master’s programme, I am aware of two Nigerian and Ghanaian businesses he developed software applications that improved the business processes and

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made those businesses sustainable till date. When the Ghanaian man enquired for his fee, George replied “I should thank you for bringing to me problems that enable me to express my skills. What I did for you is part of my studies.” On his return to Nigeria after his studies, George Aiyudu dedicated his service and commitment to his employer by involving in the various business transformational projects that see Diamond bank taking the lead in retail and commercial banking spheres. In doing this, he made it a point of call to develop others by imparting all the skills he had acquired both on the job and through self-efforts. One thing he will never be forgotten for at the Diamond bank was his influence on people. George was a people’s person. He was always with you and in it with you, be it on work or personal issues. You can count on Aiyudu as your friend even when you make the most grievous mistakes. He was known to be a problem solver with one thing in mind; people. He was always looking for the happiness and the development of others. George Aiyudu took on a new challenge as the pioneer head of IT of Titan Bank of Nigeria, a post he held before his time was due. Etinosa’s life was not a story of all smooth rides with no strain of turbulence. He had his fair share of the valleys of life after attaining many peaks in career and in seeing to the welfare of others. One thing that was constant about him was his tenacity to put smiles on the face of others in whatever way he can. During a significant health challenge and a few years after he returned to work, George coached and supported a man through fi-

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tional port. Decentralizing the seaport infrastructure would automatically decongest Lagos and birth new industrial clusters. The financial resources to build the seaports are not implausible, there are many foreign financial resources looking for such port investments. By starting from the coastal areas, as they grow into middle-income cities with high-end manufacturing, the government can then strategically encourage industrial transfers to other parts of the country through the right incentives for firms, enabling laws and critical connecting infrastructure. For the latter, the country could then use tax revenues from firms in the SEZs to provide country-wide infrastructure. In furtherance, once the SEZ structures are put in place, the government should unleash a massive investment drive whether through the Singaporean technocratic model or Chinese campaign-style. Such drive should target Nigerians in the diaspora and low end industries in East Asia. In 20 years time, oil would be history. For a post-oil Nigeria, the country has to get to work, so as to cater for such projected surge in population growth, which would include a huge percentage of young people. The present social-economic consequences of slowed growth and poverty have resulted in widespread security crises across the country. Then a doubled population size in the next 3 decades would precipitate mega consequences if the right things are not done. The solution, there again, is taking critical and coherent steps toward structural transformation.

Positive Growth with Babs Babs OlugbemI nancial difficulties to be a business owner. He was a rallying force for his secondary school alumni when he created the group and inspired everyone to be active and look after one another. Senior George as his mates and juniors popularly called him at Keke High School will forever be remembered as a mentor and teacher. He was my personal maths teacher in the 1990s. After secondary school and while in the university he will return home to teach young ones at his Alma Mata and in Agege area. This earned him names like senior George and the drummer boy. George can drum with anything including the reading desks, books and chalkboards. The life of George Etinosa Aiyudu is evergreen in the lives he had touched. It would be best if you saw the massive show of tributes on his Facebook page to know the quality in the dash of his life, though it ended at a short lifetime of 46years. Note: The rest of this article continues in the online edition of Business Day @https://businessdayonline.com/ Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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Thursday 05 March 2020

BUSINESS DAY

cityfile

Oyo tackles transporters over state commercial colour REMI FEYISIPO, Ibadan

yo State government is set to begin enforcement of uniform colour for all commercial motorcycles and tricycles operating in the state. This, according to the government, has become compulsory in view of the security challenges facing the country, as well as the dramatic influx of motorcycle operators into Oyo from its neighbouring states. Executive chairman of Oyo State Road Transport Management Authority (OYRTMA), Akin Fagbemi, stated while meeting with the leadership of Motorcycles and Tricycles Union of Nigeria (MTUN) among other stakeholders. According to Fagbemi, the authority having conducted due diligence and meeting with relevant stakeholders, has given 14 days grace to all commercial motorcycles operators in the state to comply by painting their tricycles and motorcycles in wine and yellow, being the approved commercial colours in Oyo. “The policy is in tandem with the Second Schedule, License Conditions 9 (Commercial), Code LCG01 of the Oyo State Traffic Management Authority Law 2009 which stipulates a fine of N15,000 on defaulters,” he said. He stated that this policy was backed by the extant laws of Oyo State and would help to significantly check the incidence of bag snatching, kidnapping and other nefarious acts carried out by criminals parading as commercial motorcyclists in Oyo.

Management and staff of National Ear Care Center (NECCK), during a road show to mark the World Hearing Day in Kaduna on Tuesday. NAN

FG begins distribution of gas cylinders in Ekiti

Ebonyi bans street trading in Abakaliki NKECHINYERE OGINYI, Abakaliki

fter removing traders from Abakpa market to international market, Ebonyi State government has banned street and roadside in Abakaliki, the state capital. Some traders who could not afford shops at the international market were said to have moved to the streets and roads in the state capital. But the government on Tuesday said trading along major roads from old Government House to Onuebonyi junction, Afikpo road through Akanu Ibiam to Onuebonyi junction and streets within the neightourhood of old Abakpa market are prohibited effective from Wednesday March 4, 2020. According to Kenneth Ugbala, secretary to the state government (SSG), anyone violating the ban would be arrested and prosecuted in line with the state’s laws. “All landlords of buildings around old Abakpa market are hereby directed to register with the office of SSG/coordinating commissioner within five days (from March 4, 2020) failure which will attract serious financial penalty and or sealing of the building. “Destruction of dilapidated buildings within the old Abakpa market will start from Monday, March 9, 2020 to make way for the reconstruction of the new food, fruits and vegetable market.” The government further directed that all complaints arising from the movement and/ or relating to allocation or non-allocation of shops at the new international market should be forwarded to the office of the secretary to the state government. The government also foodstuff, fruits and vegetable dealers to temporarily relocate to the new Spare-in-Deo Park around Akanu Ibiam junction.

… exercise to check deforestation, diseases among women RAZAQ AYINLA

he Federal Government has begun distribution of cooking gas cylinders to about indigent women in Ekiti as part of measures to reduce the use of firewood in the state. About 13,000 women are benefitting from the exercise. Minister of women affairs, Pauline Tallen, flagged off the distribution in Ado-Ekiti, the state capital, on Tuesday. Pauline was represented by Dupe Bakare, director of finance/administration in the federal ministry of women affairs. The exercise, according Tallen, is the first phase of the National Cooking Gas project and Tree Planting initiative of the President Muhammadu Buhari’s administration. According to her, the president had directed the supply of cooking gas cylinders

to 1,000 rural women in each of the 774 local government areas across the country. The minister said the event was to create awareness and sensitise the public, especially women on the danger of cooking with firewood. Tallen also flagged off tree planting exercise as part of efforts towards addressing effects of deforestation. “It is also in line with president’s pledge at the United Nations General Assembly session in 2019 to plant 25 million trees within one year,” she added. She advised the state and local governments to support the Federal Government by imbibing the culture of tree planting. Wife of the state governor, Bisi Fayemi, commended the Federal Government for the initiative and for selecting Ekiti as one of the pilot states to benefit in the first phase of the campaign. She urged the people of the state to

embrace alternate clean stove for cooking, rather than firewood, given the poisonous gas emission and hazard associated with firewood. According to Fayemi, study by experts showed that smoke generated by firewood causes respiratory diseases such as lung cancer. She also said that the use of firewood for cooking has resulted to deforestation and drastic reduction in the supply of forest products. Ekiti State commissioner for women affairs and social development, Mojisola Fafure, lauded the Federal Government for the initiative. She implored the beneficiaries not to dump it but to make use of the cooking gas cylinders for improved living standard, saying that this alternative method of cooking was affordable and available everywhere.

Six suspected kidnappers arrested in Delta

ix suspected kidnappers have been arrested by the police in Delta State, Hafiz Inuwa, Commissioner of Police (CP) in charge of Delta command, has said. Inuwa told journalists in Warri that the suspects were apprehended between Sunday and Monday in Oghara, Ethiope West local government area of the state.

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According to him, four of the suspects have admitted responsibility for the abduction of one Victoria Okereka from her clinic on February 22. The victim had regained freedom the following day, February 23, 2020. The CP said that the two other suspects were still under investigation to determine their extent of involvement in the crime.

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“As at Sunday and Monday, we were able to track and apprehend the suspects. “Four of the suspects have been identified and have confessed to committing the crime,” he said. According to the police chief, items recovered from the suspects include a firearm, two knives and several mobile phones, including those of abducted victims.

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Thursday 05 March 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

MARKETS

Portfolio flow to EMs plunge 88% in February on coronavirus blues SEGUN ADAMS

m e rg i ng ma rkets attracted $3.4bn in February, only about a tenth of the portfolio flow the region raked at the start of the year as the spread of the coronavirus rattled markets, said the Institute of International Finance (IIF) in its latest monthly report. EMs inflow stood at $29.5bn in Januar y according to data from the Washington-based institute, which equated outflows seen in the period to the “trade-tantr um” episodes, when US-China trade tensions impacted equity dynamics. “This is largely a result of the dramatic collapse of flows in the last oneand-a-half weeks when the increasing spread of the Coronavirus rattled global financial markets,” said IIF. “Effects are noticeable both on the debt and equities sides of non-resident portfolio flows.” Equities outflows from

EMs excluding China, which turned negative a month before worsened in February, making a dent in the emerging markets, especially in Asia. Debt flows fell to $13.2bn, almost 60 per-

cent lower than in January, which had seen the highest such flows since 2019 Q3. On the equity side, the negative trend that we observed last month continued, with flows to China essentially coming to a halt

and flows to the remaining EM universe reaching -$9.8bn (compared to -$6.8bn in January), said IIF. According to the institute, a significant decrease in debt flows was

broad-based with EM Asia experiencing the largest c h a n g e — f ro m $ 1 3 . 0 b n in January to $5.1bn this month. Equity flows turned from a $2.6bn inflow in January to a $4.5bn outflow with outflows growing

L-R: (front row): Kayode Adigun, divisional head, service management and technology, First City Monument Bank (FCMB); Gbemisola Dada, secretary general, Ojokoro LCDA Market Women Association; Rasheed Macaulay, director, Lagos State ministry of agriculture; Gboyega Idris, assistant director, and Adejumoke Arije, zonal head, Ikeja 2, during the commissioning ceremony of FCMB Cash Centre at Agege Abattoir, Lagos

slightly in EM Europe and MENA. The coronavirus outbreak has been described by the OECD as the greatest danger to global since the financial crisis and is expected to cut growth from 2.9 percent to 1.5 percent if the crisis persists. The IMF and the World Bank on Monday said they stood ready to support countries facing immediate financing needs arising from the virus crisis. Similarly, the representatives of the world’s seven most industrialized countries (G7) met to decide on an effective response to the threat posed by the COVID-19 outbreak to the global economy. While hopes of a deep production cut by OPEC and its allies have helped crude oil price bounce from its lowest level in a year. The Nigerian Stock Exchange on Monday also saw a rebound gaining by the most since early January as investors bought cheaply in anticipation of policies that would gear up global growth and support market outlook.

TECHNOLOGY

Mastercard says Pay on Demand solutions are driving new wave of digital, financial inclusion across Africa JUMOKE AKIYODE-LAWANSON

astercard on Tu e s d ay re leased a white paper which shows that if people are given the ability to pay only for what they use, as they need it, poverty levels will be drastically reduced and prosperity will be more possible across Africa. The paper, titled ‘Pay on Demand: The Digital Path to Financial Inclusion’, explores how digital inclusion has been proven to provide better access to financial and other services. This ultimately drives financial inclusion which leads to improved economic possibilities for individuals and businesses. Mastercard’s repor t, based on research from in-depth face-to-face interviews with consumers across Nigeria, Kenya, and Uganda shows that a focused deployment of solu-

tions like Pay on Demand is key to increasing connectivity. However, for these solutions to function effectively, it is critical that all stakeholders – governments, Mobile Network Operators (MNOs), financial service companies and regulators – come together to unlock opportunities to enable greater financial inclusion. Technology and connectivity enabled by MNOs initially made digital inclusion possible. Mobile devices became a viable instrument of digital inclusion when prepaid plans allowed individuals to recharge for as low as 10 cents at a time. Currently, prepaid connections are at 98.8 percent in Kenya, 97.5 percent in Nigeria, and 99.1 percent in Uganda with smartphone penetration in Africa projected to reach 66 percent by 2025, up from 36 percent in 2018. Pay on Demand applies the same principle for goods rangwww.businessday.ng

ing from mobile phones to solar panels, water filters or laundry machines. The model, often underpinned by the Internet of Things (IoT), further bridges the ownership divide by providing affordable services and assets, driving the next wave of inclusion by keeping people connected. Jorn Lambert, executive vice president, digital solutions, Mastercard, said: “The growth of digital technology has presented people in Africa with access to innovative, affordable solutions that help them meet their basic needs, ultimately leading to greater access to capital that can scale businesses and increase prosperity. The Pay on Demand model is an incredible example of this, which has already empowered millions of people by making solar energy more accessible and affordable. But now, with the expansion of Pay on Demand

to any connected device like smartphones, water filters or white goods, we have a real opportunity to positively impact the lives of a billion people, in the same way the telecoms industry did two decades ago. To further scale the model effectively and create a digital economy that works for everyone, key players in the ecosystem must collaborate to drive a new wave of inclusion through connectivity and smart devices.” In all three countries where users were surveyed, access to basic necessities was the number one driver of Pay on Demand use, with electricity top of mind for all users. The main aspirational products acquired through Pay on Demand were digital TVs, followed by smartphones. These assets are vital to connecting people to the larger world, whether it’s by powering electric devices or having

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internet access so a child can do their homework. Although smartphones are highly coveted through Pay on Demand, the desired price for them amongst users differs across all three markets. It is $200 – 250 in Uganda; $55 - $110 in Nigeria; and $100 - $250 in Kenya. Mastercard’s research also shows the far-reaching impact of Pay on Demand. “We were touched by the emotional benefits that switching on a light can bring, or the dignity that comes from having a phone that is always charged. As the Pay on Demand model scales, more consumers will gain access to useful products that support happier, healthier lives as well as financial services to secure their future,” Lambert said. One of the indirect benefits of Pay on Demand is that it helps individuals and micro, small and medium enterprises (MSMEs) establish a digital transac@Businessdayng

tion history, making other financing solutions accessible, such as credit, loans and insurance. By having relations with formal financial institutions, MSMEs can benefit from convenient and secure payment methods, and obtain financing to help them scale. Gaurang Shah, senior vice president, digital payments & labs, Mastercard Middle East and Africa, said: “There are 44 million MSMEs in sub-Saharan Africa, 97 percent of which are micro-enterprises. For them, the ass ets made possible through Pay on Demand create improved opportunities through increased connectivity, and new revenue opportunities through being part of a financial system. This initial access to financial services is the first step on the road to prosperity and can help realise the true potential of inclusive growth across the continent.”

Thursday 05 March 2020

BUSINESS DAY

COMPANIES&MARKETS TECHNOLOGY

Business Event

Blue Gate commits to improving data security for Nigerian with new product KELECHI EWUZIE

etermined to ensure that customers data on sensitive types of equipment are guarded against a break in the production flow and frequent machine breakdowns, BlueGate, the leading brand in Alternative Power and Consumer Electronics Products has displayed more capacities of their Online UPS Series to several power back-up dealers and stakeholders across the country, The Bluegate online UPS products are conceived and manufactured as an advanced power backup technology that supplies and maintains continuous electricity supply from batteries to connected equipment at zero transfer time. Speaking at the doublepresentation of the products to industry stakeholders in Lagos, Amauche Chidozie, executive director Tripplesea limited says the company understands what customers’ needs are in terms of utility values, protecting data, adding that all these considerations were imputed to make the Bluegate online UPS meet the specific needs of the various customers. According to Chidozie, “We have paid a lot of attention on our processes and quality control mechanisms

and with all sense of modesty we can say we have built a track record of excellence, durability, and reliability through our system of quality assurance procedures by constantly pushing ourselves, engaging in robust research and reengineering our processes to fully meet all standards and trending power backup lifestyle needs of our customers” Rolland Emuobor, general manager of the company opines that Online UPS series are of advanced power backup technology that supplies and maintains continuous electricity supply direct from batteries at Zero Transfer Time to connected equipment, while allowing users ample time switch to preferred power source. “Online UPS series are rightly Pocket-friendly, easy to use, maintain and a necessity for mission-critical equipment used in our diagnostic centres and hospitals. No one would want the equipment in a hospital theatre, for instance, to fail because of little time lag in power outages or changeovers during surgical operations”. “BLUE GATE Online UPS ensures that there is no nanosecond time lag when changing to any power source. The product further provides assured guards to other industries and sensitive appliances like digital printers, bank

ATMs, Server PCs, Air Traffic Control Rooms, elevators/ lift/escalators, among others”, Emuobor said. Speaking during the event, one of the attendees from Abuja, JP Maduaka, expressing his thoughts, stated that for over 15 years he has been dealing with BLUE GATE Online UPS, the reviews from his customers have been very encouraging and reinforcing for him to maintain his dealership. On his part, Hakeem Morounfolu from Lagos affirmed that 5 years of dealership with BLUE GATE products has availed him the opportunity to offer a wide range of Online UPS options and indeed other BLUE GATE products to his corporate and individual customers. Osita Godson, emphasised the BLUE GATE all-time passionate desire to provide power back-up needs and protective products for sensitive appliances and equipment during power changeover or power fluctuations which has made the brand delve into this advanced power backup technology, and has virtually remained every buyers’ choice in their over 20 years presence in the Nigerian alternative power (backup) products market. He maintained that BLUE GATE is a trusted solution when it comes to power backup needs and its state of the art after-sales services.

L-R: Olubunmi Agbaje, shopper and channel marketing manager, Nigerian Bottling Company Ltd (NBC); Rodrigo Recio, execution excellence director, NBC; Oluyomi Moses, head of marketing, NBC, and Abiodun Ajiborode, marketing manager, Coca-Cola Nigeria, during the ‘Win a trip to the EPL promotion launch’ held in Lagos.

L-R: Adewale Yusuf, co-founder and chief executive officer, Techpoint Africa; Muyiwa Matuluko, co-founder and editor-in-chief, Techpoint Africa; Kate Ifeatu Daniels, manager, brand, and communications, enterprise business unit, MTN Nigeria; Titilola Oludimu, director, SME by Techpoint, and Damilola Runsewe, senior manager, SME segment management, enterprise business unit, MTN Nigeria, during the MTN-sponsored Techpoint SME Clinic, created to accelerate businesses with the power of technology, at the National Theatre, Iganmu, Lagos.

COMPANY RELEASE

Chapel Hill’s Infrastructure debt fund raises N17.85bn in 6th capital raise

hapel Hill Denham’s Nigeria Infrastructure Debt Fund (“NIDF”) has announced the closure of its sixth capital raise since launching the Fund in June 2017. The NIDF Series 6 successfully raised N17.85 billion (US$58 million) in an oversubscribed offer from a number of domestic investors including pension funds, insurance companies, asset managers, family offices, and other qualified individual investors. The Series 6 offer attracted 2 new pension fund investors bringing the total number of PFAs participating in the Fund to 22. Following the close of Series 6, and with N58 billion (US$190 million) in capital, the NIDF is the single largest issue of nonsovereign credit in Nigeria.

The NIDF continues to deliver on all its key investment objectives, as investors enjoy consistent, attractive and predictable real returns (above inflation), along with low volatility and principal preservation. Total returns for the two and a half year period ending December 2019 were 69.2% (assuming distributions were reinvested). In a low yield environment, the NIDF presents a compelling investment case – the Fund targets a gross return of 300bps to 450bps over and above the benchmark FGN 10yr bond yields. Besides delivering attractive returns, the NIDF is also at the core of Nigeria’s economic transformation by adding to the country’s infrastructure stock, channelling institutional capital into productive assets, and www.businessday.ng

supporting sustainable economic growth. Bolaji Balogun and Philip Southwell, Partners of Chapel Hill Denham, said: “This fundraise reflects the excellent relationships we have with our investors given the strong results of NIDF since inception. We are grateful to our investors, particularly Nigeria’s pension funds, for their ongoing support and look forward to putting this capital to work on their behalf.” Anshul Rai, CEO of NIDF, said: “Despite the challenging economic environment we continue to see compelling opportunities in the infrastructure sector in Nigeria. NIDF’s progress demonstrates the importance of local currency financing in Nigeria and the continued desire for well-structured, long-term project finance.”

L-R: Chuks Afiawari, SJ of the North-West Africa Province of the Society of Jesus; Administrator, St. Francis Catholic Secondary School, Idimu, Lagos; Maduabuchi Leo Muoneme. S. J; Leslie Oghomienor, special guest of honour/ chairman, Russell Smith Group Nigeria, and Emmanuel Ogbe Akhibi, chairman of the occasion, at the St. Francis Catholic Secondary School 2020 Cultural Day/Unveiling of the Soccer Academy held at the School Premises, Lagos.

R-L: Haruna Abdurrahman, manager lubricants; Elizabeth Aliyuda, general manager sales and marketing; Billy Okoye, managing director; Affiong Akpasubi, executive director, support services; Lawal Bello, executive director operations, all of NNPC Retail Limited, during the unveiling of the NNPC Lubricants at Abuja International Conference Centre, Abuja.

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Thursday 05 March 2020

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

1,204.42 1,148.03

357.65

126.71

476.30

239.12

1,885.76

1,201.64

1,028.66

315.50

116.30

458.03

234.01

1,866.92

1,214.60

983.71

-4.68

-11.79

-8.22

-3.84

Week open (21– 2–20)

27,388.62

N14.268trillion

2,336.11

1,082.66

734.99

Week close (28-2–20)

26,216.46

N13.658 trillion

2,249.86

1,029.69

734.99

Percentage change (WoW) Percentage change (YTD)

-4.28 -2.33

-3.69 6.32

-4.89 -10.60

0.00 0.00

-2.53

-11.59

-7.57

-22.74

NSE Lotus II

-2.14

-1.00

-10.87

1.75

NSE Ind. Goods Index

NSE Pension Index

1.08

-4.37

12.92

-6.67

Demutualisation:

Positive outcomes at Court Ordered, Extraordinary General meetings affirm interest from NSE members Iheanyi Nwachukwu

n Tuesday, March 3, 2020 members of the Nigerian Stock Exchange (NSE) passed requisite resolutions for the demutualisation of the Exchange at a Court Ordered Meeting (COM) and an Extraordinary General Meeting (EGM). Members at the Court Ordered Meeting (COM) voted and assented to: the re-registration of the Exchange as Nigerian Exchange Group Plc; the transfer of its securities exchange licence and other assets required to carry out the securities function to Nigerian Exchange Limited, the establishment of a separate subsidiary company to be charged with the regulatory functions of the Exchange post-demutualisation to be called NGX Regulation Limited, and the total share capital being N1.250billion comprising 2.5billion ordinary shares of 50 kobo each to be registered with the Corporate Affairs Commission (CAC). Interestingly, this positive comes barely 19 years after the pro cess to demutualize the Exchange was initiated and on the 60th anniversary of the Exchange. Members of the NSE had approved the demutualisation scheme of The Exchange at an Extraordinary General Meeting (EGM) in March 2017. This was followed by the signing of the Demutualisation of The Nigerian Stock Exchange Bill into law in August 2018. In December 2019, the Securities and Exchange Commission of

L – R: Oscar N. Onyema, chief executive officer, The Nigerian Stock Exchange (NSE); Otunba Abimbola Ogunbanjo, president of Council, NSE; Mojisola Adeola, council secretary, NSE and Aigbojie Aig-Imokhuede, CON, Ex-Officio, NSE during a Court Ordered Meeting (COM) and an Extraordinary General Meeting (EGM) at the Civic Center, Lagos in Lagos.

Nigeria (SEC) in a No Objection letter gave its consent to the NSE to hold the COM and EGM that would facilitate its conversion from a not-for-profit entity limited by guarantee into a profit-making, public limited liability company owned by shareholders. A demutualised exchange comes with benefits and opportunities to its members and other stakeholders. It changes the structure of the current owners; makes dealing member firms become shareholders; and brings in a

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new era of corporate governance on the Exchange. Also they members assented to the allotment of 1.964billion o rd i n a r y s h a re s t o D e a l i n g Members and Ordinary Members on the basis of a ratio of 78:22, respectively; the provision of Claims Review Shares totalling 40.083million ordinary shares, representing 2percent of the Issued Shares of Nigerian Exchange Group, will be set aside for allotment to parties who are adjudged as

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being entitled to shares in the demutualised Exchange; and The transfer of the assets of NSE Consult Limited, NSE Nominees Limited and Coral Properties Limited – existing subsidiaries of The NSE – to the Nigerian Exchange Group Plc. After the Court Ordered Meeting, members of the Exchange re convene d for the E GM to determine the Board of Directors of the demutualised Exchange, and explore the implementation of an Employee Share Ownership Plan

@Businessdayng

(ESOP). The positive outcomes of the meetings affirm the great interest from members to support the pivotal restructuring of the exchange to become globally competitive. It will also move the demutualisation process significantly forward. During the business of the day, the following directors were nominated and appointed: Abimbola Ogunbanjo – Chairman and Non-Executive Director and Oscar N. Onyema, Chief Executive Officer and Managing Director.

Thursday 05 March 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Investor’s Square

United Capital Investment Views

Equities market: NSE year-to-date gain totally erased

he previous week in the equities market was rather eventful, as the market lost 4.28percent weekon-week (w/w) due to the news of Coronavirus in Nigeria and crude oil prices reaching $50/ barrel. As a result, the year-to-date (YtD) gain was totally erased, cumulating to a YtD loss of -0.1percent. Also, investors lost value worth N738billion, with market capitalisation closing at N13.7trillion. In terms of activity, the average value and volumes traded increased by 35.5percent and 3.2percent, to N4.8billion and 309.4million respectively. Diving down to sector performance, we saw major losses in four out of the five sectors under our coverage. The Banking sector (-11.8percent) bled the most as major stocks such as Zenith (-6.8percent) and Guaranty (-14.9percent) lost points. Similarly, the Insurance sector (-8.2percent) declined, on the back of price decreases in Mansard (-6.7percent) and AIICO (-23.8percent). The Consumer goods sector

also declared a dividend of N16, which gives a dividend yield of 9.4percent using the closing price as at the end of the week. Also, Custodian Investment Plc released its audited financial statements, declaring dividend of N0.35 (6.4percent dividend yield). Elsewhere, investors sentiment was downbeat, as market breadth decreased from 0.3x in the previous week to 0.1x. Notably, 4 stocks gained against 52 decliners. This week we expect to see continued riskoff sentiments as the ongoing global pandemic continues to weaken oil prices and investors’ confidence, despite the influx of earnings and dividend pronouncements. Money Market: Short-end Rates at the NTB auction hold firm Analyzing the state of the financial system in the prior week, system liquidity remained largely buoyant, m o re t ha n N 4 0 0 b i l l i o n . This was expected, given the huge OMO maturities (N927.8billion), NTB maturities (N111.1billion), Bond coupon (N49.9billion) and FAAC

(-3.8percent) also suffered losses, as NB (-16.4percent) and PZ (-10percent) drove the sector index down. Finally, the Oil and Gas sector (-2.1percent) was not left behind, as Oando (-18.2percent) propelled the losses. On the other hand, the Industrial goods sector (+1.1percent) gained, as BUA Cement (+1.9percent) appreciated. In terms of corporate actions, Dangote Cement Plc released it FY-2019 audited results. Analysing performance, revenue decreased by 1.1percent to N891.6billion and PAT declined by 48.6percent to N200.5billion, on the back of an absence of tax credit. The firm

Inflow (about N320billion), that outweighed outflows from OMO (N480billion) and NTB (N104.1billion) sales. However, a “non-discretionary debit” by the CBN towards the end of the week pressured interbank funding rates Open Buy Back (OBB) and Over Night (O/N) rates higher, from 3.4percent in the preceding week to close the week at c. 16percent. At the primary market for OMO, the Central Bank of Nigeria (CBN) was only able to mop up 51.7percent of the total OMO maturities for the week. Across the tenors that were offered, the long-end (362-day) received the most interest (bid to cover: 1.53x), while demand for

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the 89-day (0.45x) and 182-day (0.05x) bills was lackluster. In addition, the CBN was able to tweak stop rates lower across all tenors; 89-day at 11.45percent (previously 11.44percent), 182day at 11.56percent (previously 11.59percent) and 362-day at 13percent (previously 13.04percent). Meanwhile, at the primary NTB market, like the prior auction, local players bided aggressively for the tenors offered, with bid to cover for the 91-day at 2.03x, 182-day at 1.42x and the 364-day at 3.37x. Despite the impressive demand, the CBN stuck with allocating what was offered, at N104.1bn. Notably, stop rates remained the same at 3percent and 4percent at the 91 and 182-day, while the 362-day stop rate fell to 5.7percent. Elsewhere, there were widespread reports from the outcome of the Bankers committee meeting, stating that banks should desist from bidding for OMO bills at the auction, or face discretionary CRR debits. As a result, the secondary market for OMO was largely bullish, with average yield declining by 61bps to 11.35percent. However, the opposite was recorded for the secondary NTB market, as average yield tracked up by 14basis points (bps) to 4.01percent. This week, we expect the buoyant level of financial system liquidity to reduce marginally, amid a smaller size of maturity from OMO bills (N232.3billion). Also, we expect banks to continue to show significant interests in the secondary OMO market amid fears of penalty charge by CBN on participation at the primary OMO market. However, given the development of Coronavirus in Nigeria, and the drastic fall in oil prices, we could see a bearish sentiment from FPIs at the OMO market. Bond Market: Corona virus sparks massive sell-off at the Eurobond market In the previous week, the local secondary bond market was on steroids, as the huge inflows of maturities for the week seeped into the bond market. As a result, average yield dropped by 69bps to 9.22percent. Notably, yields dipped across all bond instruments, with greater declines at the short end of the curve.

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

Market and Economy

Nestlé to pay N35.7bn as final dividend …share price hits 52-week low …negative return year-to-date increases to -30.8% including MAGGI Signature seasoning mixes adapted to consumer tastes and cuisine across the country. CERELAC Junior fortified with iron was also launched to help meet the nutrition needs of pre-school children.

Iheanyi Nwachukwu

estlé Nigeria Plc has released its financial results for the year ended December 31, 2019. The company posted revenue of N283.9 billion, recording 6.6 percent growth over the preceding year. The company’s gross profit for the year 2019 stood at N 127.6 billion, compared to N113.9 billion in year 2018. The company posted profit before income tax (PBT) of N71.2billion in 2019 against N59.7billion in 2018; while it posted Profit After Tax (PAT) of N45.6 billion for the year 2019 versus N43billion during the preceding year. In addition to N25 per share interim dividend already paid, the Board proposed an additional dividend of N45 per share making for a total dividend of N70 for 2019. This proposed dividend will be submitted for approval at the company’s Annual General Meeting on 2nd June 2020. The proposed N45 final dividend by the company implies payout of N35.7billion on its shares outstanding of

792,656,252 units. The stock’s negative return year-to-date (Ytd) currently stands at -30.8percent. At N1,017 it traded on Monday March 2, Nestlé Nigeria Plc reached its 52-week low as against a 52week high of N1,580. “In 2019, we reaffirmed our market leadership by deliver ing increased profits and dividends to shareholders. We achieved this by responding speedily to consumer preferences, by offering product innovation and improving our distribution channels. Our high-performing team adapted quickly to changing consumer expectations by adopting new ways of delighting our consumers in the market place,” said Mauricio Alarcon, Managing Director and CEO of Nestlé Nigeria Plc. The company enhanced its portfolio with new products

O n the 2020 outlook, A l a r c o n s a i d , “ We w i l l continue to focus on the innovation and the renovation of our products and on rolling out new solutions and services in response to changing consumer needs. This will prepare us for the challenges ahead while we partner with key stakeholders for the growth of the local economy”. “With society looking more to business to improve social amenities, Nestlé Nigeria will continue to invest in creating shared value by improving livelihoods in the communities closest to our business operations. This is in line with our purpose of enhancing quality of life and contributing to a healthier future. We will also drive new initiatives to empower our people to deliver outstanding results for themselves, for the organisation and for society,” Alarcon stated.

International Breweries says set for growth after successful Rights Issue

embers of the Board and Management of International Breweries Plc, a part of ABInBev on Friday, February 21, 2020 paid a courtesy visit to the Nigerian Stock Exchange (NSE). In December 2019, the Company offered 18,266,206,614 units of ordinary shares of 50 kobo each to existing shareholders at N9.00 per share through a Rights issue to raise N165 billion. The additional shares were offered on the basis of 17 new ordinary shares for every 8 ordinary shares held as at November 6, 2019. The offer closed in December and was 100percent subscribed. The Rights Issue is the largest equity issuance ever in the Nigerian capital market. The additional

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shares were listed on the NSE on Friday, February 7, 2020. Led by the new Finance Director, Bruno Zambrano, the management team visited the Exchange to reiterate International Brewer ies strategy of building a sustainable business for the long-term future and discuss the company’s continued goal of creating shareholder value. The visit also provided the Company with the opportunity to introduce the new Finance Director and other members of the Board to the leadership of the Exchange. As part of the visit, there was an interactive session with the Council Members of the Exchange, led by Oscar Onyeama, the CEO of the @Businessdayng

Nigerian Stock Exchange, who commended the visitors, and informed them that the exchange was engaging government on the need for listed companies such as IB Plc to be allowed tax breaks as an incentive to promote growth and productivity. Onyeama enjoined the company to take the next bold step by visiting again soon for a ‘facts behind the figures’ session to further intimate capital market operators on the financial performance of the company. The visit culminated in the ritual of ringing the closing bell, which was ably performed by Toyin Odulate, an Independent Non-Executive member of the International Breweries Board of Directors.

Thursday 05 March 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

UBA: Analysts target price signals upside potential Iheanyi Nwachukwu

nited Bank for Africa Plc, one of the largest banks in Nigeria had last week on the Nigerian Stock Exchange (NSE) released its audited results for the fullyear ended December 2019. The Pan-African financial institution recorded impressive growth across its top and bottom line figures. The full year 2019 scorecards The bank’s gross earnings grew by 13.3 percent to N559.8 billion, compared to N494.0 billion recorded in the corresponding period of 2018. The bank’s total assets also grew significantly by 15.1 percent to an unprecedented N5.6 trillion for the year under review. This is the first time the Bank’s gross earnings and assets will respectively cross the N500billion and N5trillion marks. Notwithstanding the challenging business environment in Nigeria, the bank’s Profit Before Tax (PBT) was impressive at N111.3 billion, 4.2percent higher compared to N106.8 billion at the end of the 2018 financial year. Furthermore, the Profit After Tax (PAT) rose by 13.3 percent to N89.1 billion compared to N78.6 billion recorded in 2018. On the cost side, Operating Expenses grew by 10.1 percent to N217.2 billion, as against N197.3 billion in 2018, well below average inflation rate within the period, a reflection of cost efficiency gains.

kennedy Uzoka, chief executive officer, United Bank for Africa

These results depict UBA’s deepening of its Pan-African business strategy, given the growth in the contribution of its 19 African subsidiaries to the Group’s net earnings and total assets. ExNigeria Operations’ contributed 46percent to the Group’s Profit Before Tax (PBT) in the year under review. UBA recorded a remarkable 20.2 percent growth (to N2.1 trillion) in loans to customers, whilst customer deposits increased by 14.4 percent to N3.8 trillion, compared to N3.3 trillion recorded

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in the corresponding period of 2018. This reflects increased customer confidence, enhanced customer exper ience, early wins from the ongoing business transformation programme and the deepening of its retail banking franchise. Reward for shareholders In its tradition of rewarding shareholders, the Bank proposed a final dividend of 80 kobo for every ordinary share of 50 kobo for the financial year ended December 31, 2019. The final dividend which is subject to the affirmation of the

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shareholders at its Annual General Meeting (AGM) on March 27, 2020 will bring the total dividend for the year to N1, as the bank had paid an interim dividend of 20 kobo earlier in the year. Share price trend/trading information The share price of UBA Plc which had closed at N6.45 on Monday March 2 implies a negative return of -9.8percent year-to-date (YtD), far underperforming the NSEASI which recorded negative return of -3.82percent same day. At that pr ice, UBA share price nears its record 52-week low of N5.40, despite reaching a corresponding 52-week high of N9.25. The market capitalisation of the Premium Board listed bank currently stands at N220.586billion while its shares outstanding are put at 34,199,421,368 units. Analysts view Joshua Odebisi’s team of analysts at Lagos-based Vetiva Research who placed a “Buy” rating on UBA stocks noted that “Overall, UBA’s performance in FY’19, as well as our expectations for FY’20 have led to a FY’20 PAT projection of N102.5 billion, a 15percent year-on-year (y/y) increase (FY’19: 13percent y/y), yielding an return on average equity (ROAE) of 16percent. This gives expected earnings per share (EPS) of N2.91 and Dividend per Share (DPS) of N1.10.” “Therefore, we revise our 12-month target price (TP) to N13.78 (Previous: N13.50), a potential upside of 114percent. The bank’s shares have lost 10percent YtD and are currently trading at a P/B of 0.4x versus Tier-1 peer average of 0.8x,” the Vetiva added. Management speaks Commenting on the result, Kennedy Uzoka, Group Managing Director/CEO, UBA Plc noted that the year 2019 was important for UBA Group, as it gained further market share in most of its countries of operation. “The year 2019 was a very remarkable one for UBA given the adverse market developments. Nonetheless, we achieved sizable growth in balance sheet and earnings, even as we reposition the Bank for the future. Gross earnings crossed the N500billion threshold to N559billion, whilst total assets also crossed the N5 trillion mark for the first time to N5.6trillion. Our strategy remains centred around unparalleled service to our esteemed customers”, the GMD said. “Accordingly, we are making significant investments in a technology-driven transformation journey. We have recorded early gains as shown in the 39percent growth in electronic banking income to N38.8billion in 2019 from N27.9billion in 2018. Our businesses are gaining commendable share in their markets across regions in @Businessdayng

Africa, as we deepen the scale and scope of our operations,” he noted. “I am indeed excited about the synergy we have built within the UBA Group and the significant progress we have made in our transformation drive. We have positioned the Bank as a truly pan-African banking franchise, leveraging our operations in France, the UK and the USA, to deepen intra-African trade, and facilitate capital flows between Africa and the rest of the world. “ In 2 0 2 0 , w e w i l l pu r s u e aggressive deepening of market share in all our subsidiaries, leveraging technology, rich human resources and our customer-first strategy to win in all the markets we operate, notwithstanding the challenges of our operating environment”, Uzoka stated further. Also speaking on the performance, Ugo Nwaghodoh, Group CFO, UBA Plc emphasised that the bank is well-positioned to sustain impressive performance across key financial indices, adding that already, some of its previous investment in digital and technological transformation is already paying off significantly. “We navigated the fragile yield environment in our largest market, to deliver an 8percent growth in net interest income to N221.9billion. This was bolstered by a 7.8percent and 13.9percent growth in interest income from corporate loans and investment securities respectively, as well as a 4percent cost of funds driven by our stable retail deposits. Resulting from cost efficiency gains within the year, cost-to-income ratio moderated to 62.7percent (64percent in 2018), whilst profit for the year grew 13.3percent, to N89.1billion, translating to 16.2percent return on average equity (RoAE),” Nwaghodoh said. UBA deploys innovative lifestyle products to expand its market United Bank for Africa Plc has been deploying innovative lifestyle products to expand its market share across Sub-Saharan Africa, leveraging its presence in the United Kingdom, United States of America and France, to build a true Africa’s Global Bank, facilitating trade and capital flows between Africa and the rest of the world. United Bank for Afr ica is a leading Pan-African financial institution, offering diverse banking and payments services to more than eighteen (18) million customers, across 1,000 business offices and customer touch points in 20 African countries. With presence in New York, L o n d o n a n d Pa r i s , U B A i s connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.

Thursday 05 March 2020

BUSINESS DAY

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Thursday 05 March 2020

Harvard Business Review

BUSINESS DAY

ManagementDigest

Why soliciting donations at the cash register can backfire USE THESE STRATEGIES TO ENSURE THAT IT DOESN’T. fua Obeng describes herself as an altruistic person who regularly writes checks to charities. But several years ago she began taking note of how she reacted when asked for donations while paying for purchases in stores. “I hated it,” says Obeng, an assistant professor of marketing at Howard University. Conversations with family and friends confirmed that she was not alone. Yet research showed that philanthropic organizations relied heavily on such solicitations. So Obeng decided to investigate the practice and how retailers could mount more-effective charity-atcheckout campaigns. That work has led to an explanation for why otherwise altruistic people may react negatively to point-of-sale solicitations. Across several studies involving hundreds of participants, Obeng and her co-authors found that customers perceive point-ofsale solicitations as a violation of their social contract with the retailer — a contract built on the principle of reciprocity, whereby the two parties equally contribute to and benefit from the exchange. When customers are asked for a donation — a one-way transaction — the balance is upended. Study participants imagined that they were shopping at a grocery store and were either asked for a donation or checked out without such a request. Afterward they rated their satisfaction with the store and the extent to which they believed it had violated the social contract. Subjects who were asked for a donation were far likelier than others to perceive a social-contract violation. The request also diminished customer satisfaction by up to 10% and decreased the likelihood of recommending and revisiting the store. Controlling for other factors that might account for those results, the researchers ruled out guilt, loss of trust and dislike for the retailer. If a retailer’s social-con-

tract violation erodes customer satisfaction, Obeng and her colleagues reasoned, then a similar violation by the customer should restore equilibrium and leave satisfaction intact. So in one of their studies half the subjects were told they were checking out with an expired coupon, while the other half checked out normally. Those in the latter group who were asked for a donation reported a breach of social contract and decreased satisfaction with the store. But for participants with expired coupons, requests for a donation had no negative effect on satisfaction or perceptions of the social contract. “When customers knowingly take more than they are contributing and then are asked to give, it evens out,” Obeng explains. The final study in the series tested a practical method by which retailers might maintain reciprocity and avoid a hit to customer satisfaction: incurring a donation-related cost of their own. Here, half the subjects who were asked to donate were offered a reusable shopping bag in return. They perceived their relationship with the store to be in greater equilibrium than did subjects who were asked to donate without the offer of a bag, and they expressed higher satisfaction with the

retailer — in fact, their level of satisfaction was similar to that of subjects who were not asked to donate. A subsequent statistical analysis suggests significant implications for retailers’ revenues. Starting with a list of the world’s top 100 public retailers in 2017, the researchers identified those that had sponsored pointof-sale campaigns that year. Controlling for factors including ad expenditures, age, debt leverage and size, and using publicly available financial results, they found that the sponsors had earned $17 million less, on average, than their counterparts. To be sure, there’s little consensus regarding how many customers who are asked to donate at the cash register actually do so. A survey by the professional association Engage for Good found that participation in any one campaign averaged 18%. The subjects in Obeng’s studies were not asked to say whether they would comply with the donation request, but on the basis of other research she has conducted, she estimates the average participation rate for any given campaign to be roughly 30%. Customers who do make donations express more satisfaction with the retailer and a greater willingness

to return — so if retailers can increase participation, it should benefit them and their charity partners alike. To that end, Obeng and her co-authors offer several strategies for inspiring customers to donate while minimizing the risk of a backlash. Retailers can: — REWARD CUSTOMERS FOR DONATING: As the social-contract studies demonstrate, “retailers that utilize charity at checkout can offset the decrease in customers’ satisfaction by giving customers something that has a similar value in return,” the researchers write. Obeng says there may be exceptions. For instance, people readily give around the holidays and to causes that help children, so in those cases they may feel no need for a reward. — CAREFULLY CHOOSE THE DONATION METHOD AND MAKE THE PROCESS SIMPLE: A study involving two of Obeng’s co-authors found that the rounding-up technique — giving customers the option to bump up their payment to the nearest full dollar amount, with the difference going to the designated charity — is perceived as less painful than a request for a flat amount. And for simplicity, a yesor-no PIN pad option is generally best, Obeng says. “Some retailers ask custom-

ers to write their names on a sticker or a balloon for display in recognition of their donation, but as customers, we’re focused on efficiency,” she explains. “Any extra bells and whistles will harm a program’s effectiveness.” — TRAIN EMPLOYEES: Even if the donation request is made silently, via PIN pad, store workers should be informed and engaged to serve as the charity’s ambassadors, Obeng says. And customer service can be crucial to a campaign’s success. In another recent study, she and her collaborators found that people experiencing high-quality service are twice as likely to donate as those experiencing normal levels of service — and nine times as likely as those experiencing inferior service. The psychological mechanism responsible is similar to the one in the social-contract study, she explains: “The consumer feels grateful to the retailer and reciprocates to keep the relationship in balance.” A caveat: If shoppers doubt the authenticity of the superior service — because, for example, they’ve learned that employees are paid on commission — the tactic is likely to backfire. Study participants in that condition were less willing than members of the control group to make a donation.

Thursday 05 March 2020

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

Four things we learned from 9th Social Media Week Lagos gramming of Social Media Week Lagos comes from the feedback from the community. For the 2020 edition, the team organised a focus group in November where they got a chance to hear about what the community was interested in.

FRANK ELEANYA

he Social Media Week Lagos (SMWLagos) has become a Mecca to thousands of people eager to keep up with trends in an ever-evolving digital world. For the past nine years digital technology enthusiasts, professionals, experts, government officials and public workers from across the country and outside Nigeria have participated in the week-long event that usually takes place in the month of February. It is arguably the most popular, consistently well attended and informative tech event in Nigeria. Every year while the theme of the conference changes as well as the topics, the location stays the same - Lagos. For Ngozi Odita, co-founder and executive director of Social Media Week Lagos, the success of the event comes with great responsibility and an obligation to use the influence to move Africa forward. How it all started Social Media Week (SMW) is a franchise that started in New York City. Prior to securing a franchise license, Odita was going to conferences in different schools speaking around reframing the conversation around the use of social media on the continent in the 21st-century context. “It is what I will talk about at conferences. I did that for a few years and I started to feel like a soundboard. I was going everywhere talking about how awesome Africa was and how tech and digital culture was really different,” Odita told BusinessDay.

“I began then to feel like it would be much better and a lot more authentic if people just hear it from the people on the ground.” It wasn’t until her third event at the Social Media Week that she decided she would rather do it on the continent. She applied for the franchise licence. It was about a threemonth process and they approved. Since securing that licence, Odita and her team have learned a few things in planning big tech events. A full year of planning Planning a big event like the Social Media Week Lagos takes more than just putting together the right team and meeting sponsors. Those are very important.

But, Odita told BusinessDay that there is a full year of planning ahead of every event. As soon as one event is ending, the plan for the next edition begins. “I run very very small teams, but there is a lot of work to be done amongst the very few people. It is a tremendous amount of planning just because we always want to ensure that we are doing better and that we are providing more,” she said. “So every year we want people to notice the difference, so the changes have to feel like it is not the same event every year. That takes a lot of innovation at our end.” Localising a global theme Every year the theme of the Social

Media Week Lagos changes. In 2019, the theme was ‘Stories’, however in 2020 it changed to ‘Human X’. Odita explains that the theme of the year is generated from the global theme. The 2020 ‘Human X’ theme was seen through a marketing landscape and how businesses can be more human in the type of marketing they create. Haven received the general theme, the Lagos team are expected to crystalize it into a local context. The theme is looked at across the board through interactions on social media, feedback from the community and periodical survey. “So our approach is a little bit different,” Odita said. About 60 percent of the pro-

Foreign participation is growing Although seeing through a successful conference represents a milestone for the team, but a better indication is the growing number of foreigners’ participation at the Social Media Week Lagos. People attending from outside Nigeria accounted for 13 percent of the crowd in 2020 edition. Odita says this is a result of a deliberate strategy to plan the conference in such a way that it is not only relevant to people in Lagos, but also people outside the state and Nigeria. Thus, Social Media Week Lagos is evolving into a pan-African event. “It is relevant to anyone who is interested in doing business across the continent,” Odita said. No plans for SMW outside Lagos While the team has received several invitations to host the conference outside Lagos, Odita insists there would not be an SMW event in Abuja or other Nigerian states in the near future. “We try to make people understand that we are building an event that is for everyone, it just so happens to be in Lagos,” she said. For her, the idea isn’t to go everywhere and recreate Social Media Week; it is more of how her team can create the best event in the city of Lagos that is of service to all Nigerians.

How Decagon is tackling software talent deficit one squad at a time FRANK ELEANYA

report released last year by Indeed, a US-based tech talent recruiter, estimates that 9 in 10 business owners are struggling to find and hire the right IT professionals in the US with a very mature tech market. In Nigeria where the tech space is still a long distance away from maturity, finding and hiring these professionals also comes with significant headaches. One of the factors responsible is the neglect of quality teaching of STEM subjects like science, engineering, and IT in Nigerian schools. But there is a talent market now building and giving young people, including married women with children such as Lesi Samson, the opportunity to realise their dreams of becoming software engineers. These young people do not need to have a prior degree in mathematics, science or computer science, just the passion to succeed and the

focus to see through every task assigned to them. In fact, Decagon one of the organisations filling the shortage gap with well-trained software engineers brags about its capability to turn novices into sought after developers within months. “I have learned to keep learning,” Sampson said. She was addressing her colleagues at the passing out of Decagon’s Squad 3 on Friday, 21 February. Founded in 2018 by Chika Nwobi, Decagon Institute is on a mission of training 5000 software engineers, creating 30,000 jobs, and generating about $1 billion in export revenue by 2023. The institute has had three squad graduations so far; squad 1 (7 graduates), squad 2 (22 graduates), and squad 3 (34 graduates). Training software engineers around the world is an expensive venture, more so in Nigeria. Andela once told BusinessDay that training one engineer takes as much as $10,000 (N3.6 million).

Decagon said it spends N3 million on every candidate they train. Cost and the need to ensure only the best-qualified candidates make the program are partly the reason for the rigorous selection process the company has adopted. Justina Dika-Oha, head marketing and communication, Decagon, describes the entire six months program as “An intensive and immersive in-house software engineering program that is taught by world-class engineers using an Agile delivery framework. It consists of a project focused instructor-led training.” Last year the institute received 1500 applications and eventually selected about 1 percent. Usually, every candidate is placed on a Pay-as-you-start-earning model that enables them to go through the program without the burden of paying the N3 million tuition. This is also responsible for the 100 percent completion rate of the program Decagon has recorded. The institute also has a scholarship program designed for students

who are extremely smart to be part of the program. Prior to selecting candidates for the scholarship, Decagon has a pre-qualification booth camp. At the end of the Bootcamp the top three males and top three females are selected and interviewed by ACA. The final selected often comes down to a male and a female. Lisa Sampson is one of those on scholarship. After completing the program the software engineers are placed with hiring partners. The hiring partners collaborate with the placement team to ensure the students get the required experience. There are also career fairs (Decagon Hire Day) where the institute gives companies the opportunity to interview, assess and hire engineers. “We have relationships with companies within the local tech ecosystem like Seamfix, Access Bank, Stanbic, Workforce Group, and Terragon,” Dika-Oha said. “We also have partnerships with companies outside of Nigeria and we are actively growing our remote work

capabilities.” Beyond partnering with companies, Decagon also taps into a network of knowledgeable individuals. For instance, Aruma Oteh, former treasurer vice president of the World Bank was a special guest at the squad 1 graduation ceremony. “I believe we should be telling more success stories like Decagon, that is one way we would encourage our young people,” Oteh told BusinessDay. Nwobi who has founded four companies and exited them in the past, agrees with Oteh that young people need all the encouragement they can get. This, he said, aligns with Decagon’s mission. “To whom much is giving, much is expected,” Nwobi said. After graduation, the software engineers will become part of an alumni program Decagon is creating. As part of plans to keep them connected to the institute, there are a series of events and career growth and specific training that will be made available to the alumni going forward.

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

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Thursday 05 March 2020

Retail &

BUSINESS DAY

consumer business Luxury

Malls

Companies

Deals

Spending Trends

Malls

CONSUMER SPENDING

Modern grocery retailers cannibalise sales of local peers

Apple watch outsells traditional timepiece as young consumers go ‘techy’

BUNMI BAILEY

odern grocery retailers are fast cannibalizing the sales of traditional retailers in Nigeria, according to the 2020 retail report by Euromonitor International. The report by Euromonitor, a global market intelligence publisher stated that the on-going rise of urbanisation, partnered with the increase of busy consumers, especially time-poor women who have entered the workforce, saw a growing demand for convenient retailing options. “Modern grocery retailers attract consumers through having larger shopping spaces, with air-conditioned facilities and a more extensive array of products, often at discounted or promotional prices,” “Also the growing demand has been a boost for them as they often offer a wider range of products under one roof, allowing consumers to do weekly, or monthly shops, in one trip,” the report further stated. Nigeria’s retail sector remains relatively underdeveloped as it continues to be dominated by traditional grocery retailers due to the growing population in both rural and urban areas. And most Nigerian businesses are structured as traditional

grocery retailing due to the minimal costs involved in running the outlets in most parts of the country, particularly in low-income areas. Examples of modern retailers in Nigeria are Shoprite, Spar, Hubmart, Googies super market, Park n’ Shop etc, while the traditional ones are the corner shops, kiosks, local markets and street vendors’ Cheng Fuller, a retail and marketing consultant said, “Overtime mass grocery retailers were typically a form of tourist destinations but increasingly they are offering convenience, good hygiene and cheaper prices. So I would say that they are the future.” Even though the Nigerian landscape is still an emerging one, highly structured by traditional grocery retailers. The modern retail channel is growing fast but the high cost

of establishing these outlets is expected to see traditional grocery retailers retain its lead. According to Abiola Gbemisola, a consumer analyst at Lagos-based investment firm, Chapel Hill Denham it will take time for the modern retailers to own the value chain because the larger segment of the market is still concentrated by the mass market and not everyone in that market can afford to do modern tread of shopping. Nigeria may be the Giant of Africa, but not when it comes to the global retailing landscape. According to a 2019 Global Retail Development Index, Nigeria ranked 30th position, the lowest position on the list. And this is three places lower than it was in 2017. Nigeria is the last African country and the last nation on the list.

Analysts say the key to making the retail sector more competitive and contributing more to Gross Domestic Product (GDP) lies in the government’s ability to formalise the sector. Some of the bottlenecks that policymakers must address include improving the level of physical infrastructure, reducing the high unemployment rate, and boosting GDP per capita to support consumer spending growth. The rising level of poverty since the crash in the crude oil price of mid 2014 that plunge the country into its first recession in 25 years has made it practically difficult for the country to exploit its huge population that lunge for consumption. Over 50 percent of a population of 200 million live on less than $1.90 day as the country overtook India last year as the poverty capital of the world. The National Bureau of Statistics (NBS) has said that Nigeria’s inflation rate for the month of January this year was 12.13 percent, the highest in 21 months as price of food stuff continues to spike on the back of border closure by the Federal Government. “The downward movement in the ranking affirms that consumer purchasing power is still weak. Consumer demand is the fulcrum of retail performance, hence the under-performance,” Damilola Adewale, a Lagos-based economist.

pple wearables have continued to win the hearts of consumers across the globe as the demand for fitness and healthy lifestyle gains prominence forcing fears that time may be running out for traditional watchmakers. A combination of attractive design, user-friendly tech and sticky apps makes the Apple Watch increasingly popular. Although analog wristwatches remain popular among older consumers, younger buyers are tipping toward smartwatches and computerized wristwear. According to new research from Strategic Analytics, a factbased sales and marketing consulting company, in 2019, Apple watch was the toast of consumers as it outsold the entire Swiss watch industry by a huge margin. In 2019, Apple watch shipped a total of 31 million units worldwide, compared with 21 million for all Swiss watch brands combined. The report noted that traditional Swiss watch makers, such as Swatch and Tissot, are gradually losing the smartwatch wars noting that Apple Watch is delivering a better product through deeper retail channels and appealing to younger consumers who increasingly want digital wristwear. “The window for Swiss watch brands to make an impact in smartwatches is closing, time may be running out for

Swatch, Tissot, TAG Heuer, and others,” the report said. Analysis of Apple’s result shows it doesn’t break out shipment details for its products and Apple watch as specifics are further muddied as revenue for the product is bundled in Wearables, Home and Accessories which includes Apple watch, Airpods, accessories, beats products and Homepods Apple’s Wearables business continues to grow substantially every quarter. During Q1 2020, Apple reported Wearables revenue of $10 billion, setting an all-time revenue record and surpassing the Mac for the first time. The quarter also marks the first time that the wearable segment outperformed the Mac, which recorded $7.2billion for the company. Six years after it released its first smartwatch, it has become a major product for the world’s largest technology company by revenue. Although it has been the market leader in the smartwatch category for many years now, this is the first year the product has surpassed its analogue competitor, Swiss. This is due to the fact that the Apple Watch continues to improve and provide additional relevant functions for consumers of the brand. This, in turn makes competing with Apple harder as the swiss watches do not evolve and introduce new features the way Apple does.

CONSUMER SPENDING

Why taste is the new focus for soft drink markers in Nigeria BUNMI BAILEY

aste is the new focus for carbonated beverage (soft drinks) makers in Nigeria as they are aggressively pushing out more flavours to entice consumers around the country. Unlike before, the competition for market share was on price and quantity. But now, the narrative has changed with taste being the new niche and focus. “The three things that Fast-Moving Consumer Goods (FMCGs) or drinks companies compete against are price, quantity and taste.

For the price and quantity category, they are almost at par. So the next thing for them to focus on is taste due to consumers now tilting towards that,” Ayorinde Akinloye, consumer analyst at CSL Stockbrokers said. Over the past four years, Fast-Moving Consumer Goods (FMCGs) including soft drink makers have been competing for sales by increasing the quantity of their products without increasing prices due to weak consumer purchasing power. The carbonated soft drink market commands a unique hold on the food and beverage sector in the Nigerian economy. In 2019, innovawww.businessday.ng

tion centred on flavours as companies like Pepsico and Unilever introduced new ready-to-drink Lip tea drinks and Pepsico’s new flavours such as Pepsi Berry, Pepsi Lime and Pepsi Mango. Last month, La Casera

Apple introduced four new flavours called Bold Orange, Tropical, Bitter Lemon Extra and Ginger. Ibrahim Ahmed, an inventory manager at CocaCola Nigeria, said the new trend made Coca-Cola rein-

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troduce its flavoured Fanta Apple and Pineapple drink back into the market in January. Nigeria’s fast-growing population brings with it a continuing demand for soft drinks, especially as the climate is quite hot. The country ranked fourth globally in the volume of soft drink sales recorded in 2016, according to Euromonitor International, a global market intelligence publisher. Despite the huge popularity of the juice and drink market, the unique tasting appeals of carbonated soft drinks and their array of flavours have always been a @Businessdayng

strength other drinks cannot match. “The soft drinks companies are in the phase of ‘let us spoil the consumers by giving them various alternatives’. At every point in time, companies try to ensure that consumers get what suits them at that point in time,” Abiola Gbemisola, a consumer analyst at Lagosbased investment firm, Chapel Hill Denham, said. Gbemisola noted that the new development is not the case that consumption or purchasing power has improved but a way to ensure that consumers don’t move to their other competitors because of those flavours.

Thursday 05 March 2020

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

IESL, DORIS JV would strengthen Nigeria’s local content drive olusola Bello

espite the lull in the Nigerian oil and gas industry and the challenges it is facing some world-renowned companies still find the industry attractive and so decided to form joint venture (JV) partnership with some local companies. One of such companies is the Doris Group, an offshore engineering specialist which has formed a joint venture partnership with International Energy Services Limited (IESL), local engineering services company and the two have now fused together to form what is now called IES-Doris Limited. The two companies are not new to each other as they have cooperated in projects like Total’s Ofon in 2007 and Usan FPSO before, so it has been a long relationship. With this development, IESL-Doris will have access to all the engineering capabilities of Doris Group around the world. This

means that if works that are to be done in the country require expertise that do not exist here they would be brought into the country. The joint venture is IESL 55 percent and Doris 45 percent equity share. The capacities of Doris Group is demonstrated in the fact that almost all the floating production storage and offloading (FPSO) that have operated in Africa are

designed by Doris Group. Such FPSO includes, Apo FPSO,Usan FPSO, Egina FPSO. It is rounding up its activities on IKIKE project for Total. According to the chief executive officer of Doris Group, Christophe Debouvry who spoke with BusinessDay, the partnership will expose Nigerian engineers to technologies they are not exposed to yet,

noting that the essence of local content is domiciliation and domestication of service activities in Nigeria and IESLDoris joint venture has come to consolidate this. “To us it is very important because we are contented working with local partners anywhere we go; we are used to local content. The beauty is that the two companies have known each other for a long

L-R: Bayo Ojulari, managing director, Shell Nigeria Exploration and Production Company; Albert Akpan, chairman Senate Committee on Petroleum Resources Upstream; Osagie Okunbor, managing director, Shell Petroleum Development Company and Country Chair, Shell Companies in Nigeria, and Ed Ubong, managing director, Shell Nigeria Gas, at the presentation of the Excellence in Corporate Social Responsibility Award to Shell Companies in Nigeria at the 2020 edition of the Nigeria International Petroleum Summit in Abuja on Monday.

time,” he said. The Doris Group boss said his company is an engineering company that specialises essentially in offshore engineering and has been around for the past 55 years doing this. The company which is headquartered in Paris has engineering offices all around the world. It has different types of businesses namely, engineering in oil and gas which is what it is doing with IESL, designing of FPSO Platforms, wellheads, subsea production system, conceptual engineering, pre-Front End Engineering Design (FEED) and details engineering, everything before construction. He stated that the company does not do construction but is able to provide the entire chain of activities that are required in the upstream sector depending who it is partnering with on case by case basis on a particular project and locations. Also commenting on the joint venture, Diran Fawibe, the chairman and chief executive of IESL said the two companies are not new to

each other as they have been working together for about 15 years on a case by case basis. “It has been so good for the two companies to go one step further; this was why the joint venture was signed in 2019,” he said. Doris Group he said, will domicile some of its staff in Nigeria saying even now some are already in IESL. They would bring the expertise of Doris to support Nigeria. He stated that as the country is moving into deep water projects there would be a number of challenges when it comes to engineering design and asset management so, with the coming of the group, its expertise would rob off on Nigerians working in IESL. “Doris is very committed to supporting local content and Nigerians. It is a long time relationship which is expected to bring a lot of values to Nigeria, especially now that there lack of depth in engineering design in Nigeria. The Doris group he said would help in the process of digital transformation of the processes in IESL.

Palpable fears grip OPEC + over crashing oil prices in face of real virus threat

We remain committed, focus towards driving sustainable economic growth – Siemens CEO

…Nigeria economy in dangerous zone

n support of the Federal Government of Nigeria’s commitment to restore growth, invest in people and build a globally competitive economy, Siemens Nigeria has reiterated its commitment to remain a strong partner to the government to drive sustainable economic development in the country. The company said it has a long-standing commitment to address the need for local technical support in Nigeria’s industries by providing innovative equipment, deploying technology and offering aftermarket service. With its in- country service workshop in Port Harcourt, it claimed it has contributed greatly to the maintenance of infrastructure in industries by providing quicker and efficient solutions to customers who ordinarily may have looked overseas for solutions. Speaking on the company’s commitment to drive real value and sustainable impact in Nigeria, CEO, Siemens Nigeria, Onyeche Tifase said, “At Siemens, we fundamentally believe that demonstrating commitment to the communities in which we work is core to the success of our business. Throughout our almost 50 years journey in Nigeria, we are proud to be driv-

Olusola Bello

here are palpable fears among oil producing countries on account of the rampaging coronavirus. OPEC and Non OPEC members have become apprehensive that the price of crude oil might crash to $30 per a barrel in the nearest future on account of the virus. If this happens it would have significant impact on the Nigerian economy which is solely dependent on crude oil for her revenue and foreign earnings. Unemployment may increase as government may even begin to sack workers while our foreign reserves may be depleted. The naira could also be badly hit by this development. It is an attempt to forestall the free fall of the price of crude oil that the members of OPEC and Non OPEC members are meeting this week on the Olusola Bello, Team lead,

all-important agenda of oil production cut. This week, ministers from the oil producing countries of OPEC and their allies would be meeting to decide on the future of their latest round of output cuts. This is coming after OPEC have failed to persuade Russia to bring the meeting forward. It is however believed that, Saudi Arabia will be able to convince its biggest non-OPEC ally of the need to make deeper cuts in the face of a demand slump triggered by the Covid-19 virus. The looming pandemic has already made its mark on oil markets. U.S. West Texas Intermediate crude is now firmly below $50 a barrel and global benchmark Brent briefly followed it. That is uncomfortable territory for producers everywhere and, without a clear indication of deeper output cuts from this week’s meetings, prices will fall further. As the virus spreads, locking down Italy’s industrial heartland and

Graphics: Joel Samson.

prompting Switzerland to ban large gatherings, producers appear to be clinging to overly optimistic demand assessments. OPEC Secretary General Mohammad Barkindo, speaking at a conference in Saudi Arabia last week, said that in spite of the new coronavirus, the world’s “thirst for energy will continue to grow.” While that may be true for energy as a whole, it may not be for oil demand this year if there isn’t a quick rebound. Assessments from the three main forecasting agencies still show 2020 oil demand growth running close to a million barrels a day, but that now looks very optimistic. By contrast, veteran energy consultants FGE cut their forecast for growth this year to “almost zero.” They base their pessimism on the ripple effects of the virus beyond China, where traffic volumes in affected cities have already slumped, according to data

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from the TomTom Traffic Index. Measured in terms of how much longer journeys take than they would on empty roads, live data show that traffic volumes in Beijing are still well below normal levels, even as the city is reportedly returning to work. In Wuhan, center of the epidemic in China, there is no such uptick; economic activity remains severely curtailed. But this is no longer just a Chinese problem. The economic impact of the spread of the virus to other parts of the world is clear. Four-week average jet fuel demand in the U.S. has dropped by 18percent in the past 10 weeks. Airlines are cutting flight schedules and passenger numbers have collapsed. This is the situation that will face the oil ministers of the 23 nations in OPEC+ later this week. They need a credible plan that will take actual barrels off the market.

Olusola Bello

Email: energyreport@businessdayonline.com, Tel: +234-8023020011

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ers of initiatives that matter to Nigeria by developing local jobs and skills, electrification, oil & gas, industrialization, STEM education; essentially the social and economic growth and development of the country.” She stated further that “The Siemens ‘Stiftung Experimento’ program is one major way the company has established its footprint in Nigeria by supporting the government’s goal of improving STEM-focused curriculum for primary and secondary school students. The company the Siemens boss stated have trained teachers and educators through the ‘train the trainer’ program which over 600 students from 10 schools in Lagos have benefited from this initiative. “In addition to this, we have donated a digital factory equipment (SIMAC) worth about $11,700 to the Electrical Engineering Department of the University of Lagos with about 120 students benefitting from the donation. In the power sector, she said the company continues to work towards providing an end to end solution to the power challenges in Nigeria through innovative solutions and partnerships with the public and private sector, and this the company has demonstrated through its current partnership with the Federal.

Thursday 05 March 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Plea bargain has reduced amount of taxpayers’ money spent on prosecution of cases in court – AG, Lagos

The Lagos State Ministry of Justice is on a mission to drive and implement policies and programmes that would give residents of Lagos state greater access to justice through what it describes as its dynamic law reform programmes. In this interview with BusinessDay Law Editor, THEODORA KIO-LAWSON, the Lagos State Attorney General and Commissioner for Justice, MOYOSORE ONIGBANJO, SAN speaks about administering justice in one of Nigeria’s most populous states, legislative reforms, and protecting the rights of citizens. EXCERPTS…

lease tell us about the agenda of this administration. Our focus is on maintaining the tradition of keeping our dear state at the vanguard of Good Governance, Rule of Law and Constitutionalism, not just for now but also for the future. Under my watch as Attorney General, justice sector in Lagos State will also continue to experience the implementation of programmes aimed at giving the good people of Lagos State greater access to justice through dynamic law reforms and adherence to the Rule of Law.

sions in the Nigerian Correction Service Act. What is the state doing about the fight against Domestic and sexual violence? The fight against Domestic and Sexual violence has been on for sometime through our Domestic and Sexual Violence Response Team, which is dedicated to pursuing justice for survivors and deterring perpetrators. Recently, on the 26th November, 2019 there was a Walk to commit and act against domestic and sexual violence. The Walk represents a clear message that the Lagos State Government under this present Administration will not tolerate any form of domestic or sexual violence and that is why the symbolic walk was led by Mr Governor. We are looking at propagating a dedicated Sex Offenders Register with data extracted from the Lagos Criminal Information System and the DSVRT. The major aim of the monitoring programme and the mandated reporting policy is to reduce repeat cases by providing names and personal details of convicted sex offenders in a central database.

Lagos State comes with the full demonstration and challenges of an urban city. What is the goal of your administration, towards ensuring law and order in Lagos State? We recognise the need to ensure that Law and Orderliness is kept. It is this administration’s agenda to clamp down on criminals, land grabbers and other troublemakers to reduce crime and all forms of security threat to the barest minimum. This administration has zero tolerance for criminals, and we would also ensure that the poor and downtrodden in the society have access to justice through our agencies.

Has the focus shifted now to more critical justice issues? In the last months, the focus has basically been to foster speedy and time effective justice delivery equally amongst all persons in the state. We recognised that this can only be achieved mostly through institutional and policy strategies. Please clarify. We are all witnesses to how the activities of Land Grabbers were almost completely stifling commercial activities in the State. The Lagos State Special Taskforce on Land Grabbers popularly known as ‘Omo Onile Taskforce’ with a mandate to rid the State of land grabbers, continued to receive petitions and several criminal prosecution cases against suspected land grabbers currently on-going in different Courts. The operation of the Taskforce recently received a boost when 19 alleged land grabbers were arrested on the 13th November 2019, in Kosofe Local Government and trial is still on going at the Magistrate Court. We presently have 35 Land Grabbing cases in Court, wherein land grabbers are being prosecuted and we are hopeful that justice would be served without hindrance to serve as a deterrent to other land grabbers.

How have some of these policies and procedures impacted the confidence of the people in the ability of the state to administer of justice? Recent Statistics shows that there is an appreciable increase in the number of citizens who patronize the Taskforce for resolution of land grabbing cases. We owe this in part to the intensity of publicity and awareness campaign as well as testimonies of people who have had their cases resolved through the Taskforce. As cheering as this is, the Taskforce is confronted with myriads of challenges in carrying out its legal responsibilities, which are presently being addressed for optimal performance.

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We seek the cooperation and support of State House of Assembly, the Judiciary, the Police, the Prison Services and other security operatives, in order to collectively ensure that our dear State is a safe and secure environment for all regardless of our different tribes, religious and political affiliations.

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How has the journey been and how have you tackled obligations, tasks and projects since you assumed office? Upon assumption of office as Attorney General, my first major assignment was to chair an EXCO Sub- Committee on Road Traffic and Law and Order. That Committee looked into the expansion and functionality of the Mobile Courts in order to seek ways of reducing street trading, traffic congestion and unethical/anti-social conducts on the roads, as well as environmental nuisances; thereby improving the socio-economic well-being of the residents of Lagos State. To show the seriousness and commitment of this Administration towards Law and Order, I personally prosecuted traffic offenders at the mobile court in October, this year.

As it concerns Administration of Justice, in the last months, the Directorate of Public Prosecution received 212 duplicate files for Legal Advice and 164 have been issued and despatched. The remaining 48 could not be treated because of request for further investigation by the Police. In the last two weeks, 94 Plea Bargain applications have been treated. The introduction and utilization of the Plea Bargain has reduced the time spent on criminal cases towards achieving Prison and Court decongestion, as well as saved, in no small measure, the amount of tax payers money expended in the prosecution of matters in court. The Office of the Public Defender (OPD) handled 1,636 cases, 600 petitions out of which 245 have been concluded. 141 judgements have been obtained, over 30 children rescued and total compensation of N8,103,567.09 was received on behalf of clients by the OPD. Similarly, the Public Advisory Centre, received monetary claims of N3,684.666 on behalf of claimants, whilst the Directorate of Citizen’s Rights instituted cases in the National Industrial Court where 7 Claimants were awarded N21, 352,319 as terminal benefits from their various organizations. These are basically highlights of this office’s efforts regarding Access to Justice. The Lagos State Ministry of Justice recently intervened in respect of an encroachment on land of an elderly couple at Ejigbo, whose video went viral on social media, what is the update on this matter? The couple were invited to our office and the police have also been invited to investigate the alleged criminal activities of the individuals named. How has your office progressed with the issue of non-custodial sentences On our part, there has been a renewed effort through the Community Service Unit of the Ministry of Justice of the State Government to work with the Nigerian Correctional Service to implement the non-custodial sentence provi-

Human rights violations are the core and foundation of a state of unrest and conflict in any given society, how would the state through your ministry ensure that the rights of citizens and duly protected? The Lagos State Government under the leadership of Mr. Babajide Sanwoolu is firmly committed to the promotion, protection and fulfilment of human rights, welfare and wellbeing of the citizens. It is in recognition of this fact that the Ministry of Justice annually joins the rest of the world to commemorate the Worlds Human Rights Day on every 10th of December. We seek the cooperation and support of State House of Assembly, the Judiciary, the Police, the Prison Services and other security operatives, in order to collectively ensure that our dear State is a safe and secure environment for all regardless of our different tribes, religious and political affiliations. What is the Agenda for 2020? In the coming years, particular attention will be drawn on law, order and legislative reforms. We have a whole lot of Laws in the pipeline. The importance of Laws in a Society cannot be overemphasised. It keeps the society running. Laws are made to provide for proper guidelines and order upon the behaviour for all citizens and sustain the equity on the three branches of the government. We believe that laws are important in a society and so, we will further create awareness of the Laws that are being passed by the Lagos State House of Assembly. We hope to continue to receive the cooperation and support of the State House of Assembly, the Judiciary, the Police, the Prison Services, other security operatives, and of course the media with their first hand and prompt information, in order to collectively ensure that our dear State is a safe and secure environment for all regardless of our different tribes, religious and political affiliations. How does it all come together for you? None of this Agenda would be possible without the effort and support of the Solicitor General and Permanent Secretary, and the leadership of directorates, agencies, centres and various units in the ministry of justice.

Thursday 05 March 2020

BUSINESS DAY

GreyMatter

LegalBusiness

Validity of Consumption Taxes imposed by State Governments in Nigeria: …Has the Federal High Court decision in Hotel Owners Case settled the controversy?

he Federal High Court, Lagos Division (“FHC” or the “Court”), recently decided in The Registered Trustees of Hotel Owners and Managers Association of Lagos (suing for itself and on behalf of all its members) v Attorney-General of Lagos State & Federal Inland Revenue Service (“Hotel Owners”) that (i) the consumption tax (by whatever name called) imposed and chargeable by the Lagos State Government on goods and services supplied in hotels, restaurants, and event centers in the State, is valid and enforceable under Nigerian law, and (ii) the provision of the Value Added Tax (“VAT”) Act (the “VAT Act”), which imposes VAT on the supply of all non-exempt goods and services in Nigeria, is inapplicable to goods and services supplied by and in hotels, restaurants and event centers in Lagos State. The FHC further handed down an order of perpetual injunction restraining the Federal Inland Revenue Service (“FIRS”) from implementing the provisions of the VAT Act in relation to the supply of goods and services consumed in hotels, restaurants and event centers in Lagos State.

Synopsis of the Hotel Owners Case The Plaintiffs in the suit contended in the main that having paid VAT to the Federal Government of Nigeria (“FGN”) in respect of goods and services supplied in hotels, restaurants and event centers in Lagos State, they are not liable to pay any further consumption tax imposed by the Lagos State Government (“LASG”), and sought from the FHC the declaratory reliefs set out below, to wit; (i) That the VAT Act has covered the field in respect of consumption tax on all goods and services supplied in Nigeria; (ii) That the Hotel Occupancy and Restaurant Consumption (Fiscalization) Regulations 2017, made pursuant to the Hotel Occupancy and Restaurant Consumption Law of Lagos State (the “Lagos Consumption Law”) is inapplicable to the Plaintiffs; (iIi) That the FIRS is the only lawful and competent agency vested with constitutional powers to assess and collect consumption tax in respect of goods and services supplied in Nigeria. Lagos State Government, acting through its Attorney General, joined issues with the Plaintiffs

and sought an order of the Court invalidating the applicability of sections 1, 2, 4, 5 and 12 of the VAT Act (which impose tax on the supply of all taxable goods and services in Nigeria) to hotels, restaurants and event centers,

supplied by the affected businesses.

which are domiciled and/or operate within the State. Lagos State Government further argued that the aforementioned sections of the VAT Act are inconsistent and irreconcilable with the legislative powers conferred on the different tiers of Government reserved in sections 4(2), (4) and (7) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) (the “Constitution”), and as such, are invalid, unconstitutional and unenforceable. After hearing arguments, the FHC upheld and sustained, the contention of Lagos State Government, and consequently declared that the power to impose, charge and collect tax pertaining to the supply of goods and services consumed in hotels, restaurants and event centers is on the residual list in the Schedule to the Constitution, and as such, is within the legislative competence of the Lagos State House of Assembly. Further, the Court pronounced that Lagos State Government is the only lawful and competent authority empowered to impose, charge and collect any tax pertaining to the supply of goods and services consumed in hotels, restaurants and event centers in the State; by virtue of the provisions of section 4(7) of the Constitution, the Taxes and Levies (Approved List for Collection) Act (“Approved Taxes Act”), the Taxes and Levies (Approved List for Collection) Act (Amendment) Order 2015 (“Approved Taxes Order”), and the Lagos Consumption Law. Consequent upon the foregoing, the Court made an order of perpetual injunction, restraining FIRS, its agents and privies from further assessing and collecting VAT in relation to goods and services

ers among the three tiers of Government in Nigeria (Federal, State and Local Governments), and seeks to abolish the burden of double taxation borne by taxpayers in relation to the supply of goods and services consumed in hotels, restaurants and event centers in Lagos State (Prior to the FHC decision in the Hotel Owners’ case, Lagos State consumption tax was charged in addition to VAT). The decision, however, does not appear to have conclusively settled the controversy around the competence of State Houses of Assembly to legislate on issues and laws pertaining to imposition and collection of consumption taxes. In our view, the decision in the Hotel Owners Case is restrictive in scope and may not qualify as a sweeping authority on the point, as it does not seem to cover consumption tax imposed on goods and services supplied outside hotels, restaurants and event centers. There is also the well-founded contention that Hotel Owners Case appears to have been decided in sharp contrast to the Supreme Court’s pronouncements in Attorney-General of Lagos State v Eko Hotels Ltd. & anor (“Eko Hotels”). In Eko Hotels, the Supreme Court reasoned and held that the VAT Act covers the field in relation to imposition and collection of consumption tax in Nigeria, and that the imposition of VAT and consumption tax on a taxpayer in relation to the supply of the same set of goods and services would constitute double taxation. The Supreme Court further held that since the rates of VAT and consumption tax are similar, the co-existence of the same creates an unhealthy competition be-

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Commentary The decision in Hotel Owners reinforces the constitutional delineation of legislative pow-

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tween the federal and state tax laws to the detriment of taxpayers. Thus, the Supreme Court concluded that consumption laws passed by State Houses of Assembly would remain inoperable until such a time that

the VAT Act is either repealed or invalidated by an order of a court of competent jurisdiction. By contrast, the FHC decision in Hotel Owners suggests that the VAT Act does not cover the field in respect of consumption tax in Nigeria. Further, we hold the view that reference to, and reliance upon the Approved Taxes Act and the Approved Taxes Order as constituting in part, the basis for the decision in Hotel Owners appears misconceived, unfounded and unjustifiable; as the substance of both legislation does not expressly empower State Governments to impose consumption tax. The Approved Taxes Act does not impose taxes but only prescribes taxies and levies approved as being chargeable and collectible by the three tiers of government. The listed taxes and levies become collectible after specific laws, which empower their imposition, chargeability and collection have been properly enacted into law by the competent authority so authorized to give effect to them. Thus, in determining the applicability of the Approved Taxes Act in respect of any of the taxes and levies listed thereunder, regard would be had to the character or treatment of the particular tax or levy under the Constitution. From the provisions of section 4 of the Constitution, it is clear that taxation of goods and services supplied and consumed in hotels, restaurants and event centers neither reside on the Exclusive Legislative List nor the Concurrent Legislative List, and as such; cannot be validly legislated on by the National Assembly. This presupposes that only a State (or Local Government deriving @Businessdayng

power under a State) can validly legislate on such, being a matter on the residual list. Based on the foregoing, we are of the considered opinion that the FHC ought to have restricted itself,

and anchored its reasoning in Hotel Owners on the provisions of the Constitution, without more, and to the exclusion of any other authority including the Approved Taxes Act and Approved Taxes Order. We are aware that the FIRS has approached the Court of Appeal to challenge the FHC decision. Whilst an appeal will not necessarily operate to stay the effect of the judgement until it is effectively entered, and or an order is handed down in relation thereto, we believe that the FIRS may take steps incidental to truncating the efficacy of the judgement until the final determination of its appeal. It is also not inconceivable that the FIRS may continue to act in furtherance of imposing tax and collecting same in relation to the supply of goods and services, as it pertains to the Plaintiffs in Hotel Owners, in exercise of its powers under the VAT Act. Pertinent to state, that the FHC decision is a good judgement and shall apply as the authority on the subject until set aside by an appellate court.

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

Thursday 05 March 2020

BUSINESS DAY

IndustryFile

LegalBusiness

Employment Law Industrial Relations Committee tackles future of work at 2019 seminar

here is no doubt that today’s world of work is drastically different from what it used to be. In the past, most organisations would oversee the recruitment process creating a relationship between the employer and the employee in a strict sense. However, what is obtainable today is that, some organisations would rather employ its workforce through a third party also known as the labour contractor, thereby creating a triangular employment relationship between the outsourced staff, the labour contractor, and the organisation. This type of relationship is not without its challenges in the workplace Indeed, while outsourcing has overtime proven to be an effective means of minimizing associated costs and risks to direct employments, the legal questions around it has made it necessary for employers who intend to be the end users to be more circumspect on the practical aspects of the outsourcing practices as distinct from the form. Again, the present world of work has navigated towards heavy reliance on technology with the use of technologies and associated features such as Artificial Intelligence, Robotics, Machine learning and others. The likelihood that all these could disrupt the workplace

Oseinoma Okpeku

has raised concerns. Employers and employees are particularly pitched against one another in this regard such that innovations at the workplace are sometimes opposed by employees on the ground that they stand the risk of losing out eventually. The use of social media by employees is another talking point in

today’s world of work. Several questions have been asked and continue to be asked including (i) whether an employer can howsoever fetter the right of an employee to use their personal social media platforms in a particular way especially where it may affect the employer’s business?, (ii) whether an employer should have access to the data exchanged

over an employee’s mobile or computer devices?, (iii) whether an employer can own or be held accountable for an employee’s social media or general media activities, (iv) whether an employee is obligated to share the same views by his employer when he expresses himself in public space?. With the advent of professional social media applications such as Linked-in with an estimated 660 Million members on Linkedin, the largest professional network on the internet and Nigeria accounting for 4 Million members, an even more interesting question is whether an employee is bound to follow or share contents emanating from the employer’s social media/ general media platforms. In 1973, the Supreme Court delivered a landmark judgment in the case of Koumoulis v. Leventis Motors Ltd on the legality or otherwise of contracts in restraint of trade and till date, the issue has remain at the front burner of the subject matters being litigated at the National Industrial Court of Nigeria. A new dimension to this subject of discourse is the statutory recognition for restraint of trade clauses to ensure fair competition by the Federal Competition and Consumer Protection Act 2018. Perhaps, employees will consider it to be a pro employer provision and may push for its review? It will be interesting

to see how the National Industrial Court will interpret this provision if it ever gets to be contested. In consideration of the thoughts aforementioned and many more, The Employment, Labour and Industrial Relations Committee of the NBA Section on Business Law (“SBL-EIRC”) is organising its second annual seminar on Wednesday, December 18, 2019 by 8am with the theme “Realties of Today’s World of Work” at Lagos Oriental Hotel, 3 Lekki Road, Victoria Island, Lagos. The theme is informed by the current realities and in the today’s world of work. The seminar will interrogate these issues extensively with the help of as very rich faculty of experts comprising seasoned legal practitioners, in house lawyers, human resource management experts and Justices of the National Industrial Court. They will be sharing insights on the theme and taking on hard questions. For this year’s seminar and going forward, we have created a special Question and Answer session with judges of the National Industrial Court. Who should attend? Stakeholders in the employment and labour sector such as, Lawyers Human Capital or Resource Managers, Administrators, Employees and knowledge seekers.

Andersen global strengthens Presence in Nigeria with The New Practice (TNP)

ndersen Global has signed a Collaboration Agreement with Lagosbased law firm, The New Practice (TNP), increasing the global organization’s footprint in Africa and strengthening its presence in Nigeria. TNP was founded in 2007 by Baba Alokolaro who heads a team of over 20 legal professionals. The firm provides a large range of commercially oriented legal services in a number of disciplines including capital markets, commercial dispute resolution, corporate finance, infrastructure, construction, real estate, energy and natural resources, corporate, commercial, mergers and acquisitions, private equity, FinTech, technology, e-commerce and business advisory. Speaking about the collaboration, Baba said, “We are driven by the firm belief in doing things better and exploring new ways to deliver results and solutions to our clients, which is why we feel so strongly about our collaboration with Andersen Global,”

He added that collaboration was an opportunity for the firm to strengthen its service offerings and expand its global platform in a seamless manner that aligns with our firm’s values. In his remarks, Mark Vorsatz, Andersen Global Chairman and Andersen CEO, added, “This is www.businessday.ng

another strategic group that is relevant to our strategy in Africa and rounds out our platform in Nigeria. Baba and his team demonstrate our organization’s values of stewardship and transparency as well as a commitment to providing their clients with the best-in-class services. The https://www.facebook.com/businessdayng

TNP team has a close working relationship with our Andersen Tax team in Nigeria, which is instrumental as we continue our expansion in Africa.” Andersen Global is an international association of legally separate, independent member firms compromised of tax and

legal professionals around the world. Established in 2013 by U.S. member firm Andersen Tax LLC, Andersen Global now has more than 5,000 professionals worldwide and a presence in over 166 locations through its member firms and collaborating firms.

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Thursday 05 March 2020

BUSINESS DAY

LAWBRAND BOX

LegalBusiness

Five ways to promote your legal brand

e understand that the rules of professional conduct have seemingly built certain constraints as regards how legal practitioners can develop their brands/practices and increase their visibility whether as a firm or a person. n this edition, we have highlighted five ‘harmless ways’ you and your law firm can increase your brand visibility and reputation while staying within the ambits and provisions of the legal practitioners’ Rules of Professional Conduct (RPC). CREATE A BRAND Branding is basically perception. It might not be who you are, but definitely who you’re seen (or perceived) to be. This demands that a firm takes control to build and nurture her corporate image in a way that inspires trust in her clients and prospects. First things first… To initiate visibility into your brand as a lawyer or law firm, you must start by intentionally creating a solid brand strategy around your uniqueness and corporate purpose that goes beyond acquiring a physical space, recruiting staff, or winning cases. This entails activities and even minute details being adjusted to fit into the core vision of the firm or lawyer. A law firm through creating and strategizing around her brand must shape the public perception of image or services. Whether from firm’s logo design and colour theme, or design template that appear in publications, to office décor, which will also be in unison to the presence of the brand across online and offline platforms. In addition, law firms must also take note of the personal branding of the lawyers in their firms. The perception or branding of a firm is incomplete without the inclusion of the personal brand of her lawyers. This is vital because clients do not just employ the services of the firm as an institution but rather they hire the competence, skill and general excellence of the lawyers

For instance, creating a podcast on how to cook ‘Afang’ soup is valuable, but irrelevant to the primary audience of an auto dealership. As regards your niche, your content should include industry insights, trends, and news to keep your clients and prospects informed.

who do the work. So in this regard, a legal firm seeking to create a strong brand must ensure the alignment of the personal brands of her lawyers to the corporate vision. BUDGETING FOR BRAND VISIBILITY Part of creating and growing your brand as a legal practitioner or law firm demands you budget for it. You must understand that projecting your brand or growing your corporate visibility is beyond an event or couple of actions, it is establishing a structure on the corporate culture to help the brand stand out against its competition. So this requires a well-considered budgeting. Effective branding of your law firm has financial implications ranging from continuous research and development of processes and business structure, to implementation, or even restructuring of obsolete strategies. Having a financial plan in this regard is vital, which should be in line with the growth of the firm. The more growth experienced, or share of the market gained, the more demand placed on sustaining and increasing the branding. BECOME A THOUGHT LEADER

A very vital way of positioning your law firm as a top brand is through thought leadership. According to Wikipedia, a thought leader is a person or firm that is recognized as an authority in a specialized field, and whose expertize is often sought and rewarded. Thought leadership as a strategy is employed globally across industries to effectively establish a brand as an authority, and this is basically done through content marketing. With several law firms constantly dishing out educative content and demonstrating their thought leadership through online platforms using tweets or blog posts, or offline via publication of quality articles, content marketing is vital in establishing your brand visibility. Talking about thought leadership and how content marketing helps grow your visibility, you must understand that your content should be VALUABLE and RELEVANT. Valuable in the sense that it should be educative and enlightening, not stale or mundane. By relevant, your content should address the right audience, or rather be apt to your audience. It should contain blocks of thought that interests and addresses the needs and wants of your clients or prospects.

NETWORK AND COLLABORATE Across industries and niches, networking is a vital growth and expansion strategy, of which the legal industry is no exception. Networking as a firm or individual of legal practice helps you come across diverse and similar firms, individuals, or opportunities, which can be leveraged on for growth, exposure and dominance. Constant attendance and participation at conferences, seminars, business luncheons, symposia, dinners and other industry events, is a good leverage that increases the visibility of your law brand, expand your connections and produce referral opportunities, symbolic alliance, and vital partnership. Top law firms who have come to understand the power of networking in positioning their brands at the top by budgeting huge sums in hosting events to attract industry stakeholders, or sponsor their bright minds to selected events, and having annual parties for clients / prospects. Similar to networking is partnership, but this exist more with firms than individuals. Often times when lawyers or firms partner on temporary or permanent basis, it fosters a strong brand identity. LEVERAGE THE INTERNET Only homo erectus/homo habilis) living under a rock for tens of millenniums wouldn’t understand the power and potency of the Internet in establishing brand identity today. Whether by running a blog or website, or using the social media, the Internet has become a vital tool for PR for law firms and

legal practitioners. When it comes to branding/publicity, the Internet is your biggest platform. Not forgetting the Rules of Professional Conduct (RPC), we understand that there are restrictions on advertising for legal practitioners in places like Nigeria, but there are still ways to effectively show up and show off in this space without breaking a stick or hurting a fly. The idea is to position yourself effectively on online communities that harbor your prospective clients. For instance LinkedIn is a hive for professionals where you can easily showcase your value and image across a network of professionals and prospects. Other social media platforms like twitter, Facebook, or Instagram are useful but different social media platforms have their diverse uniqueness and structures. While twitter is best for tweet, threads, and conversations within a block of 280 characters, Facebook gives more liberty in volume of texts, videos and photos. This means you can’t have long articles on twitter as you would on Facebook. Instagram is typical for pictures and videos, but can allow for text in form of captions. LinkedIn poses as a platform for executives and professionals – more business, less social, which is ideal for a law firm to build good profile on, dish out content, network unlimited and stay aware of trends and changes. ‘The Law Brand Box’ our latest column, seeks to address critical issues in the business of law – touching on legal brand/ business development, brand strategy and positioning for law firms, competitive business intelligence, brand communication, and strategic partnerships, amongst other things. The segment is the initiative of our content partners, The LoorbrandBox & Consult - a Legal Business Support, Brand Development and Strategic Communication Company that caters to the legal industry.

GLOBALREPORT

Law firm’s £10m fund ‘resets the bargaining position’ with defendants

K law firm Royds Withy King has announced a partnership with a litigation funder worth £10m. The firm will link up with Affiniti Finance to offer clients another avenue to pursue litigation claims to trial where the costs are seemingly prohibitively expensive. The partnership is the latest example of a firm extending its commitment to third party funding by signing up to a specific financier. The firm says funding under the facility will spread the risk for clients and is provided on a ‘non-recourse’ basis, meaning if the claim fails there is no come-

back. Funding has been tailored to support a variety of practice areas in the UK and abroad, including arbitration. The terms of the arrangement have not been disclosed. Jamie Lester, dispute resolution partner at Royds Withy King’s City office, said: ‘The facility is designed to provide clients with a tool to hedge risk, eliminate budget constraints and monetise pending claims to free up capital for other business needs. ‘It also resets the bargaining position against deep pocket defendants. The facility can also be accessed within a matter of www.businessday.ng

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days rather than the customary lead time of two-three months.’ Affiniti Finance was founded in 2014 and provides funding mainly for financial mis-selling and civil litigation, personal injury and clinical negligence, commercial funding and group or class actions. The funder last year entered a ‘no win, no fee’ arrangement with commercial firm Edwin Coe to finance a group action challenge over alleged anti-competitive conduct by European truck manufacturers.

LAW SOCIETY GAZETTE

Thursday 05 March 2020

BUSINESS DAY

LAWREVIEW

Review of the guidelines issued by the FCCPC • Continued from last Week

to undertake the necessary filing/ notification to the FCCPC. 6. The parties are required to provide a non-confidential summary (of no more than 500 words) of the merger, which would be published by the FCCPC upon notification. 7. In the event that information to be disclosed is of a confidential nature or contains business secrets, the Guidelines make provision for the submission of such information under separate cover and along with acceptable reasons for non-disclosure. 8. Submissions must contain a declaration by the notifying party(ies) essentially stating that information provided in the submission is true, correct and complete.

ince its establishment in pursuance of the provisions of the Federal Competition and Consumer Protection Act 2018 (the “Act”), the Federal Competition and Consumer Protection Commission (“FCCPC”) has taken steps to implement the provisions of the Act. For this purpose, the FCCPC has issued two guidelines (both in 2019): 1. Guidelines on Simplified Process for Foreign-to-Foreign Mergers, which provides for the process for obtaining approval for foreign-to-foreign mergers; and 2. Notice of Threshold for Merger Notification, which provides for the threshold for merger notification. The Act, among other things,

repealed sections 118-128 (excluding section 121(1)(d)) of the ISA, thereby vesting the power to approve mergers with the FCCPC in place of the Securities and Exchange Commission (“SEC”). The provisions of the Act applies to all undertakings and all commercial activities within, or having effect within, Nigeria. It also applies to conduct outside Nigeria by any person in relation to the acquisition of shares or other assets outside Nigeria resulting in the change of control of a business, part of a business or any asset of a business, in Nigeria. Therefore, any merger or acquisition that results in a change of control of a business in Nigeria will come under the FCCPC’s regulatory purview. We examine the key provisions of the Guidelines below. ‘Guidelines on Simplified Process for Foreign–toForeign Mergers with Nigerian Component’ The FCCPC issued the Guidelines on 13 November 2019. The Guidelines were issued pursuant to the provisions of Section 2(3)

(d) of the Act, which extended the application of the Act to “… the acquisition of shares or other assets outside Nigeria resulting in the change of control of a business, part of a business or any asset of a business, in Nigeria”. In essence, any foreignto-foreign merger that results in a change of control of a Nigerian business will come under the FCCPC’s regulatory purview. Prior to the enactment of the Act, this was not the case. Under the Act, a merger will have occurred where one or more undertakings directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another undertaking. It may be achieved through (i) the purchase or lease of shares, an interest or assets of an undertaking; (ii) the amalgamation or other combination with an undertaking; and (iii) a joint venture. Key highlights of the Guidelines are as follows: 1. The application fee is based on the turnover of the Nigerian business, as set out below:

2. Parties are not required to pay a processing fee in addition to the application fee, as is the case for local mergers. For local mergers, processing fees are usually a percentage of the value of the transaction. 3. The documentation requirements are less elaborate than that for local mergers. The only documents specified in the Guidelines are an information memorandum showing the effect of the transaction on the Nigerian market, the relevant agreement(s), authorisations for external representatives, financial information and a summary of the transaction for publication by the FCCPC. 4. An expedited procedure has been introduced, by which the FCCPC is expected to conclude its review of the transaction and issue a decision within 15 business days. The expedited procedure fee is N5,000,000 (about US$13,889), which is to be paid in addition to the application fee. 5. The parties to the transaction are required to provide a power of attorney granting authority to their external representative(s)

‘Notice of Threshold for Merger Notification’ The FCCPC issued the Notice with an effective date of 9 September 2019. The Notice was issued pursuant to Section 93(4) of the Act, which vests the FCCPC with the power to determine the threshold of annual turnover for the purpose of determining what constitutes a small and large merger; and the method for the calculation of annual turnover to be applied in relation to the threshold. The Notice prescribes that the FCCPC shall be given notice of a merger before implementation if, in the financial year preceding the merger: a) The combined annual turnover of the acquiring undertaking and the target undertaking in, into or from Nigeria equals or exceeds N1,000,000,000 (about US$3,267,974); or b) The annual turnover of the target undertaking in, into or from Nigeria equals or exceeds N500, 000,000 (about US$1,633,987). It is presumed that a merger with an annual turnover below the threshold will constitute a “small merger” and those above the threshold would constitute a “large merger”. In accordance with Section 95(1) (a) of the Act, a transaction classified as a “small merger” does not require notification to the FCCPC unless, within the six-month period from implementation of the merger, the FCCPC is of the opinion that the merger may substantially prevent or lessen competition. For the purpose of calculating the annual turnover, the FCCPC has determined that the following will be considered: (1) all monies received or otherwise receivable either as cash or on accrual basis including: • monies received but not necessarily in exchange for goods or

services, or as sales; • equity injections (deferred or convertible) for the purpose of the business, or similar payments or returns; and • interest, royalties, rent or dividend obtained from the use by others of the undertaking’s assets. (2) No amount of the money at (i) above, including sums that may be otherwise deductible as a matter of law or any mutual agreement with respect to splits or funds sharing, shall be excluded. (3) Financial years that do not cover a full twelve-month period shall be converted to a full twelve-month period based on the average turnover of the recorded months. (4) Turnover in foreign currencies shall be converted into the Naira at the prevailing official exchange rate determined by the Central Bank of Nigeria. (5) The calculation of turnover shall have regard to generally accepted accounting principles applicable in Nigeria under the Financial Reporting Council of Nigeria Act. (6) Financial information used for calculating turnover of an undertaking must include the undertakings’ audited financial statements for the end of the preceding financial year to the notification. (7) In the event that an undertaking relevant to the threshold acquires, disposes or otherwise transfers any assets/ business or part thereof after its last audited financial statement provided to determine threshold, but prior to notification, the turnover of such business; or attributed to such asset may be considered by the FCCPC in the merger. In addition to the above guidelines, the FCCPC is currently in the process of developing a new regulatory framework for merger transactions in Nigeria, which is expected to replace the provisions of the Investments and Securities Act, 2007 (“ISA”) and Rules and Regulations of the Securities and Exchange Commission (“SEC Rules”) relating to mergers. Until such time as new rules are issued by the FCCP and C, the SEC Rules and the above guidelines continue to apply to merger transactions subject of course to any directions given by the FCCPC.

Tiwalola Osazuwa and Damilola Ogedengbe, Senior Associates, Corporate & Commercial and M&A Practice Group at AELEX mergers-acquisitions@aelex. com

Thursday 05 March 2020

BUSINESS DAY

Thebar

The heart of the matter

am thinking long and hard of my future and what legal practice (which is what I do) will look like in the next few years. I am struggling with the temptation to leave. I am what you will call a midlevel lawyer, I am no longer young, so I have a fair understanding on the realities of practice in Nigeria. I have cut my teeth on a few things and I have found my voice within the system, at least on Linkedin. For most of my career, I have been based in Kano, the North and save for my short internships in Lagos law firms, I have not felt the heat and bustle of commercial law or even litigation which is where I have honed my skills. I read a lot and so I see what is going on around the world and even in my country and I cannot wait for the day when my Kano will bustle commercially as Lagos and Abuja. Currently, the most important word in my vocabulary is opportunity. I am searching for opportunity, to grow, to learn, to earn money, to stabilize and fulfil my potential. Anytime I have these thoughts, I wonder about the Nigeria Bar Association (NBA) and its relevance to my career. For ten years now, I have paid dues and attended meetings, seeking opportunity for continuous legal education but I cannot say that I have benefited as much as I have given and this makes me ignore many of the advances made by the NBA branch or even the NBA itself. In fact, I stopped going for the Annual General Conference (AGC) in 2017 because it swiped my entire bank account to do so. This apathy, from my observation, is general among my peers and will continue to be the case if things do not change. Speaking of change, I think there is great opportunity presented to the NBA this year as it ventures to change its leadership. The truth is we have had series of Presidents who have not been effective for different reasons and it has consistently disarmed

of the whole. I have spoken to a lot of my colleagues and I have it on good authority that he is the President of the Egbe Mofin and not the bar. Also, he seems to be relying on some econometrics of the past and asserting a right to be anointed. I dare say that if we are to be indeed progressive, that mindset should be eroded now. Lastly, I know that he is part of the establishment and our historical developments but I do not think he has repositioned himself appropriately to tackle the challenges of the practice of law today in a manner that can spread the opportunity for most of the bar. He is still playing very safe and the challenges of today require severe out of the box thinking. I rest my case and leave most to be the judge of that.

the NBA of its potency with all its stakeholders. If this continues, the NBA will lose its relevance completely which is bad for all lawyers as a social bloc. Nicely, we seem to have formidable candidates this time, but formidability is not what makes for success. To my mind, it is a question of the balance of capacity and the needs of the NBA and its members at this time. If we did a referendum across the bar, I believe that the issues that will be raised will centre around the following objectives outlined below: - The need for a unified and inclusive bar, where everyone is fairly represented, and our energies are synergized; - The need for a compelling/ credible voice that can galvanize government to action on key socio-economic issues and reposition the bar as an influencer of culture and law; and - The need to restructure our legal education system and create adequate systems for equipping

our young lawyers. Firstly, I think it is so outdated for lawyers in 2020 to be speaking of leadership in terms of entitlement. No one is entitled to lead; it should be by merit i.e. who is worthy, by virtue of his track record and capacity! Now, the consensus may be that the answer to this question is dependent on context, but let us situate the context within the three critical issues highlighted above; who ticks all boxes? Let me share my humble opinion. Dele Adesina SAN Being a Senior Advocate of Nigeria, SAN, he is a frontline leader of the bar as such, one cannot discountenance his success because of an election. However, when we zoom in on the brass tacks, or more clearly, the essentials, even from recent positing of the Egbe Mofin, one can see where his loyalties will lie. More importantly, national representation means you are speaking to all the units

Babatunde Ajibade SAN A perfect gentleman with almost faultless disarming charm. This is the strength of his person but trust me, this is the weakness of his attempt to lead the bar. Yes, he is one of the trusted minds and in some of his soundbites recently issued, he is striving for the unity of the bar; but when I hear this, I ask, “is his voice is loud enough?” Is it persuasive enough to compel government to action? Is he gutless enough to withstand the challenges that will attend the bar should it seek to reposition itself? The consensus in my small world is that he falls short of this challenge. Even his best friends say this in secret, I have witnessed this. His endorsement is solely based on politics and not the trust in his ability to deliver. Modern law practice is no longer based on legacy alone, legacy must be balanced with how much of a fight one has in him to take on new territories. In my opinion, the fight that is needed is a whole lot than he can handle. Olumide Akpata What Olu (as he is popularly called), lacks in title, he has made up for in achievements. I came across Olumide Akpata in 2018

when he was leading the Section on Business Law. There was a training for young lawyers at which he shared his views about the future of the law and there and then I asked why he was not the one speaking for lawyers across board. It is clear that he has a midas touch because he took the SBL yards forward and so many parts of the NBA are trying to mirror the standard he has set. What people do not know is that Olu has been a member of the executive council of the NBA for a while and he has become a voice to reckon with in the North, South, East and of course the West where he hails from. Permit me to digress, the political attempt to reclassify West is akin to Peter Godsday Orubebe’s attempt to corrupt the national election process in 2015. It is retrogressive and will keep us stagnant. I think more lawyers need to resist this. He has entrenched his legacy as a stakeholder with young lawyers and he has continuously advocated their causes. Forget the naysayers, none of the candidates has a record that matches his. When it comes to speaking to power, you cannot fault his capacity. More importantly, Olu’sability to abase and abound cannot be matched. He is able to represent all and will democratize opportunity. Conclusion I have taken you on this journey through my mind to say this regarding the NBA elections, there is a time for everything, now is not the time for politics. Our opportunities are at risk and we are in need of a different strategy. We need to make a choice not because of scripted power transfers which will benefit some, we need a choice that will create opportunity for us as individuals and can restore the respect of the bar. At the heart of the matter, this choice is not based on title, or history, it is one that looks at the future and transforms it in an outstanding way, I have seen Olu do it with himself, Templars, SBL, young lawyers and I can see him do it for us all.

INDUSTRY FILE

Top Lagos Law firm acquires Adeniyi Tax Legal A

Lagos -based Firm, The New Practice (TNP) has announced the acquisition of Adebiyi Tax & Legal (ATL), Nigeria’s foremost tax litigation practice, with effect from 1st March 2020. In addition to its impressive track record of

resolving tax disputes on behalf of its numerous clients, which includemultinationals and local blue-chips, ATL has obtained several landmark tax judgements that have effectively saved clients billions of Naira worth of tax liabilities. Speaking about this

development, the firm’s practice manager said, “With this acquisition and our recent collaboration with Anderson Global, we are better positioned to provide best-in-class tax dispute resolution services to clients.” Founded in 2007, TNP provides a broad range

of commercially oriented services in a number of disciplines. These include capital markets, commercial dispute resolution, corporate finance, infrastructure, construction, real estate, energy & natural resources, mergers & acquisition, private equity, e-commerce, fintech,

and business advisory. It would be recalled that Andersen Global an international association of legally separate, independent member firms compromised of tax and legal professionals around the world, in 2019 entered into a Collaboration with the New Practice (TNP),

increasing the global organization’s footprint in Africa and strengthening its presence in Nigeria. Established in 2013, Andersen Global has more than 5,000 professionals worldwide and a presence in over 166 locations through its member firms and collaborating firms.

Thursday 05 March 2020

BUSINESS DAY

BUSINESS TRAVEL

How Delta is levelling the skies for women in aviation Stories by IFEOMA OKEKE

n an industry that can be male-dominated, Delta women are flying high thanks to a culture of equity, diversity and inclusion that is breaking down gender barriers. And the airline’s effort to attract and retain women into airline careers is being recognized across the industry. Last year, Delta again achieved 100 percent pay parity for employees in frontline jobs and was awarded a ‘Best Workplace for Women’ by Great Place To Work and Fortune for the third year in a row - the only airline on the list. Across the business, women have their voices heard. Delta’s SHE Business Resource Group serves as a place for employees of all genders to engage in conversations about gender in the workplace. SHE also has an international branch for employees in the Eu-

rope, Middle East, Africa, India region, launched in 2019. Meanwhile, Delta also empowers and prioritizes women-owned businesses throughout its supply chain with a robust 20 year supplier diversity program. Removing barriers Gender is no obstacle when it comes to any role at Delta - from loading bags and predicting weather, to flying planes and carrying out vital maintenance. Delta women work in every division across the airline, thanks to a fair, equal and diverse playing ground for candidates in every position. Delta constantly strives to

dismantle barriers to career entry and advancement, and currently has 19 female leaders in officer positions. Aircraft maintenance technician, Britany Abney works on some of Delta’s newest aircraft, like the A350 and A330-900neos and believes being a woman is irrelevant when it comes to the job. “I’ve the same capabilities as anyone, regardless of gender,” Abney says. “The most challenging part is learning all the different components; you need a good eye for detail and a commitment to doing your best every day.” Delta is leading the indus-

Turkish airline, NAHCO, renew agreement, sign long–term contract

ne of West Africa’s foremost ground handling service providers, nahco aviance and fast growing European Airline, Turkish, have signed a long - term contract that shows the increasing confidence between the two organisations. The contract renewal which was signed recently would see the ground handler handle all Turkish passenger and cargo flights and other ramp activities in all Turkish locations in Nigeria, including Lagos, Abuja, Kano and Port Harcourt. The renewal comes only a few weeks after the Company won the contract to handle Cabo Verde Airlines, the national airline of Cape Verde. Speaking on the development, the Group Executive Director Commercial and Business Development, nahco aviance, Saheed Lasisi, said the decision of the partners to extend the agreement between them is a demonstration of the trust and con-

fidence the parties have in each other. Lasisi said, “The fundamental of any relationship is trust. We have been in this relationship with Turkish for decades. Over this time, we have come to trust each other and to look out for what is in the best interest of one another. We are proud to be chosen consistently over others because of our excellent service delivery and unparalleled customer experience.” The Executive Director assured that in the long run nahco aviance will only have itself to compete with because of the superior it had set for the industry. The Nigerian Aviation Handling Company Plc (nahco aviance) has presence in all major Nigerian Airports. Founded in December 1979, the Company has since grown into a multi - billion Naira Company with diversified investments in energy, logistics and development of a free trade zone. This has led to the establishment of

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Nahco Free Zone (NFZ), Mainland Cargo Options Limited (MCO) and Nahco Energy Power and Infrastructure (EPI). The Company has a vision to be the leading service provider, continuously innovating and reshaping our chosen markets. NAHCO’s core values are: Safety, Integrity, Innovation, Reliability, Respect and Empathy. The Company offers a number of services at more than ten airports across Nigeria. These include aircraft handling, cargo handling, passenger handling, crew transportation, passenger profiling and training. The Company has received various certifications that confirm the integrity of its service. Some of these include ISAGO certification of which the Company was the first ground handling company in West Africa to receive. This has been recertified till June 2021. The Ra3 EU validation of our major stations will expire in July, 2022. These certifications and re-certifications which the Company is able to achieve and retain after rigorous processes has set it up as the benchmark for local aviation service quality. The Company’s Q4 2019 unaudited results released to the Nigerian Stock Exchange (NSE) shows revenue of N10.1 billion.

try when it comes to using cutting-edge technology to predict weather pattern and of its in-house team of 26 meteorologists, six are women. Heather Heitzman, Delta’s Lead Meteorologist, says a love of the job overshadows gender. Her advice to young women interested in the field? “Follow your passion and curiosity, no matter what. You’ll find yourself surrounded by people just as passionate as you are about what you do.” For Karen Borali, Ramp agent, the biggest misconception about the job is that it is not for women.

“We have the same responsibilities as the guys, working in all weathers, handling thousands of bags, mail and freight every day and if a plane needs de-icing, we take our turn,” she says. “Man or woman, we look out for each other, working to a tight set of procedures so Delta customers and co-workers go home safe.” Inspiring the future Delta’s pipeline strategy focuses on farming for the next generation – addressing underrepresentation by growing and inspiring talent, nurturing individuals and removing economic, racial and gender barriers. The airline’s annual WING – Women Inspiring our Next Generation - Flight originated in 2015 as an effort to diversify the industry and expose girls to STEM (Science, Technology, Engineering and Mathematics) careers at a young age. WING flights are planned and orchestrated exclusively by women – including pilots,

ramp agents, gate agents boarding and women in the tower guiding the aircraft on its way out. More than 600 students have participated in WING flights over five years. Aluel Bol, first officer says it’s vital to expose girls to careers in aviation at a young age. “Children see the world without limitations or boundaries,” she says. “Introducing young girls to the industry sparks interest before they’ve formed preconceptions of ‘male only’ roles.” Delta is on par with the aviation industry with approximately 5 percent pilots who are women. In the past four years, 7.4 percent of Delta’s new hire pilots have been women. “Becoming a pilot might seem daunting, but we’re working on that,” Bol says. “Women on the flight deck can be few and far between but the WING Flight is one way we are working to drive those numbers upward - the sky’s really not the limit.”

Ethiopian wins ‘International Air Cargo Marketer of the Year’ award

thiopian Cargo & Logistics Services, Africa’s largest network cargo operator and multi award winner, has won the ‘International Air Cargo Marketer of the Year’ Award at the 2020 STAT International Award for Excellence in Air Cargo which was held from 25-27 February, 2020 in Mumbai, India. Ethiopian Cargo and Logistics Services won the award for its valuable contribution to the air cargo industry in a highly competitive and one of the fastest growing markets in the world. C o m m e nt i ng o n t h e award, Tewolde GebreMariam, Ethiopian Group CEO remarked, “We are honoured to have won the ‘International Air Cargo Marketer of the Year’ award which bears testimony to our leading cargo and logistics services in Africa and different parts of the world, catalyzing multi-faceted growth in all the regions we serve. “We have been investing heavily in facilities and freighters which enabled us to continuously expand our services and deliver safe, secure, dependable and competitive cargo and logistics services worldwide. The award will spur us to further excel in our operations.” Ethiopian Cargo & Lo-

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gistics Services has built the largest cargo terminal in Africa with a capacity of close to 1 million tons annually. It delivers cargo services spanning across 57 international destinations in Africa, the Gulf, Middle East, Asia, North Americas, Latin America and Europe with 10 B777F and two B737F aircrafts. In the 2018/19 fiscal year, Ethiopian Cargo & Logistics Services uplifted a total of 432,417,404 kg cargo. Ethiopian Airlines Group (Ethiopian) is the largest aviation group in Africa and one of the reputed aviation brands in the world. Ethiopian commands the lion’s share of the Pan-African passenger and cargo network operating the youngest and most modern fleet to 127 international passenger and cargo destinations across five @Businessdayng

continents. Ethiopian fleet includes 126 ultra-modern and environmentally friendly aircraft such as Airbus A350, Boeing 787-8, Boeing 787-9, Boeing 777-300ER, Boeing 777-200LR, Boeing 777-200 Freighter, Bombardier Q-400 double cabin; with an average fleet age of five years. In fact, Ethiopian is the first airline in Africa to own and operate these aircraft. Ethiopian Airlines Group comprises of seven business centers: Ethiopian International Passenger Services, Ethiopian Cargo & Logistics Services, Ethiopian Express Services, Ethiopian MRO Services, Ethiopian Aviation Academy, Ethiopian Airports and Ethiopian Ground Services. The airline is a multiaward-winning airline registering an average growth of 25percent in the past eight years.

Thursday 05 March 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Herdsman/Farmer conflicts as they affect Nigeria’s sustainability Onuwa Lucky Joseph

ne grand plan I had, long ago as a kid, was to one day accompany a crew of herdsmen as they trekked from Northern Nigeria to the South and back. It was going to be my own version of The Great Trek. The plan was to come up with an epic report that could transform into a book. How did that dream come about? I have lived in different parts of Nigeria and in the process picked up on cultures and ways of life not native to me. As a kid in the South west, for instance, we always looked forward to the season when the nomadic herdsmen would pass by our area as they had fresh cheese (Wara in Yoruba) which we could never have enough of. We found the herdsmen courteous, friendly and also willing to learn. From time to time, they were accompanied by women. We wouldn’t know if they were part of the journey or family stationed somewhere around to give the herdsmen a sense of home. Although my father was a soldier, he was also a farmer, hunter, fisherman, etc. So we were always out in the ‘open country’ working the vast space that afforded us vast (by our limited reckoning then) farmlands and hunting grounds. Although back then it was easy to move from land to land in order to enjoy the benefits of virgin soil, farmers also looked forward to the sizeable dung droppings from the cattle which helped in no small way with quickly revitalizing the land left to fallow thereby ensuring greater productivity whenever the hoes and cutlasses turned up that way again. I was particularly taken in with the kids (herdskids?) who were on the herdsmen team and would wonder how they managed to wander the arduous hundreds of kilometers that spanned from near deserts through the savannah to tropical forests. And since I’m on a long nostalgia ride here, let me also mention that I was somewhat in awe of

their independence and sense of fashion. Those skinny boys and their colourful dresses, who sometimes made their hair and eyes like we knew girls to do! All in all, the encounters with the herdsmen and their strange ways, while enlightening, enriching, and mutually beneficial, were never in any way threatening. Eventually, events derailed that grand plan of mine even though it was perpetually on my to-do list as I lived and worked in different parts of the country, the herdsmen being one sight one was bound to come across nationwide. It just kept getting shelved for when it could be done without a terrible disruption of my own socially peripatetic life. Maybe if I’d thought to get a grant to that effect I could have taken off from one of my many jobs for one year. Unfortunately, it does not now look like a project with any prospect of materialization. Not with the mutual distrust that exists between herdsmen and farmers; not to mention between herdsmen and other Nigerians in just about every part of the country. From being people most people looked forward to seeing; whose quaint ways we thought to study and further understand, now herdsmen have become a raging band of gun-toting terrorists who treat the whole country as some frontier space for their taking and occupying. The story north, south, east and west is of fierce looking folks looking to pillage and take over people’s properties and land. And it has

not helped that there’s a general perception of government’s tacit assistance to their quest. Government unwillingness to tag them as terrorists, even while less benign groups have been so tagged, helps fuel the speculation. The now formally rested plan by the Buhari government to introduce RUGA settlements across the country, supposedly to help quell the incessant herdsmen/ farmers conflicts, was strangulated nationwide by citizens who saw this as government’s way of ceding their lands without their consent to Fulanis. By their popular estimation, it won’t be long if they are accepting of this policy that Fulanis will overrun the country altogether. Or is it a case of fear taken too far? Not when someone of General TY Danjuma’s military antecedents weighs in to tell Nigerians to defend their lands against the bandits who he said – and at a public function – were in cahoots with the security agencies. He thundered that it makes absolute sense for besieged people not to trust any intervention by security agents. Now that is quite a strong indictment of the military! But as this government is wont to do, the general’s claim was roundly rubbished. But that has done nothing to allay the fears of people across the length and breadth of the country. To be boxed in between the Boko Haram and ISWAP terrorists and the Fulani herdsmen bandits and with government seemingly showing no leadership under the circumstances, it

is not surprising that the South West governors, most of them members of the ruling party (APC), have had to create a semiautonomous pan regional security outfit known as Amotekun. Citizens from other regions are as well taking up the cry to their leaders to toe the steps of the southwest governors. It cannot be said enough: Security of lives and property is the number one remit of any government. Where citizens fail to see a proper undertaking on the part of its government for their security they are bound to resort to self-help and there’s no faster way to actuate loss of faith in a nation. It’s this loss of faith that exacerbates the need for migration by young Nigerians; to seek opportunities in places where their security, even if not their dignity, is assured. Nowadays, even much older Nigerians are joining the migration train. Not so much for greener pastures as to live out their days in peace and safety. The import of this is that Nigeria is back to bleeding from its brains: a condition the current administration is ill equipped and seems ill interested in managing. Internal tourism is badly affected as people, not confident enough about the security in place, opt for other countries on the west coast of Africa, or elsewhere. Every once in a while, the blogosphere is awash with stories of blood soaked highways. And in churches, testimonies abound of those who made it out of kidnappers den with their lives after

having paid humongous ransom sums. This is not to mention the great cost to the economy for private sector operators whose businesses are affected by the slide in security. Transporters especially, who are the artery of our economy. Between Kaduna and Abuja, most passengers have opted for the train, and even the train has been subjected to bandits attack at least once. The road? It’s a no-go despite assurances from Nasir El Rufai, Governor of Kaduna State. Farmers, on whom government is depending for the much touted diversification of the economy, are the ones being displaced on a regular basis. An irony of elephantine proportions! Where’s the guarantee of food security when the operators no longer have access to their lands, or worse, lives? Nigerians have resorted to coping by making fun of everything. But underneath the mirth and elaborate celebratory events is a stratospheric stress level for which millions of Nigerians are willing to risk life and limb to escape. For too long has Nigeria been mired in violence. They erupt with unpredictable regularity and have succeeded in creating an air mutual suspicion amongst Nigeria’s peoples. The president and his cabinet needs to take another look at their oaths of office. Nigeria under their watch is a responsibility they must guard jealously and work at feverishly. May it not be said that under the current watch, government was deep in slumber as the forces of violence tore the country asunder.

Meadow Hall Foundation to reward teachers again

f you consider yourself an inspirational teacher or school leader, you can put in your nomination for the Meadow Hall Foundation Inspirational Educator Awards (INSEA).

The Inspirational Educator Awards (INSEA) is a merit-based award aimed at elevating the teaching profession and motivating teachers and school leaders to continue to strive for excellence www.businessday.ng

in their profession. The award is open to teachers in Nigeria who teach in public or private schools (primary or secondary). The Inspirational Teacher of the year will receive a cash reward

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of one million naira while The Inspirational Head Teacher of the year will receive a cash reward of two million naira. To nominate and apply, kindly visit www.inseawards.org @Businessdayng

For further inquiries, please call 08095585623, 08035006512 or email info@meadowhallfoundation.org Entries submission closes on Friday, 7th March 2020.

Thursday 05 March 2020

BUSINESS DAY

Corporate Social Impact

Nestlé Nigeria upgrades Library and other Facilities in Community School

5th of February 2020 marked a new day for students of Makun High School in the Sagamu community of Ogun State who on that day, via the commissioning of the recently refurbished and furnished library by Nestle, now have been afforded an excellent opportunity to explore the exciting world of books in a conducive environment. It’s an effort, clearly, to address the growing concern over the perceived decline in reading culture among Nigerian youth. A 2019 report by the National Commission for Mass Literacy shows that 4 in 10 primary school children cannot read for comprehension. And for a country that has produced literary giants like Chinua Achebe, Wole Soyinka, John Pepper Clark-Bekederemo, Cyprian Ekwensi, Zaynab Alkali, Niyi Osundare, Chimamanda Adichie, and many stellar more, these statistics are disturbing. It is in keeping with its commitment to improve livelihoods in the commu-

L-R Olotu Omoba M. O. Oyedele, RIDSCo Chairman, The Ewusi of Makun, Sagamu, HRH Oba Adewale Osiberu, Elepe of Epe, Sagamu (Rep. of the Akarigbo of Remoland), P.K Omotayo, Zonal Education Officer (Rep. of the Hon. Commissioner for Education), and Mrs. Victoria Uwadoka, Corporate Communications and Public Affairs Manager, Nestlé Nigeria

nities directly connected to its operations that Nestlé Nigeria, aside renovating and fully equipping the Makun High School library, also included as part of the project, an office for the Librarian and a crèche for nursing teachers. Mrs Victoria Uwadoka, Corporate Communications and Public Affairs Manager for Nestlé Nigeria, while speaking at the commissioning, aptly captured

the sentiments: “We send children to school with the hope that they will develop a strong desire to acquire knowledge. It would be difficult to encourage them to imbibe the culture of reading and learning if the environment is not conducive. Therefore, we are continuously focused on improving learning and teaching environments in the schools within our communities.” This won’t be the first

time. Just last year, for instance, Nestlé Nigeria had refurbished facilities including classroom blocks, toilets, playgrounds and handwashing stations in primary schools close to its factories, one of the beneficiaries being the NUD Primary School in Owode Egba, Ogun State. Unsurprisingly, community leaders, representatives of the ministry of education, teachers and students all expressed t h e i r d e l i g ht w i t h t h e improved facilities. The Ogun State Commissioner for Education, Science and Technology, Mrs. Modupe Mujota, whose speech was

delivered by the Zonal Education Officer, Mr P.K Omotayo, in commending Nestle Nigeria, declared that “Education is both a necessity and an investment which everybody must embrace with the seriousness it deserves. In building this library for Makun High School, Nestlé Nigeria has not only uplifted the reading culture but has lived up to its corporate social responsibility. It is also a show of good partnership with the State Government in the education sector.” In the same vein, Mrs. O. W. Sotunde, Principal of the Junior School, said, “Today is a unique day because

the teeming population of over 3,000 students and their nursing teachers now has the privilege of a top class library and a wellequipped crèche, both of which can match those of any renowned private school.” On her part, Gift Felix, an SS1 student at Makun High School was brimful of gratitude when she said, “I am thankful for the support of Nestlé Nigeria and the government of Ogun State in building this beautiful library. This grants us access to materials for preparing towards our dream professions. Words are not enough”, she continued, “to express our profound gratitude to Nestlé Nigeria. God bless you!” Community leaders and other stakeholders at the meeting made sure to admonish the students to take care of the new facilities to enable them derive the intended benefits. In the same vein, they urged the school authorities to jealously protect, monitor and guard the library and its books from being damaged or rough handled.

4 ‘Corpers’ Win N500k each

… in the JA Nigeria–Sigma Pensions Ready. Set. Boss. 2.0 Competition

eady. S et. B oss. That’s the name of the innovative career program competition anchored and sponsored by JA Nigeria and Sigma Pensions which recently netted for four National Youth Service Corps (NYSC) members an impressive two million naira project grant. The competition is part of a career program organized for members of the National Youth Service Corps to equip them with essential skills for success in entrepreneurship or corporate careers. And it covered modules on critical thinking and creativity, communication and conflict management, as well as entrepreneurship, financial independence and early retirement. Gloria Okeke, serving in Abuja won with a project titled

‘Preventing Cervical Cancer through HPV Vaccination’ Samuel Egbedeyi, serving in Enugu won with a project titled ‘Rehabilwww.businessday.ng

itation of water system through Rain Water Harvesting in Awha Imezi’ Deborah Obasi worked on ‘Renovation of Sick Bay

at Eva Adelaja Junior Girls Grammar School, Bariga’ Lateefat Arogundade advocated for quality Education in St. Andrew’s Basic School Araoje. All these corps members got five hundred thousand naira each to execute their project. While commenting on the program, the Director of Marketing and Innovation, Junior Achievement Nigeria, Oduolayinka Osunloye expressed JA Nigeria’s gratitude for the partnership with Sigma Pensions Limited, stressing that the grant for the project was provided by Sigma Pensions Limited. She added that the Career Program was also in pursuance of JA’s mission of inspiring and educating young people to becoming conscientious leaders while contributing their

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quota to societal development. “This program is structured in three phases,” Oduola said. “The corps members went through an intensive learning period on entrepreneurship, critical thinking, effective communication, financial independence and early retirement. After the workshop, a career fair and career development seminar was organized for the corps members and the final stage was the project plan competition. All these phases have directly prepared and equipped these corps members for personal success while working to improve their community” she said. An elated Samuel Egbedeyi, one of the winners, said “Winning the Ready. Set. Boss. 2.0 Project Competition is mind blow@Businessdayng

ing for me, even though I was optimistic. I am still amazed that my project was selected for the award out of hundreds of brilliant project ideas. I am particularly happy that the project when completed will solve the issue of lack of potable water for community dwellers of my place of primary assignment”. He thereafter thanked JA Nigeria for organizing the program and Sigma Pensions Limited for their generosity in donating the funds to execute the project. Deborah Obasi, in her own reaction, said “I am delighted that I am contributing my part to sustainable growth and development and I am excited that this win has fueled my passion for making more impact in the society by meeting the needs of educational development”.

BUSINESS DAY

Thursday 05 March 2020

BusinessDay Legal Business Tech Forum in Lagos

L-R: Olasupo Shasore, former attorney general and commissioner for Justice, Lagos Sate/founding partner, Africa Law Practice; Jan Van Weijen, consul general, Kingdom of the Netherlands in Lagos, and Gbenga Oyebode, chairman, Aluko and Oyebode.

L-R: Oyindamola Oyeduntan, legal adviser/company secretary, Heirs Holdings; Bidemi Olumide, CEO, Taxaide Technologies Limited; Jan Van Weijen, consul general, Kingdom of the Netherlands in Lagos; Adedoyin Pearse, company secretary, Siemens Nigeria Limited; Abayomi Adebanjo, general counsel, MainOne; Adeleke Alex-Adedipe, managing partner, Duale, Ovia, and Alex-Adedipe, and Frank Aigbogun, publisher, BusinessDay Media Limited.

L-R: Abi Haruna, managing legal counsel, Oracle; Ngozi Aderibigbe, partner, Jackson, Etti and Edu; Collins Onegbu, founder, Signal Alliance; Jan Van Weijen, consul general, Kingdom of the Netherlands in Lagos; John Edokpolo, head of legal, Microsoft, and Olubunmi Abayomi-Olukunle, managing partner, Balogun Harold.

Abimbola Ogunbanjo (l), president, Nigerian Stock Exchange, with Francis Chuka Agbu, senior partner, Lexavier Partners.

Mary Agbu (l), country director, SI-UK Nigeria, presenting the most innovation law firm 2020 award to Ololade Ademoroti, client interface officer, Detail Commercial Solicitor.

Chuba Agbu (l), legal business associate, BusinessDay Media Limited, presenting the pioneer award for legal technology to George Etomi, principal partner, George Etomi and Partners

Chuks Nwachukwu (l), associate partner, BTO Partners, with Osahon Uhuangho, partner, BTO Partners.

L-R: Olayimikah Bolo, MD, The Seers Practice; Franca Akue, CEO, and Olubunmi Abayomi-Olukunle, managing partner, Balogun Harold. Pictures by Olawale Amoo

Thursday 05 March 2020

BUSINESS DAY

L-R: Wole Fayose, company secretary, MainOne; Toluwalase Adeyeye, associate, Babalakin and Co., and Onyeka Kelly Anyanechichief business development executive, Seton Fross.

R-L: Ilamosi Ekenimoh; Gina Odah; Obishai Paul, and Abiola Laseinde.

L-R: Tamuno Atekebo, partner, Streamsowers and Kohn; Adebola Babatunde, senior associate, Ukiri and Lijadu, and Laide Adeyemo, MD, JCS Client Services Limited.

R-L: Oluyemisi Oni of Siemens Limited; Temi Oladele of Aelex, and Folarin Alayande, director, The Diversity Initiative.

Benjamin Obidegwu (r), chairman, Capital Market Solicitor Association, with Albert Adu, managing associate, Alliance Law Firm

Bukola Oyeneyin (l), partner, Wigwe and Partners, with Tosan Mene-Afejuku, senior associate.

L-R: Ose Okpeku, partner, The Law Crest LLp; Sijibomi Agbadaola, head, Legal, Landwey Investment Limited, and Willie Onwuka, general manager/HR, Pinefields Investment Services Limited.

L-R: Ifeoluwa Ogunbufunmi; Daniel Jaiyeoba, Damilola Wright, all associates at Banwo and Ighodalo. Pictures by Olawale Amoo

Thursday 05 March 2020

BUSINESS DAY

news

Experts advocate citizen collaboration for economic development GBEMI FAMINU

conomic experts have called on Nigerian citizens to put in collaborative efforts in order to improve the economic situation of the country and prepare towards the projected population growth. Speaking during the Nigerian Economic Summit Group’s (NESG) panel session at the 2020 Social Media Week, Yinka Iyinolakan, head, corporate communications, NESG, said for Nigeria to become an economically viable and globally competitive country, there was a need for Nigerians of all ages to partner and get involved in the discussions surrounding the development of the country. “Development is achievable in Nigeria, but it requires collaboration among all citizens as well as commitment,” Iyinolakan said. The panel session aligned with the NESG’s development discussion “Nigeria 2050: Shifting Gears,” which focused on the policy framework that can help transform Nigeria into a modern and globally competitive economy by the year 2050. The panellist therefore discussed issues around human capital productivity, sustainable peace and security, managing demography and rapid industrialisation. Senior Economist at the NESG, Wilson Erumebor, said Nigeria’s population was projected to reach 401 million by the year 2050 and that it would have an effect on infrastructure, social amenities, education, health and food security, therefore there was need to prepare towards the

projection. “The three scenarios that the NESG projects for Nigeria in the year 2050 are as Nigeria rises, Nigeria stagnates and Nigeria fails therefore much work needs to be done to ensure the best-case scenario for Nigeria and this requires the collaboration of everybody,” Erumebor said. Special assistant to the Lagos State governor on SDG’s and investments, Solape Hammond, stated that the Lagos State Security Trust Fund (LSSTF) had tirelessly worked in collaboration with the private sector to help provide a more secure and thriving state. She mentioned that the LSETF was dedicated to growing the state by working hard to empower citizens, especially youths, adding that the LSETF had successfully trained over 7,000 people in empowerment skills and about 5,000 in employability skills. Furthermore, Hammond, while responding to questions mentioned that the government recognised the importance of human capital development to the growth of the Nigerian economy, and that was why the budget for the education sector had risen to 12 percent of the total budget, which has marked a remarkable improvement from the past. She concluded by saying “as Nigerians, we need to do more to paint Nigeria in a positive light to further attract investors and aid the country’s development.” Titilope Oni, acting head, Think Tank operations, NESG mentioned that peace and security were critical factors to the growth and development of Nigeria’s economy.

NAHCO repossess Ethiopian Airlines business ... as handling company exercises contract rights Gbemi Faminu

igerian Aviation Handling Company (NACHO) Plc has taken over the ground handling operations of Ethiopian Airlines Cargo and Mail Services, which was formerly handled by SACHOL, the company has said. This was effected based on the provisions of the Standard Ground Agreement Service (SGHA) signed on October 1, 2018, between NAHCO plc and Ethiopian Airlines, Tayo Ogunbanjo, head, legal services, NAHCO, explained in a signed statement on Wednesday. Ogunbanjo explained that the current agreement between NAHCO and Ethiopian Airlines is for 3 years effective from 1st October 2018, covering amongst others ground handling services, handling of cargo and mail generally. “Ethiopian Airlines should ideally not have two contracts running on the same cargo handling business. Since we

have an existing and bidding contract, we are simply exercising our right as stipulated in that contract,” Ogunbanjo said. Explaining on why this is just being effected, Ogunbanjo said: “On assumption of office recently, I came across this oversight while going through the company’s obligations and contracts. As a law-abiding and corporately responsible entity we choose to deal on the right side of existing and extant laws and contracts.” Saheed Lasisi, group executive director, commercial and business development, NAHCO, said consultations were made and clarifications sought before the action was taken, and that all concerned were carried along. “Under Section 5 and as stated in Clauses 1.10 and 1.11 of our current contract, NAHCO is entitled to charge Export Terminal Charges to the Exporter and Import Terminal Charges to the Agent or Consignee,” Lasisi explained. www.businessday.ng

Stakeholders acknowledge need to bridge finance gap for women …call for need to push HerVest, other women focused investment platforms Jumoke Akiyode-Lawanson

he relentless drive for innovation, financial inclusion and gender focused investment is yielding as stakeholders in Nigeria’s financial sector have identified that inequality may restrain the country from nearing its massive potential. Nigeria’s gross domestic product (GDP) could grow by 23 percent – or $229 billion – by 2025 if women participate in the economy to the same extent as men, according to a McKinsey report. However, gender focused financial services and investment platforms with a mission to improve women’s lives through greater access to and use of financial services are springing up and should be promoted to help achieve maximum economic potential, experts say. A platform such as HerVest, currently in start-up

phase, is goal-based savings. In addition to annualised interests up to 15 percent, HerVest offers users free, specialised, one-on-one support to ensure goal actualisation and balance in areas that affect their finance, vice-versa. “We are a growth community beyond savings. We offer absolutely free support from women professionals in areas that affect wealth creation and sustainability. These areas include; financial literacy, healthcare, career, entrepreneurship, insurance, continuing education and more,” Aminat Alegunleye, the product management lead, says in an interview with BusinessDay. Alegunleye also assures users of fund safety, saying, “We invest your savings in low-risk, principal-guaranteed financial instruments with only regulated investment portfolio managers.” HerVest seeks to bridge existing money gender gaps from stereotyped pay gaps

and other social cultural norms. As a result, the application is built with tailored features to help women set long-term investment goals by creating different and specific plans through their investment wallet in-app. Also embedded in the platform’s technology is a finance mentorship hub to allow female users discuss basic and extensive money matters with dedicated finance experts in a judgement free ambience. Users can also discuss other lifestyle related issues like career, entrepreneurship, healthcare and insurance with certified experts on the platform. The application, which is currently available on android and web, is backed by a co-operative multi-purpose licence and guarantees the safety of investors’ capital through a partnership with a trust company. “We are currently in partnership with the trustees who act in the capacity to serve as custodi-

an of our pool of investment, we are also compliant with all regulatory guidelines and procedures in order to return competitive returns to our women,” Philip Itimitang-Idiok, legal director and board member at HerVest, notes. In a low-yielding money market environment, HerVest interest yield has been highly competitive, offering within a range of 10 percent to 15 percent. This is in a bid to bridge the financial inclusion gap through accelerated on-boarding and attractive rate while ultimately fulfilling its mission for women. The start-up operating out of Lagos is exclusive to the African fintech community, with its curated brand style, targets female market and the combined years of experience of her management team. Following a successful beta launch, the organisation will conclude its Series A Firstround of fundraising.

L-R: Ahmed Kumshe, registrar/chief executive, Institute of Chartered Accountant of Nigeria (ICAN); Nnamdi Okwuadigbo, president, and Ben Ukaegbu, deputy registrar, technical services, ICAN, at the faculties induction ceremony of the ICAN in Lagos, yesterday.

Put N50bn floating dock into effective use to generate revenue, NASS tells NIMASA AMAKA ANAGOR-EWUZIE

he House of Representatives Committee on Maritime Safety, Education and Administration has urged the Nigerian Maritime Administration and Safety Agency (NIMASA) to ensure the effective utilisation of the N50 billion floating dockyard acquired by the agency in 2018. Speaking in Lagos on Tuesday during an oversight visit to the agency, Lynda Ikpeazu, chairman of the committee, said the floating dockyard had the potential to generate revenue for the nation, if put into commercial use. Recall that NIMASA had in June 11, 2018, taken delivery of the floating dock to help boost ship repair capacity, generate wealth and create employment for Nigerians. The committee, which also inspected the Special Mission Vessels (SMVs) and the C4i

Centre under the Integrated Security and Waterways Protection Infrastructure, commonly called the Deep Blue project, pledged their support for the project. Ikpeazu said the committee was impressed by the projects the Agency had facilitated in recent times, adding that the floating dock acquired by NIMASA remained a viable project that would generate lots of revenue for the country. “We need to get a permanent berth for this huge platform because when it is fully operational it would amount to a very huge revenue earner for Nigeria because a lot of vessels would be able to dry-dock in-country,” she said. On the SMVs and the Command, Control, Computer Communication, and Intelligence Centre (C4i Centre), which the committee also visited, Ikpeazu said she was impressed with the level of coordination at the centre, especially

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the partnership between NIMASA and the Nigerian Navy. But she advised that aside NIMASA working with the Navy, the Agency should collaborate with other relevant agencies in the fight against illegalities in the maritime domain. On his part, Dakuku Peterside, director-general of NIMASA , laude d the National Assembly for its continued support for the Agency and the maritime sector, generally. He also extolled the Nigerian Navy for its leading role in the pursuit of maritime security, adding that the maritime security assets were funded by NIMASA and run in conjunction with the Navy and other armed forces, paramilitary organisations, and agencies under the Federal Ministry of Transportation. Stating that the National Assembly was very crucial in the Agency’s quest to reform the maritime industry, he said @Businessdayng

the success of any regulator depended on the enforcement of laws made by the legislators. Maksun Mohammed, captain of DB Lagos, said the vessels would be a game changer in the fight against piracy and other maritime crimes on the Nigerian waters, as criminals could be easily reached and stopped. “We have had hijack cases on our waters and more often than not, the reason they were successful was because they were beyond reach. But with this craft, that is not going to be an issue anymore, because it is either we launch fast interceptor boats that are capable of attaining the speed of about 55 nautical miles or we put our special forces on the aircraft and send them out to the target and capture the ship,” the captain stated. He said there would be rigorous training for personnel, who would man the vessels, before going into full operation.

Thursday 05 March 2020

BUSINESS DAY

news

NIPC: Nigeria records investment announcements worth $29.92bn in 2019 HARRISON EDEH, Abuja

ederal and state government have cumulatively recorded investment announcements worth $29.92 billion in 2019, the Nigerian Investment Promotion Commission (NIPC) states. Investment announcements are expected investments tracked by states and the Federal Government waiting for maturity and impact on the economy, and are monitored closely by the NIPC till after their maturity to benefits. According to a report obtained by BusinessDay from NIPC Newsletter, it shows that a total of 76 projects were announced across 17 states plus Federal Capital Territory and offshore Nigeria. The amount is 67% less than what was tracked in 2018 ($90.89bn). The huge difference may be attributed to the uncertainty around 2019 as an election year in Nigeria, which may have contributed to the perception of the economy, and ultimately affected investors’ sentiment. The report shows that Lagos State had the greatest number of projects with 33, followed at a distance by

Ogun with five and Kaduna with three. In terms of value, $19.8 billion (66%) worth of investments were announced to be located offshore Nigeria, $2.6 billion (9%) in Lagos, and $1 billion (4%) in Ondo. Further analysis of the announcements by sector shows that the investors preferred mining and quarrying $21.5 billion (72%), manufacturing $3.2 billion (11%), electricity, gas and water supply $2.3 billion (8%) and transportation and storage $2 billion (7%). Domestic investors were the most active, announcing 39 projects with a total worth of $10.8 billion (36%), followed by Netherlands, 1 project worth $10 billion (33%), Canada, 3 projects worth $2.4 billion (8%), Morocco, 2 projects worth $2.1 billion (7%), Malaysia, 2 projects worth $1 billion and Singapore announced 1 project worth $1 billion (3%) each. The report is based only on investment announcements cited in NIPC’s document from January to December 2019; it may not contain exhaustive information on all investment announcements in Nigeria during the period. Nevertheless, the report gives a sense of investors’ interest in the Nigerian economy.

IMF, World Bank pledge support for virus-hit economies … as World Bank Group announces $12bn in the immediate Onyinye Nwachukwu, Abuja, & SEGUN ADAMS, Lagos

nternational Monetary Fund (IMF) and the World Bank have expressed their readiness to provide assistance to member countries facing immediate financing needs arising from public health disasters, the global financial institutions said in a joint press statement Tuesday. This is as the COVID-19 reaches more than 60 countries, with the World Bank Group announcing an initial package of up to $12 billion in immediate support to assist countries coping with the health and economic impacts of the global outbreak. This financing is designed to help member countries take effective action to respond to and, where possible, lessen the tragic impacts posed by the COVID-19 (coronavirus).

Both institutions said they would utilise every means possible including emergency financing, policy advice, and technical assistance and in particular, rapid financing facilities that, collectively, can help countries respond to a wide range of needs. “We are engaged actively with international institutions and country authorities, with special attention to poor countries where health systems are the weakest and people are most vulnerable,” the institutions said, calling for countries to strengthen health surveillance and response to the virus outbreak. In particular, the IMF said it stands ready to deploy the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI), which is an emergency financial assistance to member countries without the need to have a full-fledged programme in place. A similar measure helped Ecuador cope with one of its worst

earthquake in 2016. Other measures include augmenting existing lending programmes, grants for debt relief and new financing arrangement, the fund said. The Coronavirus outbreak has been described by the OECD as greatest danger to global since the financial crisis and is expected to cut growth from 2.9 percent to 1.5 percent if the crisis persists. Representatives of the world’s seven most industrialised countries (G7) will meet to decide on an effective response to the threat posed by the COVID-19 outbreak to global economy. So far, death toll around the world has risen to 3,127 in over 75 countries that have recorded around 92,109 cases of the deadly coronavirus outbreak. While the numbers of deaths are increasing in countries like the United States and Iran with Senegal as second sub-Saharan coun-

try with a case, Nigeria has not noted any new case or death so far following efforts by the government towards curtail spread of the disease. Furthermore, the World Bank Group said, “Through this new fast track package, the World Bank Group will help developing countries strengthen health systems, including better access to health services to safeguard people from the epidemic, strengthen disease surveillance, bolster public health interventions, and work with the private sector to reduce the impact on economies. “The financial package, with financing drawn from across IDA, IBRD and IFC, will be globally coordinated to support country-based responses”. The COVID-19 support package will make available initial crisis resources of up to $12 billion in financing — $8 billion of which is new — on a fast track basis.

25 years after Beijing Declaration, violence against women, girls still common in Nigeria - UNICEF Cynthia Egboboh, Abuja

s the world gets set to mark 25 years since the historic Beijing Declaration and platform for Action to advance women’s and girl’s rights, United Nations Children’s Fund (UNICEF) has warned that much more needs to be done to protect the rights of Nigerian girls, particularly from violence. In a new report released Wednesday, ‘A New Era for Girls’, which analysed the past 25 years of progress, UNICEF, Plan International and UN Women reveal that violence against women and girls is still common, despite significant gains in education globally. The report came ahead to the 2020 International Women’s Day with the theme: ‘I am Generation Equality: Realising Women’s Rights.’ The theme of the event, scheduled for March 8, 2020, aligns with UN Women’s new multigenerational campaign, Generation Equality, which marks the 25th anniversary of the Beijing Declaration and Platform for Action. According to the UNICEF report, one in every 20 adolescent girls aged 15–19 years around 13 million globally has experienced forced sex, one of the most violent forms of sexual abuse women and girls can suffer. In Nigeria, one in four girls has suffered sexual violence. Yet, very few of them seek professional help, preferring to keep their abuse secret. In Nigeria, only 2

percent of girls aged 15–19 years who ever experienced forced sex sought help from professionals, according to statistics. The report and associated Generation Equality campaign note that the number of out-of-school girls has dropped by 79 million in the last two decades worldwide, as girls became more likely to be in secondary school than boys in the last decade. Yet, violence against women and girls is still common. “Sadly, after 25 years, the world is still a very violent place for girls and women including in Nigeria,” said Peter Hawkins, UNICEF Nigeria representative, “But there are things we can do to change this and we need to do them urgently”. Hawkins stressed on the need to invest in protection services and support programmes that give survivors of violence an opportunity to speak up and to heal. “We need to work with local communities to change practices that make women and girls vulnerable to violence and abuse. And we need to speak to our children to ensure they grow up knowing that such violence is unacceptable. “Together, we can end violence against women and girls, and this is long overdue,” Hawkins said. Globally, despite the ongoing violence, some remarkable gains have been made in the 25 years since the Beijing Declaration with more girls in school than ever before. www.businessday.ng

President Muhammadu Buhari congratulating Folashade Yemi-Esan after her inauguration as the head of civil service of the federation, during Federal Executive Council meeting in Abuja, yesterday

Budget 2020: FG plans to revise oil benchmark if coronavirus persists HOPE MOSES-ASHIKE & Tony Ailemen, Abuja

he Federal Government, through the Budget Office of the Federation on Wednesday, said it had released N400 billion for capital expenditure from the 2020 financial plan, while the recurrent aspect was being implemented as well. The minister of finance, Zainab Ahmed, also disclosed this while briefing State House correspondents after the weekly Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari. The minister expressed concern over the dwindling revenue from crude oil sales, saying, “We are concerned in the current drop in oil price because it is now below our budget”. BusinessDay’s checks re-

…releases N400bn for capital expenditure

veal that issues around infrastructure, aviation and implementation of the 2020 budget featured prominently at the weekly FEC meeting. Inside cabinet sources had informed BusinessDay that efforts would continue this week to rejig strategies for implementation of the budget following the high volatility in the world crude oil market. Meanwhile, Nigeria’s President Muhammadu Buhari approved a record N10.59 trillion ($34.6bn) budget for 2020 on December 2019. The Africa’s largest economy is planning to do a media budget review in July where all of the assumptions will be revisited, including the growth assumption. Also in the plans of the government is to revise the benchmark oil price if the $57

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per barrel is not sustainable. Following the outbreak of coronavirus in China, oil price (Brent crude) has fallen to as low as $52.18 per barrel on Wednesday, from a peak of $68/barrel in January 2020, which is below the $57/ barrel budget benchmark of the Nigerian government. “Indeed, the reduction in oil price on account of the coronavirus is a source of concern,” Ben Akabueze, directorgeneral, Budget Office of the Federation, said on the sideline at the ongoing National Assembly/Budget Office retreat/ workshop on budget process in Lagos. Analysts admit that lower oil prices will also impact the 2020 budget, which was based on 2.18 million bpd production at an oil price benchmark of @Businessdayng

$57 per barrel. Akabueze expects the coronavirus issue to abate shortly, “But we intend to do a media budget review; we are going to revaluate and if it seems like for the rest of the year the $57 per barrel benchmark price is not sustainable, we will revise that”. What this means is that if the country could not find any alternative revenue sources to make up for the shortfall it would then also have to revise downward the expenditure projections. Responding to the fiscal authorities plans to contain the effect of the Covid 19, he said, “Whatever resources are required by the health authorities including emergency funding to be able to respond have been made available”.

Thursday 05 March 2020

BUSINESS DAY

news SA’s recession re-emphasises power sector’s role in driving economic growth ...poor economic showing fuelled by Eskom’s woes MICHAEL ANI, BUNMI BAILEY & GBEMI FAMINU

outh Africa posted a negative growth of 1.4 percent in the fourth quarter of 2019, down from a revised contraction of 0.8 percent in the third quarter, pushing the economy into its second recession within a space of two years. Africa’s second-biggest economy reported widespread quarterly contraction in almost all key sectors of the economy including manufacturing, education and transportation, as the economy continues to suffer power woes due to the insolvent state of its stateowned utility, Eskom. The agricultural sector contracted as much as 7.6 percent while transport and communication printed a negative growth of 7.2 percent, data released by the country’s statistical agency showed. Similarly, economic activities in the construction, electricity, gas and water, and trade sectors all shrank by 5.9 percent, 4 percent and 3.8 percent, respectively, while both manufacturing and the government sector contracted 1.8 percent and 0.4 percent. The economy only managed to expand in its finance, mining and personal services at a marginal growth of 2.7 percent, 1.8 percent and 0.7 percent, respectively. “South Africa’s disappointing GDP numbers were on the back of lack of pro-growth policy reforms and debt-ridden Eskom,” said Damilola

Adewale, a Lagos-based economic researcher. “This majorly has crippled economic activities in the state as companies cannot operate efficiently due to power cut,” Adewale told BusinessDay on phone. South Africa’s state-funded power utility, Eskom, has been faced with a huge financial crisis with a debt of over $30 billion, a development that has crippled power supply and brought economic activities to a halt. For the past one and a half years, the southern African country has witnessed power cuts,andthishasweighedgreatly on its output and business confidence, an almost similar situation being faced by multinational companies and Micro Small and Medium Enterprises (MSMEs) operating in Nigeria. South Africa’s full-year GDP expanded 0.2 percent in the 2019 calendar year, a decline when compared to the 0.8 percent growth recorded in 2018 With this, South Africa no longer vies with Nigeria as the continent’s giant, after Nigeria last week reported its biggest growth in four years. The country also overtook Nigeria to earn the mantle as being the most miserable African country to live in, according to the 2019 Hanke’s Annual Misery Index. But Nigeria and South Africa have shared similar fortune in terms of slower economic growth, after a collapse in oil price pushed Nigeria into recession in 2016.

Future of Nigeria’s justice system lies in complete automation – Experts … law firms lagging peers in South Africa, Egypt ... alternative legal service providers threatening industry FRANK ELEANYA

he Nigerian justice system would take its position as the biggest in Africa by complete automation of the entire process of justice delivery, experts say. Currently, law firms in South African, Kenya and Egypt are seen as leading the continent in terms of size and financial valuation. Experts at a BusinessDay event tagged ‘Disruptive Technology and the Future Realities of Legal Business’ said the justice system faces disruption from alternative legal service providers (ALSPs) led by the so-called Big Four firms – Deloitte, KPMG, PwC and EY. Alternative legal service providers are niche companies that specialise in providing such high-demand legal

services as document review, contract management, litigation support, discovery and electronic discovery, contract lawyers and staffing, investigation support and legal research, and IP management. The ALSPs are playing a bigger role in providing legal services. Businesses are now more often turning to these innovative companies for many routine legal services, and law firms are even outsourcing certain jobs to ALSPs that would be too expensive and timeconsuming to do in-house. This new trend offers a lot of promise for paralegals who may be looking to own and run their own independent businesses. Demand for ALSPs is driven by demand for more efficient in-house counsel services from traditional law firms, Adedoyin Pearse, company secretary and general counsel, Siemens

Nigeria Limited, said. “And the practice rules have also been liberalised such that it is not just the traditional law firms that can provide legal services,” Pearse said. “ALSPs can also do this even better.” The threat of disruption has since seen law firms in the United Kingdom especially transforming themselves and creating ALSPs as well. Even courts are not left out as some are planning on ways to integrate video conferencing to reduce issues of incessant adjournment, said John Edokpolo, lead commercial attorney, Microsoft EMEA. “We are seeing a lot of collaboration and co-creation; a lot of law firms are working with ALSPs and also outsourcing to the ALSPs. We have firms that are fully into legal outsourcing,” Edokpolo said.

While the judicial system in Nigeria is generally perceived as late adopters of technology, Bidemi Olumide, partner, AO2 Law and Taxaide, said a few law firms are already leveraging technology and making legal services easier and more convenient for consumers. For instance, Taxaide has through automation democratised tax information for clients, he said. “We also automated enforcement,” Olumide said. “If you don’t have a process that uses technology to collect evidence, you haven’t started at all.” Another area lawyers are not tapping, Olumide said, is in data science. Law firms are custodians of different information from a wide array of clients they have to deal with.

•Continues online at www.businessday.ng

Boko Haram: US declares war on Shekau, places $7m bounty on him Innocent Odoh, Abuja

he United States has declared war on the leader of the Boko Haram sect, Abubakar Shekau, placing a $7 million bounty for information leading to the arrest of the terrorist leader. This was announced in a tweet by the United States Department Rewards for Justice Programme on Wednesday. “The United States Department of State is offering a reward of up to $7 million for information leading to the arrest to the terrorist Abubakar Shekau boss of #BokoHaram,” the tweet said. The latest bounty placed on the head of Shekau under President Donald Trump might open a new vista in the hunt for the Boko Haram leader perhaps in the same way that the leader of ISIS, Abubakar Al-Baghdadi, was hunted and killed in Syria in October last year, according to an analyst who craved anonymity. Since he assumed the leadership of the Boko Haram sect after the execution of the for-

mer leader Mohammed Yusuf in 2010, Shekau has claimed responsibility for coordinated attacks and bombings leading to deaths and destruction of lives and property in Nigeria and neighbouring countries in the Chad basin such as in Niger, Cameroon and Chad. Boko Haram activities have caused the death of over 35,000 persons in mainly the northeast states of Adamawa, Borno and Yobe and other parts of Nigeria since the beginning of the conflict in 2009. The sect’s activities have also led to the displacement of over 2.5 million people. Shekau’s terrorist activities attracted world attention first with the bombing of the United Nations headquarters in 2012. He went further to shock the world when he masterminded the abduction of nearly 300 female schoolgirls from Government School in Chibok, Borno State, on April 14, 2014 after masterminding the killing of over 100 people in Nyanya, a suburb of Abuja, on the same day.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Olasupo Shasore, former attorney general, and commissioner for Justice, Lagos Sate/founding partner, Africa Law Practice; Tolulope Aderemi, partner, Perchstone and Graeys LP; Jan Van Weijen, consul general, Kingdom of the Netherlands in Lagos; Theodora Kio-Lawson, manager, legal business, BusinessDay Media Limited, and Gbenga Oyebode, chairman, Aluko and Oyebode, during the BusinessDay legal business tech forum themed ‘Disruptive Technologies and the Future Realities of Legal Business’, in Lagos, yesterday. Pic by Olawale Amoo

OPEC+: Saudi-Russia coalition threatened as coronavirus weakens oil demand … Russia won’t accept additional 1.2m bpd output cut DIPO OLADEHINDE (Lagos) & HARRISON EDEH (Abuja)

ussia’s reluctance to jump on board a bigger OPEC production cut may signal a potential crack within the oil producers cartel as delegates from some of the world’s most powerful oil-producing nations meet this week to discuss how best to cushion the impact of the coronavirus outbreak. In a meeting expected to agree on a deeper round of oil production cuts in an effort to stabilise prices, Saudi

Arabia and other members of Organisation of Petroleum Exporting Countries spent most of Wednesday persuading Russia to join with output cuts to prop up prices. According to sources, Russia is not on board with a proposal of OPEC leader Saudi Arabia that the OPEC+ coalition deepen the collective cut by 1.2 million barrels per day to compensate for lost demand seen by the virus crisis. Russian Energy Minister Alexander Novak left the OPEC’s Joint Ministe-

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rial Monitoring Committee (JMMC) meeting after proposing that OPEC and allied members maintain the current output cuts through the end of the second quarter. Some key members of the group, most notably OPEC kingpin Saudi Arabia, are thought to be pushing for an output cut of up to 1 million bpd to compensate for lost demand occasioned by the deadly coronavirus crisis. That’s significantly higher than the cut of 600,000 bpd initially proposed by OPEC’s joint technical committee. @Businessdayng

However, non-OPEC leader Russia has yet to sign off on this strategy. A significant output cut by OPEC on Thursday could help to normalise oil demand and inventories in the second half of the year. Still, the global slowdown that started several years ago has left the oil industry saturated with large stockpiles. Johannes Benigni, chairman of JBC Energy Group, told CNBC late last week that the problem for the Saudi-Russian alliance is that while Riyadh might Continues on page 39

Thursday 05 March 2020

BUSINESS DAY

news Oshiomhole’s suspension a new dawn...

Olusegun Obasanjo (r), former president of Nigeria, displaying the ‘Ogelle’ T-shirt presented to him by Osita Oparaugo, founder of Ogelle, an online videosharing resource and entertainment platform for African-only content, when the latter paid the former president a visit in Abeokuta, Ogun State.

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Movement but he refused to call them to order. If not, we won’t have gone to this level,” Obaseki said at the Edo

No leadership in power sector keeps... Continued from page 1

of the massive 3,050MW

Mambilla power plant, set to cost $4.8 billion. If the plant is ever completed and begins generating electricity, it will hit a distribution network that is essentially ‘bankrupt’, and transmission (owned by the government) that is only able to wheel out 50 percent of generation capacity today. Only 60 percent of Nigerian residents have access to electricity and even those who do are plagued by regular blackouts. In August last year, the Nigerian Electricity Regulatory Commission (NERC), the power sector regulator, announced plans to review electricity tariff benchmark. Popular outrage greeted the plan and the commission pulled the message. Today, it is capping estimated billing in the middle of public consultations over tariff increases. Few days ago, the National Economic Council (NEC) ordered a forensic audit of electricity distribution companies (Discos) to know how much they have invested in the sector. Yet, NERC approves investment thresholds for DisCos and claimed last year it was setting up information technology systems to monitor DisCos’ collections. Power Minister Sale Mamman recently criticised the DisCos for their failure to utilise all available power or pay for the energy they purchase, even as the government has undermined them by failing to implement cost-reflective tariffs. These examples illustrate how most human challenges in the form of poor coordination amongcriticalstakeholderskeep Nigerians in darkness as both the regulator and the operators continue to offer excuses where reforms are badly needed. “The entire power sector value chain is in a state of flux and grossly inefficient because of the misalignment that exists between policy pronouncements and actual reality,” Charles Akinbobola,

an energy economist at Creditville Limited, said. According to the structure of Nigeria’s power sector, generation and distribution assets are owned by core investors who bought the government’s electricity assets in a public auction in 2013. The transmission segment remained with the government. The country currently has 13,000MW of installed electricity-production capacity, about 80 percent of which comes from gas-fired plants. Only 7,500MW of that is available and about 4,000MW is dispatched to the grid each day. The industry is hamstrung by unpaid bills and power theft even as the government-mandated tariffs aren’t high enough to recover costs, leading to circular debt and illiquidity. The Bureau of Public Enterprises manages government’s 40 percent stake in the assets; the regulator, NERC, envisaged to be independent, oversees the sector, while the Nigerian Bulk Electricity Trader (NBET) manages the money pool. While this nifty arrangement works seamlessly on paper, in reality, it is maze of contradictions. The BPE by virtue of holding government’s stake in the DisCos is represented on their boards but nary is a word heard from the agency when critical issues affecting the operation of DisCos are discussed including tariffs. Government ministries and departments, especially security agencies, constitute the biggest defaulters in paying electricity bills. NBET buys electricity from the GenCos through Power Purchase Agreements (PPAs) and sells to the DisCos through Vesting Contracts. And now the government is tinkering with plans to excise it from the Ministry of Power and place it in the Ministry of Finance, against the power sector law, following a decision by the minister of power to fire the managing director of NBET, a decision the president reversed. www.businessday.ng

The core investors who purchase power distribution assets are not keeping faith with their obligated investment thresholds to maintain the integrity of their network. They are not also demonstrating fidelity with customers by metering them. Capital expenditure for the 11 DisCos during privatisation in 2013 was estimated at N60 billion per annum for each the next five years, while GenCos were thought to require $4.28 billion just to achieve full installed capacity of about 7,000MW at the time. Since 2013, two metering programmes – the Credited Advanced Payment for Metering Implementation (CAPMI) and the Meter Asset Providers (MAPs) – have been implemented. Both programmes allowed customers to pay for their own meters. CAPMI failed when foreign exchange difference following currency devaluation in 2016 destroyed calculations and MAPs is failing largely because the Ministry of Finance introduced a new 35 percent tariff on meters after NERC had fixed the prices of meters, so producers who import the parts for assembly balked. According to NERC’s data, about 50 percent of customers still do not have meters. Hence, DisCos’ argument about unsustainable tariffs impeding their operations comforts the persuaded and alienates the persuadable. Getting to a successful private electricity sector, however, goes beyond just the DisCos and GenCos to include other players which will influence the viability of the industry. The DisCos are at the end of a complex chain of players in the power sector which include the gas suppliers, IPPs/ GenCos, the bulk trader, and the Transmission Company of Nigeria (TCN). The TCN manages a grid that collapsed over a dozen times last year alone. The transmission network, still in state hands, is ageing and overburdened. According to government estimates, only 7,000MW of electricity can be transmitted through the

available system against a generation capacity of about 13,000MW. There is also often inadequate gas supply to power the turbines which generate most of Nigeria’s electricity. Pipelines that move gas from the Niger Delta to plants outside the region are often inadequate and prone to attacks by militants. Worse still, the Federal Government fixes gas prices sold to power plants making the venture commercially unviable. Gas plants in Nigeria require at least 3bcf/d of gas to operate at full capacity but they often get around a third. TCN is seeking funds to expand the grid but lack of coordination and poor project management have seen it unable to draw down even 25 percent of the $1.66 billion funding extended by the African Development Bank (AfDB) after five years. Some analysts say Nigeria needs a presidential panel or taskforce to help in coordinating different operators as well as the regulators and other stakeholders. “We need an independent, high level committee or taskforce to serve as some sort of think tank to coordinate policy and implementation to move the sector forward,” said Desmond Ogba, energy partner at Lagos-based Templars law office. Power Minister Mamman in December set up a Special Task Force with a two-year mandate to improve service delivery, but the task force has been accused of working to do the minister’s bidding. Members of the committee include Abubakar Sani Sambo (chairman), Olabamiji Ogunleye (vice-chairman), Sunusi Muktar Bichi, Sam Uche Okoro, Goodluck Enimakpokpo, Chidi Adabanya, Musa Usman Yola, Abubakar Atiku Tambuwal, Shehu Inuwa, among others. However, the track record of the members of the committee has come into question. Some analysts say only a sincere presidential task force committed to resolving the issues in the sector will suffice.

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South senatorial party meeting in Benin City, the state capital. A Federal Capital Territory (FCT) High Court sitting in Jabi, Abuja, had on Wednesday orderedthesuspensionofOshiomhole as APC national chairman. The suspension order is sequel to a suit filed by Mustapha Salihu, national vice chairman, North East, of the ruling APC, Anselm Ojezua, chairman of the party in Edo State, and others seeking to remove Oshiomhole from office. The temporary suspension order is pending the determination of the substantive suit. Justice Danlami Senchi, in giving the order, asked Oshiomhole to step down as national chairman of the party. The court ordered Oshiomole to stop parading himself as chairman of the party until all issues relating to the chairmanship position are resolved. It also urged the APC to desist from acknowledging Oshiomhole as chairman of the party and refuse him access to the national secretariat of the party. Reacting to the judgment, Ojezua said the court has vindicated the position of the party members in the state who wanted Oshiomhole out. “This is not the time to celebrate. For us, it a very sad commentary. We helped to put this man in office. The likelihood that a man could abuse his office was so manifest that we feared that the very tenets of democracy were threatened,” Ojezua said while answering questions on a Channels TV programme monitored by BusinessDay on Wednesday.

“The tenets of democracy have been served. No man is god. What the court has done provides for the basis for the reconciliation that we seek. It allows now to prepare for the crucial election that is imminent now. Our position has now been vindicated by a competent court,” he said. Meanwhile, the APC National Working Committee has indicated that it would validate Oshiomhole’s suspension as national chairman. Victor Giadom, APC acting national secretary, said the party was aware of the injunction and would respect the court orders. “Very soon the National Working Committee will meet and you will hear further from the party. I am trying to say that theAllProgressivesCongresswill respectalllawfulcourtorders.We will soon do that,” he said. Asked whether he meant that Oshiomhole was on suspension, Giadom said “there is a court injunction and it is binding on us as a party to respect all the court injunctions”. He declined comments on possible replacement of Oshiomhole as it was not within his powers and denied an ongoing NWC meeting in the Aso Drive residence of Oshiomhole. BusinessDay gathered that police in about 10 patrol vans and an armoured personnel carrier (APC) have been stationed around APC national secretariat for the fear of outbreak of violence. But expressing a contrary view, Samson Osagie, former minority whip in the House of Representatives, said the purportedcourtorderwasmadeout of mischief and not supported by any known principles or law.

•Continues online at www.businessday.ng

OPEC+: Saudi-Russia coalition under... Continued from page 38

have appetite for higher oil prices, Moscow is “perfectly happy” with crude futures between $50 and $60. International benchmark Brent crude traded at $51.67 Wednesday morning, up over 1 percent, while U.S. West Texas Intermediate (WTI) stood at $47.75, around 1.2 percent higher. Iranian Oil Minister Bijan Namdar Zanganeh told reporters in Vienna, Austria, on Wednesday that Russia will decide on production cuts at the very last minute, Bloomberg notes. Oil prices have fallen more than 20 percent from their early January high, and the sharp drop in demand from China comes as the market was already seeing softness. China has cut off transportation in a number of major cities and grounded all flights. Airlines have cut back flights bothtoChinaandHongKong. Russia and Saudi Arabia drove the alliance between OPEC and non-members, like Russia, that was formed in December 2016. At the @Businessdayng

time, it united the world’s two biggest oil producers and others, in an effort to curb a glut in the world oil market, fuelled in part by the growth of US shale oil. The US has since surpassed both Russia and Saudi Arabia to become the world’s largest producer. The US industry continues to grow, pumping as much oil as is economically feasible, while the OPEC+ group has struggled with a production cut of 1.8 million barrels a day. Now with the coronavirus reducing world energy demand, the pressure on OPEC+ is more intense and oil is sliding below price levels that many producers need to support their budgets. Three meetings are expected to be held between March 4 and 6, 2020. The 18th Joint Ministerial Monitoring Committee (JMMC) took place Wednesday, the 178th Extra-ordinary OPEC Conference will take place today (Thursday), while the 8th OPEC-NON OPEC (OPEC+) takesplacetomorrow(Friday).

Thursday 05 March 2020

BUSINESS DAY

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Regional integration key to Nigeria’s economic prosperity - DBN CEO Daniel Obi

anaging director of Development Bank of Nigeria (DBN), Tony Okpanachi, says Africa Continental Free Trade Area (AfCFTA) agreement slated to commence in July 2020, will likely unlock Africa’s intratrade potential and drive economic prosperity in Nigeria. Okpanachi, in a keynote address at the 41st Kaduna International Trade Fair seminar of the Kaduna Chamber of Commerce, Industry, Mines, and Agriculture (KADCCIMA), says intra-regional trade in Africa remains relatively low compared to other continents, and this continues to make business environment challenging for Africans. In his words, according to

a statement, “Comparative trade data shows why Africa is the least developed region of the world. Intra-African trade in goods was $135.4 billion in 2017, representing only 14.6% of Africa’s total trade. This means that over 85% of Africa’s total trade (exports and imports) was with countries outside the continent. This is in sharp contrast with intra-EU trade (69.8%), intraAmerican trade (46%) and intra-Asian trade (59.6%). “There are no doubt the potentials that can be unlocked through regional integration, particularly through trade. In fact, according to a study conducted by the IMF, a 5% increase in the export weighted growth rate of intraregional partners is associated with about a 0.5% increase in the growth of a typical sub-

Saharan African country. Regional integration is pivotal to economic prosperity in Nigeria, hence an important step in unlocking Nigeria’s economic potentials”. The managing director noted that regional integration through trade would propel Nigeria’s economic growth by offering preferential access to a much bigger single continental market for goods and services worth $416 billion and $121.8 billion, respectively. This will also lead to increased investments in the real sector, which provides opportunity to grow and diversify non-oil exports, improve export capacity and the current government reforms will also improve the country’s attractiveness for foreign direct investments.

AFEX partners FMDQ to promote product innovation for Nigeria’s capital market Cynthia Egboboh, Abuja

n a signing ceremony held Wednesday at the AFEX Commodities Exchange Limited (AFEX) offices in Abuja, AFEX and FMDQ Holdings plc formalised their partnership by executing a memorandum of understanding (MoU), solidifying their mutual interest in developing products to deepen the Nigerian capital market. The collaboration between AFEX and FMDQ recognises the importance of product innovation to market development and encouraging participation of a wider swathe of investors in the capital market. Holding the promise for developing new markets, the partnership will help deliver new initiatives focused on deepening the Nigerian capital market. Key on the roster of positive impact that will stem from the partnership between the two Securities and Exchange Commission (“SEC”)’s-reg-

istered Exchanges is the unlocking of additional sources of finance for the agriculture sector in Nigeria. Products developed under this new partnership will support innovative financing structures for the sector that will leverage AFEX’s established infrastructure and supply chain network and FMDQ’s extensive experience as innovators in the Nigerian financial markets. Speaking to stakeholders present at the signing ceremony, Ayodeji Balogun, CEO of AFEX, said, “AFEX is on a path to building Africa’s second commodities derivative market, and this partnership sets the tone for that journey. We are extremely proud to be collaborating with FMDQ, as this helps our goal of increasing our product offerings to investors. We see a clear path to product innovation that will unlock a wider range of products that are able to be traded within Nigeria’s capital markets, promoting broadbased wealth creation that’s accessible to every Nigerian.”

According to Bola Onadele. Koko, CEO, FMDQ Group, “We are delighted to announce this collaboration agreement between FMDQ and AFEX. As members of the SEC’s Implementation Committee on Commodities Trading Ecosystem, an area of focus for this partnership will be the Nigerian Agricultural Commodities Ecosystem. Our goal at FMDQ is to support the growth of the sector through commercial and market-driven propositions. Through the partnership, we will be introducing new products aimed at de-risking the value chain, attracting capital market funding to the sector and diversifying the existing products available to investors in this space.” In the course of the event, both parties reiterated the need for continuous cooperation, alluding to the frontloading of relevant initiatives and campaigns to educate the market on the results of product and market development activities.

Again, Zenith Bank emerges most valuable banking brand in Nigeria

enith Bank plc has again emerged as the Most Valuable Banking Brand in Nigeria in the recently released Banker Magazine Top 500 Banking Brands 2020. For the third consecutive year, Zenith Bank has been ranked as the number one banking brand in Nigeria with a brand value of $287 million and market capitalisation of $1.62 billion, ranking 392 in the 2020 global ranking of banks. The ranking was published in the February 2020 edition of The Banker magazine of the Financial Times Group in conjunction with Londonbased Brand Finance. According to the publication, brand value is the licensing rate that a third-party would need to pay to use

the bank’s brand. All brand values in the report are for the year ending December 31, 2019. Zenith Bank has clearly distinguished itself in the Nigerian financial services industry through superior service quality, unique customer experience and sound financial indices. The bank, with a knack for setting the pace and raising benchmarks, is a clear leader in the digital space with several firsts in the deployment of innovative products, solutions and an assortment of alternative channels that ensure convenience, speed and safety of transactions. In an apparent show of its resilience and market leadership, Zenith Bank recently announced an impressive result

for the year ended December 31, 2019, with profit after tax (PAT) of N208.8 billion, achieving the feat as the first Nigerian Bank to cross the N200 billion mark. Consistent with this excellent performance and in recognition of its track record of exceptional performance, Zenith Bank was voted as the Best Commercial Bank in Nigeria 2019 by the World Finance and the Best Digital Bank in Nigeria 2019 by Agusto & Co. The bank was also recognised as Bank of the Year and Best Bank in Retail Banking at the 2019 BusinessDay Banks and Other Financial Institutions (BOFI) Awards. Most recently, the bank emerged as the Bank of the Decade (People’s Choice) at the Thisday Awards 2020.

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Live @ The Exchanges Nigeria equities sustain gains Stories by Iheanyi Nwachukwu

n line with analysts’ expectations, Nigeria’s stock market recorded another session of positive close on Wednesday March 4. This comes on the heels of investors’ continued bargain hunting in some notable counters. Stock investors gained N83billion at the sound of trading closing gong. Twenty-two (22) stocks gained as against 7 losers. Ahead of Thursday’s trading session, market watchers foresee a mixed session of continued bargain hunting in some stocks and profit taking in others. Stocks like Nigerian Breweries Plc (+4.44percent), UACN (+8.64percent), Access Bank (+6.51percent), ETI (+9.26percent), and FBN Holdings (+9.71percent) were on demand

L-R: Ayodeji Balogun, chief executive officer Afex Commodities Exchange Limited, Mary Uduk, acting DG Securities and Exchange Commission; Les Male, chief executive officer Dubai Gold & Commodities Exchange and Isyaku Tilde, acting executive commissioner operations SEC during a meeting at the SEC Head office in Abuja.

while the likes of Ardova (-10percent), Lafarge Africa (-0.36percent), Africa Prudential (-1.03percent), Nahco (-1.96percent), and Law Union & Rock (-4percent) were on offer. FBN Holdings, Zenith, UBA, GTBank and Transcorp were actively traded stocks as investors www.businessday.ng

in 4,419 deals exchanged 307,721,869 shares valued at N2.805billion. The Nigerian Stock Exchange (NSE) All Share Index (ASI) and market capitalisation increased from 26,255.11points and N13.681trillion on Tuesday respectively to 26,415.54points and

N13.764 trillion on Wednesday March 4. The value of listed stocks increased by N83billion while the NSEASI increased by 0.61percent. Week-todate (WtD), the market has gained 0.76percent, while year-to-date (YtD) returns stood negative at -1.59percent.

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FCMB opens ultra-modern cash centre at Lagos Abattoir Complex

irst City Monument Bank has opened an ultramodern cash centre strategically located within the Lagos State Abattoir Complex, Oko-Oba Road in Agege. The opening of the bank’s new cash centre is in line with its expansion approach and commitment towards bringing banking services directly to the doorsteps of its existing and potential customers. The location of the branch takes into consideration the convenience of residents and businesses in these communities and would go a long way to promote financial inclusion in the country. With this development, customers of FCMB and Nigerians in general resident or running businesses in Agege, Oko-Oba, Abule-egba, Ojokoro and environs now have an opportunity to further enjoy the excellent offerings of the bank. Apart from the team of experienced financial experts deployed in the Cash Centre, it is equipped with top class traditional banking and digital infrastructure that will ensure convenient banking transac-

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tions and sundry financial service delivery to customers in a relaxed and tranquil environment. The commissioning ceremony, held on March 3, 2020, was attended by top dignitaries, including officials of the Lagos State Government, trade unions, their members, customers of the Bank, among others. In his address at the ceremony, the Divisional Head, Service Management & Technology of FCMB, Oluwakayode Adigun, said with the opening of the cash centre, individuals and businesses now have an opportunity to access another convenient location for their transactions, with the aim to further enjoy the valued-added offerings which the Bank has been known for since its establishment 37 years ago. Adigun disclosed that, ‘’a unique feature of the Cash Centre is the installation of solar technology, which is a clean energy solution that produces minimal waste, is non-pollutant and great for the environment.

Thursday 05 March 2020

BUSINESS DAY

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Health workers worldwide risk scarcity of personal protective equipment ANTHONIA OBOKOH

he World Health Organisation (WHO) is urging industry and governments to increase manufacturing by 40 percent to meet rising global demand, as healthcare workers rely on personal protective equipment to protect themselves and their patients from being infected and infecting others. The agency warns that severe and mounting disruption to the global supply of personal protective equipment (PPE) – caused by rising demand, panic buying, hoarding and misuse – is putting lives at risk from the new coronavirus and other infectious diseases. Meanwhile, shortages are leaving doctors, nurses

and other frontline workers dangerously ill-equipped to care for COVID-19 patients, due to limited access to supplies such as gloves, medical masks, respirators, goggles, face shields, gowns, and aprons. “Without secure supply chains, the risk to healthcare workers around the world is real. Industry and g ov e r n m e n t s mu s t a c t quickly to boost supply, ease export restrictions and put measures in place to stop speculation and hoarding. We can’t stop COVID-19 without protecting health workers first,” said Tedros Adhanom Ghebreyesus, WHO director-general. According to the agency, since the start of the COVID-19 outbreak, prices have surged. Surgical masks have seen a six fold increase, N95

respirators have trebled and gowns have doubled. Supplies can take months to deliver and market manipulation is widespread, with stocks frequently sold to the highest bidder. WHO has so far shipped nearly half a million sets of personal protective equipment to 47 countries,* but supplies are rapidly depleting. “To meet rising global demand, WHO estimates that industry must increase manufacturing by 40 per cent. Governments should develop incentives for industry to ramp up production. This includes easing restrictions on the export and distribution of personal protective equipment and other medical supplies,” the agency urged. Based on WHO model-

ling, an estimated 89 million medical masks are required for the COVID-19 response each month. For examination gloves, that figure goes up to 76 million, while international demand for goggles stands at 1.6 million per month. Recent WHO guidance calls for the rational and appropriate use of PPE in healthcare settings, and the effective management of supply chains. The agency is working with governments, industry and the Pandemic Supply Chain Network to boost production and secure allocations for critically affected and at-risk countries. Every day, WHO is providing guidance, supporting secure supply chains, and delivering critical equipment to countries in need.

Akeredolu signs Amotekun Bill into law ...says outfit complementary to Police, others KORETIMI AKINTUNDE, Akure

ndo State governor, Oluwarotimi Akeredolu, on Wednesday signed the Ondo State Security Network and Amotekun Corps Bill into Law. This followed the passage of the Bill by the Ondo State House of Assembly sequel to legislative scrutiny which included a Public Hearing. This was contained in a press statement issued and signed by the state Commissioner for Information and Orientation, Donald Ojogo and made available to journalists in Akure.

L-R: Laurine Ubanozie, publicity secretary, Risk Management Association of Nigeria (RIMAN); Soji Olasoko, general secretary, RIMAN; Magnus Nnoka, president, RIMAN; Mobola Faloye, executive director/chief risk officer, Standard Chartered Bank; Kola Ajimoko, 1st vice president, RIMAN; Grace Ademola, head, retail credit, Standard Chartered Bank; Victor Olannye, executive secretary, RIMAN, and Joshua Uwedinisu, ex-officio, RIMAN, at a courtesy of RIMAN executive council to Standard Chartered Bank’s head office in Lagos.

N4m reward awaits teachers at 4th edition of INSEA Awards

2020 Africa CEO Forum: Glo restates commitment to private sector-led growth

he 2020 edition of Africa CEO Forum comes up in Abidjan, Cote d’Ivoire from March 9 to 10, with national telecoms company, Globacom, partnering the organisers, Jeune Afrique Media Group and Rainbow Unlimited, to package the 8th edition of the forum. The annual event is gathering of the continent’s top business leaders. Themed “Capitalism for the many, a new horizon for the African private sector” the conference has Globacom as its officially accredited Diamond Partner. Globacom, which is sponsoring the forum for the second year running expressed its delight to join the gathering of executives and investors, heads of governments, CEOs, international investors, experts and high-level policy makers to brainstorm on ways of mobilising African businesses to champion private sector-led growth on the continent. The company is equally optimistic that its partnership with Jeune Afrique Media Group on the 2020 edition would provide

eadow Hall Foundation (MHF) to reward teachers with N4 million at Its Inspirational Educator Awards (INSEA), as it announces the date of its 4th edition of the INSEA and the annual Education Convention, which will take place April 25, 2020. Driven by its desire to reform the education sector, INSEA and Education Convention are two initiatives among many others, which MHF uses to achieve its objectives. Believing children are the leaders of tomorrow, Meadow Hall Foundation ensures the quality of education in public and low-cost private schools are improved. MHF partners individuals, public and private organisations to implement its sustainable programmes that support teachers, students, schools and communities. Since inception, Meadow Hall Foundation has strived to equip teachers especially those from public and low-cost private schools with necessary tools to combat society’s ever evolving structure. In line with the United Nations Sustainable

Development Goal 4, Meadow Hall Foundation believes the road map to achieving quality education is by improving the quality of teachers continuously, changing mindsets about teaching and advocating for the teaching profession. The INSEA is an annual merit award aimed at honouring teachers and school leaders dedicated to imparting lifelong learning in their students, schools and communities. This prestigious award recognises, rewards and promotes excellence in teaching and advocacy for the profession. The categories for the award include; The Inspirational School Leader of the Year and The Inspirational Teacher of the Year. The winner of the school leader category will receive a cash reward of N2,000,000 only, while the winner of the teacher category will receive N1,000,000 only. Runners-up of each category will receive N500,000 each. To nominate an Inspirational Teacher or School Leader for these awards, visit www.inseawards.org. Nominations close March 14, 2020, and nomination and participation are free. www.businessday.ng

the platform for participants to work out modalities towards improving intra-African trade and investments, thus boosting the continent’s economic potentials. Speaking on the 2020 edition, organisers of the forum, Jeune Afrique Media Group, stated that “1,800 business leaders, heads of government and policy makers will gather to rethink the role of African capitalism in this age of digital disruption with its attendant economic and political uncertainties”. It added, “The Forum will encourage debate and address tough questions such as: How far should African companies focus their strategy on reducing inequalities, combating climate change, training and creating decent jobs for the continent’s youth? “How can such goals be balanced with the challenges of international competition and fast-changing trading alliances? What resources and intelligence do companies and their leaders need to navigate the accelerating technological and social changes that are revolutionising the business landscape?”

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At the brief signing ceremony which took place at the Executive Council Chambers, Governor Akeredolu warned against any political colouration of the outfit even as he reiterated that the Amotekun Corps shall be complementary and not independent of the operations and efforts of the Nation’s security agencies. Akeredolu said: “We wish to reiterate that the Amotekun Corps is a child of necessity and was purely borne out of the need to explore other means of securing our forests and protecting all those who do legitimate business within the Southwest region.

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POLITICS & POLICY Atiku felicitates Obasanjo at 83

… ‘Nigeria owes you a debt that we cannot pay’ Innocent Odoh, Abuja

ormer Vice President and t h e P re s i d e n tial candidate of the Peoples Democratic Party (PDP) in the 2019 general election, Atiku Abubakar, has felicitated with former President Olusegun Obasanjo as the former Nigerian leader turns 83 years today. Atiku in a statement he personally signed and made available to BusinessDay on Wednesday by his Media Adviser, Paul Ibeh, said to Obasanjo: “As you turn 83 today (March 5), my family and I felicitate with you and

thank God for your life. No individual living or dead, has bestrode the Nigerian political space as positively and purposefully, as you have done, for good and better, in peace time and war, in times of austerity, and times of prosperity.” Atiku, who served as vice president to Obasanjo at the return of civil rule in Nigeria in 1999 under the PDP, noted that it was not an exaggeration to describe his former boss as the preeminent political colossus in Nigeria, adding that the nation owes so much to him. “Indeed, many Nigerians would read about your birthday on their GSM devices, which are one of your

Olusegun Obasanjo

Lagos APC, PDP bicker over response to Coronavirus by Sanwo-Olu Iniobong Iwok

he Lagos State chapter of the All Progressives Congress (APC) and its People’s Democratic Party (PDP) counterpart may be heading for a clash over their different perceptions of how the state Governor, Babajide SanwoOlu is handling the Coronavirus issue in the state. While the PDP is telling Lagosians to hold the governor responsible if the virus spreads beyond the present stage in the state, the APC is saying that the PDP is being blind to the reality on ground, as according to them the governor is working round the clock to ensure the virus is routed out of the state. While the PDP in a statement by its state Publicity Secretary, Taofik Gani called on the State House of Assembly to as a matter of urgency approve for the executive and relevant ministries and agencies, funds to procure and flood Lagos State with preventive measures viz, masks, sanitizer, health personnel to visit public places and homes, health officers to visit hospitals to inspect patients as many hospitals may not willingly disclose their Corvid-19 patients, the APC, however, considers the PDP position as misinformed. The APC in a statement by its Spokesman in the state, Seye Oladejo said that the Lagos State government, as soon as the first case of coronavirus was recorded in China, started putting scientific and medically-proven measures in place for detection and isolation of potential patients. According to the PDP in

the statement, “the SanwoOlu administration must be held responsible for any spread because, the efforts to prevent the spread is very minimal and only needs the willingness and diligence of a “commander”. “The APC and Sanwo-olu government have deliberately looked the other way and pursuing frivolities like purchase of expensive cars to House members; accusing traders of inflating costs of masks and sanitizers. “A responsible and responsive governor should have ordered large supplies of these needs so much that the traders will even sell cheaper at this time. Rather than do the needful, he is attempting to control private trading. “Same way this APC has fooled themselves by attempting to control house rents where they have indeed not provided any house as alternatives for residents. “We call on Lagosians, parents in particular to hold Sanwo-olu responsible for the spread in schools, public places. The monies in the 2020 budget for contingencies etc is more than enough to meet the cost of this preventive accessories” “The free masks etc, must get into our public and private schools, motor parks, Ministries and Agencies, other public places within 72 hours. We will advise parents and other Lagosians to stay home after the timeline unless this governor and government get serious about funding in curbing this Virus.” However, responding, the APC spokesman said it ordinarily would not have responded to the PDP position, www.businessday.ng

legacies to the Nigerian people. “Your love for Nigeria and commitment to her unity, good governance and stability has prevented you from retiring, a sacrifice that my family and I deeply appreciate,” the statement said. Atiku said further that from Congo, to South Africa, to Angola, to Liberia and São Tomé and Príncipe, Obasanjo’s democratic finger prints on the African continent is indelible. He pointed out that the former President has served and still serves as a beacon of democracy and a guardian of constitutionality. “Nigeria owes you a debt that we cannot pay; because

but that in order not to make his “blatant misinformation be mistaken for gospel truth, let me state categorically that those clowns in PDP cannot offer what they don’t have.” According to him, “The state government set up laboratories and isolation centres at the infectious diseases hospital at Yaba. The chief executive of the state, Governor Babajide Sanwo-olu, was announced as the chief incident officer with relevant medical personnel put on red alert. “The state government was able to build on the world acclaimed feat during the Ebola scourge to record another landmark in emergency preparedness. “The state government has since set in motion the various relevant emergency agencies since the pivot case was reported in Nigeria and this has even been acknowledged by the international media as novel, responsible and commendable.” “The government has also held various sensitisation and enlightenment programs for public education. The writer will also need to be better informed that the use of face mask is only recommended for the confirmed victims of Covid 19 to protect other members of the general public. The issue of Covid 19 is a much more serious issue than for mere political jobbers to play politics with. “The Lagos State APC has implicit confidence in the measures put in place by Governor and his team. We hereby urge the general public to ignore the ranting of some alarmists whose sole aim is just to create needless panic in the state.

you led us to pay the foreign debts that we could not imagine paying. By that singular action, you planted trees for generations yet unborn. “You hold the enviable and esteemed record of being the first African military ruler to have voluntarily, and without internal and external pressure, restored power to the government democratically elected by the Nigerian people. “It was Not Your Will to be in office, but it was your will to bequeath democracy to Nigeria. And after 21 years of the Fourth Republic, Nigeria has cause to celebrate your democratic credentials,” Atiku further said in the statement.

Akeredolu signs Amotekun Bill into law ...says outfit complimentary to police, others KORETIMI AKINTUNDE, Akure

ndo State Governor, Oluwarotimi Akeredolu, on Wednesday signed the Ondo State Security Network and Amotekun Corps Bill into law. This followed the passage of the bill by the Ondo State House of Assembly Tuesday sequel to legislative scrutiny which included a public hearing. This was contained in a press statement issued and signed by the state Commissioner for Information and Orientation, Donald Ojogo and made available to journalists in Akure.

At the brief signing ceremony which took place at the Executive Council Chambers, Governor Akeredolu warned against any political colouration of the outfit even as he reiterated that the Amotekun Corps shall be complimentary and not independent of the operations and efforts of the nation’s security agencies. Akeredolu said: “We wish to reiterate that the Amotekun Corps is a child of necessity and was purely borne out of the need to explore other means of securing our forests and protecting all those who do legitimate business within the Southwest region. “For the umpteenth time,

the Amotekun Corps is not an independent regional outfit but a complimentary effort by the governors of the Southwest to engender unity, peace and security. “Most importantly, the corps shall not be allowed for political purposes; it has no business at political rallies just as the police must continue to discharge its obligations and responsibilities to the people”. He thanked the House of Assembly for the promptness in the handling of the Bill, saying, their speed and thoroughness underscored the importance attached to the Bill.

Kidnapping: Reps ask FG to set up joint security taskforce on Lokoja-Abuja Highway James Kwen, Abuja

he House of Representatives has called on the Federal Government to set up a well-equipped and properly motivated Joint Security Task Force to address the multiple crimes, particular kidnapping along Lokoja - Abuja highway. It urged the Federal Ministry of Works and Housing to clear the bushes on the highway to prevent criminals springing from there to attack motorist. The House also urged the Federal Roads Maintenance Agency (FERMA) to urgently commence the repair of bad spots on the road, especially between Abaji and Gegu. It mandated the Committees on Legislative Compliance and National Security and Intelligence to ensure

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compliance. The House reached this resolutions after adopting a motion titled: ‘Need to address the incessant kidnappings in Kogi local government area of Kogi State’, moved by Isah Ibrahim from Kogi at Wednesday plenary Moving the motion, Ibrahim noted that ensuring security and welfare of the people is the primary purpose of government. He said the House is aware that as a result of alarming rate of kidnappings, killings and armed robberies in that area, more than 45 people were gruesomely murdered in over eighty four cases reported between March 17 and December 5, 2019. Ibrahim lamented that there are spots on the highway that are terribly bad and have become dens for kidnappers to nourish be@Businessdayng

cause motorists must slowdown in such spots, thereby making themselves easy targets. The lawmaker worried that if repair works are not carried out immediately to allow free flow of vehicular traffic those dastardly acts will continue, a situation could result in famine in the affected communities which are largely agrarian. According to him, “Kogi local government area is situated on the ever busy Lokoja-Abuja highway which is very strategic by virtue of the status of Abuja as the nation’s capital city. As about 25 people were reportedly kidnapped between Ahoko and Adabo along the highway and in January, 2020 alone, more than 96 people were kidnapped and 12 people out of the number lost their lives, including a teenager.

Thursday 06 March 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Fed rate cut piles pressure on Lagarde to take action ECB constrained by record low interest rates as it weighs response to coronavirus Martin Arnold

hristine Lagarde has been in charge of the European Central Bank for only four months but her decisive test has come early in her term of office: how to respond to the economic impact of coronavirus. The US Federal Reserve’s emergency rate cut on Tuesday piled pressure on other central banks to take action, too — none more so than the ECB, whose rate-setting committee meets next week. As well as being the first major central bank to hold a scheduled meeting since coronavirus hit the global economy, the ECB is also among those with the least room for manoeuvre, having failed to lift rates once the economy started to improve as the Fed has done several times in recent years. Eurozone interest rates are at record low of minus 0.5 per cent and debate about the adverse impact of negative rates has intensified across Europe in recent months. Ms Lagarde has so far sought to resist calls for an early rate cut. In a statement on Friday, Jay Powell, the Fed chair, promised to act “as appropriate” to support economic growth — a clear signal of the upcoming rate cut which he then announced on Tuesday — but Ms Lagarde has said only that the ECB is “ready to take appropriate and targeted measures, as necessary and commensurate with the underlying risks”. After the 2008 financial crisis erupted, the ECB earned a reputation for being slower than other major central banks to take action; Ms Lagarde’s hesitancy risks recreating the impression that the ECB is once

more behind the curve. By contrast the Bank of Japan has promised to inject liquidity into markets, and Bank of England governor Mark Carney said on Tuesday that he was prepared to cut rates if necessary. “She is really stuck between a rock and a hard place,” said Frederik Ducrozet, strategist at Pictet Wealth Management. “No one I know expects a rate cut to have any impact on the eurozone economy — it could even be counterproductive — but there may be no choice.” On the supply side there is not much the ECB can do, beyond providing liquidity to specific sectors affected by the virus Danae Kyriakopoulou, OMFIF The case for monetary policy action is clear: economists are slashing their growth forecasts, with many

predicting the eurozone will slide into a recession in the six months to June — its first since the bloc’s sovereign debt crisis in 2012. Coronavirus is causing serious economic disruption in Europe: companies are restricting staff travel, tourists are calling off their plans, airlines are scrapping flights, sporting events are being cancelled and factories are preparing for supplies of Chinese goods to dry up. Supermarket shelves across Germany have been left bare in recent days as shoppers buy up all the toilet paper, tinned tomatoes, pasta and disinfectants they can find — a behaviour nicknamed Hamsterkäufe, or shopping like hamsters. Yet stockpiling is unlikely to provide much of a long-term boost to the economy. Adding to Ms Lagarde’s dilemma,

there is little hard economic data available yet to show how hard the economy has been hit — and that is unlikely to change much by the time the ECB governing council meets on March 12, when it is also due to update its economic forecasts. Ms Lagarde’s statement on Monday hinted that ECB officials are working on the expansion of its programme of cheap loans for banks, which is designed to provide incentives for them to keep credit flowing to companies via the targeted longerterm refinancing operation (TLTRO) which the ECB relaunched last year. The ECB could offer loans to banks at negative interest rates on the condition that they keep lending to small businesses affected by the disruption of the virus, either by repurposing its existing TLTRO programme or launching a new one.

Mr Ducrozet said the ECB might need to go further by cutting rates and increasing its bond purchases if the euro keeps rising against the US dollar, fuelled by the Fed’s latest move. Investors are pricing in a more than 75 per cent chance that the ECB will cut rates to minus 0.6 per cent next week and lower them further later in the year. “The ECB will probably not want to forgo the signal effect of an interest-rate cut in order to make a greater impression on the market,” said Jörg Krämer, chief economist at Commerzbank. However, some economists doubt whether cutting rates will do much to ease the economic pressures of coronavirus. Measures introduced to contain the disease have created a supply shock for the economy, but monetary policy is generally more effective in addressing a shortfall in demand rather than disruptions to supply. “On the supply side there is not much the ECB can do, beyond providing liquidity to specific sectors affected by the virus,” said Danae Kyriakopoulou, chief economist at central bank think-tank OMFIF. Ms Lagarde’s task is further complicated by divisions in the ECB’s main rate-setting committee, which blew up into a bitter public spat last autumn when it last cut rates and restarted its bond purchases, shortly before Ms Lagarde became president. “Ms Lagarde has said she wants to respond more to the real economy and not just financial markets,” said Ms Kyriakopoulou. “But there is also a question over divisions within the governing council and how much support there would be for action.”

Africa’s cloud computing boom creates data centre gold rush Continent’s capacity has doubled in the past three years as global investment surges Neil Munshi

nternational investors are rushing to fund a boom in the African cloud computing market, as the proliferation of smartphones and mass adoption of business software on the continent leads to soaring demand for data centres to power the technology. Africa currently accounts for less than 1 per cent of total available global data centre capacity, according to data from Xalam Analytics, despite being home to about 17 per cent of the world’s population. However, its capacity has doubled in the past three years. Among those to invest is London-based private equity firm Actis, which is injecting $250m into African data centres over the next three years — beginning with taking a controlling stake in Rack Centre, a leading Nigerian company that

serves the west African market. The investment will fund a doubling of Rack Centre’s 750kW capacity and its expansion across west Africa, creating one of the largest data centres on the continent. “If you look at the trends around data, data consumption, cloud migration globally — those trends have played out in many markets and have led to significant growth of the data centre sector,” said Kabir Chal, director at Actis. “Africa is no different: you see digitisation, the inexorable migration to cloud, and really the advent of big data but, as a consequence, the supply of data hasn’t kept up.” The supply of data Where governments and companies have historically used their own in-house data servers for storage and computing, rising demand — driven by an increasingly online population and cloud-based business world — is leading them www.businessday.ng

to outsource these capabilities to external data centres. These large facilities, which were once the province of telecoms operators, are now more frequently run by independent companies. A driver for the localisation of data storage is that it improves connection speeds, since users no longer have to fetch data from the other side of the world, while it is also being mandated by governments that stipulate that local data must be hosted domestically. Meanwhile for companies operating in Africa — particularly those in banking and oil and gas — the high cost of managing their own data via expensive internal server rooms and data centres, while keeping up with the growing technical demands of the field, can be prohibitive, said Uzoma Dozie, former chief executive of Nigeria’s Diamond Bank. “Cyber security is not an expert

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capability of banks, and continuous upgrading and development [of data centres] is expensive,” said Mr Dozie. “So there’s a big opportunity there, as more people begin to use cloud services instead of having their own data servers . . . These are going to become more valuable.” Powering the cloud For data-storage companies operating in Africa, a big hurdle is the continent’s lack of infrastructure, which complicates an already capital-intensive, power-hungry business. Companies must often rely on large-scale generators running on costly diesel and petrol to provide electricity, while slow internet speeds, high data costs and a lack of fibre networks — plus the increased cost of capital in countries perceived as risky by investors — all further constrain their operations. “We have to fundamentally build our own power-generating @Businessdayng

capability to get a level of reliability and consistency, so that is a capital cost in itself,” said Tunde Coker, managing director of Rack Centre, which connects to over three dozen telecoms operators across west Africa, including Orange, MTN and Airtel. Nevertheless, the Actis investment is part of a broader trend of international players looking to become involved in the data centre sector in sub-Saharan Africa — where the total data centre capacity equals about a quarter of London’s or half of Frankfurt’s, according to Xalam Analytics. Last year, Boston-based private equity firm Berkshire Partners acquired a stake in Teraco Data Environments, which owns Africa’s largest data centre and powers much of the cloud computing in South Africa, saying it would use it to double capacity from 30MW to 60MW in the next few years.

Thursday 06 March 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

US Fed’s coronavirus rate cut is first move in a dance with markets Investors expect more action but policymakers say fiscal policy should take the strain Brendan Greeley, Colby Smith and Jennifer Ablan

hen the Fed and markets move together it is difficult to figure out who is watching whom — former Fed chair Ben Bernanke called it the “hall of mirrors” problem. Giving investors what they want is precisely what the Fed seemed to be doing on Tuesday, when it announced its first emergency rate cut since the height of the financial crisis. But in a hastily assembled news conference, Fed chair Jay Powell laid out a simple justification for its actions. He suggested that when there is great uncertainty and no historical precedent for what is about to happen, the best thing is to do whatever you can — even if you do not have great tools for the job. As the number of coronavirus cases in the US passed 100, Mr Powell indicated he had no other choice. But he was forthright about what he did not know. “For us what really matters is not the epidemiology, but the risk to the economy. So we saw a risk to the economy and we chose to act,” he said. The move came after days of increasingly urgent signals from markets. A week ago investors assigned zero probability to a single rate cut at the Fed’s next scheduled meeting on March 18 according to analysis by CME Group; by Monday, they were already anticipating two cuts. The Fed is doing “what the bond market says — with a lag”, said Jeffrey Gundlach, who oversees more than $155bn in assets. The bond market “definitely helped to encourage” the Fed to

Jay Powell, Fed chairman, announces the cut on Tuesday in response to ‘evolving risks’ from the virus outbreak © Kevin Lamarque/Reuters

take action, he said. Rick Rieder, BlackRock’s chief investment officer of global fixed income who oversees the group’s $2.3tn bond portfolio, said the Fed “almost had to do it” given how elevated investors’ expectations were for additional easing. “Financial markets are now much more important than they have ever been before,” he said. Loretta Mester, president of the Cleveland Fed and a voting member of the Fed’s rate-setting committee, echoed Mr Powell’s uncertainty in a speech in London. “Both the magnitude and duration of the economic effects of the virus are highly uncertain,” she said. Unknowns include the actions of other countries and public health officials, and the characteristics of the disease itself, Ms Mester said. The Fed is probably looking at more than just the market rout, which has begun to ripple

through to businesses. Turbulence in the markets forced companies to postpone debt deals last week; there were no new corporate bonds or leveraged loans sold in the US, according to data from Refinitiv — a rare occurrence outside the seasonal year-end slowdown or summer doldrums at the end of August. Globally just $41bn of debt was sold, less than half the prior week’s total. “You had better believe that this is one of the things Fed chair Powell was paying attention to,” said Danielle DiMartino Booth, chief executive of Quill Intelligence, a research company, and a former adviser at the Dallas Fed. On Tuesday both Mr Powell and Ms Mester mentioned several specific industries that were already experiencing a slowdown: travel and tourism companies, and manufacturers that rely on components from China. According to Claudia Sahm and David Wilcox, both former heads

of research divisions at the Fed’s Board of Governors, policymakers are probably talking regularly to their extensive networks of regional business contacts. “They almost certainly activated that network last week if not the week before,” said Ms Sahm. “They talked about the coronavirus at the last meeting. They’re watching this . . . I hope it doesn’t get bad, but they’ll be the first to know.” This leaves open the possibility that Tuesday’s emergency rate cut was just the first of a series of policy easing measures. Mr Powell said the Fed’s committee had not yet considered alternative monetary policies such as asset purchases or forward guidance about future decisions. But by the end of the day key US stock markets were down almost 3 per cent, the yield on the US 10-year Treasury dropped to a record low and US president Donald Trump demanded even

more easing. But some economists and investors say monetary policy will have limited effectiveness. “I don’t think [rate cuts] will have a true economic impact at all,” said Mr Rieder, noting instead that policies to help small business lending, among others, would be more effective. “[Coronavirus] is completely unknown and unlike virtually anything else. It is an exogenous shock that is not much different than [the financial crisis in] 2008, because you just don’t know how the world will react.” That piles pressure on the US government to prepare for fiscal stimulus; other governments hit by coronavirus, including South Korea and Italy, have already launched spending packages. Central bankers across the developed world have warned for years that — because interest rates are so low — their ability to combat a sustained global economic slowdown is limited, in comparison to the fiscal options available to governments. In January, Mr Bernanke and Janet Yellen, another former Fed chair, said the central bank might not have enough tools to respond to the next downturn, and asked Congress for a better plan for a fiscal response. Speaking to Congress in early February, Mr Powell added to the clamour; the Fed openly acknowledges that it does not have perfect tools for any downturn, and this downturn in particular. But with the White House still non-committal on a fiscal stimulus, a swift and dramatic rate cut was the best the Fed could do. “It seems to me they’re in a situation where there’s really nothing to be lost and there might be something to be gained,” said Mr Wilcox.

Intu shares plunge after group abandons cash call

Indebted UK shopping mall owner had tried to raise up to £1.5bn to shore up its finances Donato Paolo Mancini and Robert Smith

hares in Intu almost halved after the UK shopping centre owner abandoned a proposed cash call, casting doubt on its future just weeks after the plans were first disclosed. The indebted London-listed property group’s stock plummeted as much as 43 per cent to an all-time low in early trading on Wednesday. The shares were recently trading at 8.1p, giving the company that had hoped to raise more than £1bn a market value of a little more than £100m. “Following discussions with its shareholders and potential new investors regarding a possible equity raise of £1bn to £1.5bn, [the company] has concluded it is unable to

proceed with an equity raise at this point,” Intu said in a trading update. The group, which is saddled with net debt of about £4.7bn, said it would consider other arrangements, including “alternative capital structures and asset disposals”. “Intu will continue and broaden its conversations with its stakeholders with a view to discussing the range of options available to the company to demonstrate the equity value of the business and to utilise its assets to provide further liquidity,” it added. The property group has been hit hard by the collapse of a series of retail tenants amid the slowdown in consumer spending in the UK. Plans for a cash call were first disclosed in January, with the company saying last week that it would need at least £1.3bn, but difficulties soon emerged. Hong Kong-based www.businessday.ng

Link Real Estate Investment Trust last month performed a U-turn on its plans to take part in the equity raise, sending Intu’s shares down by a third. Matthew Roberts, chief executive, said: “We remain focused on fixing our balance sheet in the near term to ensure this business has the financial footing it needs to realise its significant potential.” “We will face further challenges in what has been an extraordinary few months for Intu and the wider sector, but I am confident that we will face these head on and emerge a leaner, fitter and more focused business,” he added. The value of Intu’s bonds plunged on Wednesday, as investors grew more nervous about taking losses in a potential debt restructuring. Intu’s £375m convertible bond

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plummeted by 20p in the pound to trade at around half of its face value. While this debt is not secured on any of the group’s properties, it would rank ahead of the equity in an insolvency. Intu’s asset-backed debt was also hit, with its £485m MetroCentre bond falling more than 10p to trade at 79p in the pound. The declining value of the company’s shopping centre in Gateshead triggered a covenant on this bond — Intu’s largest — in January. The debt backing Intu’s shopping centres typically carries conditions linked to a “loan-to-value” ratio, which measures how much the property is worth versus the amount that has been borrowed against it. Declining valuations on its shopping centres lead to higher loan-to-value ratios, which in turn trigger covenants that allow lenders @Businessdayng

to impose new conditions or even take control of the asset if Intu does not stump up cash. Intu has moved to dispose of a number of its assets for nearly £600m in the past year, which it said would reduce its debt to asset ratio to 65 per cent from the current 68 per cent. It has also halted its dividend to improve liquidity. The company said it was in compliance with its debt covenants, but warned it could breach some of them at their scheduled testing date in July, as property valuations continued to fall. Intu added that footfall in its UK centres was flat, outperforming the sector benchmark. Full-year likefor-like net rental income was down 9.1 per cent, in line with guidance. “It is clear the outlook for Intu remains challenged,” said Goodbody analysts.

Thursday 06 March 2020

BUSINESS DAY

ANALYSIS

The seeds of the next debt crisis

With debt levels already at a record high, coronavirus raises the risk of a credit crunch in a world of low interest rates John Plender

he shock that coronavirus has wrought on markets across the world coincides with a dangerous financial backdrop marked by spiralling global debt. According to the Institute of International Finance, a trade group, the ratio of global debt to gross domestic product hit an all-time high of over 322 per cent in the third quarter of 2019, with total debt reaching close to $253tn. The implication, if the virus continues to spread, is that any fragilities in the financial system have the potential to trigger a new debt crisis. In the short term the behaviour of credit markets will be critical. Despite the decline in bond yields and borrowing costs since the markets took fright, financial conditions have tightened for weaker corporate borrowers. Their access to bond markets has become more difficult. After Tuesday’s 50 basispoint cut, the US Federal Reserve’s policy rate of 1.0-1.5 per cent is still higher than the 0.8 per cent yield on the policy-sensitive two-year Treasury note. This inversion of the yield curve could intensify the squeeze, says Charles Dumas, chief economist of TS Lombard, if US banks now tighten credit while lending has become less profitable. This is particularly important because much of the debt build-up since the global financial crisis of 2007-08 has been in the non-bank corporate sector where the current disruption to supply chains and reduced global growth imply lower earnings and greater difficulty in servicing debt. In effect, the coronavirus raises the extraordinary prospect of a credit crunch in a world of ultra-low and negative interest rates. Policymakers in advanced countries have over the past week made clear their readiness to pursue an active fiscal and monetary response to the disruption caused by the virus. Yet such policy activism carries a longer-term risk of

entrenching the dysfunctional monetary policy that contributed to the original financial crisis, as well as exacerbating the dangerous debt overhang that the global economy now faces. The risks have been building in the financial system for decades. From the late 1980s, central banks — and especially the Fed — conducted what came to be known as “asymmetric monetary policy”, whereby they supported markets when they plunged but failed to damp them down when they were prone to bubbles. Excessive risk taking in banking was the natural consequence. The central banks’ quantitative easing since the crisis, which involves the purchase of government bonds and other assets, is, in effect, a continuation of this asymmetric approach. The resulting safety net placed under the banking system is unprecedented in scale and duration. Continuing loose policy has brought forward debt financed private expenditure, thereby elongating an already protracted cycle in which extraordinary low or negative interest rates appear to be less and less effective in stimulating demand. William White, who while head of the monetary and economics department at the Bank for International Settlements in Basel was one of the few economists to predict the financial crisis, says the subsequent great experiment in ultra-loose monetary policy is intensely morally hazardous. This, he argues, is because unconventional central bank policies may “simply set the stage for the next boom and bust cycle, fuelled by ever declining credit standards and ever expanding debt accumulation”. A comparison of today’s circumstances with the period before the financial crisis is instructive. As well as a big post-crisis increase in government debt, an important difference now is that the debt focus in the private sector is not on property and mortgage lending, but on loans to the corporate sector. A recent OECD report says that

at the end of December 2019 the global outstanding stock of nonfinancial corporate bonds reached an all-time high of $13.5tn, double the level in real terms against December 2008. The rise is most striking in the US, where the Fed estimates that corporate debt has risen from $3.3tn before the financial crisis to $6.5tn last year. Given that Google parent Alphabet, Apple, Facebook and Microsoft alone held net cash at the end of last year of $328bn, this suggests that much of the debt is concentrated in old economy sectors where many companies are less cash generative than Big Tech. Debt servicing is thus more burdensome. The shift to corporate indebtedness is in one sense less risky for the financial system than the earlier surge in subprime mortgage borrowing because banks, which by their nature are fragile because they borrow short and lend long, are not as heavily exposed to corporate debt as investors, such as insurance companies, pension funds, mutual funds and exchange traded funds. That said, banks cannot escape the consequences of a wider collapse in markets in the event of a continued loss of investor confidence and or a rise in interest rates from today’s extraordinary low levels. Such an outcome would lead to increased defaults on banks’ loans together with shrinkage in the value of collateral in the banking system. And asset prices could be vulnerable even after the coronavirus scare because the central banks’ asset purchases drove investors to search for yield regardless of the dangers. As a result, risk is still systematically mispriced around the financial system. The OECD report notes that compared with previous credit cycles today’s stock of corporate bonds has lower overall credit quality, longer maturities, inferior covenant protection — bondholder rights such as restrictions on future borrowing or dividend payments — and higher payback

requirements. Longer maturities are associated with higher price sensitivity to changes in interest rates, so together with declining credit quality that makes bond markets more sensitive to changes in monetary policy. Current market volatility is further exacerbated by banks’ withdrawal from marketmaking activities in response to tougher capital adequacy requirements since the crisis. In a downturn, some of the disproportionately large recent issuance of BBB bonds — the lowest investment grade category — could end up being downgraded. That would lead to big increases in borrowing costs because many investors are constrained by regulation or self-imposed restrictions from investing in non-investment grade bonds. The deterioration in bond quality is particularly striking in the $1.3tn global market for leveraged loans, which are loans arranged by syndicates of banks to companies that are heavily indebted or have weak credit ratings. Such loans are called leveraged because the ratio of the borrower’s debt to assets or earnings is well above industry norms. New issuance in this sector hit a record $788bn in 2017, higher than the peak of $762bn before the crisis. The US accounted for $564bn of that total. Much of this debt has financed mergers and acquisitions and stock buybacks. Executives have a powerful incentive to engage in buybacks despite very full valuations in the equity market because they boost earnings per share by shrinking the company’s equity capital and thus inflate performance related pay. Yet this financial engineering is a recipe for systematically weakening corporate balance sheets. Otmar Issing, former chief economist of the European Central Bank, says prolonged low central bank interest rates also have wider consequences because they lead to a serious misallocation of capital. This helps keep unproductive “zombie” banks and companies — those that cannot meet interest

payments from earnings — alive. The IMF’s latest global financial stability report amplifies this point with a simulation showing that a recession half as severe as 2009 would result in companies with $19tn of outstanding debt having insufficient profits to service that debt. Overall, this huge accumulation of corporate debt of increasingly poor quality is likely to exacerbate the next recession. The central banks’ ultra-loose monetary policy has also fostered what economists call disaster myopia — complacency, in a word, which is a prerequisite of financial crises. The greatest complacency today is over inflation and the possibility that central banks will inflict a financial shock by raising interest rates sooner than most expect. This myopia is understandable and not just because of the coronavirus. Since the financial crisis the debt laden advanced economies have suffered from deficient demand. Hence the central banks’ recent difficulties in meeting inflation targets. At the same time tightening labour markets have not led to increased wage inflation, leading many economists to assume the traditional relationship between falling unemployment and rising price inflation has broken down. Clearly there is still a deflationary impulse at work in the global economy, causing growth to be both anaemic and debt dependent. Yet inflation may not be quiescent for as long as markets assume. One reason is that with the central banks’ unconventional measures becoming less effective, there is a pressing question about how to respond to stagnation when interest rates are close to zero, together with a growing consensus, helped by coronavirus, that a more activist fiscal policy may be necessary. With the rise of populism there are growing calls for monetary finance of increased fiscal deficits — that is, direct financing of gov-

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Thursday 06 March 2020

BUSINESS DAY

NATIONAL NEWS

Joe Biden arrests Sanders’ march to Democratic nomination Former vice-president wins Texas to sweep the South but falls in California Demetri Sevastopulo , Courtney Weaver, and Lauren Fedor

oe Biden swept the South including Texas and consolidated Democratic moderates from Minnesota to Massachusetts in an impressive Super Tuesday performance that arrested rival Bernie Sanders’ march to the party’s presidential nomination. Despite Mr Biden’s resurgence, Mr Sanders demonstrated he will remain a formidable contender by winning the night’s biggest prize: California — though much will ride on the final vote totals in the state, which were still being counted late into the night. The former vice-president started the evening winning landslides in the delegate-rich states of Virginia and North Carolina, where he used his strong support in the African-American community to build up doubledigit margins over Mr Sanders. But as the polls closed in 14 states voting across the country, Mr Biden demonstrated he could win outside the Deep South, taking Minnesota after winning the endorsement of home state Senator Amy Klobuchar, and Massachusetts, where he bested both Mr Sanders, from neighbouring Vermont, and Elizabeth Warren, who represents the state in the Senate. Mr Biden registered a clean sweep of the South when he was projected as the winner of Texas. With 228 delegates, Texas was the night’s second-biggest prize after California, which awards 415. “Just a few days ago, the press and pundits had declared the campaign dead,” Mr Biden told a rally in Los Angeles. “We are very much alive . . . this campaign is taking off. Join us.” The biggest loser of the night

appeared to be Mike Bloomberg, who was on the ballot for the first time and counted only a victory in the territory of American Samoa despite spending more than $500m of his own fortune on the race. He struggled to finish higher than third anywhere in the country, though he will rack up dozens of delegates by finishing above the 15 per cent threshold in several of the 14 states that held contests. Kevin Sheekey, Mr Bloomberg’s campaign manager, issued a statement before the polls closed defending the former New York mayor’s performance — though it pointedly did not mention how long the Manhattan billionaire intended to stay in the race. “Tonight, only one-third of delegates will be allotted,” Mr Sheekey said. “In just three months, we’ve gone from just 1

per cent in the polls to being a contender for the Democratic nomination.” Mr Biden was declared the winner in nine state primaries in all. His other victories were in Alabama, Tennessee, Arkansas and Oklahoma. Mr Biden also had a narrow lead over Mr Sanders in Maine. Outside of his home state of Vermont and California, Mr Sanders’ other victories were concentrated in the mountain west: Utah and Colorado. At a boisterous rally in Burlington, Vermont, the city where he started his political career as mayor, Mr Sanders struck out at Mr Biden, painting him as a politician who backed the 2003 Iraq war, voted for cuts in pension benefits, and ratified “disastrous” trade deals. “We’re going to win because it’s our campaign, our move-

ment that is best positioned to beat Trump,” he said in some of his most pointed rhetoric to date. “You can’t beat Trump with the same old, same old kind of politics.” In a pair of tweets on Wednesday morning, Mr Trump lamented the results, saying the Democratic party had moved to smother Mr Sanders as it did in the 2016 primary, when the Vermont senator was facing Hillary Clinton. He also described Ms Warren as “selfish” for remaining in the contest and splitting the liberal vote. “The Democrat establishment came together and crushed Bernie Sanders, AGAIN! Even the fact that Elizabeth Warren stayed in the race was devastating to Bernie and allowed Sleepy Joe to unthinkably win Massachusetts. It was a perfect storm, with many good states remaining for Joe!,”

Mr Trump wrote. Mr Biden’s wins on Super Tuesday — the most important night on the Democratic primary calendar — demonstrated that he had rejuvenated his campaign following disappointing performances last month in the early-voting states of Iowa, New Hampshire and Nevada. Trailing in the polls in many states, Mr Biden attracted a surge in support from more moderate Democrats after his win in South Carolina on Saturday. His campaign had received a big boost this week when two other moderates, Pete Buttigieg and Ms Klobuchar, dropped out of the race and threw their weight behind the former vice-president. In Texas, Mr Biden also won an endorsement from Beto O’Rourke, the former El Paso congressman, who dropped out of the presidential race last year.

ployment rates have fallen. A pressing question, in the light of the debt build-up, is whether the regulatory response to the great financial crisis has been sufficient to rule out another systemic crisis and whether the increase in banks’ capital will provide an adequate buffer against the losses that will result from widespread mispricing of risk. History matters here. The one period in the last 200 years when banking was relatively free of crises was between the 1930s and early 1970s. This was because the regulatory response to the 1929 crash and the subsequent banking failures was so draconian that banking was turned into a low-risk, utility-like business. It was the progressive removal of this regulatory

straitjacket, which began in the 1970s, that paved the way for the property based crises of the mid1970s, the Latin American debt crisis of the 1980s, more property based crises of the early 1990s and the rest. While there has been a plethora of reforms since 2008 — though conspicuously not including the removal of the privileged tax status of debt relative to equity — the operations of the likes of Goldman Sachs, Barclays or Deutsche Bank could scarcely be called utilitylike. And when very rapid changes in financial structure are taking place, as today, regulators are often left behind by the new reality and wrong footed by regulatory arbitrage. It is impossible to predict the

trigger or timing of a financial crisis. And it seems unlikely that a full-blown crisis is imminent, notwithstanding coronavirus. But the potentially unsustainable accumulation of public sector debt and of debt in the non-financial corporate sector highlights serious vulnerabilities, notably in China and other emerging markets, but also in the US and UK. And the continental European banking system is conspicuously weaker than that of the US. Against such a background, the conclusion has to be that of the late Herb Stein, the American economist who remarked that if something can’t go on for ever, then it will stop. When coronavirus is long gone, that will be when systemic trouble starts.

The seeds of the next debt crisis Continued from page 50 ernment deficits by central banks of the kind currently happening in Japan. Monetary finance has been a precursor of high inflation and while its proponents argue that the risks can be contained provided the quantity of such finance is controlled by independent central banks, central bank independence has been increasingly under threat since the crisis. Demography is also relevant. Charles Goodhart of the London School of Economics and Philipp Erfurth of Morgan Stanley have argued that low and negative interest rates are not the new normal because the world is on the cusp of a dramatic demographic shift. A decline in the working population

relative to the retired population potentially returns bargaining power to labour. Combined with a decline in household savings because elderly populations have become less thrifty, they say, this makes it almost inevitable that real interest rates will reverse trend and go back up. Nor, in the shorter term, is it clear that the relationship between unemployment and wage inflation has really broken. Chris Watling, founder of Longview Economics, says the sogginess of wage data in the US is substantially to do with the oil-producing states, which suffered a marked slowdown last year as a result of the fall in crude prices in late 2018. Non-oil wage inflation has remained in a relatively robust uptrend as unemwww.businessday.ng

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Garden City Business Digest How to resolve the power sector crisis instead of canceling Discos licenses – expert • If you cannot map it, you can’t solve it • Metering is beginning of solution • Govt agencies owe over one trillion naira • Policy summersault is major cause • Sudden increase of import duty on meters killed the sector Ignatius Chukwu

he federal government since 2015 seems to be at crossroads over the power sector crisis, not seeming to know where to go. Now, the government seems to decide that the distribution companies (Discos) are to blame. Government is said to weight withdrawal of license option, but insiders and experts warn that the rot is far more than that and that the withdrawal method would never work. They have suggested steps to first unravel all the issues and do a mapping that would capture all problems and solutions. After privatization, there was national euphoria that the giant elephant full of problems had been solved at last. Many felt power would begin to flow 24 hours per day at affordable rates. This did not happen as estimated billing continued and power theft resumed. Cinedu Amah opens up Now, an expert, a Port Harcourt-based power sector expert, the Lead Strategist at Spark Limited, a power sector value chain player, Chinedu Amah, opened up in an exclusive interview with BusinessDay in the Garden City. He made it clear that no matter what blames anyone may lay, what matters is Nigerians do not have 24 hours or adequate power supply. Mapping may solve it

Chinedu Amah, CEO, Spark Ltd

He said: “For us to get this, transmission, distribution, generation, Federal Ministry of Power, Bureau of Public Enterprises, and customer groups must meet to plan. The Discos will show step by step how they plan to serve each customer; transmission people will share with the Discos how they plan to optimize and ensure that the plan to serve those people can be met by adequate supply from the point where the power is generated to the point where it is distributed. So, how they would achieve it would be defined. You now determine that, with this number of customers, can this generated power solve it? You map it. “If you cannot map it, you cannot create a solution. As

we speak today, you may sit in your house and see power cuts every day whereas they told you the place had 24 hour supply. You do not know who cut it. The Genco guy or the Disco guy would say it is this person or this person. The Ministry of Power will say its that guy. This is not good.’ Collecting back Discos’ licenses: Amah vehemently said collecting back the license from the Discos could never solve the problem, even if it does not create new problems. “It will not solve the situation. When you collect the license, are you refunding the money they used in buying it and who will fund the refund? People spent billions of Dollars to acquire

these licenses; the customer population handed over to the Discos in the books was nonexistent. Between then and now, there have been improvements. Data shows that there is increase in energy supply distribution capacity, increase in collection and remittance. “Collecting it back is not the solution. If we doubt that policies are not the problem, have we asked ourselves why the biggest players in utility business across the world have not jumped into Nigeria that is such a big market? When Econet Wireless had problems, a company jumped in; when Etisalat had problems, a company jumped in. Somebody is always buying, but why has one person not moved in to buy in Nigeria? Kelosker has not come in to buy, Starter is not here, has GE proposed to acquire one Disco in Nigeria or Genco? “So, if the biggest players in the sector worldwide have not made an inroad into your county, you should ask yourself why. The big international oil corporations (IOCs) are dumping their fields and other companies are buying them. Why is this not happening in the power sector? It’s because the policies are not right. If you like, withdraw the licenses one million times; the next person won’t even buy from you. How much alone does the FG owe the Discos? If the MDAs owe over one trillion naira, where will the money come from to fix the system and expand it?

We missed it by not getting effective metering right on time: Before privatization came, Nigerians resisted anything called increase in tariff until they see adequate power supply. The then power company (PHCN and now Discos) would say until there is readiness to pay commercial rate, they wont give adequate power supply. It’s obvious that the present tariff regime may not sustain the level of investment needed to boost power supply. Many wonder what can be done in the present situation. Amah said; “I see the biggest challenge or question mark regarding tariff and the customers is the meter because if everybody has a meter and the tariff is set at a price, you can know what you consume and you pay for it. It’s not about the cost of the tariff but about the estimated billing. Now, if the meter was made available, the consumer would not complain. Value Added Tax (VAT) has been introduced in cell phone calls but not many people have complained. This is because people make conscious choice on how long to stay on calls. That is the first line. How sudden jerk up of meter import duty ruined all govt efforts He went on; “Now, NERC introduced Meter Asset Provider (MAP) scheme for people to buy meters a little a year ago, so what happened

to this scheme? The Ministry of Finance and Ports Authority and Customs and whoever else increased import duties on pre-paid meters by up to 50 per cent from five per cent, whoever did that has caused huge problem for Nigeria. Thus, the local companies who are producing pre-paid meters are not able to meet the capacity and the volume needed. “The nation is thus struggling for pre-paid meters today. Does it mean that the agencies are not speaking to each other and do not understand the implication of policy summersault? “You cannot ask a company to increase an investment to you for a product that is priced at 50 per cent of the value. So, there are three or four items or problems that we collectively face: policy on import duty (if you are increasing it, are you providing tax breaks for companies to come in and set up meter production plants in Nigeria? No, you did not). How does the MAP make money if you cannot get a tax break to manufacture in Nigeria and his cost of business has increased by over several per cent? Then, the Disco is still struggling with a tariff that is about of 50 per cent of cost per unit. So, policy summersault will continue to fail in the power sector.” Conclusion: The Spark Ltd CEO said the solution is right in our hands but looking round and round will keep the nation groping in the dark.

PH City Chamber’s Mike Elechi returns from Paris with exciting ideas for agric revolution Port Harcourt by Boat

IGNATIUS CHUKWU

he first deputy president of the Port Harcourt Chamber of Commerce, industry, Agriculture and Mines (PHCCIMA), Mike Elechi, was part of the delegation to the Paris 2020 Market Expo led by the Rivers State Commissioner of Commissioner for Agriculture on behalf of the governor. Elechi returned only to describe it as biggest fresh market experience. He followed this up with vivid description of specific innovations Rivers State and Nigeria need urgent to launch real agric revolution by tweeking

the downstream sector especially the off-take sector or market sector. Elechi who was the leader of the delegation made this known in a chat with newsmen on Sunday, March 1, 2020, at his Vintage Farm in Elele in Ikwerre Local Government Area of Rivers State. He pointed out that the Governor’s burning zeal in agricultural development in the state was about receiving international attention, using the Paris trip as a leveraging point. To buttress his point, he said that he and his team members were exposed to many business enhancement programmes capable of turning agricultural development in the state around positively. Accordingly to him, the very land market where the Paris market was situated was provided by the government. This made it easier for private investors to invest. The businessman said in such market arrangement, the incidence of loss as a result of lack of storage facilities and other risk factors are reduced. The reason, he said, was due to the adequate provision of such facilities by the government. “For agricultural sector to move

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forward in Nigeria, the FG must take steps to intervene in the system and make it practical”. He also pointed out that the government of Paris provided legislation for the market operators, there by bringing price under control. “In the Paris Remtius Market, price is regulated.

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No the price of orange can increase in such market arrangement, because their Government had provided legislation. This is what we need here”. He expressed regrets over the delay by the Government to execute its policies on Agriculture, like that of the inauguration of the Seed Board which he said he was to be a member. The businessman was optimistic about the ability of the private sector to unlock all the riddles needed to develop agricultural sector of the county, if the government would be prepared to show its presence. Another beauty of the Paris market, he pointed out, was the equity arrangement where the government was expected to shoulder almost all losses in the event of failure on the agreement between it and the private investors. “That government should create a kind of risk absorption system to help private investors. This is like in the days of cocoa production where the produce house will buy off all products from producers to reduce loss” being borne by them.”

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Investing in Rivers State Online lending: Between Lagos and the PH emerging market • Ife Ibitokun of BizNurture says Lagos is bigger but PH appears more credible • The financial services expert wants PH people to invest in self-improvements Ignatius Chukwu

nywhere investors and business operators gather, the next debate would be which is better or more profitable, between Lagos and Port Harcourt business environments. The debate is never exhaustible and the answer usually varies from sector to sector and type of business. When this question was put to Ife Ibitokun, founder and CEO of BizNurture Financial Services Limited, an online lending firm, she minced no words as she dug into her personal experience to prove her point. The ex-banker even had her figures ready. Hear the verdict: “That is very interesting because we have also learnt our lessons on the job about fraud. We have even had to modify some of our processes just because of this. You are faced with the issue of how to give people funds when we do not ask for collateral. We only demand for guarantors, strong guarantors with very strong cash flow such as salary earners and business owners with strong inflow we can trust. We have had issues, especially in Lagos. “Lagos borrowers are more sophisticated than Port Harcourt ones. The Port Harcourt ones seem to be ‘good people’ as some of our staff members would put it. I wouldn’t say the Port Harcourt borrower or business person is naïve or has rural mentality, no, I would say they have a higher level of sensitivity or fear over debt or higher interest in protecting his or family name. They know they owe you and they have this feeling of an obligation to pay. On the contrary, when you go to Lagos, you find that the borrowers there have probably gone to many lending firms or banks. You find that they really understand what the lenders are looking out for. Some of them now doctor some of the documents they submit to us. For instance, one of my products is local purchase order (LPO) financing. You come and say company A gave you a purchase order. Initially, we were not confirming those orders, so long

Ife Ibitokun, founder/CEO of BizNurture

as you see a blue chip company. But when we got our fingers burnt, we began to verify them right with the issuing companies. “Another thing we discovered was that emails that were provided for confirmation did not have the issuing company’s domain name. We expect that the person to confirm should be, say, ife@campanyA.com, instead of ife@gamial.com. We now realized that a well known company must have a domain name and cannot send us confirmation by general mail system. We even had a staff member that was doing all of these things from the inside. He connived with people to come take loans with dubious credentials. “Again, in entrepreneurship, you learn, and learn. For me, my mantra is, progress is a goal, not perfection. If we wanted to be perfect before venturing out, we would not have started today. So, we have made mistakes, we met fraudulent people, we have seen documents that are doctored, we have done tracings, etc. All this has made us more careful and cautious particularly in the Lagos area. “We have not really had many issues in Port Harcourt, maybe because of what we described before or because I started with family and friends and people I knew so well from the my banking day; people I know and people they also know. People will naturally behave like the people that introduced them. You find out that they are quite loyal to us. They also have to guarantee

the persons they brought in. Once they hear the person is defaulting, they literally stand on them to ensure there is no damage to their reputation. Also, working from the known to unknown really helps in entrepreneurship. It has helped here. “Lagos was a new environment for me though I started my career in there, but it was just for nine months. What we have tried to do with the Lagos office is to get people who know that environment. The first person we got was the one actually telling clients how to defraud us. We had to let him go. In fact, we had let him go before we found out what he was doing to the firm. We found the certificate he used to get the job was fake. The funny thing is that he had worked in big banks with it and they did not find out. It took a small company like ours to find out. It pays to have those structures in place and to do things properly. When we found out and let him off, we now found many of the things he did, including charging clients (2%) to process their applications. “You can’t know it all. So, you keep learning and updating your processes. In as much as we want to make access to finance very easy for business owners, we also have to protect the funds of the investors. In doing this, we learnt everyday; to confirm all documents from the issuers. Because we started from Port Harcourt and we could trust the people we started with, it was easy, but Lagos taught us new lessons. Trust is important in this business. From the onset of treating an application, if we find dishonesty in minor disclosures, we stop there. Yes, we have met fraudulent people.” Ife as she popularly called, is a mother of two with a BSc in Accounting from the university of Lagos as well as a Chattered Accountant with an MBA from Crawfield School of Management in the UK (Disruptive Strategy). Her firm, BizNurture is an online lending company that provides funding for SMEs in Lagos and in Port Harcourt. She said the firm has been around for four years, having started as a consulting firm that ran for two years before she now sold

the vision to her partners and they started online lending platform in 2018. She has a rich background in the Port Harcourt financial world. “We started from Port Harcourt because it is the region I know. I used to work in a bank in Port Harcourt for six years. I left the bank for about one year for studies. When I got back, I saw there was an opportunity in the space because I had people calling me, asking about finance and funding. This was despite that I was away from the country for about 15 months. I would turn on my phone and it would be the same issue of ‘we need funding, the banks are not funding us’, etc. “We have done almost N1Bn volume to over 200 SMEs. In the same 2018, we opened our Lagos office. Again, we just migrated the list in my consulting company to this new firm. People were beginning to know us, so, we started the Lagos office. We have moved from a one-man company to a 15man company (three partners, 12 workers). Niger Delta Business drive Again, hear from the former Lagos girl, now a Port Harcourt top lady: “Majority of our requests come from Lagos. Lagos as a city is very commercially viable. In terms of disbursement, however, we have done more in Port Harcourt than in Lagos. Again, it could be due to the aforementioned reasons. Lagos borrowers are very sophisticated. When they come to you, they are indebted to a couple of companies. Some of the things we advise them is on debt profile; over exposure. “If somebody had financed you before and you had behaved yourself well and acquitted your integrity, they should be able to finance you again. The question now is, why are they not doing it again? We drill this down and analyse this and find out what they do, etc. We also have limit of lending which is N5m. If you need N10m and you go to two firms for N5m each, it is understandable. There are so many companies in Lagos but we lend more to Port Harcourt businesses because of higher integrity levels or compliance levels.”

How to boost SMEs in Port Harcourt Some analysts say Port Harcourt or even the Niger Delta area seems laid back in investments and businesses. We now asked Ife how she is helping to prop up business awareness in the region and to help SMEs structure their businesses to qualify for loans and partnerships, so as to also grow like Lagos SMEs and overcome basic issues like structuring and ICT awareness. She said: “We have always come across people who look laid back a lot, and again, we have criteria to give loans. For you to even get a loan, your business must have a structure such that your personal account will not be same as your business’s account. When they come to us, we don’t just turn them down, we educate them on why they can’t get loans. They get to know about being properly structured. The lender must know what is going on in your business separate from your personal life. You need to have been in business for two years. Some will say they have been in business for long but it is in their name. We say, you need to register the business. We have that advisory service though we do not charge for it. We do something that looks like mentoring. “We let them know that there is huge information out there in the social media. We tell them to join our blog so we can regularly send out tips on how to structure and manage their businesses. Your phone should not be just for selfies. You need to be able to apply for a loan online. In BizNurture, there is no paperwork. We educate you on a weekly basis on these basic issues through a conversation with you. Even as we go through your financials (record book), we can point out that there is something going on. We can tell you how the cash flow should look like in your industry. We ask such questions. We provide feedback. Conclusion: BizNurture can help SMEs secure funds to transact business in the oil region, but the business owners in the region need to do a lot of selfdevelopment and act embrace IT for good.

Wike’s 4th flyover coming, now at GRA Junction

ov Nyesom Wike, long known as ‘Mr Projects’, is about to declare decision to start a fourth flyover bridge in the Garden City, this time the third on Aba Road. He said at the weekend that it is to better traffic flow in the state capital. Wike carried out the inspection in company of the State Commissioner for Works, Austin BenChioma, senior engineers of the

State Ministry of Works and project engineers of Julius Berger. The team inspected the designs of the fourth flyover with Governor Wike. They discussed the prospects of the project. In an interview, Wike said that a final decision would be taken in relation to the construction of the bridge. He said: “We have taken another look to have the fourth Flyover www.businessday.ng

Bridge. That is why we came to examine the location at the GRA Junction. “We are thinking that the fourth Flyover Bridge should be at the GRA Junction. We went there today to examine the possibility. We have not taken a final decision on it. “Within a short time, we will take a final decision. But the three other Flyover Bridges are progressing quite well.”

Governor Nyesom Wike

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4 policy options open for FG to boost manufacturing sector Gbemi Faminu

he Nigerian manufacturing sector is struggling at the moment—as it has over three decades. The sector grew by just 0.77 percent in full-year 2019, from 2.09 percent reported in 2018, according to a recent GDP report released by the National Bureau of Statistics (NBS). It contributed 8.74 percent to overall real GDP in the fourth quarter (Q4) of 2019, lower than the 8.86 percent recorded in the fourth quarter of 2018 but the same as 8.74 percent recorded in the third quarter of 2019. In many advanced countries, the sector contributes double-digits to the GDP, but no so in Africa’s most populous count Capacity utilisation in the manufacturing sector slowed to 54.1 percent in the first half of 2019, from 54.50 percent recorded in same half of 2018, according to the Manufacturers Association of Nigeria (MAN). Recent financial performances of firms justify that manufacturers are facing postrecession struggles. Unilever Nigeria, one of the leading consumer firms in the country, had its revenue slump by 58 percent, to N9.13 billion in the fourth quarter of 2019, from N21.7 billion reported in the corresponding period of 2018. The firm recorded a loss after tax of N4.76bn and other income recorded a huge decline to N65 million, from the N2 billion. The revenue of McNichols Plc dropped 17 percent to N679.13 billion from N818.56 billion in the full year of 2019. Profit of the sugar maker followed similar trajectory, crashing 55 percent to N18.58 billion from N40.89 billion. Analysis of Nigerian Breweries 2019 full-year results shows that revenue declined by a marginal 0.4 percent to N323 billion, from the 324 billion realised in the previous year. But the company’s profit before tax fell to N23 billion from N29 billion. Also, profit for the year fell by 16 percent to N16 billion, from N19 billion. In spite of the border closure, the 2019 full-year revenues of palm oil makers Okomu and Presco dropped 3 percent and 7 percent respectively while profits crashed 33 percent and 8 percent. These are only few out of

many manufacturers that are hard hit by Nigeria’s underperforming economy. But experts believe that all hope is not lost. They say it was high time the federal government reopened the borders to unlock trade untapped potential. “Border closure is not a sustainable policy,’ said Ambrose Oruche, acting director-general of MAN at an event in Lagos. Oruche believes that by reopening the Nigeria-Benin border, exporters will be able to earn foreign exchange, spending seven to eight days rather than eight weeks to ship their goods to the global market. In the third quarter of 2019, the Nigerian federal government ordered the closure of Nigeria-Benin border to curb smuggling and spur local production of goods. But the policy, though has boosted agricultural production, is hurting manufacturers who struggle to get some of their raw materials. The implication of the closure on trade and non-oil inflows can be dire. The trade sector is in recession and the non-oil export is not growing as much as it should. As of the third quarter of 2019, Ghana was the biggest importer of Nigerian non-oil products. It imported 17.18 percent of madein-Nigeria products within the period, beating the European Union and China, according to the NBS data. This is no longer a possibility. Another policy change that analysts want to see is the harmonisation of taxes. Many manufacturers in Nigeria, depending on their locations, pay multiple taxes and frivolous

charges such as radio and television fees. Data from the Manufacturers CEOs Confidence Index (MCCI) for the third quarter of 2019, compiled by MAN, showed 89 percent of the chief executives identified multiple taxes and levies as big impediments to the growth of the industrial sector. The CEOs said multiple taxes and levies depressed production in the manufacturing sector, with records showing that manufacturers paid over 30 different taxes, levies and fees to agencies of the federal, state and local governments on account of increased revenue targets. The report recommended harmonisation of various tax rates to encourage investment, particularly into the manufacturing sector. Taiwo Oyedele, policy partner and West Africa tax leader for PwC, at a recent breakfast meeting, said that there were

over 60 types of taxes in Nigeria. The Finance Bill is a laudable step towards this, say analysts, but they doubt it will eliminate multiple taxes among states and local governments, given the hunt for revenues among them. Next is the need to have a policy in place that is focused on Apapa and Tin Can ports. These ports are bleeding the Nigerian manufacturers’ margins and the leaders seem unperturbed. A chief executive officer of a manufacturing firm in Ikeja, Lagos, recently said his company spent N800,000 to move container to Apapa in February 2020, from N570,000 paid in December 2019. “It is easier to move goods from Germany to Nigeria, than to move them from Apapa to Ikeja,” the CEO said. MAN recommended a new policy that would be focused on addressing challenges such as dilapidated infrastructure, inadequate space, weak trade

facilitation infrastructure, poor road network and the associated gridlock to enhance competitiveness at the ports. Moreover, the non-oil export sector has no policy to drive it. Many Nigerian firms are facing rejections at the borders of other countries. Experts say the country needs an export policy to address the trend. Also, they canvass full implementation of the Export Expansion Grant (EEG), which is yet to kick-start since 2016 when fresh paper work by the Nigeria Export Promotion Council (NEPC) started. The EEG is a practice in Brazil, China and many European countries. Even though there have been cases of abuse of the EEG by fraudulent firms, data have shown that export will rise when the EEG is given to genuine exporters. For example, non-oil export rose from a little above $1 billion in 2005 to $2.97 billion in 2013 when exporters enjoyed the EEG. At the moment, crude oil remains the mainstay of the economy, but that is risky for the economy and for manufacturers who rely on foreign exchange for the importation of their inputs. These policies have become important due to the declining purchasing power of the consumers. A recent economic report released by CSL research says that the demand for manufactured products has declined due to economic conditions constraining consumer purchasing power. With high level of poverty and unemployment, manufacturing companies are unable to increase prices of goods as this will further hit them hard, depending on product elasticity.

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