BusinessDay 05 Nov 2018 by BusinessDay

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NGUS JAN 30 2018 364.39

Nigeria has an infrastructure problem only private capital can fix T LOLADE AKINMURELE & IFEANYI JOHN

he government may downplay it all it wants, Abuja is too broke to meet the financing needs of an abysmal infrastructure stock that has rendered Nigeria economically non-competitive and put a cap on growth. Despite being at its highest level since 2011, Nigeria’s capital expenditure as a percentage of GDP was 1.3 percent in 2017 and has averaged 1 percent since 2010, according to data compiled by Business Day. In 2016, when the economy slumped into a recession, capital expenditure as a percentage of GDP crashed to an all-time low of 0.2 percent. The picture gets worse. Nigeria’s infrastructure stock of 25 percent of GDP is less than

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L-R: Nike Akande, past president, Lagos Chamber of Commerce and Industry (LCCI); Babatunde Ruwase, LCCI president; Olayinka Oladunjoye, commissioner for commerce, industry, and cooperative, Lagos State, and Vice President Yemi Osinbajo, during the opening ceremony of Lagos International Trade Fair with the theme “Connecting Business, Creating Value” in Lagos, at the weekend. Pic by Olawale Amoo

NGUS APR 24 2019 364.84

NGUS 0CT 30 2019 365.74

Mixed reactions trail HSBC, UBS Nigeria exit …Atiku calls development ‘sad day’ LOLADE AKINMURELE

SBC Holding’s closure of its representative office in Nigeria may have been a long time coming but a fall-out with the government last September hastened the decision, sources familiar with the matter tell BusinessDay. The central bank of Nigeria in a report Friday said HSBC and UBS Group have closed their local representative offices in the country’s commercial capital of Continues on page 2

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NIRSAL provides breakdown of $373m facilitated for agriculture ... highlights expansion of agric insurance for smallholder farmers Onyinye Nwachukwu, Abuja

breakdown of the $373 million said to have been facilitated to different areas of the agricultural value chain by the Nigerian Incentive Based Risk Sharing System for Agricultural Lending, (NIRSAL), has been provided to BusinessDay. In a detailed response provided by NIRSAL, showing the Credit Risk Guarantees and other Agricultural Risk Management Tools and Products, it was indicated that the agency has facilitated N43.8 billion for Agricultural Inputs; N1.7 Billion for Mechanization; N19 Billion for Primary Production, and N20.9 Billion into Processing. Aliyu Abdulhameed, NIRSAL’s Managing Director, also clarified that the agency is not a lending institution, but created to stimulate the flow of affordable finance and investments into fixed agricultural value chains. He emphasised that the agency is able perform this mandate through fixingofagriculturalvaluechains,building long-term capacity, and institutionalising incentives for agricultural lending leveraging its five (5) strategic pillars namely:RiskSharing,InnovativeInsurance ProductDevelopment,Technical Assistance, Incentive and Rating. “Thus, NIRSAL serves as a catalyst that enables providers of finance and investment, to lend and invest in agribusinesses by leveraging on its Credit Risk Guarantees and Risk Management Products, Tools, Techniques, Methodologies and Strategic Partnerships,” Abdulhameed noted. He further explained that, through its Credit Risk Guarantee, NIRSAL has facilitated about N85.5 billion since Incorporation by the CBN in 2013 to date. “At the prevailing exchange rate year on year, this translates to well over $373 million up to Q3, 2018,” he said. Abdulhameed added “This amount was not facilitated for the upstream (Primary Production/ Farming) segment alone (largely at the level of the smallholder farmers); but across all four segments of the agricultural value chain.” Breaking the financing down, he said “a total of N45.6 billion in the pre-upstream segment of the agricultural value chain was facilitated primarily to mechanization and agricultural inputs such as fertilizer,

seeds and agrochemicals required before primary production. “Over N19 billion into the upstream which is mainly the primary production of maize, cassava, soybeans, rice, cotton, poultry among other commodities; as well as N20.9 Billion midstream segment of the agricultural value chain used predominantly in the processing of cassava chips, rice milling, cotton, oil palm, and cocoa.” Abdulhameed said that to date, NIRSAL has paid a total of N4.6 Billion as claims on Credit Risk Guarantees that crystallized to providers of finance (Deposit Money Banks). Further analysis of the numbers has revealed that in addition to paying out on crystallized guarantees, NIRSAL has also paid about N1Billion as Interest Drawback (IDB) to borrowers. NIRSAL’s Interest Drawback scheme was established to reduce the burden of interest paid on loans by value chain actors under NIRSAL’s agricultural Credit-Risk Guarantee scheme, who perform well in their loan repayment. “It is important to state that through NIRSAL’s facilitation, a total of 373,752 direct jobs have been created and 1.8 Million indirect jobs in the pre-upstream, upstream, midstream and downstream segments of the agricultural value chain, specifically in the areas of Mechanization, input supply, primary production and processing,” Abdulhameed also stated. He also noted that insurance is a critical measure deployed by NIRSAL in managing and mitigating risk. “It is an essential component of NIRSAL’s five (5) pillars. This Insurance facility is designed to expand agricultural insurance products to reduce credit risk and increase lending across the agricultural value chain. “NIRSAL’s goal is to expand insurance uptake by primary producers from 0.5 million to 3.8 million by 2026 and contiunally develop insurance products that will give financial institutions and Agricultural Value Chain players the comfort they need to lend to the agricultural sector while building the capacities of underwriters. “Prior to NIRSAL’s intervention, Agricultural insurance in Nigeria was indemnity based which only provided compensation equivalent to farmer’s cost of production. The uptake of this insurance product was very low,” noted the NIRSAL CEO.

L-R: Stella Ojekwe-Onyejeli, ED/chief operating officer, Nigeria Sovereign Investment Authority and nonexecutive director, InfraCredit; Chinua Azubike, MD/CEO, Infrastructure Credit Guarantee Company Limited; Michael Wehinger, first vice president, West Africa & Madagascar, KfW Development Bank, and Ron Rother, principal project manager, West Africa & Madagascar, KfW, after signing the agreement on the KfW’s €31 million subordinated capital investment in InfraCredit in Lagos, recently.

Nigeria’s onshore-offshore oil production conundrum DIPO OLADEHINDE

nvestors and industry players will be keeping an eagle eye on what seems to be a conundrum on the future of Nigeria’s oil industry as the country is looking miles out to sea, shifting away from onshore to offshore fields. By early 2019, the most ambitious production vessel ever delivered in Nigeria’s history is expected to start pumping crude from water depths of over 1,500 meters which is anticipated to increase Nigeria’s oil production by 200,000 barrels of oil per day. The $16billion-worth Egina development is the largest deep offshore investment part of a strategic shift that began at the start of the decade when International Oil Companies (IOC) including Chevron and Royal Dutch Shell started looking at higher-cost offshore fields to minimize risks from sabotage, kidnapping and crude theft

Insight associated with onshore fields. Industry analysts will be keeping their fingers crossed on the differences between Onshore and Offshore fields as insecurities remains a major risk peculiar to Nigeria’s operating environment which has continued to drive the costs of oil and gas projects in the country above the global benchmark. Ademola Henry team leader at the Facility for Oil Sector Transformation (FOSTER) said its impossible to state which one is better for Nigeria because the debate about onshore fields or off shore fields depends on the contract system, cost of production per well as oil companies cost of production differs. “For Offshore fields there is less threat to security and with the technology being developed daily there will be growth but it also depends

on some other factors because after drilling to a certain depth it will be impossible to get anything from such fields and there are a couple of wells like that now which is a loss to government in terms of revenue,” Henry team leader at FOSTER said. Emmanuel Afimia an energy expert at Afimia consulting said it depends on the parameters adopted before comparison can be made between offshore and onshore. “In terms of assets and production offshore fields are better while in terms of revenue and royalty onshore fields are better.” “Moving production to offshore fields will minimize incidents of pipeline vandalism which will reduce loss of crude oil in the process of transportation, thereby maximizing its revenue,” Afimia told BusinessDay. Minister of State for Petroleum, Ibe Kachinkwu, had in February stated that Nigeria was expecting invest-

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Power producers kick as N701bn intervention funds dry up

Mixed reactions trail HSBC, UBS Nigeria... ... unpaid bills for power piling since July 2018 Continued from page 1

Lagos without stating any rea-

son. US lender, UBS, has in the past said a dispute between the central bank and South African telecom company MTN Group Ltd. over repatriation of $8.1 billion may erode confidence in the country. Neither HSBC nor UBSimmediately responded to a Business Day email late on Sundayseeking comment, but sources say HSBC’s exit from the country was part of a global strategy by new Chief Executive Officer, John Flint, to exit smaller consumer operations. UBS’s exit is unclear. HSBC, like UBS, only had a representative office in Nigeria, but didn’t operate a full banking unit in the country, unlike rivals such as Citigroup and Standard Chartered Plc. “Constant harassment by the government and security operatives forced HSBC out quicker than was originally planned,” the sources who

were not authorised to speak publicly said. In April 2018, the Financial Times and Bloomberg News reported that Europe’s biggest bank by market capitalisation, HSBC, was reviewing as many as a quarter of the 67 countries the bank operates in, with plans to exit small consumer operations. HSBC has been shrinking since the financial crisis of 2008 as new regulations and low interest rates threaten earnings. In that time, the lender, which used to call itself the “world’s local bank”, has closed almost 100 businesses and reduced the number of countries it operated in to 67 from 88. The London-listed lender rose 1.14 percent Friday, valuing the company at 128 billion British pounds (USD$166 billion). With $2.5 trillion (N907 trillion) of assets, the bank’s balance sheet is six times the size of Nigeria’s economy. “The noise following their exit is

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ISAAC ANYAOGU

he N701billion payment guarantee initiated by the Federal Government to assist electricity generation companies (GenCos) in settling their obligation to gas suppliers as remittances from electricity distribution companies (DisCos) dwindles, will run out by December 2018, fuelling concerns about sustainability. Babatunde Fashola, minister of Power, Works and Housing when announcing the project in March 2017, said the decision to approve the payment assurance guarantee for the Nigerian Bulk Electricity Trader (NBET) was to pay gas suppliers so that plants can stay on following poor collections by DisCos. The GenCos now say they are concerned that as the money will run out next month, there is no provision to sustain it and the issues that necessitated it are still very much around.

“We don’t know what is happening next,” Joy Ogaji, executive secretary of the Association of Power Generation Companies (APGC), a trade group representing power generation companies in Nigeria, told BusinessDay by phone. Angered by the inclusion of Azura Independent Power Project in the intervention fund beneficiaries list, 5 GenCos took the Federal Government and NBET to court in March this year, to force them to prioritise settlement of over 11 months of unpaid bills. The Federal Government and NBET have since reached an understanding and began settling market invoices since 2017 but payment has stalled since July this year. On its website, NBET said it paid GenCos N15.08bn for the July 2018 invoices of N51.79bn which represents 29.14 percent payment. The Federal Government, in June, had through NBET released the first tranche of about N12 billion to 10

GenCos from the N701billion intervention fund. Further releases have since been made to GenCos with consequent improvement in power generation capacity. The concern for GenCos is that the problems may resurface again. “When the government starts something, it does not think it through and does not consult with the operators who have the technical knowledge, hence this situation,” Ogaji said, “Nigerians need to ask government what they are doing with their money.” The Nigerian Electricity Regulatory Commission (NERC) also thinks the process could have been managed better. “Somebody put in N701 billion to support a business you have already said you are the owner. You took a licence to run your business, if you make a profit, declare it. Go and find

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Radical uncertainties

Bashorun J.K Randle Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants Continued from last week

t was against this overwhelming arc of radical uncertainties that the retired partners of KPMG subsumed discussions over their unpaid gratuity and pension (which was to have been vigorously debated at the United Nations General Assembly that was held in New York from 18 September – 5 October 2018 but for the last-minute appeal from Mr. António Guterres the Secretary-General of the United Nations that the matter should be deferred till next year). Mr. Guterres used to be the United Nations High Commissioner for Refugees (2005–2015), hence he has been particularly concerned that former KPMG partners do not join the queue of refugees!! When we learnt that President Buhari would not be personally present to declare the ICAN Conference open, we protested by forsaking the Independence Day Banquet at the Villa, Aso Rock. Instead, we took it upon ourselves to assess the erosion of the clout and might of Chartered Accountants in the national landscape, particularly in the economic/financial sector.

In previous governments, Chartered Accountants dominated key positions such as: - Minister of Finance - Governor of the Central Bank Minister of Planning and - Budget Auditor-General of the - Federation Accountant-General of the - Federation Chairman, Federal Inland - Revenue Service Not so anymore. The current Auditor-General of the Federation, Mr. Anthony Mkpe Ayine is the only Chartered Accountant amongst the list of those holding those positions. To further compound matters, Governors who are Chartered accountants – Alhaji (Dr.)Ibrahim Hassan Dankwambo, FCA (Gombe State); Otunba Ibikunle Amosun, FCA (Ogun State);Mr. Willie Obiano, FCA (Anambra State)and Mr. Akinwunmi Ambode, FCA (Lagos State) had not shown up. Even a private audience with President Buhari by the retired partners of KPMG was not confirmed. Also, unlike in previous years, the President, Alhaji Razak AdelekeJaiyeola and members of ICAN would not be hosted in the Villa by President Muhammadu Buhari. It took almost three weeks before President Buhari received the ICAN delegation at the villa on 19th October, 2018. Without mincing words, it was indeed strange that considering that almost five thousand chartered accountants were in Abuja for the conference, the President could not

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It is our love of our country and our fervent patriotism that are the driving forces behind the zeal to encourage those in position of power and authority to press the reset button instead of tormenting the nation while Boko haram and other terrorists/ insurgents hold sway with ruthless kidnapping, callous beheading, vicious armed robbery and bestial rape as their weapons of choice

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be persuaded that it was an excellent opportunity to launch a charm offensive and woo the votes of not only the delegates and spousesbut also the vast network of Chartered Accountants (and their dependants) all over the country at a time when the next presidential election is only a few months away. There is rage everywhere. News media have been streaming the complaint of Mrs. Aisha Buhari, (Wife of the President and First Lady of Nigeria): “It is disheartening to note that some aspirants used their hard-earned money to purchase nomination forms,

got screened, cleared and campaigned vigorously yet found their names missing on Election Day. These formswere bought at exorbitant prices. All Progressive Congress [APC] being a party whose cardinal principle is change and headed by a comrade/ activist [Adams Oshiomole] whose main concern is for the common man, yet such impunity could take place under his watch.” Ironically, there appears to be an international dimension to our angst and frustration. On CNN an elated Sarah Campbell of the New Democratic Party of Ontario was jubilating over the legalisation of cannabis (Indian Hemp) as a recreational drug in Canada. It turns out that by sheer co-incidence there has been a spike in the flood of Nigerians who have decided to emigrate to Canada!! One of the brand new and young presidential candidates,Omoyele Sowore has disclosed on CNN that when he becomes President of Nigeria he will not only legalise marijuana, he will declare it as Nigeria’s number one export earner which will rapidly surpass crude oil. Amongst the fleeing brethren are doctors, engineers, professors/lecturers, chartered accountants (including retired partners of KPMG) They appear to have concluded that Nigeria is a slow-moving disaster and that the deluge of bamboozling by politicians and hoodwinking by their cohorts are just driving the country to breaking point and there is nothing the retired partners of KPMG, (who are still awaiting their gratuity and pension) can do about it. they cannot even get to meet their

old pal President Muhammadu Buhari. Such a meeting would have served as an excellent platform to remind the President that we are of the same age (seventy-five years) and he is our Ambassador Extraordinary and plenipotentiary armed with our Letter of Credence to the succeeding generation and a special message: “There is nothing to be gained by setting the country on fire.” Here we are on home turf but the politicians are holding the entire nation to ransom with their subversive inertia. We are not here to pursue lucrative government contracts or ask for favours/waivers. It is our love of our country and our fervent patriotism that are the driving forces behind the zeal to encourage those in position of power and authority to press the reset button instead of tormenting the nation while Boko haram and other terrorists/insurgents hold sway with ruthless kidnapping, callous beheading, vicious armed robbery and bestial rape as their weapons of choice. For almost fifty years, we have watched the massive plunder of our nation’s treasury and commonwealth through barefaced brigandage and reckless impunity. What we are now witnessing is a profound shift in strategy – from brazen exploitation to indifference. The tactics are obvious – just ignore them and thereby ensure that poverty, hunger, ignorance inflict sufficient damage to render the victims both hopeless and homeless.

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President Buhari, WAEC and PDP’s toxic air

Garba Shehu Garba Shehu is the Senior Special Assistant to the President on Media and Publicity

he West African Examinations Council, WAEC, Friday, said the controversy concerning President Muhammadu Buhari’s school certificate is embarrassing and felt a sense of duty to produce and deliver to him a confirmation and attestation of his results, in form of a duplicate certificate. This is a god-sent, with WAEC being a non-political entity. This should put to rest the absurd allegations by the People’s Democratic Party, PDP, brought up again and again, that he did not attend a secondary school. The unreasonable position of the PDP had been sustained all along in spite of testimony by classmates who read with him in school and graduated together, and that fact that a court of law had given a ruling on the matter. In 2014-2015 when they raked up the issue, I remember that it took the courage of the then college Principal to issue a statement of results from available records. In doing so, he defied the ruling PDP

government in the state which asked him not to. At the time we got the results sheet, reports said that the government had determined to send arsonists to burn the school to ashes so that the existing records will be obliterated. This was against the backdrop of the shocking claim by the Army Records office in Lokoja, that they didn’t keep any records of General Buhari as a military officer. Curiously, the Army Records office had once come under Muhammadu Buhari, as Military Secretary who, during his tenure streamlined the records of the entire officer corps, and could not, by any stretch of imagination, have left his own records in a mess. General Alani Akinrinade (Rtd) reportedly dismissed this mischief as an insult to the military. After doing his conscience’s duty by daringly releasing those results, the then government of Katsina State punished the Principal by stripping him of his seniority and posting. As we said in a number of past statements, the matter of the President’s qualification to run for office is a non-issue, nonetheless feasted upon by the PDP which has stopped thinking and have nothing to offer to Nigerians. Based on arguments that “education gives a human being the power to discriminate between right and wrong,” the 1999 Constitution stipulates a minimum educational qualification for citizens who intend to contest for elections at all levels, which requires that

they must possess a secondary school education or its equivalent. The provision above has itself come under serious re-examination by scholars who argue that the possession of a secondary school certification does not necessarily mean that a person is intelligent. It is equally argued that it is a mistake to assume that a person with a certificate has higher knowledge or intelligence than the one who doesn’t have. In an article published by the Daily Trust a day or so ago, Professor Shehu Zuru quoted Wendy Sherman, the author of the book Not For The Faint Heart, that “courage and integrity are critical attributes that you cannot acquire from a classroom because they are the inert fabrics of human conscience that dictates the power of the negative and the power of the positive.” As far as his educational career is concerned, President Buhari attended the Katsina Provincial Secondary School, before enrolling in the Nigerian Military Training College, NMTC Kaduna (1962), renamed Nigerian Defence Academy, in 1964. As narrated by Major-General Sani Saleh (Rtd), “I worked at the Nigerian Defence Academy so I know the processes. You cannot get in with a forged certificate, it is impossible. “At the time (Muhammadu Buhari enrolled), the army was still controlled by the British...Nigerian Army was a select and (an) elite organization, we had very few Army Officers at that time. I don’t think the whole Nigerian Army Officers were up to 50. You can imagine what it takes for you as a Nigerian to be one of those...and today, somebody will be accusing you

that you don’t have a certificate.” From NMTC, Muhammadu Buhari went to the Mons Officer Cadet School, Aldershot, United Kingdom (1962-63), the Defence Services Staff College, India (1973) and thereafter, United States Army War College, which upon completion, awarded its graduates a Master’s degree in strategic studies. In the belief that the nation has the right to know the educational details of their president, Candidate Muhammadu Buhari laid bare everything and tendered an affidavit in respect of the WAEC certificate. The masquerades wielding the real power behind the PDP, some of whom played an active part in his overthrow as military Head of State in the mid-eighties are deliberate in keeping this issue alive. As a thoroughbred, toughened general, he won’t cry out that his home and office were vandalized by scoopers when they threw him out of power. In meeting the eligibility for the contest in 2015, President Buhari presented the WAEC results and the other degree and non-degree related results. He went through the verification process in the party, the Independent National Electoral Commission, INEC and the court. He ran and won against the PDP. With these, the unnecessary controversy should have ended. It is equally hard to fathom how such a dead issue should get the type of attention given it by the media, considering the many matters of serious concern to the citizens - internal security that was given a short shrift for 16 years by the PDP; the diversification of the economy by

focusing on key sectors (apart from oil) that can create jobs and generate revenue such as Agriculture, Solid Minerals and Manufacturing which the Buhari administration is keenly doing; the ongoing pursuit of more reforms and better governance; bolstered efforts towards poverty alleviation; ending corruption and insurgency and ploughing the savings therefrom to put in place needed infrastructure and so forth. Do they know that Nigeria Airways, NITEL and other pensioners they left in the cold, unpaid when they sold public assets to cronies or to themselves are getting their dues under this dispensation? If these things had been done when the oil price was as high as US$140 per barrel, Nigeria would not be in the current predicament. We would not have suffered when we had no cash reserves but we had regular supply of power, a good rail system, good roads and good housing. These are the issues dear to the hearts of our people. In its political fight for 2019, the PDP is not relying on the big issues of the day -security, corruption and jobs but on small, distractive matters that take little or no account of national interest. But what do you expect of a group that has stopped thinking, just blowing hot, toxic air, indulging in divisive politics and is raking up sectional issues so that the people will forget the real issues of corruption, infrastructure, security and economy for which they have no plans?

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Allison Akene Ayida: The profile of a super administrator

Tunji Olaopa Prof. Olaopa is a retired Federal Permanent Secretary & Professor of Public Administration tolaopa2003@gmail.com tolaopa@isgpp.com.ng

he administrative history of the Nigerian public service will definitely not be complete without the mention of Mr. Allison Ayida. Indeed, just a mention will be a serious disservice to the historic role that this astute administrator played in the attempt to reconfigure the public service system, as well as put the Nigerian project right back on track administratively. Like the legendary Simeon Adebo and Jerome Udoji, Ayida belonged in what we affectionately, and with a bit of nostalgia, refer to as the golden years of public administration in Nigeria. And even more so, he was one of the “notorious” super permanent secretaries whose roles in the prosecution of the Nigerian Civil War have been the subject of positive and negative analyses. Together with Ahmed Joda, Ime Ebong, S. O. Wey, Phillip Asiodu, and so on, Allison Ayida played a significant and crucial administrative part that

had a lot to do with their vision of the Nigerian project, as well as the professional credentials they had acquired as public administrators. Allison Ayida had just left us for the beyond. He was 88 years old. This is not a lamentable fact because he not only lived to a good age, and lived well also, but he played his part in the Nigerian national drama. He was a patriot, by all accounts of that term. He was there right at the beginning, and in the very engine room of the Nigerian state as one of the British-trained bureaucrats who had the unenviable task of steering the Nigerian state through the murky waters of the postcolonial realities which the British colonialists themselves had engineered. Paradoxically, Allison Ayida, like Simeon Adebo, Jerome Udoji and the rest of the first-generation pioneers, was invested the best that the British administrative training could muster. The crop of firstgeneration administrators were the best. They were professionals who were properly inducted into the ethos and values of what it means to be public servants. Unlike Adebo and Udoji who came to the public service, largely self-educated with English and law degrees respectively, Ayida was very prepared intellectually. In the early 1950s after a stint at King’s College, Lagos, he proceeded to the equally prestigious Queen’s College, Oxford where he got a Bachelor’s degree in the most prestigious Politics, Philosophy and Economic (PPE). A quick word about this course. The PPE was established

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Allison Akene Ayida was operating with the sensibility of a patriot. He wanted to contribute the best that his profession allowed him to add to the untangling of the complexities of nation building in Nigeria. He also had to suffer the indignities of those who stuck to integrity and professionalism as the most important credentials they could bring into the priestly vocation of the public service

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specifically as a multidisciplinary course that was targeted at preparing students for the public service. And this explains why the course turned out to be a great hit for those with the

objectives of making a mark with their country’s administrative machinery. Over the years, the PPE has had such notable figures like the late former Prime Minister of Pakistan, Benazir Bhutto, three former prime ministers of Britain (Harold Wilson, David Cameron and Edward Heath), three former prime ministers of Australia, and so many others from around the world. An incredible combination of a sound intellectual background as well as a solid practical professional orientation produced Allison Ayida as who he turned out to be. And those were the days of brimming patriotism on behalf of a country that was fought for with an immense arsenal of hope and optimism that defeated the colonialists’ reluctance. By the time he returned to Nigeria, after his father’s death which cut short his search for another degree at the London School of Economics and Political Science, Nigeria was already well into the postcolonial trajectory that was to shoot him into the very centre of the unfolding drama. He made the tight list of permanent secretaries that General Aguiyi Ironsi collected as part of the Federal Executive Council. He was in charge of a very critical ministry—Economic Development. That was exactly where the focus of postindependence development was. It was the ministry where the military had to receive the best education about how to take Nigeria forward. And Ayida had the benefit not only of a reputable background, but also of a crop of colleagues—Alhaji Musa Daggash, Phillip Asiodu, Abdul Aziz Attah, S. O. Williams, Sule

Katagum, M. A. Tokunbo, H. A. Ejeyuitchie, and so many more—who had a grasp of their various posts and departments, and who were equally dedicated to the service of putting Nigeria on a sound postcolonial administrative footing. Working for Ironsi already means that optimism had been eclipsed for Nigeria. The hope of a smooth transition was already endangered. But not for these technocrats. They saw beyond the military to a Nigeria that could still realize her objectives as a nation. Then, as if the sudden desperation enabled by the 1966 coup was not enough, Allison Ayida and the rest of the bureaucrats watched with mounting horror as the country was thrown into the tension of an approaching war. While Gowon and Ojukwu sparred and traded words and political altercations, Ayida and the rest of the technocratic teams calculated the costs of impending war on a nascent state that had barely got its administrative credentials and development planning together. The war eventually happened, and Ayida found himself in the cabinet of General Gowon right from the commencement of hostilities. There were a lot to be done administratively, first, to prevent the war from being fought; and second, to reconstruct the Nigerian state after the war ended.

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Nation building: Communities, inclusion and prosperity

AKINWUNMI AMBODE Mr Ambode is governor of Lagos state

t is an honour to address the illustrious and prestigious Island Club and to be part of your 75th anniversary. I am proud to be associated with a club that has promoted good fellowship and inter-racial as well as inter-religious harmony; not only in Lagos State but in all Nigeria. Founded by some eminent and distinguished Nigerians, to whom we should still be grateful to, our club has remained very relevant and positively impacted on the social and political growth of our country. As we cherish the history of our club and revel in the present, we must realise that the responsibility of shaping the future of our nation is a responsibility we must face up to. Just as the Island club influenced the social and political growth of Nigeria in the past, I am very confident that, with the calibre of individuals in our club, the future is ours to determine. This is the reason why I chose the topic – Nation Building: Com-

munities, Inclusion and Prosperity. But again, because of the nationalistic nature of Island Club, the topic could easily be – Island Club: Communities, Inclusion and Prosperity. So, there is a linkage between Communities, Inclusion and Prosperity. Communities interact to create prosperity, but again what I am trying to bring out is to find out to what extent has this linkage worked for us as a State and as a nation. Our Club is a very important Community in Nigeria and we must be part of the story of inclusion and prosperity of our Nation. Before I get into this discourse let me make a few declarations: There have been so many papers on Nation Building focus on Institutions and Regulations but I will restrict myself to the softer issues – the people; the most important fabric of the nation. In discussing this topic, we must determine who we are as a Nation, Where we are and Where we want to be. I will not draw any conclusions but I will present some critical information and present what we have tried to do in Lagos State for Nation Building. Globally there is a feeling that we live in an increasingly fractured world Results of the World Inequality Report of 2018 shows that in-

equality has increased everywhere in the world despite substantial geographical differences, with the richest 1 per cent twice as wealthy as the poorest 50 per cent and Nigeria is no exception. In recent decades, income inequality has increased in nearly all countries, but at different speeds, suggesting that institutions and policies matter in shaping inequality. There are a number of prevailing opposing political, economic, and trade trends reshaping the world, including the widening gap between the rich and poor, climate change and concerns around the future role of technology. So, recently, we have been hearing things like Brexit, nationalism or Triumpism, which some people see as populist and nationalistic tendencies. That is how fractured the world is. Around the world, people are finding it increasingly difficult to buy into the narrative of shared, continuous social and economic progress that has prevailed for decades. The truth is that globalization has inadvertently exposed a fractured world. However from a strictly economic perspective, the world is really not in bad shape. The International Monetary Fund (IMF) for example predicted a growth rate of 3.7 percent in 2018. The reality however is that for most people, the benefits of eco-

nomic growth remain elusive. This category of people thus feel excluded from globalization and all the rosy narratives that often accompany it hence the fractures we see in the world today. These fractures foster intolerance, the rising nationalism, populism and strife all over the world and intolerance technically leads to terrorism. This fracture is even more evident in Nigeria with the various indicators of inequality. The focus of national economic programmes since 1960 has been the reduction of poverty, bridging inequality and the achievement of a sustained economic growth that should translate to economic development. However, our growth indicators, even when we averaged growth of 6 per cent prior to the recent recession of 2015 and 2016, we have not managed to translate into real development for the greater majority of our people. The reality and which is the stark truth is that the country is stuck in dire situation. UNDP’s most recent Human Development report (combines life expectancy, education, and income into a single measure) reveals Nigeria’s has a score of 0.51 which is low (1 is the maximum; Norway is at 0.953). To put this in perspective, Nigeria’s HDI is lower than Kenya, Congo and Ghana. The question

is, if Nigeria is number one on GDP, then where should our HDI be if we really want to grow and become a true nation. However, the 0.51 score masks massive differences between different parts of Nigeria for example, Lagos ranks the highest among all States at 0.65 and is comparable to South Africa and Morocco, while, Sokoto ranks the lowest at, 0.29, which is worse than war-torn Yemen. The stark difference in HDI scores points to the extreme inequality in Nigeria’s well-being – imagine a segment of the population with life expectancy, education and incomes similar to South Africa, while others live like residents of currently devastated Yemen. Various other indices present an equally worrying picture According to UNICEF: Nigeria has the highest number of out-ofschool children in the world. 10.5 million children (20% of world population of such children). According to Oxfam, women represent between 60 and 79 percent of Nigeria’s rural labor force but are five times less likely to own their own land than men.

Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline.com/ Send reactions to: comment@businessdayonline.com

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Editorial Publisher/CEO

Frank Aigbogun editor Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua

Monday 05 November 2018

Hold President Buhari responsible for the Apapa port crisis

igeria continues to bleed in several pores over the continued crisis with ingress and egress into the Apapa port. Beyond the obvious costs in downtime to port users, reduction in the value of properties in the district and economic value, there is the additional one of leadership responsibility. It is time to call a spade by its name and hold President Muhammadu Buhari to account for the gross failure in bringing order to Apapa ports. Vice President Yemi Osinbajo has been to Apapa three times. Each time he has led missions with promises of deliverance to Apapa. There has been no deliverance of those promises. Sadly. Lagos State Governor Akinwunmi Ambode has been dismal concerning taking charge and leading on the matter of the gridlock on the roads into and out of Apapa. Indeed, Ambode has since rolled up his hands in the admission of failure, claiming that the Apapa matter is beyond him. Repair of the access roads into the city has taken longer

than planned. It would seem that the well-meaning contractors trying on a new technology did not anticipate the depth of the problem as they have missed their timelines. The matter of the Apapa ports is so severe it deserves presidential attention and action. Perchance the President is not aware; there are many reasons why he should set up a desk, roll up his sleeves and take charge of the effort to solve the Apapa challenge. Before those who quibble on these matters raise the usual apologia, everyone knows the crisis with Apapa ports predates this administration. It has been in a lousy state for at least six years. However, there is a government in charge and in office over three and half years now. The brief falls on its table. The Apapa ports challenge is more than one of traffic management and the deterioration of the environment or loss of economic value to property owners and residents. Apapais integral to the economy of Nigeria. States and the Federal Government depend on the customs and excise duties and revenues derived from the ports of Apapa. Nigeria should be

earning more from that source if Apapa ports operated optimally. The matter of its revenue contributions to the economy is more than enough reason for the President to pay attention to solving the Apapa challenge. Our economy is in dire straits, and Government must pursue and explore every avenue to shore it up. Solving the Apapa challenge would contribute significantly. Apapa is also critical to the management of petroleum distribution. A vast 68 tank farms have a base in Apapa. The public face of the Apapa challenge is the presence of an outsized number of tankers on the roads into this small island. Tankers go to Apapa to pick cargo from the ports and to lift petroleum products from the tank farms. Oil pipelines still run from Apapa to many locations for distribution of fuel products. Failure in stopping vandalisation led to the recourse to tankers. Solving the Apapa challenge will include restoring the use of pipelines. It would also involve restoring the rail line to Apapa. It lies fallow and in disuse. The original planners of the infrastructure and layout of Apapa saw correctly

the wisdom indeploying the rail to move heavy cargo from the ports into the hinterland. The Federal Government must revive it. Restoring the rail line can be an immediate short-term measure to enable movement of goods all the way to Ewekoro and stations out of the city centre to reduce the flow of tankers into Apapa. Then there is the matter of the revival of the ports in other locations outside Lagos. Whatever the rationale for this situation where a nation of vast size with ports in six locations uses only one, it is no longer tenable. The Apapa ports cannot cope. Nigeria must share the load by distributing it among the many ports. Resolving the Apapa challenge, therefore, would involve tackling it from various angles. Whichever way you look at it, the President must bear responsibility for failure to act in resolving this crisis and allowing it to fester. Time now for presidential action. We invite Mr President to take action urgently to solve the Apapa port crisis by setting up a taskforce that he would chair to solve the problem. Some immediate actions can yield results in three months. Start now.

GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

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Monday 05 November 2018

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BUSINESS DAY

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Monday 05 November 2018 In Association With

Tapped out

Credit later Beyond comes boom and bust?

Saudi Arabia’s might as an oil producer is being tested

Britain’s universal credit could yet be a success

Will it be able to fill the gaps left by smaller producers? I L T R A D E R S a re inherently strongstomached, but even for them October has been a woozy month. On October 3rd the price of Brent crude reached $86 a barrel, a four-year high. On October 23rd it slid to $76, on the news that demand might ebb, stockpiles rise and production increase. At the centre of this is Saudi Arabia, the world’s most powerful petrostate. Khalid alFalih, the country’s oil minister, said on October 23rd that the kingdom was prepared “to meet any demand that materialises”. But that is not an easy task. E xports from Iran have plunged and are due to fall further after November 4th, when new American sanctions take effect. Even as America’s crude production soars, President Donald Trump has demanded that the Organisation of Petroleum Exporting Countries (OPEC)

boost output to lower prices. Saudi Arabia seems keen to appease him, both because it supports the sanctions and because of anger over the killing of Jamal Khashoggi, a journalist, in the

Saudi consulate in Istanbul. But the gains from producing more are uncertain. Both OPEC and the International Energy Agency (IEA) have cut their forecasts for oil demand in 2019. Even if Saudi Arabia wants to fill the gap left by Iran, it is not clear that it can. That is in part because Saudi output is already so high. As Iranian exports have dropped since May, when Mr Trump announced the sanctions, Saudi Arabian exports have picked up. The kingdom is producing more than 10.5m barrels of oil a day (b/d); officials claim the capacity to produce around 12m. “They can reach about 11m barrels with relative ease,” explains Neil Atkinson, head of oil markets at the IEA. Analysts debate how quickly—or whether—the country can ramp up to 12m b/d. “They have never actually proven they can do that,” says Ehsan Khoman of MUFG, a bank. Saudi Arabia may also be unable to counter weakness in smaller petrostates, where supply could drop unexpectedly. In the past six months Nigeria, Libya and Venezuela have helped to offset falling exports from Iran. But they are a volatile trio. Violence and political unrest

A disastrous launch has had deep costs. That is not a reason to roll back the reform

HE GULF between principle and practice is often fatal for policies—and for political careers. Britain’s government faces a backlash over universal credit, a reform combining six welfare programmes into one. This was widely seen as a good idea about a decade ago. But a series of administrative failures, a senseless decision to make payments well in arrears and a squeeze on the system’s overall generosity have left many claimants angry. Some are destitute.

make production in Nigeria and Libya prone to big swings. The situation is more extreme in Venezuela where, thanks to political turmoil, production is about half of what it was in early 2016. Still, Venezuela produced 1.2m b/d in September. Exports actually increased by 250,000 b/d between April and September, according to Bernstein, a research firm, equivalent to more than half the rise in Saudi exports in that period. There is ample room for Venezuela’s output to drop further. The result may be further dramatic swings in the market, with Saudi Arabia’s oil production put to the test. “It is the first time in modern history that countries have faced so many restrictions at the same time,” according to Mr Atkinson of the IEA. Much depends on just how far exports from Iran sink—some countries are pushing for waivers from sanctions. Mr Falih remains confident that Saudi Arabia can help provide stability. But as it increases output, spare capacity may reach a record low by the end of the year. “The more they produce, the less there is in the tank for any additional supply outages,” says Mr Khoman. Get ready for a bumpy ride.

In places where universal credit replaces legacy benefits, reliance on food handouts rises and more people fall behind with the rent. This good-idea-turned-disaster has already led the government to delay the reform. Some critics say it should be abandoned altogether (see article). They are wrong. If the government corrects its mistakes—starting by providing a little more money in its budget on October 29th—universal credit could still succeed. In fact, Britain might end up with a world-class welfare system that approximates an idea long advocated by many reformers, including this newspaper: a negative income tax for low earners. Welfare systems worldwide are plagued by complexity. By one count America has 72 federal anti-poverty programmes providing cash or benefits. France has upwards of 35 state-pension schemes. In Japan welfare recipients must sell items that are deemed—sometimes at the whim of an individual bureaucrat—to be luxuries. Complexity creates obstacles that prevent the hard-up claiming support that is meant for them. It also leads to haphazard patterns Continues on page 15

Monday 05 November 2018

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BUSINESS DAY

In Association With

Poverty in California

Britain’s universal credit...

Why one of America’s richest states is also its poorest

NIMBYism is partly to blame

HE LOS ANGELES regional food bank distributes 300,000 meals a month, but that, says its director, Michael Flood, is only a fraction of what the hungry 1.4m people in the county need. The bank resembles the vast warehouse operation of a supermarket chain, with apartment-sized refrigerators and fork-lift trucks processing millions of pounds of groceries. Every hour, a dozen or so of the 650 soup kitchens in the city arrive to collect sandwiches for the homeless (who cannot cook anything on the streets) or groceries for families. At one of these, the Interfaith Food Centre in Santa Fe Springs, dozens of people are queuing. A few are homeless, living on the dry river bed behind the centre. Most are on minimum or fixed incomes. Dianka Espinosa is a graduate student at Rio Hondo, a local community college—hardly a typical food-aid recipient. But like many Californians, she was one event away from poverty. That event was her husband’s deportation. He not only left her behind, but their three children; her hopes of a better job hang by the thread of a weekly food parcel. And this is happening in one of America’s richest cities. If you were to ask most Americans which is the poorest state in the nation, they might say Alabama or Mississippi, with their low average incomes and concentrations of African-American poverty. In fact, the state with the largest share of people in poverty is California. As the most populous state, it also has by far the largest number of poor people, 7.4m. Many measures of poverty exist. The official poverty line is used as a guide as to who should get federal assistance. The state where the largest share of people fall below that line is Mississippi; California is roughly in the middle. But the official poverty

line is the same in every state and takes no account of different living costs or of public assistance. So in 2011 the Census Bureau came up with a Supplemental Poverty Measure (SPM), which most social scientists think a better way of comparing levels of poverty across the country. By this yardstick, 19% of Californians were poor in the three years 2015, 2016 and 2017, the highest rate in the country excluding the special case of Washington, DC. The national average was 14.1%. With its many undocumented immigrants, California poses special measurement problems. So two institutions in the state, the Public Policy Institute of California and the Centre on Poverty and Inequality of Stanford University, created their own California Poverty Measure (CPM). This confirms that 19.4% of Californians did not have enough resources to meet basic needs in 2016, down from 21.8% in 2011. And it provides more details. California’s poverty map has changed, argues Sarah Bohn, of

the PPIC. Indigence used to be concentrated inland, in agricultural regions with lots of cheap, seasonal labour. Now the poorest counties are on the southern coast, including Los Angeles and Orange Counties. Most of the poor have jobs: 80% of those living below the CPM’s poverty line are in households with at least one person in work. Latinos are somewhat more likely to be poor than average. But a better predictor of poverty is lack of a university education: 35% of those with only a high-school diploma are poor. Shockingly, 45% of children live in households that are poor or near-poor (living below 150% of the poverty line). By the time they are 18, estimates Mr Flood, half the children of the Golden State will have made use of food stamps or food banks. California is not only America’s poorest state. It is also among the richest. According to the Census Bureau, its median household income in 2016 was $11,500 above the national average. So why, asks Frank Mecca, head of the County Welfare Directors’ Association, the people responsible for overseeing the state’s assistance to the poor, has a state that creates so much wealth been unable to address the problem of poverty? The problem can be misunderstood. Poverty is not a result of economic decline or lack of jobs. California’s GDP rose 78% in real terms in the two decades to 2017, overtaking Britain to become the world’s fifth-largest economy. The number of people with jobs has grown almost without interruption since 2011. In September unemployment stood at just 4.1%. But the gains from growth have been distributed unequally. According to the Urban Institute, a think-tank, the incomes of the poorest Californians fell in real terms between 1963 and 2017 (see chart). In 1963 a family nine-tenths up the income scale earned 6.5 times as much as a

family one-tenths of the way up. By 2017 it was earning 14 times more. The rich have done better than the poor in America as a whole, but not by this much. Two forces seem to have widened California’s inequality. One is that millions of undocumented immigrants arrived between the 1980s and the 2010s. Their impact has been much debated. But recent research suggests that, in the country as a whole, immigrants have been good for the economy, good for jobs and bad for some groups of low-earners. California’s high-growth, full employment, working-poor economy is consistent with that picture. The other influence has been the success of the two industries for which the state is best known: Silicon Valley and Hollywood. Both benefit from large network effects (from having lots of people in the same business in the same place) which offset California’s high costs of doing business. But they require high skills and further education, which the poor are less likely to have. The big problem in California, though, is not the stagnation of low incomes per se. It is stagnation relative to costs—in particular the cost of housing. As a rule of thumb, in rich countries household budgets come under strain once housing accounts for more than a third of income. California’s poor are far beyond that. According to the California Budget and Policy Centre, 56% of those living below twice the federal poverty line (that is, below $24,280 for one person) are spending more than half their income on housing. For recipients of food aid, the share is higher. Almost everyone at the Interfaith Food Centre tells the same sorry tale: after paying the rent, they have nothing left. Whereas the poor would once spend their last dime on food for the children, now they spend it on housing— and depend on charities for food.

Continued from page 14

of eligibility and, as a result, poverty traps in which it is more lucrative to earn less in wages. Universal credit is designed to fix both problems. After it is fully implemented, it will cover seven of every ten pounds in the working-age welfare budget. Official forecasts say that as take-up rises another £2.9bn ($3.7bn), or 5% of the programme’s total cost, will be handed out. It will always pay at least a little for recipients to earn more. Welfare states also have an undesirable tendency to spend ever more on increasingly wealthy and numerous pensioners, leaving an ever skimpier safety-net for those of working age. Britain has recently followed this trend, boosting state pensions by 6% (after adjusting for inflation) since 2010 even as working-age welfare has been cut. Worse, the government has used the launch of universal credit as cover to deepen the cuts. Nonetheless, among rich countries Britain’s welfare system is one of the more progressive. The last time it was counted, 34% of British welfare spending went to the poorest fifth of the workingage population, compared with an OECD average of 23%. The EU as a whole shells out about 9% of GDP on state pensions; Britain spends only 5%. And even after recent cuts, in 2018 it will still spend more than three times as much as America, as a share of GDP, on wage top-ups for poor workers and parents. Targeted spending has a cost. Focusing money on the poor means withdrawing it fairly rapidly as people earn more. Universal credit’s withdrawal rate is 63%, meaning claimants lose 63p for every £1 they earn above an allowance. The disincentive to work can be sharper still once payroll and other taxes are taken into account. Amazingly, this is an improvement on the previous system for most claimants. But it is a steeper taper than reformers proposed when they first dreamed up universal credit.

BUSINESS DAY

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Monday 05 November 2018 In Association With

The picture of wealth

The wealth of the top 1% may have peaked In many countries their share of wealth is now falling

EE SHAU KEE moved to Hong Kong from mainland China in 1948, the year before China’s Communist Party seized control. In 1976 he set up a property company, Henderson Land Development,

which helped to develop the tallest building on Hong Kong island and the hotel where Edward Snowden spilled America’s national-security secrets. Mr Lee is now the world’s 27thrichest person, according to Forbes, a business magazine. He and the 26 richer individuals have a combined worth of $1.39trn—more than the entire wealth of the poorest half of humanity. This kind of startling comparison between the world’s most and least pecunious has been popularised by Oxfam, a charity. It draws on Forbes’s regular rankings of the world’s billionaires and the Credit Suisse Research Institute’s

annual reports on household wealth. But the precision implied by such comparisons is spurious. The data on global wealth (which includes the net financial assets and property holdings of individuals) are too spotty to be rounded off to the nearest billionaire. Tony Shorrocks, the lead author of the Credit Suisse report, is reasonably confident that the poorest

half of the world owns less than 1% of its wealth. But it is hard to be more exact than that. The measurements are, however, improving. In last year’s Credit Suisse report, the richest 1% seemed to claim more than half of the world’s wealth (see chart). But new and improved estimates suggest the share of the one-percenters may have peaked or levelled off. Between

2016 and 2018, it fell in Brazil, Britain, France, Germany, India and Russia and flattened off in America, Canada, China, Italy and Japan. To be a member of the 1%, a person now needs over $870,000 in net assets. Twofifths of this happy bunch can be found in America. In the past, the second-biggest contingent was always in Japan. But this year they live in China, home to 8.4% of them (and Hong Kong adds another 0.4%). This rapid accumulation of wealth is testimony to the industry and ambition of people like Mr Lee. Back in the 1970s, he gave his new company a sensible Scottish name, presumably because of the Scots’ admirable reputation for stewarding wealth. But China now has more than 1m more millionaires than the whole of Britain.

Autumn harvest

The chancellor says austerity is over. It is not quite so simple A splurge on health means overall spending will rise. But most departments will see flat or falling budgets

EMINISCING ABOUT budgets of yore, Kenneth Clarke, the Conservative chancellor of the exchequer from 1993 to 1997, recalled how very sensible they used to be. “Politics was different then,” he sighed. “People did not expect the budget would always be popular…even the popular budgets would have things they did not like.” Politics today, in Mr Clarke’s view, is too “short term”. In an era of 24-hour news and instant analysis on social media, politicians are too nervous to propose tough but necessary changes. On October 29th Philip Hammond, the current Tory chancellor, presented a very modern budget. It had only good stuff in it: big spending rises and juicy tax cuts. Mr Hammond proclaimed three times that fiscal austerity, in place since 2010, was “coming to an end”. And despite all the giveaways, he boasted that the public finances remained healthy. On current forecasts the ratio of public debt to GDP, which rose to 85% after the financial crisis of 2008-09, is now falling. For now, Mr Hammond is all things to all men. But the chancellor cannot forever ignore the big fiscal challenges facing Britain. Before each budget the Office for Budget Responsibility (OBR), the fiscal watchdog, presents the chancellor with a new set of

forecasts. This time Mr Hammond could not believe his luck. Over the financial year Britain will borrow about £10bn ($13bn, or 0.5% of GDP) less than had been forecast in March, possibly because the economy is bigger than forecasters had previously believed. By the end of the OBR’s forecast period, in 2023, the public finances will be some £20bn healthier than expected. The obr giveth and taketh away Mr Hammond could have used this windfall to reduce the budget deficit, with a view to bringing down public debt more quickly. Had he made no changes to policy, the OBR reckons, by 2023 the budget would have been in surplus for the first time since 2000. Instead the chancellor promised the big-

gest spending boost since at least 2010. The National Health Service (NHS) will get more than £20bn extra per year. Defence will also get a one-off payment of £1bn, spread over the next two years. Having been in steady decline for eight years, overall departmental spending will now grow once again in real terms. By Mr Hammond’s logic, this means that austerity is coming to an end. The change in tack is motivated more by politics than economics. Many Tory MPs are wavering over whether to support Theresa May, the prime minister, when she presents her hoped-for Brexit deal to Parliament. After a feelgood budget they are less likely to kick up a fuss. Mr Hammond also found enough money to grant the city of Belfast a devolution deal

worth £350m, as well as £2m to restore the city centre following a recent fire. That ought to mollify MPs from Northern Ireland’s Democratic Unionist Party, who have threatened to vote down any Brexit deal that erects new trade barriers between the province and the mainland. The prime minister and the chancellor may also be looking to shore up their position beyond March 29th, when Britain is due to leave the European Union and when some Tory MPs may decide it is time to get a new leader. Talking of the end of austerity is intended to blunt the message of the opposition Labour Party, whose anti-austerity rhetoric has chimed with many Britons. History shows that governments often present giveaway budgets ahead of elections. However, Mr Hammond’s allthings-to-all-men approach to fiscal policy creates hazards. Declaring the end of austerity is a risky political strategy. Although overall spending is to rise, this is only because of the big dollops of cash given to a few protected departments, chiefly health (see chart). The budgets of other departments, including the Home Office and Ministry of Justice, face more cuts. Stories of rising rough sleeping and out-of-control prisons will not go away. Even with the boost, annual growth in spending

on the NHS will remain below its long-run average. Britain’s worst-off households are particularly unlikely to feel as though austerity is over. True, the minimum wage will rise by 5% in April. In the budget Mr Hammond also put a bit of extra money towards universal credit, a big welfare reform, increasing the amount that a claimant may earn before benefits are withdrawn. Before the budget, universal credit was less generous than the already hardnosed benefits system it replaced. Now it is probably slightly more so.

Monday 05 November 2018

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BUSINESS DAY

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Monday 05 November 2018

BUSINESS

Monday 05 November 2018

COMPANIES & MARKETS

Capacity utilization underpins C&l Leasing profit margin

Pg. 20

C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

Sterling Bank’s bad loans are turning the corner LOLADE AKINMURELE

terling bank s aw i m p a i rment charges decline by 5 2 . 6 p e rc e n t to N3.62 billion in the third quarter of 2018 from N7.6 billion the previous year, leading to a slide in the tier three lender’s Non-Performing Loans to 5.4 percent, according to its financial statement published Friday. The decline in impairment charges was a major contributor to profit and analysts expect the trend to be sustained by yearend. The bank’s gross earnings grew 21.1 percent to N114.6 billion as at September 2018, helped by a 31.2 percent increase in non-interest income to N21 billion and a 19.03 percent rise in interest income to N93.6 billion. Profit after tax jumped 38.95 percent to N8.21 billion in the period under review from N5.91 billion a year before. The bank’s share price closed at N1.60 Friday, unchanged from the previous day’s closing price. The bank has a Return

Last week’s best performing stocks (Oct.29-Nov. 2) Presco leads weekly gains as Eterna slumps

orte Oil Plc looks set to end the year 2018 on a positive note as it recorded a Profit After Tax (PAT) of N78 billion in 9months 2018 compared to a loss of N626 million recorded in the corresponding period of 2017. BusinessDay analysis revealed revenue increased by 39.0 percent year on year to N94.8 billion in 9months 2018 compared to N68 billion recorded in 9Months 2017 while profit for the period improved to N9.1 billion in 9months 2018 from N5 billion recorded in 9months 2017. On a quarterly basis, the firm made an aftertax loss of N24 million in quarter 3 2018 compared to N837 million in q3 2017 while finance income reduced to N742 million in

Low product supply eats into MRS revenue LOLADE AKINMURELE

Source: Meristem on Equity (ROE) of 10.19 percent, Return on Assets (ROA) of 1 percent and Net margin of 7.05 percent. The bank has a book value of 0.4 times, which implies that investors are

willing to pay N0.4 naira for every naira of shareholder’s funds. That book value is slightly lower than the industry average of tier-three banks of 0.5 times.

The reduction in the bank’s impairment charges also helped bolster cost of risk ratio to 0.80 percent in the nine months through September 2018 from 1.80 percent in 2017.

Loans and advances to customers climbed 10.7 percent to N662 billion from N598 billion while customer deposits rose 5.61 percent to N723 billion from N684.8 billion.

Forte Oil bounces back from loss with N78bn profit DIPO OLADEHINDE

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9months 2018 from N1.1 billion in 9months 2017. Also, Forte oil’s quart e r t h re e 2 0 1 8 re v e nu e grew by 54.7 percent Year-on-Year to N33 billion largely supported by the rise in fuel sales of 58.7 percent year on year which accounted for about 89.6 percent of total revenue. Ac c o rd i ng t o f igu re s from its 9month 2017, Gross profit increased to N8.4 billion in 9months 2018 from N7.3 billion in 9months 2017 while operating profit increased to N2.56 billion from N1.4 billion in 9months 2017. T h e Ye a r o n y e a r growth in turnover was also supported by higher lubricants sales of 2.1 percent during the quarter. How ever, on a quarter on quarter basis revenue slid to 1.4 percent which was attributed to the Quarter on Quarter drop in turnover to lower supply of Premium Motor

Sp r i t ( P M S ) by Nig e r i a National petroleum Corporation (NNPC) during the quarter. In the period under review Total non-current asset stood at N11.4 billion from N68 billion recorded in 9months 2017 while full year 2017 figures stood at N71.2 billion. Total current asset in 9 m o nt h s 2 0 1 8 s t o o d at N136 billion compare to N79 billion recorded in corresponding period of 2017 while full year 2017 figures stood at N76 billion. To t a l n o n c u r re n t l i abilities increased to N8.7 billion in 9months 2018 from 2017 9months figures of N26 billion while full year 2017 stood at N23 billion. For te Oil re corde d a lower gross margin of 8.4 percent in quarter 3 2018 from Q2 2018 of 9.5 percent pressured by higher landing costs.

Also, Operating margin declined to 2.4 percent in Q3 2018 from Q2 2018 of 2.8 percent. Lean profitability marg i n s a n d h ig h e r n e t f inance costs. Earlier in may this year, Shareholders of Forte Oil Plc gave a nod to the proposal of the board of directors to restructure the business by divesting its upstream services , power generating businesses in Nigeria and downstream business in Ghana. The approval was given by the shareholders at its annual general meeting held Lagos, saying the proceeds from the divestment be used to fund the d ow n s t re a m ma rke t i ng business. Forte Oil Plc had said its decision to focus on d i v e s t s f ro m u p s t re a m services and power generating business es w ill boost its distributable earnings for the benefit of shareholders.

According to Forte Oil Plc, following the significant changes in the oil and gas industr y in recent years, it believed that only downstream operators with huge investments in both storage a n d d i s t r i bu t i o n i n f rastructures can remain competitive and operationally efficient in the long run. The company said despite the significant resources deployed the upstream services business has consistently contributed less than seven to the Group earnings in the last three financial years. Similarly, its downstream subsidiary in Ghana has consistently declared losses after tax i n t h e l a s t t h re e y e a r s and has substantial bad and uncollectable trade debts in the business as a result of negative economic conditions and currency devaluation in prior years.

RS Nigeria recorded a 29.33 percent decline in revenue to N13.76 billion in the third quarter of 2018 from N19.47 billion in the third quarter of 2017, as low sales were recorded in key segments of the refined petroleum products marketer, according a financial report published Friday. A 16.13 growth in the sale of Premium Motor Spirit (PMS) or petrol was offset by 41.59 percent and 41.07 percent declines in sales of Automotive Gas Oil (AGO) and Dual Purpose Kerosene (DPK), dragging revenue from the retail segment by 4.25 percent. Revenue from the aviation and lubes segments also dipped 33.76 percent and 10.52 percent to N4.93 billion and N2.77 billion. “From full year 2018, we expect low sales from AGO, ATK and DPK to moderate top line performance and have therefore revised our revenue growth projection lower from 11.91 percent to 4 percent,” Kikelomo Alatise, an analyst at Lagos-based investment firm, Meristem Securities Limited, said in a Nov.2 note to clients. Meristem has a SELL rating on MRS, with a downside potential of 15.85 percent from its current price of N28.55, where it closed Friday, according to NSE data. The share price is closer to the firm’s year to date low of N27 than it is to its year to date high of N36. MRS has a return on equity of 0.66 percent and return on assets of 0.26 percent. The stock has returned 3.97 percent since the start of 2018.

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COMPANIES & MARKETS Capacity utilization underpins C&l Leasing profit margin BALA AUGIE

and I Leasing Nigeria Plc was able to translate each unit of Naira invested in sales into higher profit, thanks to improvement in capacity utilization from both marine and nonmarine assets. The company also attributed the impressive results to a significant improvement in efficiency and efficient marketing strategy as it continues to tap into the country’s robust market. For the first nine months through September 20187, C and l Leasing’s net profit margin rose to 6.0 percent in September 2018 from 5.20 percent as at September 2017. A six percent profit margin means for each N1 of revenue the company earns N0.10 in net profit. Earnings before interest, taxation, depreciation and amortization followed the same growth trajectory as it increased to 36.50 percent in September 2018 from 36.40 percent the previous year.

C and l Leasing recorded growth at the top and bottom line even amid a tough and unpredictable macroeconomic environment, bearish sentiment in the stock market, trade war between China and the United States, and emerging market sell off brought on by political risk is Turkey, Argentina, and South Africa. Profit after tax (PAT) increased by 25.0 percent year on year to N1.20 billion in the period under review from N950.0 million as a5t September 2017. Gross earnings were up 15.60 percent to N19.9 billion as against N17.20 billion the previous year. A breakdown of revenue shows Lease rental income rose by 17.50 percent to N13.90 billion in September 2018 from N11.80 billion the previous year. Personnel outsourcing income increased by 10.4 percent to N5.0 billion as against N4.50 billion the previous year. “This result was achieved on the back of increased efficiency from all the business units as

well as improvement in capacity utilisation of both marine and non-marine assets,” said Andrew Otike-Odibi, managing director/ CEO of C&I Leasing Plc “This continued progress of our business units and brands is the result of our dedication to quality service delivery and efficient processes coupled with increased visibility following some successful strategic marketing activities,” said Otike-Odibi. Odibi said the company’s capital adequacy ratio still stood at 8.9 percent in the period under review, below the CBN minimum requirement of 12.5 percent “This is due to the pending conversion of $10 million loan stock from Abraaj which is expected to be completed through 2018 and result in our CAR returning to normalized levels,” said Odibi. C&I Leasing Plc’s N7bn bond issuance has been oversubscribed by 33 per cent, as it plans to use the funds raised to buy more expensive vessels to lease to oil companies and expand its operations in Ghana.

NSE lifts suspension on Unity Bank shares LOLADE AKINMURELE

he Nigerian Stock Exchange lifted a ban placed on trading of Unity bank stocks Tuesday Nov.2, after the regulator confirmed that the local lender has filed its outstanding audited and interim financial statements to the exchange. Unity bank was one of six companies that included Fortis Microfinance Bank Plc, Thomas Wyatt Nigeria Plc and Multi-Trex Intergrated Foods Plc, whose shares were banned from being traded a day before on Nov 1, by the NSE for lack of timely submission of their financial reports. Golden Guinea Breweries Plc and Deap Capital Management & Trust Plc were also among the affected companies. “In view of the submission of the Company’s accounts and pursuant to Rule 3.3 of the Default Filing Rules, which provides that; “The suspension of trading in the issuer’s securities shall be lifted upon submission of the relevant accounts provided,” the Exchange is satisfied

that the accounts comply with all applicable rules of The Exchange,” the NSE said in a statement Tuesday. Unity bank, in a statement announcing the submission of its financial results Tuesday, blamed the initial delay on “certain corporate actions including ongoing discussions with the bank’s prospective investors undertaken by the bank which necessitated extensive reviews by our primary regulator.” “In furtherance of this, the bank consulted extensively with both the NSE and Central bank of Nigeria and obtained extension of up to October 31 2018 to file the accounts for which it remains appreciative,” the bank said in a statement signed by company secretary, Mohammed Shehu. Unity bank’s share price fell the most since October 11, after sliding 8.97 percent to N0.70 Friday, according to NSE data. The company has yet to release 2017 financial statements after reporting its second straight year of negative capital adequacy ratios in 2016. That year, net income slid almost 54 percent to N2.18 billion, with assets of N493 billion, accord-

ing to the annual report. The lender in April said it had submitted its audited financial statements to the central bank for review and those will be filed with the Nigerian Stock Exchange once this process is concluded. Unity Bank Plc sold N400 billion ($1.1 billion) of bad loans last September to clean up its balance sheet as it seeks to conclude talks for a cash injection aimed at stabilising the lender. The disposal to Frontier Capital Alternative Asset Limited of the toxic assets cut the ratio of non-performing loans to near zero from almost 50 per cent and helped to shore up Unity Bank’s liquidity, Bloomberg quoted its Chief Financial Officer, Ebenezer Kolawole, as saying in an interview. He said the deal helped the lender to sign an agreement with a foreign equity investor that it hopes to finalise during the first half of 2019. Unity Bank is trying to raise about N270 billion to recapitalise its operations after missing a regulatory deadline last year to bolster the amount of cash it sets aside as a buffer against potential shocks.

Accenture empowers young entrepreneurs through NES startups pitch

s part of its commitment to youth empowerment and nation building, Accenture Nigeriahasannounceditsintention to continue to empower young entrepreneurs in the country through the Nigerian Economic Summit (NES) Startup Pitch.

Early this year, the firm offered to provide free professional advisory services and skill development for eight selected tech entrepreneurs chosen by a team of investor experts during the 23rd Nigerian Economic Summit (NES23) Startup Pitch in Abuja. Today, the young entrepreneurs have been inspired to do more – growing their small businesses following the mentorship

programme. According to Toluleke Adenmosun, Accenture Nigeria’s managing director financial services, empowering startups with skills and insights that will enable them make significant contributions to the economy of the country is a commitment that the company is very passionate about. “We believe in mentorship and knowledge sharing as a way buildingabettersociety.AtAccenture, we are very passionate about proffering solutions to problems. That’s why we decided to take up theresponsibilityofmentoringthe winners of NES 23 Startup Pitch”, she said. “It’s part of our Corporate

Social Responsibility and we are veryproudtohavepartneredwith the Nigerian Economic Summit Group (NESG) to have make our contributions to the nation building through the initiative,” she added. The eight entrepreneurs that benefited from Accenture mentorship programme are: L&L Foods, Accounteer, My Padi, Academix, Piggy Bank, Insight Africa,OjoroKitchenandEdusko. Accenture also sponsored the NES24 Startup Pitch Event which took place on Sunday, October 21, 2018 at the Transcorp Hilton Hotel, Abuja and intend to offer similar mentorship programme to the winners.

Monday 05 November 2018

COMPANIES & MARKETS Business Event

Iheanyi Ononiwu, head, financial inclusion, Diamond Bank; Mercy Makinde, founder, Amazing Amazon Initiative; Uche Ben-Uzoebo,-group head, agency & merchant services, Diamond Bank; Hajiya Hafsat Mohammed Baba, commissioner of women affairs, Kaduna State; Kuburat Amodu-Ode, area manager, Kaduna Kachia Diamond Bank; Fatimah Pollit, branch manager, Isa Kaita Diamond Bank, during the BETA WOMAN BETA NAIJA event in Kaduna recently

L-R: Afolabi Olorode, director of administration; Oyinda Akinyemi, director of finance; Chuka Eseka, incoming president; Oyinda Akinyemi, director of finance; Sonnie Ayere, outgoing president; Ike Chioke, 1st vice president, and Samuel Chidoka, director of publicity, all of Association of Issuing Houses of Nigeria, during the 2017 annual general meeting and election of new officers in Lagos. Pic by Pius Okeosisi

L-R: Ayo Omotosho, conveners; Abiola Dosunmu, erelu of Lagos; Bashir Muhammad, acting secretary Social Development Secretariat FCT Abuja And Omotayo Omotosho, Former DG, Nigerian Tourism Development Corporation, at the Destination Tourism Night 2018, in Lagos.

L-R: Tuna Gulenc, vice president, regional sales, Daikin Middle East & Africa FZE; Yuji Miyata, chairman, Daikin Middle East & Africa FZE; Suraj Rupani, promoter, Panaserv Nigeria Limited, and Mohamed Abbas, regional director, Africa & Near East Daikin Middle East & Africa FZE, during the Launch of the New R-32 Inverter Split Wall Mounted Units in Lagos, recently.

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CBN misses 2017 NFIS targets Endurance Okafor

he central Bank of Nigeria (CBN) have disclosed its failure to meet the set National Financial Inclusion Strategy (NFIS) targets for the year 2017. “Overall, progress towards achieving the NFIS targets has fallen short of the annualized targets for the year 2017. We are hoping that concerted efforts and policy initiatives rolled out in 2017 will yield more positive outcomes in subsequent years starting from 2018,” CBN said in the report. This was disclosed in the apex bank’s 2017 annual report on NFIS implementation, published on 1st of November 2018. The Annual Report on NFIS implementation is a compendium of statistical analysis, reviews of periodic returns from stakeholders, desk research on local and international developments, discussions and review meetings, the report read. BusinessDay analysis of the report revealed that only one out of the set financial inclusion strategy projections was achieved. The apex bank had a 59.8 percent (59.3m Adults) set target as the number of Nigerians it planned to bring into the cycle of those having access to a payment product with a formal financial institution but 52.3 percent of that was achieved. 63.6 percent of adult population having a savings product with a formal financial institution was achieved in the year under review, this however surpassed the set target of 49.2 percent (48.8m adults). 17.1 percent of adult population having borrowed or paid back a loan through a regulated financial institution in the 12 months of 2017 was achieved compared to the set 31.6 percent (31.3m Adults) target. Also, 3.8 percent of adult population covered by a regulated insurance policy was attained as against the set 28.6 percent (28.4m Adults) projection. While, lastly, 28.2 percent of adult population registered with a regulated pension scheme was achieved, which is less than the 29.2percent (29m Adults) projected for the year was achieved. “Financial Inclusion is absolutely important for us as an economy. We need to be able to ensure that all of our people, wherever they live, no matter how far away they are can be reached with financial products,”

Yemi Osinbajo, Vice President of Nigeria said. Although one of the key milestones of 2017 as disclosed by CBN was the approval of a State level Steering Committee: Financial Inclusion State Steering Committee (FISSCO). “Recently, FISSCO was also added to the governance structure to further deepen strategy implementation at the state level.” In the same year under review, the World Bank’s Global Findex Database released 19, April 2018 revealed there was a slump in the level of financial inclusion in Nigeria. “Financial inclusion is on the rise globally, accelerated by mobile phones and the internet, but gains have been uneven across countries,” the World Bank said in a statement. Nigerian adults who are 25 years and above with bank accounts declined by 5 basis points from 49 percent in 2014 to 44 percent in 2017. This was not different with account holders over 15 years, as their numbers fell 4 percentage points from 44 percent in 2014 to 40 percent in 2017, as compiled from the latest World Bank’s Global Findex Database. The data shows that 51 percent of Nigerian male adults had a bank account in 2017 compared to the 27

percent recorded for female adults; this brings the gap between the male and female to 24 percentage points. This is however bigger than the 20 percentage points gap that was recorded in 2014 when the total male with an account was at 54 percent with females at 34 percent. “Nigeria stands a better opportunity in exploring telecoms to help spur financial inclusion and as such there is need for accelerated regulatory framework between National Communication Commission (NCC) and Central Bank of Nigeria (CBN), as the world is moving on very fast with regards to mobile money,” Tajudeen Ibrahim, Head of Research at Chapel Hill Denham Securities Limited said. Meanwhile, in mid 2018, the central bank of Nigeria had thrown in the towel in achieving the set 80 percent financial inclusion target by the year 2020. As a result it came up with a reviewed strategy. The review came up with the following critical themes to scale up achievement in the financial inclusion targets as outlined in three steps: - Focus on building foundations: creating a controlled and enabling environment for innovation to thrive, whilst assuring overall financial system stability;

enhancing private sector understanding and interest in Financial Inclusion objectives; expanding Agent networks; and accelerating issuance of the national identity number to all citizens. The other step is unlocking high potential models: comprising Digital Financial Services (DFS) and Community lending models through Microfinance. While the third step is - Broadening and deepening inclusion: investments in tailored savings and credit products, accelerating digitization of government payments, including social transfers and Government to Persons (G2P), Persons to Government (P2G) and Financial and Digital literacy. “Our target is to bridge the 20 percent exclusion rate by 2020…we need to work on propagating digital financial services as simple, flexible and easy alternative channels for reaching our remote areas and rural hinterland,” CBN cited. Meanwhile the Governing Structure of NFIS consist of; the National Financial Inclusion Steering Committee, chaired by the CB N governor, comprises the Heads of relevant Ministries, Departments and Agencies (MDAs), Industry Associations, Regulators and Technical Advisory companies.

It provides high-level policy and strategic direction for the implementation process. The National Financial Inclusion Technical Committee, chaired by the CBN Deputy Governor, Financial System Stability, comprises CBN Directors as well as equivalents within relevant Ministries, Departments and Agencies, Industry Associations, Regulators and Technical Advisory companies. It provides technical support and validates data supplied on financial inclusion. The Technical Committee carries out its operational activities through Working Groups – Products, Channels, Financial Literacy and Special Interventions Working Groups: The Working Groups develop and implement annual work plans in order to achieve the defined financial inclusion targets by 2020 and monitor implementation of the strategy. The Financial Inclusion Secretariat which is a Unit within the CBN, which was established to run the day-to-day coordination, data management and reporting on the National Financial Inclusion Strategy implementation process. It comprises three key offices, the Strategy Coordination Office, the Data Management Office and the Digital Financial Services Programme Management Unit.

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Monday 05 November 2018

More dissenting voices emerge as experts rally support for AfCFTA ODINAKA ANUDU

he private sector, academics and trade experts are not on the same page on the African Continental Free Trade Area (AfCFTA) as each marshals arguments on why Nigeria should sign or opt out of the treaty. At a one-day conference organised by the Nigerian Institute of International Affairs (NIIA) in Lagos last Wednesday, Chibuzo Nwoke, a professor and vice chancellor of Oduduwa University, raised a number of questions for the Nigerian trade contingent, saying that though the country had not rejected the AfCFTA, the federal government must have a closer look at the place of regional economic communities in the implementation of the trade treaty. “How will the Common External Tariff (CET) and the ECOWAS Trade Liberalisation Scheme (ETLS) fit into the scheme? How was 90: 10 arrived at? Is the AfCFTA consistent with the Economic Recovery and Growth Plan (ERGP)? We need to ensure that the Nigerian economy remains competitive,” Nwoke said. He explained that protectionism was not a totally bad idea as countries often came up with strategies to protect

their local industries. Following Nwoke is the Manufacturers Association of Nigeria (MAN), which stated that it was not against the trade treaty as perceived in some quarters, but pointed out that there was an ambiguous basis for the determination of 90:10 Market Access ratios, set to be achieved within five years. Segun Ajayi-Kadir, director-general of MAN, said the thinking behind the instantaneous implementation of Market Access without negotiating the Rules of Origin was untidy and ran contrary to sound trade negotiation practice. For starters, the AfCFTA is

easily the largest trade agreement since the World Trade Organisation (WTO) in 1994, targeted at creating a single market for Africa’s 1.2 billion people and exposing each country to a $3.4 trillion opportunity. The deal is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 if all African countries sign up. The 90:10 Market Access means that 90 percent of goods will be liberalised while only 10 percent will be protected. Similarly, Rules of Origin is used to determine the country from which products emanate. Ajayi-Kadir, who was represented by Oluwasegun

Osidipe, director of Economics and Statistics at MAN, said the association was concerned about AfCFTA because there was hastiness attached to the completion of the whole process, even when there was absence of clear safety nets, trade remedies and well though-out dispute resolution mechanisms to protect the interest of many African countries. “Nigeria should not sign the AfCFTA based on bandwagon effect or on the grounds of diplomatic niceties,” he said, adding that the association remained resolute in its belief that a trade agreement that would improve intra-African trade was

desirable for the continent’s development. Francisca Nlerum, associate professor at the Nigerian Institute of Advanced Legal Studies (NIALS), disagreed, saying that the trade treaty was most likely one of the most important international trade agreements regarding commerce and business, adding, however, that most of the objectives of the continental trade were complex and would require further implementation and more negotiations. “The Director-General and Chief Negotiator, Nigerian Office for Trade Negotiations, Ambassador Chiedu Osakwe, disclosed that 49 members of the African Union have signed the CFTA agreement while six have ratified and, out of the 15 members in ECOWAS,13 have signed, remaining Nigeria and Guinea Bissau, and the world moves on nonetheless. I agree with him. Nigeria should hurry the consultation process and sign because the world is moving on.” Iyalode Alaba-Lawson, national president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said Nigeria was deeply involved in the negotiation process from the beginning and should not afford to be excluded from a common African market because it was a veritable strategy to raise the competitiveness of African economies

in the global market. Alaba-Lawson, who was represented Ayoola Olukanni, director-general of NACCIMA, pointed out that the association was in support of conducting baseline studies but added that this should not be allowed to stall the AfCFTA process. “AfCFTA is entering critical stages and negotiations are going on in priority sectors while Nigeria is still indecisive. We must therefore remember that the world will not wait for us. We need to sign so that we can be involved in negotiations, especially with regards with our areas of concern,” she said. Abolade Adeniji, professor of History and International Studies at Lagos State University, explained that in order to multiply the benefits of AfCFTA and promote developmental regionalism in Africa, a comprehensive vision of trade and development must be put in place. “Expanded market for African goods and services, unobstructed factor movements and reallocation of resources should promote economic diversification, structural transformation, technological development, and the movement of human capital. For the CFTA to succeed, it must be aggressive in dismantling barriers and reducing the cost of intra-African trade. It must also contribute to improving productivity and competitiveness,” Adeniji said.

Relief for manufacturers as SON removes PRC as requirement for cargo clearing ODINAKA ANUDU

he Standards Organisation of Nigeria (SON) says its Product Registration Certificate (PRC) is no longer required for clearing cargoes at the country’s point of entry. This move favours manufacturers and importers as facilitates speedy movement of cargoes. Osita Aboloma, directorgeneral, SON, explained that the new development was in line with the present administration’s ease of doing business mandate. Aboloma said the move, which commenced on 1st November, was targeted at curbing the excesses of corrupt officials who take advantage of the

PRC to constitute unnecessary delay of cargoes at the ports. At a nationwide awareness programme to sensitise members of the Auto Spare Parts and Machinery Dealers Association (ASPMDA) in

Lagos on dangers of substandard products in circulation, he said PRC was still part of SON’s minimum requirements that must be met by both importers and manufacturers of goods, stressing that the removal from cargo

clearance was to fast track cargo processes. He stated the agency had also gone as far as reducing all its fees to encourage local manufacturers and attract Foreign Direct Investments (FDIs) into the country. “The fight against the influx of substandard goods is continuous and as you can see, we have to bring the fight to the biggest market in West Africa. We are here to get the buy-in of importers and distributors in a bid to agree to work together as a team to curb the influx of substandard life-endangering auto spare parts into Nigeria.” He appealed to importers and local manufacturers to comply with the minimum requirement of the Nigeria Industrial Standard (NIS), re-

stating the agency’s commitment to protect investments. “The government is diversifying from a single product economy into other products. So, we must encourage other sectors to grow; we must open up our doors to genuine foreign businesses and protect their investments. We are also calling on the public to report to SON whenever they see anything unwholesome. It is a win-win situation if people comply with standards because it will go a long way in boosting consumer confidence and increasing revenues of importers and manufacturers,” he said. In acknowledging the vital role technology plays in global trade and seamless business transactions, the

standards body has automated its processes to facilitate trade in the nation’s maritime downstream sector, he said. Also speaking at the event, Daniel Offorkansi, president, ASPMDA, , said SON was vital in safeguarding the lives and property of Nigerians, adding that the association had set up a committee comprising of SON officials and ASPMDA members to combat the preponderance of fake and substandard goods in the country. Tersoo Orngudwem, acting director, Product Certification, SON, said there were over 32 brand new laboratories in Nigeria available for testing and certifying products in the country, urging manufacturers and importers to feel free to bring their products for testing.

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real sector watch ‘We are connecting local firms with foreign businesses at Lagos trade fair’

Gabriel Idahosa is the vice president of the Lagos Chamber of Commerce and Industry (LCCI). Idahosa is also the chairman of Trade Promotions Board of the chamber, which is in charge of the on-going Lagos International Trade Fair. In this interview with ODINAKA ANUDU, he explains why the fair is important for manufacturers, exporters, foreign investors and the Nigerian economy. You have often spoken about ‘Big Changes’ for this year’s Lagos International Trade Fair. Tell us about these big changes?

hey are big changes because anyone who has been visiting this fair in the last 31 years when we started will notice clear differences. That is why we call them big changes. The first big change is the booking experience. In the past 31 years, you had to come to our office or you get a canvasser to come to the office and do the booking. But this year, you book online, pay online, get your receipt online and have your space and ticket online. You have a ticket like a street address. You can go to your space without human interface, unlike before when you had to come to start looking for people to guide you. The second big change is that no exhibitor is allowed to bring any loud speaker or do any construction or dancing on the fair ground. In place of that, we have a coordinated, harmonised information system. That is Lagos International Trade Fair (LITF) Radio, which gives information, entertainment and education to exhibitors and visitors. Our media partners use LITF Radio to announce their pres-

Gabriel Idahosa

ence. They use it to highlight their products and grant interviews. Again, every year, we used to have a theme. We have looked at this and decided that this enterprise should have a brand promise that is enduring, so that every stakeholder in the trade fair can interrogate it. We decided to adopt, ‘Connecting Businesses, Creating Value’. That is the brand promise on which the trade fair in future years will be built on. We are connecting local businesses

with foreign businesses in the city of Lagos. In previous years, some exhibitors, after the trade fair, decided to set up businesses, either here in Lagos or in other parts of Nigeria or West Africa, using Lagos as their head office. We have seen that actually, there is an in-built brand promise in the trade fair which we have not brought to the fore. All our activities are around this brand promise now. The other change that is not visible is security related. We have several layers of se-

curity—the ones that are visible such as the police, Army, LATSMA and other ones that we can’t talk about. We want to ensure that the entire 10day event is incident-free. Online booking has been very successful. We have had 100 percent success. We closed the online booking on 2nd October, but right now, we are taking a lot of offline booking. People who could not book online are coming now and we have to accommodate them. Eighty to 90 percent of our exhibitors have been able to walk in and have their bookings successfully. A lot of our media partners are already using the platform to expand their business. How many exhibitors do you have now? We have crossed the 2,000 mark and we are looking at between 2,000 and 2,500 exhibitors. We are looking at over 20 countries from all the continents by the time we sign off. Each year, LCCI keeps building tents for the trade fair. Don’t they cost you a lot? It costs a lot of money. We are forced to do that because we had to move from our permanent site at Badagry Expressway. We are operating from here temporarily. There are two possibilities. One is moving back to our original permanent site. We are in discussion with the

government, and they are positive, though not yet concluded. Another option is to have a new facility within the chamber and Lagos State government is helping. How much have you invested in this trade fair so far? A lot of these investments are proprietary, in the sense that we are unable to have this information in the public domain because there are several stakeholders involved. What we have done this year is to ensure we are able to break even. Our surplus used to be much better at the permanent site. Compare this year with last year in terms of number of exhibitors and revenue? As far back as mid-October, we had exceeded last year in terms of number of exhibitors and revenue. That was one clear positive effect of online booking, because online booking involves some discounts for early booking. Some exhibitors booked earlier than they used to do. So, that boosted our revenue and ensured we were able to make some savings. On the economic side of the trade fair, it is looking quite good. Let us look at the impact of the trade fair. From the ground level of economic impact, anything between 3,000 and 5,000

people are hired. Some started working three months ago. Some will continue to work throughout this fair and even after. These temporary jobs often lead to permanent jobs, either at our office or from our exhibitors. So, at the very base level of job creation, every year, the trade fair creates a lot of jobs. If you are looking at the tourism impact, people are coming from 22 countries. In fact, there are 200 companies coming from one country. You are talking about a large number of people who will spend money in hotels, who will stay beyond the trade fair, create more value in the economy for hoteliers, for food sellers and for the economy. Beyond that, exhibitors appoint distributors or wholesalers to represent them here in Nigeria or appoint exporters to supply them with raw materials. So, you find that a lot of exhibitors come with a lot of objectives. Some are here to sell their projects; some are here to appoint their representatives or get more suppliers of raw materials such as cashew, sesame seeds and fruits. Every year, we see lots of partnerships being done. Last year, we had Japan signing some MoUs with various institutions. If we track the years, we could get a lot of exhibitors who decided to build factories.

Cadbury director to launch book on non-oil export ODINAKA ANUDU

ala Yesufu, director, corporate and governmental affairs (West Africa) at Cadbury Nigeria plc, will unveil a book on non-oil export dynamics in Nigeria. The book entitled, ‘Export Architecture Roadmap: The Nigerian and Global Perspectives’ details opportunities in the non-oil export sector

and why it remains key to revivifying the economies of countries, including Nigeria. The foreword was written by Sanusi Lamido Sanusi, former Central Bank governor and current Emir of Kano, with endorsements from foreign trade ministers, a former World Bank chief, and diplomats. The book describes the easiest way of becoming an exporter in Nigeria and steps required to attain this status.

Bala Yesufu

Why is export important for individuals and nations? Who gains from exports? What happens to nations that pay little attention to exports? These and many related questions were answered by the author. The book also enumerates associated risks in export, and exposes intending exporters to exportable commodities and products, including the countries in why they are needed. The book challenges Nige-

rians and Africans to begin to get creative in order to earn more foreign exchange from export to serve as a buffer against external shocks. The book coincides with the 60th birthday of Yesufu, who has worked as senior export officer in blue-chip firms. Yesufu has distinguished himself in corporate communications and has worked in large enterprises including Nigerian Breweries.

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ECONOMY

These Charts show Unity Bank is beleaguered

(CIR) stood at 96 percent in September 2018, from an all-time low of 63.45 percent as at September 2014. It means expenses have been rising steadily since 2014. The bank is not making money and it is carrying higher costs. There is a lot of bad loans not yielding income, according to

Ayodeji Ebo, manading director/ CEO of Afrivest Securities Ltd. Small and mid-sized banks are grappling with a devaluation of the naira, rising bad loans and an oildependent economy that’s set to record its first annual contraction in more than two decades. This is because they

lack the capital buffers to weather the storm of headwinds compared to the tier one or big lenders. The Central Bank of Nigeria (CBN) has said three banks failed to meet the 30 percent liquidity ratio requirement as there have been slight improvements in banks financial health. “At end-June 2018, the

12.08 per cent, compared with 10.23 per cent and 11.51 per cent at end-December 2017 and end-June 2017, respectively. The development reflected the increase in banks’ total qualifying capital. “The industry threshold, however, remained at 15.0 per cent for banks with international authorisation and 10.0 per cent for banks with either national or regional authorisation,” said the apex bank in its 2018 half year economic review. “Asset quality of the banking industry, measured by the ratio of nonperforming loans to total loans (NPL ratio) fell to 12.45 per cent at end-June 2018, compared with 14.80 per cent and 15.02 per cent at end-December 2017 and end-June 2017, respectively. At this level, the ratio remained above the regulatory threshold of 5.0 per cent.

Insurers record growth in gross premium income in Q3 BALA AUGIE

he role of insurance i n t h e Ni g e r i a n economy cannot be overemphasised and that the strategic role it plays in underwriting business and individual risks is evident as 16 largest firms quoted on the floor of the bourse recorded a cumulative gross premium of N170.09 billion, reflecting a 13.86 percent growth

P.E

SHORT TAKES 379.84 billion naira

HSBC and UBS have closed their offices in Nigeria; the country’s central bank said in a report on Friday as it revealed the foreign direct investment in Nigeria fell to N379.84 billion ($1.2 billion) in the first half of the year from N532.63 billion ($1.7 billion) a industry average capital adequacy ratio (CAR) was year earlier

BALA AUGIE

t long last Unity Bank released its financial results after keeping shareholders on the edge of their seats. The small lender is struggling as total liabilities of N496.45 billion as at September 2018, exceeded total assets of N254.51 billion. This resulted in a negative shareholders fund of N242.30 billion in the period under review. This is unsurprising because Unity Bank has been carrying accumulated losses in its balance since 2013, data gathered by BusinessDay shows. A cursory look at the financial statement of the lender shows revenues have been ebbing while rising operating costs are eroding profitability. For instance, net income stood at N585 million in the third quarter of 2018, this compares to an all-time of N11.04 billion in the corresponding period of 2014. In short profits have been falling since the third quarter of 2014. Operating expenses are eating most of the windfall from top lines as evidenced in spiralling cost to income. Cost to income ratio

Monday 05 November 2018

over third quarter of 2016. This is an impressive performance since firms operate in an environment fraught with inflationary pressures, low consumer spending, volatile currencies, and apathy towards insurance. Despite the myriad of challenges bedevilling the insurers, experts say opportunities abound in the industry as industry penetrate rate stood at

0.40 percent in 2018. However, the country’s penetration rate makes the insurance sector a non-starter compared with South Africa with 16.9 percent and Kenya with 2.9 percent penetration respectively. A report for the insurance industry for 2017 has been released by Agusto & Co, a rating firm based in Nigeria. According to ratings

agency Augusto and Co, a rating agency, “ going forward, evolving risks such

as job losses, cyber risks among others will offer

Diamond Bank Diamond Bank last week denied it was in talks with investors to raise cash but said it was managing its capital, which borders on the regulatory minimum, to grow. Central Bank of Nigeria

The Central Bank of Nigeria has directed banks to intensify efforts at debt recovery, realisation of collateral for lost facilities and strengthening their risk management processes

Continues on page 27

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

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

Monday 05 November 2018

C002D5556

BUSINESS DAY

Markets Intelligence ECONOMY

Consumer goods firms wobble as headwinds take a toll BALA AUGIE

onsumer goods firms took a hit from the macroeconomic headwinds and tough operating environment, dealing a great blow on a sector that once allured investors. Even firms that have never kissed the canvas in decades- those that have never recorded losses- capitulated to the vagaries of macroecon0mic environment. Dwindling purchasing power among consumers, insecurity in the northern part of the country, decrepit infrastructure, high incidence of smuggling, counterfeiting locally manufactured products, and the menacing grid lock at the Apapa Ports have made it practically difficult for firms to make profit or bolster margins as amid sky high cost of production. Other challenges bedeviling the industry are: high excise duties on products, exorbitant cost of haulage, and congestion at the Lagos seaports arising from the non-functionality of other seaports in the country. As a result of the above stumbling blocks, the cumulative net income 13 largest consumer goods firms quoted on the floor of the bourse fell by 20.21 percent to N85.21 billion in September 2018 from N106.80 billion the previous year, this compares with 182.03 billion surge recorded at the bottom line in the 2017 and 2016 periods. The stellar performance recorded in 2017 was due to a price increase across key products and the introduction of the Importers’ and Exporters’ Window in early 2017. However, as consumers refused to

open their wallets, it became practically difficult for firms to pass cost to them, hence the inevitable contraction in revenue. Combined sales of the 13 firms fell by 7.59 percent to N1.11 trillion in September 2018, the first drop since 2013 when cumulative revenue were flat. Christian Orajekwe, equity research analyst at Cordros Capital said that Nigerians suffered significant erosion from Naira devaluation and increase in price of fuel while wages are yet to increase with inflationary consequences of those events. “After the recession, a lot of middle income class left the country in search of greener pastures thus dampening sales volumes as patronage reduced,”

said Orajekwe. Nigeria’s economy remains fragile as GDP grew by 1.50 percent in the second quarter of 2018, a downturn from 1.95 percent in the first quarter. To further exacerbate the already anaemic position of firms, consumers have refused to open their wallets, as Nigerians are getting poorer by the minutes, while unemployment rates are rising amid growing population. According to a recent World Bank data, 92.10 percent of Nigerians live at below $5.50 a day. The reality is that most people cannot afford to buy a packet of Spaghetti or proteins. Nigeria with a population of 180 million people has 87 million people, nearly half its population, in extreme poverty; as high inflation environ-

Insurers record growth in gross premium... Continued from page 26

prospects for the development of new insurance products” “We expect increased government spending in the near term which will support GPI growth. “In addition, micro insurance- which allows people purchase insurance cover in small daily premiums payable using mobile phones- is expected to gain traction in the near term with insurers using various avenues to reach the uncaptured market,” the report said. A breakdown of the financial statement of insurers shows AIICO Insurance Plc’s gross premium income (GPI) increased by 15.97 percent to N25.95 billion in September 2018 as against N22.35 billion the previous year. AxA Mansard’s gross premi-

um income was up 25.74 percent to N24.711m billion in the period under review as against N19.65 billion as at September 2017. Wapic Insurance Plc’s gross premium income rose by 18.29 percent to N8.62 billion in the

period under review as against N7.28 billion the previous year. Continental Reinsurance’s gross premium income increased by 21.33 percent to N26 billion in September 2018 from N21.43 billion the previous year.

ment continues to erode discretionary income. Expectedly, firms were unable to turn each Naira invested in sales into higher profit as profit margins shrunk. The cumulative average net profit margin of the 13 firms under our coverage fell to 3.91 percent in September 2018 from 4.67 percent the previous year. Nigerian Breweries recorded its first quarter loss in decades, albeit stiff competition from rival company- International Breweries- contributed to the beer makers’ woes. The consumer goods firms’ index has shed -26.79 percent since the start of the year.

US stocks retreat as Apple leads techs lower

S stocks turned lower after three straight days of solid gains, as a steep fall for Apple led a retreat for the broader technology sector and participants took a less optimistic view of the prospects of a thaw in US-Sino trade relations. European equities pared their early gains although the Stoxx 600 index still registered its best week since December 2016, while emerging market stocks — as measured by the FTSE EM index — extended their recent rally to reach a four-week high. The retreat for Wall Street also came as a robust US employment report helped reinforce expectations that the Federal Reserve would raise interest rates again next month, pushing Treasury yields and the dollar higher. Apple’s decline came in response to a disappointing outlook for holiday season sales from the company. “The fact the group will no longer report unit sales of iPhones and iPads suggests they don’t want to draw attention to the numbers, possibly because we might be near peak iPhone

sales,” added David Madden, analyst at CMC Markets UK. Apple’s worrying outlook followed disappointing guidance from a number of other big-name US companies during the quarterly reporting season. Meanwhile, there was plenty of uncertainty about the prospect of a trade deal between the US and China. Reports on Friday suggested that Donald Trump, US president, was looking to reach a deal before the end of this month and had asked officials to draw up a draft of a potential agreement But Larry Kudlow, Mr Trump’s top economic adviser, appeared to throw cold water on the prospect of an imminent agreement when he said there were no such plans in the works. “We’re not on the cusp of a deal,” Mr Kudlow said. Some observers suggested that Mr Trump’s remarks might be little more than an attempt to calm markets ahead of next week’s midterm elections, following the turbulence seen in October.

BUSINESS DAY

C002D5556

This is M NEY A daily guide to your Personal Finance

Monday 05 November 2018

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

Is there art in your investment portfolio?

alvator Mundi, the long-lost Leonardo da Vinci painting of Jesus Christ commissioned by King Louis XII of France more than 500 years ago, sold at Christie’s in New York for $450.3m, including auction house premium, shattering the world record for any work of art sold at an auction. The 3rd edition of Tokini Peterside’s ARTX Fair pulled a massive crowd; a mix of art lovers, collectors, investors, artists, curators, students and the curious. With major art fairs taking place across the globe from London, Brussels and Lagos; art enthusiasts, collectors and sophisticated investors are increasingly including works of fine art in their investment portfolios. Here are some thoughts about including art in yours: Capital Appreciation The “right” art usually appreciates steadily with time. If you have carefully chosen a piece and sought professional advice, and are prepared to wait, sometime in the future, your art is likely to be worth considerable more than what you paid for it. Art is Subjective The price of a painting or other piece of art is highly subjective and is worth just as much as a willing buyer is willing to pay for it. Several issues determine an artwork’s value including the artist, market trends, it’s condition, the subject and great PR. It is difficult to calculate the rate of return on investments in art. Art is a collectable; as it gets older or more rare, art pieces tend to increase or at least hold their value. There are no guarantees when it

comes to investing in art. Market Fluctuation A huge advantage of art as an investment class is that the inevitable volatility that you find in the financial markets is less so when it comes to art. Art investors thus avoid some of the sleepless nights that market volatility causes investors in bear markets. Limited Information When you invest in the financial markets, there is available information and analysis with which you can make informed decisions. Experts would have researched a company and its fundamentals, and looked at past performance which, even though does not guarantee future performance, gives some important signals. Think Long-Term Don’t try to “get rich quick” with art. Art is not very liquid and it can be difficult to sell quickly. Mutual funds and blue chip stocks can generally be bought and sold fairly easily, sometimes almost instantaneously with a ready established market. It is as simple as a telephone call to your stockbroker or just a click away if you trade for yourself. Selling art can be long, drawn out and involved; from valuers, dealers, insurance agents, lawyers and of course the tax authorities will be interested in capital gains. If you

want to get the best price possible, selling art can take time, effort, as well as planning and knowledge. Care for your Art For many investors, the fact that you control your physical asset and it is in your care is important. Whilst the main advantage of having art is the fact that it is there for you to enjoy, the responsibility for caring for it, displaying, maintaining and storing it can be a challenge and lies with you; it is thus important that it is preserved and insured in case of fire, flood or other disaster in order for it to retain its value. Is your Art Insured? Depending on your collection’s value, you will probably require an additional rider or on your home insurance policy that covers special pieces. Some insurers may require that you keep very valuable pieces in a vault and not on display them at home. Conditions vary from insurer to insurer; some do not have the expertise in-house to place an appropriate value. Be sure to check with your agent, what they will and will not cover. Diversification Asset diversification can reduce the overall risk of an investment portfolio. By spreading savings around different asset classes, investors can minimise volatility across their

Your collection should be a reflection of your taste and a part of your everyday life. Seek professional advice but also trust your own instincts

overall portfolio. Basically, it’s about not putting all your eggs in one basket. Artwork tends to hold its value and is generally not affected by market factors. A Hedge against Inflation Inflation can eat the value of the monetary based assets like certificates of deposits and other money market instruments. Art can act as a hedge against inflation, because of it being a store of value and wealth preservation. It is real and tangible. Include your Artwork in your Estate Plan. Be proactive about determining the future of your artwork. How do you pass on your collection to the next generation? Your children may love the same painting. Perhaps they are not interested and resent paying any capital

gains tax on art they have no interest in. Some paintings are far more valuable than others. Who gets what? These are all issues to consider as you would with other assets including stocks and property. Many serious collectors donate ownership; either fractional or outright, of their artwork to institutions. A professional art consultant can identify appropriate homes for your collection. Particularly when art collectors decide to donate the art pieces as charity there are tax advantages. Watch Emerging Artists If you are a novice investor with a small budget, art fairs and galleries are good places to start. There you will find emerging artists that have distinct pieces that are affordable. If something you like is more expensive, you will be surprised that some artists might agree to an instalment payment plan. Just ask. Just as with stocks and other investments, resist the noise. Hype and excess demand just inflates the price of any asset. Even if you don’t intend to sell your artwork, it is exciting to observe a star emerge, whose early pieces you acquired several years before. Do your Homework In spite of the compelling reasons to invest in

art, it is not an asset class you should venture into for investment purposes without careful consideration. Remember, every investment comes with a degree of risk and art is no different. Expertise in this asset class comes from careful research, being very involved in the sector and takes several years to cultivate. Buy Art because You Like It Art is certainly a viable investment asset to acquire but don’t bank on being able to sell your piece in Sotheby’s for a fortune in your lifetime! Ideally you should buy art because you love what you see; an important reason for being a collector is to be able to display such beauty and derive immense pleasure from it in your everyday life. Your collection should be a reflection of your taste and a part of your everyday life. Seek professional advice but also trust your own instincts. Even if it doesn’t appreciate significantly in value, you would have derived so much pleasure from it; this is priceless when it comes to quality of life.

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

Monday 05 November 2018

C002D5556

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: November 2 - November 9, 2018

KEY MACROECONOMIC INDICATORS GDP Growth (%)

1.50

Q2 2018 — lower by 0.45% compared to 1.95% in Q1 2018

Broad Money Supply (M2) (N’ trillion)

25.28

Increased by 1.68% in Sept’ 2018 from N22.27 trillion in Aug’ 2018

Credit to Private Sector (N’ trillion)

22.56

Increased by 0.40% in Sept’ 2018 from N22.56 trillion in Aug’ 2018

Currency in Circulation (N’ trillion)

1.928

Decreased by 0.12% in Sept’ 2018 from N1.926 trillion in Aug’ 2018

Inflation rate (%) (y-o-y)

11.28

Increased to 11.28% in September’ 2018 from 11.23% in August’ 2018

Monetary Policy Rate (%)

Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor)

14 (+2/-5)

Lending rate changed to 16% & Deposit rate 9%

External Reserves (US$ million)

42.00

October 31, 2018 figure — a decrease of 4.61from October start

Oil Price (US$/Barrel)

77.71

November 2, 2018 figure— a decrease of 5.27% from the prior week

Oil Production mbpd (OPEC)

1.75

September 2018 figure — an increase of 1.51% from August 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

2/11/18

26/10/18

32,124.94 11.73

Change(%)

32,907.33 12.01

(2.38) (2.38)

0.24

0.28

(14.70)

Value (N’bn)

2.85

1.96

45.26

MONEY MARKET NIBOR Friday Rate

Friday Rate

Change (Basis Point)

(%)

2/11/18

26/10/18

4.0800

10.3300

(625)

O/N CALL 30 Days

4.8300 4.6000 12.7404

11.4200 15.2917 14.0885

(659) (1069) (135)

90 Days

13.4052

14.1570

(75)

Friday

1 Month

OBB

FOREIGN EXCHANGE MARKET Market

Friday

Indicators

(N/$)

Rate (N/$)

2/11/18

26/10/18

2/01/18

Official (N) Inter-Bank (N)

306.60 362.33

306.55 362.55

306.40 361.00

BDC (N) Parallel (N)

363.50 362.00

362.99 361.00

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

Tenor

YTD Change

Friday

Change

(%)

(Basis Point)

26/10/18

3-Year 5-Year

0.00 15.00

0.00 14.91

0 9

7-Year 10-Year 20-Year

15.43 15.38 15.58

15.15 15.20 15.23

27 18 35

(5.27) 1.59

20.56 4.38

2,290.00 118.80 79.57 13.28 508.25

3.25 (2.78) 3.08 (4.46) 2.94

18.29 (8.76) 2.67 (13.37) 17.24

1,235.97 14.79 275.10

(0.01) 0.75 1.36

(6.19) (13.96) (16.08)

Friday

Change

(%)

(Basis Point)

26/10/18

11.85 12.67

13.22 13.27

(137) (60)

6 Mnths 9 Mnths 12 Mnths

13.51 15.37 16.56

13.52 14.40 16.10

(1) 96 46

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Change

(%)

(Basis Point)

2/11/18

26/10/18

Index

2,664.43

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.32 5.22

YTD return (%) YTD return (%)(US $)

8.47 -47.17

2,678.76

(0.53)

8.66 5.43

(3.91) (3.89)

9.05 -46.56

(0.58) (0.61)

TREASURY BILLS (MATURITIES)

Disclaimer

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

77.71 3.19

2/11/18

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

(%)

1 Mnth 3 Mnths

AVERAGE YIELDS

2/11/18

1-week Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

BOND MARKET Tenor

2/11/18

(%)

Volume (bn)

Tenor

Global Economy The Eurozone economy advanced 0.2% quarteron-quarter in Q3 2018, after a 0.4% expansion in the prior period. It is the weakest growth rate seen since Q2 2014 as Italy's economy stalled for the first time in almost four years according to the European Statistical Office (EUROSTAT). France's GDP growth rate was the strongest in almost a year (0.4% vs 0.2%) and Belgium's economy grew at a faster pace (0.4% vs 0.3%). Lithuania's GDP contracted for the first time in eight years (-0.4% vs 0.9%). In a separate development, the Bank of England voted unanimously to leave the Key policy rate steady at 0.75% on November 1st 2018. The Bank Policy makers hinted that further tightening might take place if the economy continues to grow in line with forecasts. The central bank lowered growth forecasts for both 2018 (1.3% from 1.4%) and 2019 (1.7% compared to 1.8%). Inflation is seen higher at 2.5% (2.3% in the August forecast) in the end of 2018 but lower at 2.1% (2.2 %) in Q4 2019. Elsewhere in Japan, the Bank of Japan kept its policy settings unchanged at its October meeting. The central bank maintained its benchmark for the 10-year government yield at around zero percent and kept a short-term interest rate of -0.1% for some funds deposited at the bank by financial institutions. The central bank also revised down inflation forecasts again, saying that the momentum toward achieving the price stability target of 2% is not sufficiently firm despite years of massive monetary easing.

91 Day 182 Day 364 Day

Amount (N' million) 7,851.74 43,522.53 93,915.15

Rate (%)

10.9752 13.49 14.4

Date 31-Oct-2018 31-Oct-2018 31-Oct-2018

Domestic Economy The Manufacturing Purchasing Managers' Index Survey conducted by the Central Bank of Nigeria (CBN) eased to 56.8 in October, from 56.2 index points in September. Although the performance still marked the eighteenth consecutive month of expansion in the manufacturing sector. Of the 14 subsectors surveyed, 13 reported growth in the review month in the following order: electrical equipment; petroleum & coal products; printing & related support activities; cement; chemical & pharmaceutical products; textile, apparel, leather & footwear; furniture & related products; transportation equipment; plastics & rubber products; food, beverage & tobacco products; fabricated metal products; non-metallic mineral products; and paper products. The primary metal subsector declined in the review month. In a separate development, the Central Bank of Nigeria's (CBN) Business Expectations Survey report for the month of October showed a less optimistic view on the macro economy as respondents' overall confidence index (CI) on the macro economy dipped. According to the report CI eased to 23.2 index points relative to 24.8 points in September. Firms identified insufficient power supply, high interest rate, unfavourable economic climate, financial problems, unclear economic laws, unfavourable political climate, insufficient demand and access to credit as the major factors constraining business activity in the current month. The businesses outlook for October 2018 however showed greater confidence in the macro economy at 64.4 index points compared to 61.6 index points previously buoyed by improvements in volume of total order, business activity, and financial conditions. Stock Market The bears reigned supreme as indicators on the local bourse closed on a negative note last week. The market was driven by losses in the industrial & consumer goods sector, h ealthcare, conglomerates and oil & gas sector as earnings reports from the sectors came below market forecast. The All share Index (ASI) tapered by 2.38% to 32,124.94 points from 32,907.33 points the previous week. Similarly, Market Capitalization declined by a similar rate at 2.38% to N11.73 trillion from N12.01 trillion the prior week. This week, the pullback is likely to continue as investors digest the numbers and reposition their portfolios ahead of December rally. Money Market The overnight lending rate dipped last week as inflow from Federation Accounts Allocation

Committee (FAAC) estimated at N358 billion hit the system. Consequently, short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 4.08% and 4.83% from 10.33% and 11.42% respectively the previous week. In the same vein, longer dated placements trended downwards. The 30-day and 90-day NIBOR closed lower at 12.74% and 13.41% from 14.09% and 14.16% respectively the previous week. This week, cost of funds in the interbank money market is expected to tick up in response to expected Retail Secondary Market Intervention Sales (SMIS) auction by the CBN. Foreign Exchange Market The local unit settled in varying directions in the prior week against the dollar. At the interbank window the naira appreciated to N362.33/$ from N362.55/$, while it remained stable at N362/$ in the parallel market week on week. The official rate settled lower at N306.60/$ compared to N306.55/$ the week before. The relative stability of the local currency continues to be supported by the intervention of the apex bank. This week, we envisage the naira will oscillate around current levels, as the CBN continues to support the naira. Bond Market Average bond yields trended northwards for the fourth consecutive week. The trend witnessed was due to sell-off by off-shore investors. Concerns about supply outweighing demand as take up of for the Feb 2028 bond to be auctioned this month remains low is also a reason for the upward trend seen in yields. Yields on the five-, seven-, ten- and twenty-year debt papers settled at 15.00%, 15.43%, 15.38% and 15.58%% from 14.91%, 15.15%, 15.20 and 15.23% respectively the previous week. The Access Bank Bond index declined marginally by 14.32 points to close at 2,664.43 points from 2,678.76 points the previous week. This week, we expect investors to remain cautious about trading as they monitor the market in a bid to sell off or retain their current position. Commodities Oil prices retreated last week after data showed that OPEC and the U.S. are together adding enormous volumes of new supply, which together have softened the oil market. The 15 countries in OPEC produced an average 33.31 million barrels per day in October, the highest since December 2016. The Energy Information Administration (EIA) also reported U.S. production levels for August, estimates that the U.S. produced a whopping 11.346 mb/d in August, an increase of 416,000 bpd from a month earlier. Investors are also growing increasingly pessimistic about the direction that the oil market is heading in, and their negative outlook is helping to drag down crude oil prices. Accordingly, Bonny light, Nigeria's crude oil benchmark, slipped $4.32 or 5.3% to $77.71 per barrel. Safe haven assets settled in differing directional performances as gold prices declined and silver prices notched higher. A stronger dollar hurt the price of gold while higher demand by coin makers led to the rise in price of silver. Gold declined 0.01% to $1235.97 an ounce, silver closed higher by 0.7% to settle at $14.79 an ounce. This week, oil prices might pick up as reports about a possible trade deal between the US and China should lift any concerns over a drop in crude oil demand and a global economic slowdown. Precious metals is expected to remain bullish as uncertainty around Brexit negotiations and US policy following U.S. Midterm elections continue to support demand for bullions.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Nov’18

Dec’18

Exchange Rate (Official) (N/$)

363

364

365

Inflation Rate (%)

11.30

11.32

11.45

Crude Oil Price (US$/Barrel)

77.00

78.00

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

Jan’18

BUSINESS DAY

Monday 05 November 2018

INTERVIEW

Why ICAEW is collaborating with ICAN, to ease accounting practice in Africa – Michael Armstrong, Regional Director, Institute of Chartered Accountants in England and Wales (ICAEW) was recently in Nigeria for the annual conference of the Institute of Chartered Accountants of Nigeria (ICAN). In this interview with TONY AILEMEN in Abuja, Nigeria, Armstrong bares his mind on several topical issues affecting the accounting profession, as well as the collaboration between ICAN and ICAEW. Excerpts What has been your key takeaway from this conference? have been here for about four days for the 48th Annual Accountants Conference and it has been fascinating and great to be part of this conference to contribute to a session on ‘The Future of Accounting Firms’. This, l have enjoyed very much. But most of all, l enjoyed meeting the people from the Institute of Chartered Accountants of Nigeria, ICAN. It is a very strong institute, very robust and the professionalism is very much appreciated. I also enjoyed interacting with many of the fellow Chartered Accountants attending this meeting here in Nigeria. I think one of the main themes of this conference was ‘What will the future look like for accountants’? l was greatly impressed listening to the words of the ICAN President, Alhaji Razak Jayeola, who was talking very much about collective responsibilities of how the accountants need to collaborate and take ownership of the future of the accounting profession. This, l find very pertinent at the moment. So, l enjoyed every aspect of the meeting. What would you envisage to be the major challenges facing accounting firms of the future? I think the accounting profession globally has some significant challenges at the moment and l see that those challenges are also here in Nigeria. The reputation of the profession has been tarnished over these years. There had been a number of significant scandals in the media in the UK and around the globe. This has tarnished the image of the professional accountants; but certainly one of the main tasks for the accounting profession going forward is that Chartered Accountants must re-establish the trust of the public. This is the most important area of focus and this can be done with the help of emerging developing technologies available to accountants, going forward. What is the current state of relationship between ICAEW with ICAN? My institute, the Institute of Chartered Accountants in England and Wales, is a leader in the global accountancy and finance industry. ICAN regulates the ac-

Michael Armstrong

counting profession here in Nigeria. So, one of the key issues is to share ideas for mutual benefits for the profession as a whole and l am delighted to say that earlier this year, our two presidents got together and signed a memorandum of understanding where we agreed to collaborate going forward. We agreed to share experiences, looking at issues of best practices and ensuring that development of the professional qualifications, the technology and sharing ideas to ensure that the profession remains attractive to young people so we can enhance members, going into the future. Additionally, one of the specific opportunities is that my Institute (ICAEW) has been very keen to evaluate and look at the professionalism working with ICAN as a result of which we have developed a pathway approach so that members of ICAN can follow our pathway approach to become our members as well. This is available to those ICAN members who have completed five years and by the completion of examinations experience, they share with us what they have been doing to make sure that they have the right skills to be part of

our membership. This is good in two ways. One, this allows us to collaborate and two, to make sure more members come into our profession. A new independent research in the UK says that over 40 per cent of accounting firms / departments still rely on paperbased processes. What is the ICAEW plan to address this issue? I think the use of paper or use of technology shouldn’t be an objective overall. It is a means to an end. At the end of the day, the accountant needs to add value to clients. They can do that in a number of ways. The most important thing is to take advantage of technology. So, yes, technology has improved over the years and we now have collaborative accounting which allows accounting firms to offer their services more effectively and add more value. So, l think there will be a move from the paper-based accounting systems to more effective use of technology and the benefits will be that the accounting firms will respond more quickly to their clients and more accurately, too. At the same time, it will help their clients to reduce their cost base as well, if

they are more efficient and getting more timely advice. In Nigeria today, many companies still have their own accounting departments. However, one of the current trends is the outsourcing of finance and accounting services. What impact can outsourcing have on Nigerian companies?

My Institute is very passionate about how it can support the development of strong national accounting bodies

I think outsourcing is not a question of one-size-fits-all. There will be some corporates that will justify cost effectiveness to have fully functional accounting departments. Other organisations, such as the small MSMEs for example, or perhaps, start-up entrepreneurs, may want to invest in their normal core businesses. In such cases, it could be very cost effective to outsource the accounting function which is the non-core part of their business. This will provide the information more accurately and more timely. It is really a cost benefit analysis that has to be taken by each company. But l see more and more of that taking place particularly for the smaller companies, so that they can get more value, cost effectively. What is Forensic Accounting and how relevant is it in today’s accounting world? Forensic Accounting is a deeper area building on the skills of the professional Chartered Accountant. The term ‘forensic’ is generally associated with analysis and information that potentially could be used in the court of law. We have forensic accountants and we have forensic auditors. If you compare for example, a forensic auditor to a conventional auditor, the procedures, the approach and skills to carry out the audit is very similar. However, in conventional audit, you will find that whilst the auditor is required to have a healthy sense of skepticism, he does not automatically mistrust the management. However, in forensic accounting and auditing, it is somewhat different because it is somewhat associated with embezzlement or fraud and investigative approach, whereby the forensic accountant has to independently check and find out the nature of the transaction. In summary, the forensic accounting approach is much more intense and there are skills sets required to do that. In the ICAN, they have a faculty that trains people on forensic accounting and equips the accountant for better performance as well. How can this help the Nigerian government in its efforts to fight corruption? In accounting practice, corruption is a very important aspect to be aware of. We must have

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developing new tools Armstrong the right skills to investigate and identify potential corruption. The forensic accounting skills will be very useful in probing such investigations. These investigations could include money laundering, terrorism financing and other aspects of this nature which need to be very carefully investigated. I think it is a little bit naive to think that any approach can stamp out or eliminate corruption in its entirety, but it will certainly go a long way to detect and deter such a situation. What role has your Institute played in the development of the accountancy profession, especially in Africa? I think that the key to developing the robustness of the accounting profession is collaborations. Certainly, by sharing mutual experiences and bringing international best practice into focus, this is something very important as practices evolve. Accountancy as a profession doesn’t stand still. The techniques used 20 years ago have been refined for today. I think by working together and sharing information between ICAEW and ICAN, for instance, allows to collaborate and strengthen the professional examinations to make sure that they are up-to-date and incorporate recent developments and ensuring qualified accounting students become Chartered so that they are equipped with the necessary skills to tackle the modern age diversity. You once mentioned that ICAEW is a strong champion of national professions evidenced by its capacity-building work in Africa. Can you highlight some examples of this work? My Institute is very passionate about how it can support the development of strong national accounting bodies. Part of the way we operate is to offer that support where there has been request for assistance. We are very pleased to say that we have done this in various National Accounting bodies across Africa. Here in Nigeria, we have worked together with ICAN. Ghana, Malawi and Botswana are places where we worked. Sometimes, we work together with the World Bank funding and International Federation of Accountants, IFA. Where this works most is where there is collaboration. We review areas of focus to make sure that our international capacity is brought to the equation to work together for mutual benefits. According to the 2018 MOVE Accounting Project Report, approximately 51 percent of the accounting workforce is made up of women. However, women only represent 24 percent of

Accountants think that because of the overriding nature of confidentiality, they felt unable to disclose matters of non-compliance either by employers or the corporates they were auditing. partners and principals in accounting firms. In Nigeria, female accountants are currently about 10,000, which is also sizeable. But ironically, it is the same trend of female accountants not largely attaining the height of partners / principals. Would you then say accounting as a profession is gender-biased? Certainly, the issue of gender diversity is not unique to Nigeria and is not unique to the accounting profession, either. This is a topic which is being addressed all over the globe and equally in various professions – health services, lawyers, accountants. This is because it is not just a nice-to-have, it is also a business imperative. The importance of having females at the high levels is critical because you already mentioned that at the junior levels, female accountants are more than 51 percent and that dwindles to about 24 percent of the positions for the females in senior positions. This is where everybody is focusing; not just the numbers, but also the seniority of the female accountants. I am excited by what is taking place here because most boards in accounting firms recognise the benefits of having the experience of females in senior positions. We are working together on this, to address areas like flexible working hours. They are all aware that in the life cycle of the accountants, perhaps there are some differences between the males and the females. Females often have work cycles where they have children and this requires them to take a different approach, but certainly they shouldn’t be lost to the organisation. The organisations are struggling very hard to maintain their involvement by looking at ways to support them. But are we there yet? No! Have we got a journey to take? Very must so. Not

just because it is the right thing to do but because it is important and makes the whole equation more efficient. Then accountants can give better advice, run their companies better and the whole financial systems benefits by having gender diversity. Some people are of the opinion that females are better managers. What is your opinion on this? Certainly, l think individuals have differences. If one is generalising, perhaps there are stereotypical aspects where females and males have different strengths. But the strong and rigorous trainings allow individuals to benefit from the skills that are required to succeed and excel in business as strong professional accountants. How can you ensure discipline in the profession? How do you ensure that there is strong compliance to the regulations because many believe that corruption can only be possible with the active connivance with accountants? Indeed, all professions need to be monitored and need to be held accountable. The audit profession is no exception to this. I think there are two aspects to this – the carrot and the stick. The carrot is making sure that people are aware about the rules and the regulations. That is making sure that people are trained to apply the rules, to deliver results, follow international standards for auditing and ensuring that they add value to their clients. At the same time, you can’t always rely on people to do the right thing. That

is why we have to have monitoring programmes. Best practice requires that National Accounting bodies need to have a robust system of monitoring, process of education and follow-up on issues. Sometimes, they may need to carry out disciplinary actions. Last year, the Institute of Chartered Accountants of Nigeria (ICAN) authorised a new standard in the Code of Ethics, known as the Non-Compliance with Laws and Regulations (NOCLAR) in a bid to eliminate financial corruption. Many practitioners suggest that this act puts the accountants in a tight spot with both clients and employers. What are your thoughts on this? Yes, in 2017; ICAN embraced the IESBA, that is the International Ethics Standards Board for Accountants. This is aimed at checking non-compliance with laws and regulations. The standards gave guidance to professionals chartered accountants as to how they must approach matters when they come across areas of non-compliance with laws and regulations. Hitherto, there had been a concern that accountants had a dilemma relating to conflict of interests with confidentiality. Sometimes, accountants think that because of the overriding nature of confidentiality, they felt unable to disclose matters of non-compliance either by employers or the corporates they were auditing. The new standards put out by IESBA, have certainly helped them in this direction. It is not whistleblowing, rather, it is a procedure and a process

which allows the accountants to consider and make judgments on what to do in the circumstances. Equally, there is a misconception sometimes that this is a mandatory requirement to alert the authorities. What it does is that it gives the accountant the right to take a decision to alert the authorities even when matters of confidentiality might come in to play. There is a lot of guidance given in the standard being developed. The accountant can come under dilemma if he discovers matters of noncompliance and this might put him or her under pressure. This is understandable but I will say two things. The professional Chartered Accountant must maintain his ethics and integrity. This is fundamental. Again, what this means is that the professional Chartered Accountant must do the right thing always and that is even more important when no one is looking as well. That doesn’t however mean that they cannot come under pressure or stress. The standards that are being developed give the accountants certain procedures to follow under that circumstance. Under the new standards, if the accountant resigns from a particular engagement, the new requirement is that he is obliged to inform any incoming auditor that might take over the engagement. This will enable them to pass on the necessary information to any other accountant taking over that engagement. I am not pretending that these are going to be easy, but certainly the experienced accountants will have the right professional tools to make the right judgments. This is your first visit to Nigeria. What would you say your experience has been – the food, the ambience, etc? The excitement for me is more than the food, it is the people and l have always been told how charming and hospitable Nigerian people are. This is absolutely the case. I was fortunate, as part of the conference, to attend a programme where the various District Societies of ICAN were competing in a friendly way to demonstrate their commitment to the profession and collaborations. What I noticed from that was, yes, they want to collaborate, yes they were professionals, much more, they were enjoying themselves. They displayed very informal and colourful outfits each to show forth their own identities. They were at the same time showing great pride as professional accountants. I will certainly like to visit Nigeria again very soon.

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INTERVIEW Nigeria woos Canadian investors at an investment summit in Abuja … over 300 participants in attendance Canadian investors will today begin engaging with their Nigerian counterparts on how best to ensure mutually beneficial business relationships at a two day investment summit scheduled to hold at the Transcorp Hilton Hotel, Abuja. Taiwo Odutola, chief executive officer of Prime Essentials Development and Investment Limited, the firm promoting the summit spoke with John Osadolor, Conrad Omodiagbe and Cynthia Egboboh in this interview. Excerpts: Kindly let us in as to what the Nigeria – Canada Economic Summit (NCIS) is about and what does the Nigerian economy stand to gain at the end of the summit? NS: Well, first of all, let me thank you. My name is Taiwo Odutola, the Managing Director of Prime Essentials Development and Investment Limited, the company mandated to undertake this task. This is the initiative of the Nigerian High Commissioner to Canada, Adeyinka Asekun. Having been in office for just about a year, he feels like it’s very important to bring in Canadian investors into the country or take Nigerian businessmen over to Canada to strengthen bilateral corporation and the relationship between both countries in economic and cultural terms. The summit from the name itself is an investment summit, the very first edition. It will feature Nigerian businesses presenting opportunities to Canadian investors and also investors presenting packages and partnerships. In the age of government diversification into the non-oil sector and Canada being one of the G7 countries and at the forefront of a lot of technological advancement, we have narrowed the sectors of focus to include agriculture, mining, financial technology, power, aviation and infrastructure. Agriculture being something very dear to the current administration, although a lot of giant leaps have been recorded in areas like rice production, there is still need for further investment. The mining sector is something that has been at a pedestrian level for years, so this also requires interventions. This applies to the other sectors we have taken on. So, this means there is a lot for Nigeria to gain and also a lot for the Canadians to gain. The biggest trading partner out of Africa for Canada is Nigeria, yet we do more for them than they for us, with the volume of trade of Nigeria into Canada amounting to about $1.3 billion while the converse measures $400 million. Nigeria stands to gain a lot from one of the superpowers of the world by building a symbiotic relationship with Canada. Q: Having interacted with most of the companies coming, do we expect any specifics in terms of direct investment and partnerships to be formed to further drive the sectors you’ve spoken about? Yes, we definitely expect such to

Taiwo Odutola

happen and it is a major focus of the summit. The summit has a whole segment dedicated to B2B sessions between Canadian would be investors and Nigerians. Mind you, we already have some Canadians doing business here, so we’re trying to increase that volume. In fact, the response has been encouraging on both ends, with a lot of Nigerian businesses registered and also Canadians showing enthusiasm through the High Commission to invest. How many participants are we looking at? In total, including both Nigeri-

We are working with the NIPC, BOI, Nigerian - Canada Business Association, BOA among others to ensure that the people coming forward are not only members, but also credible and have a good track record

ans and Canadians, we are looking at about 300 – 400 participants as we try to pre-qualify people, especially participants on the Nigerian end. Is registration free? ANS: Registration is free. But we also have exhibition booths in partnership with all of our sponsors, giving participants a sense of what they do. What are some of the takeaways you intend to achieve as an organiser at the end of the summit? ANS: We hope that at the end of this summit businessmen at both ends will have had the opportunity to engage one another. Investment opportunities will have been showcased in Nigeria, regulatory agencies will prove that all the incentives and policies aimed at making Nigeria an investment haven are in place to boost investor confidence. We want Canadians to go back saying “Nigeria is a place where we can do business. The people are ready, and there are potentials to be harvested”. Canada is one of the leading nations in terms of mining and Nigeria’s mining sector, despite reforms has remained comatose, so we hope to get Canadians interested in the sector. The Small and Medium Enterprise Development Agency (SMEDAN), Bank of Industry (BOI)

and Bank of Agriculture (BOA) and all major stakeholders will be there to push for the agricultural sector. It is a platform for investors, Nigerian businesses and policy makers to speak on challenges and issues, while looking ahead into the future. One of the major challenges in investment is policy. Is the Presidency involved in this, and do we expect that this summit will influence government policies? The Presidency is heavily involved, as the Vice President, Yemi Osibanjo will be giving the keynote address at the summit. Also the ministers of aviation, agriculture and other key government officials will be there, as this affords them the opportunities to gain an insight into some of these investor’s requirements and needs. One of our major partners is the Presidential Ease of Doing Business Council who have made tremendous progress in unlocking bottlenecks businesses have in doing businesses in Nigeria. This is a bridge building event as Canada has previously conducted major businesses with the United Kingdom and the United States but now with Brexit and Trump, trading has evolved and countries are shopping for new trade partners. There is a need for quantum investment in major sectors and the bridge needed to move this money needs to be properly constructed and although there are some bilateral agreements, further steps are required. Although this summit is championed by the Nigeria – Canada Investment Summit (NCIS), it is still a vital part of the Federal Government, through the High Commission in Canada. We are trying to ensure that the vision of the High Commission to Canada is actualised. Most investment summits fail at the point of follow- up postsummit. Do you have a structure set in place to follow -up on deals brokered at the summit to ensure that these plans eventually come to fruition? For us, the whole idea behind this summit is to ensure a win-win situation between both countries, so we’re trying to not only to bridge this relationship but monitor it and ensure that it doesn’t falter. What we are doing is creating and sustaining this bridge, year in year out, even after this maiden edition passes. To answer your question directly, yes. A lot has been set in place to monitor these eventual

deals and ensure they see the light of the day. Both countries will rely heavily on Prime Essentials Developments and Investment Limited to help coordinate and guide this relationship. Also we’re having facilitating agencies such as the Nigerian Investment Promotion Commission (NIPC) as a one- stopshop, experts from the Nigerian Stock Exchange, private law firms and insurance agencies, to ease these transactions and help sustain post-summit. These agencies will help in areas of information provision, drafting of Memorandum of Understanding (MoUs) and Memorandum of Associations (MoAs) among others. What will make our next summit successful are success stories from this one on deals that have progressed into quantifiable and visible development. Everything we do is relayed to the High Commissioner to Canada which has a trade desk and officers who are joyful that this platform is being created. So we have all the facilities and impetus on ground to support these businesses in both countries. Is there a proper vetting process set in place to ensure that the businesses representing us at the summit are credible to avoid charlatans who lack foresight and knowledge of the sectors they represent? Yes, we do have a vetting process that is already in full swing. We are working with the NIPC, BOI, Nigerian - Canada Business Association, BOA among others to ensure that the people coming forward are not only members, but also credible and have a good track record. So by working with these associations and industry stakeholders, we’ve managed to sift through the intending participants to ensure that they are genuine. It is also notable to mention that we’ve taken advantage of public records with the Corporate Affairs Commission (CAC) to cross check these businesses looking at financials and other information available to us. The penchant for doing business with Nigeria on the Canadian front over the years hasn’t been too good, so to lure these investors, we had to carry out thorough due diligence. The Nigerian government has also shown preparedness in terms of the pre-qualifying exercise carried out to aid the Economic Recovery Growth Plan (ERGP), were business and concept ideas were prepared. So we are expecting organizations possessing this ERGP status, at the summit.

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Start-Up Digest

In association with

How Jumoke, Sunday are crafting successful furniture business Josephine Okojie

urniture business in Nigeria is booming, supported by Nigeria’s rising population and demand for homes and office accommodation. The industry is fast becoming attractive to young entrepreneurs who are now redefining its architecture. Among the entrepreneurs tapping on this industry are Jumoke Dada, founder and CEO of Taeillo, and Sunday Stephen Eze, CEO of Pasich Furniture. Jumoke Dada Jumoke Dada is the founder and CEO of Taeillo, a start-up brand that produces afro-urban furniture using African inspired pieces. Jumoke was inspired to establish Taeillo in 2016 out of her passion to brand Africa’s culture and identity in appealing modern designs. “What I wanted was to create a great piece because I realised that many of our traditional arts and crafts evolved overtime to include practical and decorative items, and human expressions find their way through various forms of art,” Jumoke says. The Architecture graduate tells Start-Up-Digest that she started her business with zero capital, a computer and an idea. Jumoke says she made a profit of N12,000 from the first contract she did and used the proceeds to purchase materials for subsequent work. After Jumoke’s first furniture piece, she began to get referrals from her initial clients, family and friends, which helped her in gen-

Jumoke Dada

erating revenue she reinvested into the business. Also, the University of Lagos graduate raised some money through grants from some local and international organisations to further increase her production capacity. The young entrepreneur says she sources all her raw materials locally. Since Jumoke started her business in 2016, it has grown despite a saturated market. She points out that Taeillo has continued to grow as it leverages on technology and investments in research and development. “When we were going into the market, we understood that the furniture business was saturated, but we are still able to grow the business because we leverage on technology. Technology helped us scale our business model, coupled

Sunday Stephen Eze

with the strong investment we put into research and development to continue to produce exciting designs,” she says.. It is not all rosy for Jumoke as the industry lacks the required skilled professionals. Huge infrastructural gap is also a huge challenge facing the business. She wants the government to invest more in human capital development in order to provide industries with the needed skills. Speaking on the business expansion plans, she says the business plans to increase its global reach through technology. She also plans to have a furniture showroom across major Africa cities and Nigeria. Sunday Stephen Eze In 2016, Sunday Stephen Eze quit his pharmaceutical job to start a furniture business. His company Pasich Furniture designs, produces

and installs furniture for clients across the country. Sunday was inspired to establish his business owing to his love for drawings and creativity as well as his desire to be an entrepreneur. To further broaden his designs and creative skills, Sunday took up a job in a furniture firm. The pharmacist-turned-entrepreneur started his business small from his personal savings, which he spent on registration and purchase of basic carpentry tools. He tells Start-Up Digest that through the profit he got from his first contract, he was able purchase more carpentry tools for the business. “Well, as shocking as it may sound, our initial start-up capital was basically the money used in registering the company back then and buying some carpentry tools,” Sunday says.

“After the first job we did, the profit made was used to buy the first set of handheld tools for carpentry and from there came other equipment and tools. Our modus operandi till date is make money and then put it right back into business,” he explains. The young entrepreneur says the business has grown tremendously since starting, as its client base keeps expanding. “The business has grown tremendously. We have worked in over 18 states in Nigeria and our client base keeps expending.” Currently, Pasich Furniture has 19 permanent employees and 10 contract staff members. “The contract staff members are mostly made up of carpenters who help us carry out installation of already produced furniture in situations when we have clashing deliveries to make,” the young entrepreneur says. He tells BusinessDay that the company sources the majority of its raw materials overseas. Sunday says that Pasich Furniture plans to expand the size of the furniture factory by almost five times its current size before the end of 2019. Also, the company plans to open a showroom in Abuja and subsequently other cities in Nigeria and Africa at large. Sunday states that poor power supply has remained the major challenge facing his business and has continued to increase his cost of production. Similarly, he identifies lack of employees’ dedication to job as another problem, as this has led to continuous engagement and disengagement of workers.

Nigerian firm sets up crowdfunding website to support start-ups ODINAKA ANUDU

Nigerian firm has set up a donation- based crowdfunding website to raise funds in the form of grants for start-ups, micro, small and medium enterprises in Nigeria and beyond. The MSME Crowd Funding Foundation is set to officially launch www.fundanenterprise.org through which start-ups can access funds. The launch will take place in Lagos on 22 November. MSME Crowd Funding Foundation is a new not-for-profit organisation in Nigeria aiming to provide relief to start-ups, small and growing businesses while changing the way Nigerians and the world support business operations. “Given the imbalance in the

Nigerian economy, and its recent rating as the poorest country in the world, it is high time individuals and groups joined hands together to make our economy work again. It is high time we began to support one another in every littlest way in order to expunge the poverty index and make our economy great again,” Vivian Chigozie-Nmonwu, trustee, MSME Crowd Funding Foundation, said. Crowdfunding is an art of raising funds from a large number and spread of people all over the world, majorly through a website. It is a globally accepted financing method, practised as a much easier alternative to traditional fund raising through the capital markets and other financial institutions. “The MSME Crowd Funding

Foundation, Nigeria believes that by bringing this practice of crowdfunding for enterprises closer home, Nigerians can benefit from the much needed ease of funding / financial support for their personal and group enterprises,” ChigozieNmonwu said. The mandate of MSME Crowd Funding Foundation is to help build thriving enterprises through skills training, crowd funding and handholding/ monitoring of enterprises. “The Foundation provides its enterprise community members with the necessary financial and soft skills training to start, manage and grow their businesses. Most importantly, the Foundation works with intending start-ups to develop a business plan that is realistic and

practicable,” she said. “A compulsory one-year hand holding support is put in place to assist enterprises who are beneficiaries of grants or backers’ grants from www.fundanenterprise.org to put a proper legal and operational structure around their new businesses. Existing businesses are also offered the same business process improvement to ensure that they henceforth grow more, generate their own funding needs and also assist other start-up and struggling enterprises with donations.” Chigozie-Nmonwu,,,,, a business consultant, said the Foundation targets to help the country and the world in many ways. “People who love to engage in philanthropic activities (both in and outside the country) can now

help build enterprises and change lives very easily by donating to enterprise building on www.fundanenterprise.org,” she disclosed.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Fifen Eyemisanre Famous Graphics

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Start-Up Digest

The art of strategic laziness

uring one of my recent longhaul flights, I came across an article by Sophie Devonshire, the author of ‘Superfast: Lead at Speed’ where she concluded that successful leaders are skilled at ‘strategic laziness’ and they are always smartly choosing to do less. This conclusion aligns with my personal beliefs and long-time habit of always looking for a more efficient way of doing things, maybe because I am actually very lazy. In Sophie’s article, she made reference to Kurt Gebhard Adolf Phillip Freiherr von Hammerstein-Equord, the German Chief of the Army High Command during the pre-war period who resigned from office due to his opposition to Hitler. Kurt classified his officers into four groups – clever, diligent, stupid and lazy, but that each officer usually demonstrates behaviours in two of the four groups. The clever and diligent are assigned to the general operations. The stupid and lazy, making up over 80 percent of the army, are

assigned to routine duties. He believes that those that are stupid and diligent must not be entrusted with any position of higher responsibility because they are mischiefmakers. However, as Sophie mentioned in that article, “those that are classified as clever and lazy are qualified for the highest leadership duties because such people possess the intellectual clarity and the composure necessary for difficult decisions”. Laziness as illustrated by Kurt, therefore, means working efficiently and effectively, and not necessarily being idle. Bill Gates has been reported to have said that “I always choose a lazy person to do a difficult job because he will find an easy way to do it”. As a business leader, if you get involved in the nitty gritty of everything, you will not be able to focus and strategise about things that are really critical to the business. Leaders are supposed to focus on strategic activities while delegating operational matters to the next line of managers. In adopting the concept

of strategic laziness, Sophie emphasised three methods of adoption – automation, delegation and prioritisation. These are proven methods to enhance the operational efficiency and effectiveness of any business, large or small. I don’t enjoy working on tasks that involve repetitive routines, so I will always look

for ways to automate such processes. For example, if you post regularly on Instagram, then you will definitely want to leverage on Buffer or Hootsuite applications instead of those entirely manual posting by yourself. As a consciously lazy person, I always look for ways to get things done faster and more accu-

Top fashion entrepreneurs showcase designs as LFW ends

The IVH SME Fair to hold in December

he 2018 Lagos Fashion Week (LFW) has ended in grand style recently with Nigeria’s top fashion entrepreneurs showcasing their spring and summer 2019 collections. The fashion event, which featured over top 50 fashion entrepreneurs, also showcased Fets Limited Nigeria’s cashless payment technol-

ogy and featured conversations on culture, style and business in Africa’s fashion industry particularly for Nigeria. O m o t a d e O d u n o w o, CEO, Fets Limited Nigeria, said that the event had in attendance top Nigerian fashion designers which included Emmy Kasbit and Orange Culture, among others. Speaking on Fets’ cashl e s s p ay m e nt p l at f o r m showcased, Odunowo

said, “We were delighted to sponsor Lagos Fashion Week again this year. It is part of our mission to promote easy access to financial services for all Nigerians. We have just begun to unlock the potential of mobile money in Nigeria – it will transform Nigeria’s creative industries and improve lives.” The support for LFW follows the introduction of the Fashion Focus Fund earlier

he IVH Small and Medium Enterprise (SME) Fair 2018, which is set to showcase emerging and existing entrepreneurs in different sectors of the economy, will take place this year in December in Lagos. The focus SMEs cut across various areas such as fashion, arts/craft, creativity, homes, real estates, financial services,

largest markets. “As you already know, the SME industry is a highly innovative, extremely impactful and high revenue generating sector as far as economic development is concerned in Lagos, Africa’s 5th largest economy.” Ogrih noted that over a four-year period, IVH Services Ltd has pioneered the official Business Yellow Pages resource (IVH Yellow Pages) for enterprises and residents in Island, Lekki and Ajah com-

lifestyle, wellness/ fitness, technology, household gadgets, food, drinks and entertainment open market. Lawretta Ogrih, CEO and convener, IVH SME Fair and Publisher of IVH Yellow Pages, Lekki-Ajah, said the idea is to promote established and emerging SME brands, making them visible to Africa’s

mercial landscape. The expo, which will take place on Saturday 1st and Sunday 2nd December 2018, in Lagos, will be the mother of all SME-designed exhibitions, incorporating over 300 emerging and existing small and medium business entrepreneurs from the Island and mainland regions of Lagos.

IFEOMA OKEKE

…Fetswallet cashless platform showcased Josephine Okojie

rately. As a business leader or entrepreneur, you need to consistently evaluate opportunities for automation in your various operations and business processes. If I am not able to automate, my plan B will be to delegate to more junior team members whose cost/hour or cost/day is not as high as mine. That’s

just simple common sense. For you to delegate successfully, train and empower your team to act. Then ensure that your reward system is merit- and performance-driven. It works like magic – the empowerment of the team members is a motivational factor for the team, and the business leader is able to now devote the freed-up time to those things that really matter. The art of delegation just involves looking for easier and probably, cost effective ways to get things done. As a business leader, focus on things that only you can do effectively. This is all about prioritisation. Focus on only what really matters and put your time and energy on such tasks and activities. Be strategically lazy. Wole Oluyemi is a chartered accountant and business advisor, with special interests in SME businesses, strategy, finance and tax. He is also a doctoral researcher at Cranfield University (UK) with research focus on corporate political strategy. He can be reached at @WoleOluyemiCo on Instagram, Twitter and FaceBook.

this year, overseen jointly by Fets and LFW. The fund supports promising young fashion designers and the first recipient Emmy Kasbit has already attracted ample public attention. His eye-catching jacket was worn by British Prime Minister Theresa May during her recent visit to Nigeria. “Fets’ continued support for LFW, as well as for the Fashion Focus Fund, is a huge boost for Nigeria’s fashion industry. We see fashion and finTech as complementary sectors – together they can put Nigerian fashion and LFW on the map,” Omoyemi Akerele, event’s founder, said. A k e re l e p ro m i s e d a memorable finale to Lagos Fashion Week, with entertainment and a number of highly anticipated social events The event also featured a retail zone and a food court where visitors purchased items via the fetswallet mobile money app. It also saw Nigerian fashion designers and stakeholders dine and discuss the peculiarities of the Nigeria fashion industry.

BUSINESS DAY

Monday 05 November 2018

Start-Up Digest

Air Force officer turns entrepreneur, sets up Gada Africa to revive Aba shoes Ben Chiobi, a retired air vice marshal, is the chief operating officer (CEO) and founder of Gada Africa, a marketing and logistics firm. The firm recently launched an online platform in Aba, the commercial hub of Abia State, to promote made-in-Nigeria products. He spoke with GODFREY OFURUM. Excerpts How did you get into entrepreneurship, having served in the Air Force for 33 years? t runs in the family. I come from a family of entrepreneurs. Let’s say it is in my DNA, but I had this vow right from when I was in secondary school to Nigeria. And I was given that opportunity in 1982 to attend the Nigerian Defense Academy (NDA) and I was privileged to be commissioned on June 22, 1985, and thereafter, I said I was going to dedicate myself to serving the country. I was privileged to fly different aircrafts in the Nigerian Air Force, up to the moment I retired. However, I decided to unveil the interest that I have in different areas, particularly in entrepreneurship and the burden was on how to promote made-in-Nigeria. Serving the Nigerian Air Force gave me the opportunity of traveling to various parts of the world. And each time I visited any of those locations, what often agitated my mind was to find madeIn-Nigeria goods on shelves of the shopping malls, but often I didn’t find them. So, I said to myself that when I finish from public service, I was going to do my best to promote and market Nigerian products. So, the advent of internet made it easy for me to get that done, but I said, ‘where should I start’ and naturally, it is Aba, because all the referrals kept saying, ‘go to Aba, that I will find the people that are productive in Aba clusters’. And when I came, I truly saw that it was the case and decided that, as part of our market entry strategy into the e-commerce industry in Nigeria, we are going to interface with Aba people, not to exploit them, but to choose an avenue of a seminar to ask them to come with samples of their products. Interfacing with them gave us an opportunity to see their products and right in their presence take shots of those products and put them on our website and that is exactly what we have done in the course of this programme and we will continue to do that until we have at least one-thousand different products from Aba on our website, then we will move to Benin. From Benin, we will move to Kano and from Kano, we will go to Lagos. And once we’ve done all that, we’ll create what we call ‘Gada Africa Made in Nigeria Hub’

Ben Chiobi

in each of these locations. And we will now be able to have what we call ‘a Fulfillment Centre’, where people can walk in with samples of their products and have an opportunity of hosting them on our website for free. And like we said, the service charge and other things will begin to come once they begin to make money through our platform. So, our concept is to bring our services closer to the people and get them understand that we are here to unveil a win-win approach. Once we are done with Nigeria, we will move to other African countries and I’m sure once we are able to do that, I will become a fulfilled man, because Nigeria has done a lot for me. I served the country for 33 years in the course of my military career, so I just feel that the greatest thing I can do is to give back to the society. And that is why we are not asking anybody to pay us any fee to enroll on our site, we are not asking them to pay us any fee before they can host their products on our site, but subsequently those fees will come. We will leverage on just commission based on what we have on each site, ranging from 10 to 20 percent. We have what we call service level agreements with each individual person that will be on our site and that is what it is all about.

Apart from hosting these products on your platform, you also promised that Gada Africa will handle the distribution of the goods, which, to me, is unique. Do you have the capacity to do both marketing and distribution of the goods? That is what we call ‘Logistics value chain services’. It will not be enough for us as an e-commerce company that is running an online-mall to just sell without bothering about how the products will get to the end users and we are already building the structure. Let me give you an example. In Aba here, we are going to have our Made-in-Aba Logistics Hub or what we call Gada Africa Hub. What we will be doing there is that any manufacturer in Aba that brings his/her products, he/ she will put them on our display stand. Then if anyone orders a product from our site, it will also be from our hub that we will ensure that the product gets to the customer that has placed order for it, through the partnership that we have built. We have built partnership with local and some international logistics handling companies, which I may not mention now until we tidy up all the arrangements. This is to ensure that for every product people order, they want door to door service that will happen. But

the capacity will be built over time, but for now, the capacity that we have developed is that effective from December 1, 2019. If you place any order from our platform, that order gets to you if you live in Lagos or Abuja. The idea is to see that products that are made-inAba are pushed from this end. We have a hub here, and in the next one month, the office will be ready for business, so that by December 1, if an order is placed on our site for a product that is made in Aba, all that the manufacturer needs to do is to drop it in our office and we will now ensure that whoever placed order for the product will get it and in good time. Overtime, we will be able to share with our customers the timings for other destinations. We have built a structure and we will be unveiling them as time permits. And that is why I said that we have the capacity. However, we do not have the capacity to send products to everywhere in the world, as I speak with you now, but we want to see that structure overtime is developed. But what I am assuring you now, is that if you live in Abuja or Lagos and you place an order for any product made-in-Aba on our site, give it a maximum of four days, you’ll get the product. Aba artisans need capacitybuilding to improve the quality of their products. Does Gada Africa have plans to fill this gap? I need to let you know that our services are supported by the Nigerian Export Promotion Council (NEPC), the Standards Organisation of Nigeria (SON) and the National Agency for Food and Drug Administration and Control (NAFDAC), because what we have worked out with them is to see that it is only products that are certified by at least SON and NAFDAC that would be sold on Gada Africa and that is one pledge that we have made to these very important stakeholders. However, that does not leave out people that their products are not certified. Gada in this outing will not be able to share all our plans. As I speak to you, we have packaging sample for every kind of product you can think of, but we decided that we should not unveil that here. When you come to our office, you’ll see different packaging samples, because we are preparing these products for export. Beyond export, we are preparing them to be placed in proper locations in shopping malls around the

world and so in that case it means beyond packaging in bulk, we are also talking about how to package for retail. So, what that means is that for any of these people that are in any of these production clusters, when they visit our hub, they will see the different samples and look at how that fits into their production cost. It is not binding that they must use a particular one, but we will only share with them that the difference between bottled and sachet water is in the packaging. So, if you make your product presentable, definitely customers will ask for such products. So, we are working on that and beyond that we will continue to educate them. By the grace of God and God giving me life and resources, I intend that every year, we will be organising ‘Ndi Ahia’ seminar and exhibition. So, this is Ndi Ahia seminar and exhibition part-one, where we organise free seminars and exhibitions for everybody that is in the production cluster in Aba, so that they can see the opportunities that are out there. In the second edition, we intend to bring in people with different kinds of machines for production. In this case, as I speak with you, Gada is also discussing with a Korean firm that is also talking out investing in Aba, putting automation machines for shoe production. And the good news is that as I speak with you, the Aba Chamber of Commerce, Industry, Mines and Agriculture just hinted us about an investment forum that is about to hold in Aba and we intend to invite the Korean company and others to see exactly where the gaps are. If Gada is filling the e-commerce gap, we will need someone who can fill the automation process gap. Gada is there also to fill the gap of packaging, to ensure that their products are shipped to customers within and outside the country. What is your last word to Aba artisans? My advice to Aba artisans is to take it one step at a time. You are in business today and you think that your problem is funding. It may not necessarily be funding. It might just be that you need to understand the processes of getting your products to international standards, so that you will not only meet local consumers, but also meet the requirements and needs of international consumers.

BUSINESS DAY Harvard Business Review

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MondayMorning

Monday 05 November 2018

In association with

The role of a manager has to change in these key ways JOSEPH PISTRUI

or almost 100 years, management has been associated with the five basic functions outlined by management theorist Henri Fayol: planning, organizing, staffing, directing and controlling. These have become the default dimensions of a manager. But they relate to pursuing a fixed target in a stable landscape. Take away the stability of the landscape, and one needs to start thinking about the fluidity of the target. To help organizations meet today’s challenges, managers must move from being: DIRECTIVE TO INSTRUCTIVE: What will be needed from managers is the ability to think differently about the future in order to shape the im-

pact AI will have on their industry. This means spending more time exploring the implications of AI, helping others extend their own frontiers of knowledge and learning through experimentation to develop new practices. Learning, not knowledge, will power organizations into the future, and the central champion of learning should be the manager. RESTRICTIVE TO EXPANSIVE: Too many managers micromanage. Managers today need to draw out everyone’s best thinking. EXCLUSIVE TO INCLUSIVE: Managers need to bring a diverse set of thinking styles to bear on the challenges they face. Truly breakaway thinking gets its spark from the playful experimentation of many people exchanging their views, integrating their experiences and

done before. EMPLOYER TO ENTREPRENEUR: Being entrepreneurial is a mode of thinking, one that can help us see things we normally overlook and do things we normally avoid. Thinking like an entrepreneur simply means expanding your perception and increasing your action — both of which are important for finding new gateways for development. And this would make organizations more future facing — more vibrant, alert, playful — and open to the perpetual novelty it brings.

imagining different futures. REPETITIVE TO INNOVATIVE: Organizations need managers to think much more about inno-

vating beyond the status quo — and not just in the face of challenges. PROBLEM-SOLVER TO CHALLENGER: The role of today’s manager calls

for finding better ways to operate the firm — by challenging people to discover new and better ways to grow, and by reimagining the best of what’s been

(Joseph Pistrui is a professor at IE Business School in Madrid. Dimo Dimov is a professor at Bath University in England.)

How to develop a data-savvy human resources department NIGEL GUENOLE

uman Resources professionals can be broadly categorized into one of three groups with respect to their current analytical capability: analytically savvy, analytically willing and analytically resistant. Once you understand the different levels of analytical comfort and expertise that exist within your HR team, you can determine how to hire and develop each type of HR professional. — HIRING FOR ANALYTICAL CAPABILITY: Roles that require producing analytical information demand analytically-savvy

workers, while roles that involve interpreting and working with analytical information require analytically-willing workers. You can assess whether workers are analytically savvy by examining formal qualifications, and by administering welldesigned psychometric tests that measure general

mental ability. General mental ability is a good predictor of performance because high scores indicate workers can acquire job-related knowledge more quickly. — DEVELOPING ANALYTICAL CAPABILITY: The key to developing capability among existing workers is to provide

engaging learning opportunities to workers at all levels of expertise: Analytically savvy: Keep these workers’ skills upto-date by providing opportunities for advanced training. Assign them responsibility for analytics evangelism and reinforce this in performance objectives. Analytically willing: A good starting point for these employees is to provide foundational education on HR analytics. They should then put their learning into practice by applying the techniques to their day-to-day work. Analytically resistant: For these employees, focus on how analytics can enhance their personal effectiveness. The ultimate

goal is not necessarily to transform the analytically resistant into data experts but to have them see the value in analytics and, ideally, embrace it as a path to success. — PERSONALIZE LEARNING, AND DELIVER IT AT SCALE: Analytically related learning opportunities for all HR professionals can be managed with a Netflixstyle online learning system, such as IBM’s Your Learning platform. Analytical skills should also be designated “hot skills” for HR professionals, and as people acquire more of these skills, their compensation should be increased to reflect their enhanced capabilities.

A more data-savvy HR function is entirely achievable. By understanding the levels of analytics capability in your HR team today, hiring for critical skills to fill gaps and providing ongoing, targeted and engaging learning opportunities, organizations will be well positioned to realize the promise of analytics in HR.

(Nigel Guenole is an executive consultant at IBM and director of research for the Institute of Management at Goldsmiths, University of London. Sheri L. Feinzig is a director at IBM Talent Management Consulting and Smarter Workforce Institute.)

Monday 05 November 2018

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How to end extreme poverty in Nigeria - Ambode JOSHUA BASSEY

agos State governor, Akinwunmi Ambode, says for Nigeria to escape extreme poverty, it must begin to take concrete steps towards empowering every group in the society towards actualising their aspirations. Ambode, who said this while delivering a paper to commemorate 75th anniversary business lecture of the Island Club, Lagos, said the country needed to aggressively pursue strong social inclusion policies in order to build a virile nation where every member of the society, regardless of their status or creed, was catered for. Speaking on the topic ‘Nation Building: communities, inclusion and prosperity,’ the governor said presently there were various indices that present a worrying picture, stressing that the country must address it by taking actions that would change the narrative and engender prosperity. “A sustainable path towards ending extreme poverty and promoting shared prosperity also involves creating an inclusive society, not

only in terms of economic welfare but also in terms of the voice and empowerment of all groups. “We must begin to realise that every strata of the society count, we must listen and accommodate all views, whether they are poor, whether they are Igbos, Hausas, whether they are Muslims or Christians. An inclusive society must have the institutions, structures and processes that empower local communities, professional associations, and artisans, CDAs so they can hold government accountable. “It also requires the participation of all groups in society, including traditionally marginalised groups such as ethnic minorities and indigenous populations in decision making processes,” he said. Highlighting the Lagos example of inclusion and prosperity, Ambode said his administration in the last three years, despite the population and migration challenges vis-a-vis pressure on physical and social infrastructure, has continued to carry out massive upgrade of its infrastructure, which according to him would have improve the lives of all residents and ultimately the economy.

Why businesses cannot survive without participating in policymaking, governance - experts IFEOMA OKEKE

he need for companies to get more involved in governance and policymaking was emphasised at the eighth Detail Business Series seminar organised by Lagos-based law firm, Detail Commercial Solicitors (DETAIL), recently. Tagged ‘The Non-Market Environment, The Most Overlooked Challenge Facing Businesses Today,” the seminar’s keynote speaker, Kenneth Dubin, adjunct professor, IE Business School, described the nonmarket environment as everything that was beyond the buying and selling of goods and services. Dubin said, “The nonmarket deals with interactions companies have with stakeholders in government and society. A major part of what goes on in every market is determined by the non-market environment. Non-market factors such as laws, regulations, policy and social issues heavily influence the market environment in which businesses operate.” Dubin emphasised that though most companies

were aware of non-market forces, they typically were not thinking strategically of opportunities available in the non-market environment. He said, “When I say companies are ignoring the non-market forces, it doesn’t mean they are not aware of it. But they don’t think that having a strategy in the non-market environment can help transform their businesses. They tend to be reactive, as they believe politicians are people you have to avoid. “One has to first understand the non-market forces that make sense for one’s business. Once you understand the non-market issues facing your business based on an assessment of your market strategies, then you can talk about opportunities and threats presented by such non-market factors. When companies think of this systematically, it becomes obvious that every business needs to have some kind of non-market strategy.” The professor, however, said it was not necessary to get too close to politicians before a company could get involved in politics

Taraba traders laud FG’s financial inclusion scheme for SMEs KELECHI EWUZIE

raders at the Jalingo Main Market in Taraba State have commended the Federal Government for the National Social Investment Programme scheme geared towards boosting financial inclusion for small medium enterprises by disbursing N10,000 TraderMoni to petty traders in the state. They say initiative such as this will greatly improve the fortune of local traders in the state. Shuaibu Muhammad, one of the beneficiaries, says the money would help expand his business for more profit and a better standard of living. Elizabeth Kuma, who deals in provision, lauds the Federal Government for remembering the micro small medium scale enterprises in the society with the TraderMoni initiative. Earlier, Ayuba Baju, the Adamawa and Taraba coordinator of the Federal Government Entrepreneurship and Empowerment Scheme ‘TraderMoni’ at the flag off of the registration in Jalingo, notes that the benefiting traders were expected to pay back the money in six months. Baju says the traders who would successfully pay back the money within the six months period would be given N15,000 by the scheme to equally pay back in six

months. According to Baju, “The essence of TraderMoni is to

assist willing traders to sustain their businesses for a better economy. Traders that will

continue to pay as at when due to access the funds up to N200,000 in the long run.”

37 NEWS

BUSINESS DAY

Dangote Sinotruk auto to enhance local content, provides more jobs

s the budding automobile company, Dangote Sinotruk West Africa Limited entered another phase in its expansion drive, the company said it was increasing its local input into the assembling plant up to 60 percent, even as it plans to roll out commercial vehicles soon. The expansion drive, which is part of the backward integration plan, is meant to enhance value addition and local content. Group general manager of the company, Hikmat Thapa, made this known during a facility tour of the Ikeja plant by the Lagos State commissioner of commerce, industry and cooperatives, Olayinka Oladunjoye. He said having done with the phase one of the project, the company has embarked on the phase two which has to do with adding of the facility for Cab welding, Painting and Trimming. Thapa stated that the third phase of the project expansion would be to add the facility that would be used to

fabricate, Paint and Assemble different type of Trailer bodies, load bodies with dual and triple axles, Tipper bodies and tankers and so on. He explained that Dangote Sinotruck has installed capacity to assemble and produce 15 –16 trucks per shift or 10,000 trucks annually and will create over 3000 different jobs across Nigeria. He said: The company has the plan to have welding & painting shops to fabricate & paint truck cabin & Trailers of different type so as to enhance local content of Completely Knocked Down (CKD) operation of commercial vehicle Manufacturing. “In next one year, we have on our agenda to assemble and fabricate Truck Cabins, different type of trailers, Tipper bodies and Tankers etc. in our plant to increase value additions up 40 – 60 %.” The automobile company said it hopes to expand sales to all the neighbouring West African states, saying, “We are targeting to sell our products to ECOWAS countries in addition to fulfilling local market requirement.”

Adeduntan, FirstBank MD to headline UI maiden graduate career fair

irst Bank of Nigeria Limited has announced its sponsorship of the University of Ibadan (UI) Graduate Recruitment/Career fair scheduled for November 6, at the university’s conference centre in Ibadan, Nigeria. The Career Fair is part of the activities lined up for the commemoration of the institution’s 70th Foundation Day Anniversary and 2018 convocation ceremonies. The Career Fair is an event in which organisations spanning diverse industries and sectors are given the opportunity to engage the exceptionally talented final year students of the university on a career mentoring and ready for work tips. Vice Chancellor of the University of Ibadan - Abel Olayinka will be on hand to deliver a welcome address whilst the managing director of FirstBank, Adesola Adeduntan who is an alumnus of the University will give the keynote lecture. Other activities lined up

for the event are syndicate and coaching speed sessions. The Syndicate Session comprises four activities namely; Employability Skills, The Future of Work, Academic Pursuit – What and How? and Entrepreneurship/Startups. These sessions are driven to ensure the preparedness of the young graduates towards their career pursuit. On the other hand, the Speed Coaching Session will be used to share knowledge and solve problems quickly. There would be experienced Human Resource professionals on ground to help the students in the areas of resume writing; aptitude test, assessment centres and interview preparation as well as searching for jobs. According to the Group Head, Human Capital Management & Development, First Bank of Nigeria Limited, Rosie Ebe-Arthur, “the FirstBankUniversity of Ibadan Graduate Recruitment/Career Fair is a noble initiative we are pleased to identify with.

38 BUSINESS DAY NEWS Oando, IOCs converge in South Africa for 25th Africa oil week DIPO OLADEHINDE

his year, Africa Oil Week (AOW) the continent’s leading oil and gas gathering bringing over a thousand key industry players annually, celebrates its 25th year. In the past 25 years, AOW has provided a platform for Government officials, national and international oil companies, independents, investors, corporate players and financers, to share their strategies for growth, better national participation in the oil and gas sector and engage in high level discussions on the future of the continent’s oil and gas industry, focusing on current challenges and trends and proffering solutions that will provide a positive and lasting impact for all. The conference which kicks-off today in South Africa, with the theme ‘The Leading Business Intelligence and Transaction Platform for Africa’s Oil and Gas Sector’,will play host to 16 ministers from across the continent,delegates from over 70 countries, 1,300 international CEOs and senior decision makers. As the largest oil producing nation in Africa, Nigeria is well represented at the event with a cross section of delegates consisting of Government and private sector leaders. The former President, Olusegun Obasanjo

will give a Chairman’s welcome address at the event alongside Rt. Hon Mark Simmonds, Former Minister for Africa, United Kingdom. Ibe Kachikwu, the Minister of State for Petroleum Resources, will share the Nigerian perspective at the ministerial insights session with six ministers from other African countries. As Nigeria’s leading indigenous oil and gas player, Adewale Tinubu, the Group Chief Executive, Oando PLC will lead discussions on a panel session titled ‘Can Africa upstream play a significant role in the context of the global and regional energy landscape?’ This session will offer an objective market watch of the African oil and gas landscape, addressing the challenges and opportunities the industry is presented with. Oando has carved a niche for itself as an independent indigenous oil and gas company flying the Nigerian flag at global events that shape the future of the sector and Africa in general. At a cross section of local and international events, Oando has engaged in open and transparent dialogue with a broad range of stakeholders to analyze and proffer solutions to issues that transcend the oil and gas industry and in the process has contributed to a more positive conversation around the African continent.

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Japanese firms use Lagos Fair to market new products DAVID IBEMERE

part from highend tech products, cutting-edge automobile, food and beauty products, Japanese exhibitors to the ongoing Lagos International Trade Fair are showcasing new products designed for the Nigerian market. One of such products is a brand-new Nail Printer mode by DMM.com LLC, for the first time in the Nigeria. Speaking at the ongoing fair, Shigeyo Nishizawa, trade commissioner/managing director, Japan External Trade Organisation (JETRO), Lagos, reinstated the commitment to support Japanese companies to invest more in Nigerian market as well as promote trade and investment between the both countries. “As the Nigerian economy is starting to recuperate, exhibitors are keen to enter and expand their business in the biggest market of African continent,” Nishizawa said. The positive result Nishizawa noted had seen a huge difference in the size of the Japan pavilion and number of exhibitors this year compared with last year 2017. “The pavilion, which is

one of the biggest at the Lagos International Trade Fair, had a gross size of 1,750m2 with 23 Japanese companies that exhibited in year 2017, as compared to 2,125m2 gross size featuring around 30 Japanese companies this year 2018, which includes participants from Japan as well as their local representative agents,” he said. Continuing, Nishizawa revealed areas covered by the Japanese companies include “vehicles, transportation machinery like motorcycles, trucks and auto parts; stationary, home appliances, fibre for hair making, hair care goods, dietary supplement, power generators, raw materials for cosmetics, industrial equipment, electrical tools, office equipment and sewing machines.” “I am more than excited to recognize that the Japan Pavilion function as a business pathway for Nigeria, West Africa and even the whole continent for Japanese companies,” Nishizawa said. One of the exhibitors, Hiroshi Seko, general manager of Kaneka Corporation (Africa), a beauty product company, described Nigeria market as a privilege for any organisation.

CBN’s $3.1bn sale to BDCs sustained naira stability, protected 25,000 jobs HOPE MOSES-ASHIKE

he dollar sales to Bureaux De Change Operators (BDCs) by the Central Bank of Nigeria (CBN) rose by 163 percent to $3.1 billion in the first half of the year (H1’18) from $1.2 billion in the corresponding period of 2017 (H1’17). This, however, helped to sustain exchange rate stability and protected 25,000 jobs in the sub-sector, Aminu Gwadabe, president of Association of Bureaux De Change Operators of Nigeria (ABCON), said while commenting on the half year (H1’18) economic report released by the CBN last week. The report states: “The significant increase in BDC sales, reflected the bank’s policy to increase the supply of foreign exchange to small end-users.” The CBN on May 27, 2018, increased weekly dollar sales to each BDCs by 50 percent to $60,000 per week from $40,000 per week. Gwadabe noted that the 163 percent increase in foreign exchange sales to BDCs was attributed to the success recorded in the Investors and Exporters (I&E) window

backed by the company’s international submarine cable, Glo 1, which has reliable and sufficient internet bandwidth capacity. A statement from Globacom said: “The radio propagation property of the 700MHz band enables Globacom 4G signal to travel the farthest, giving the largest coverage for any site. In effect, any city where Glo LTE is present, it covers the widest area than any other network.” The band comes with a dedicated spectrum bandwidth of 10MHz which gives users the fastest speed required to download and view movies and videos as well as listen to songs without any delay. It all comes in crystal clear quality,” said the statement. The operator had in October, 2016, rolled out the 4G LTE service, the first GSM company to do so in the country, while also gaining the unique advantage of being the first to launch the 4G LTE nationwide. By doing this it offers instant efficient broadband internet to millions of Nigerians at speeds that are several times faster than the 3G network.

introduced by the CBN, and the transparency in the forex market, facilitated by www. naijabdcs.com, the live exchange rate platform introduced by ABCON. He said the development enabled the apex bank to empower BDCs in achieving sustained exchange rate stability, convergence of exchange rates, which by extension discouraged rent seeking and other speculative tendencies in the market. On the impact of the increased forex sales to BDCs, Gwadabe said: “The overall impact in the economy includes employment generation of over 25,000 in the BDC sub sector and enhanced investors’ confidence.” He said the recent efforts of the association to automate operations of BDCs would help to consolidate on these gains. “The ABCON automation drive of BDCs operations designed to enhance their visibility and attractiveness is already giving them an information technological (IT) edge in the quest to become direct agents of international money transfer operators,” he said.

L-R: Baldwin Nwankwa, cohead, Thomson Reuters Refinitiv West Africa; Jonathan Owens, head of investment, advisory and wealth Middle East and Africa; Candice Dott, head of market development; Ini Ebong, winner of the People’s Choice Award, and Sonwabise Sebata, head of corporate communication, Africa, at the Refinitiv (formerly Thomson Reuters) Excellence Award to Customers at Victoria Island, Lagos, Nigeria.

Glo says its 4G LTE gives best penetration, national spread otal telecoms service provider Globacom has said that its 4G LTE service gives better indoor penetration than other networks. It also offers seamless 4G coverage within the major cities without the requirement of handing over to 3G or 2G while using data, whether the subscriber is indoor or outdoor. According to Globacom, this ensures a better user experience for 4G subscribers on the Glo network in more locations across the country; as the network’s 4G service covers all the 36 states of the country and over 200 tertiary institutions. This reconfirms Globacom’s status as the network with the widest LTE coverage in the country. The network particularly focuses on higher institutions in order to empower the students with fast and affordable data services which are needed to facilitate academic work. The telecoms service provider attributes the exceptional quality of its 4G LTE to the 700MHz band which gives Glo 4G better coverage and penetration. It is also

Monday 05 November 2018

World Quality Alliance underscores significance of quality product, governance as tonic for growth DANIEL OBI

igeria will later this week join comity of nations to mark World Quality Day with the theme ‘Quality: A question of trust.’ The day, November 8, is designed to further increase worldwide awareness about the important contribution that quality makes towards both organisational and national growth, and prosperity. Quality, which is the

critical success factor in global competitiveness, is not just about products but leadership and, according to analysts, this has become significant for Nigeria as the country craves for quality management of its resources to lift its citizens out of poverty. Ordinarily, as traditional trade barriers fall, they are replaced by international recognised quality systems. As a result, quality becomes not only a business imperative but also an

essential life skill that is as fundamental to the success of individual and companies. Keying into the celebration this year, World Quality Alliance, a global quality organisation says it has concluded plans to hold Global Quality Excellence Awards on November 8, in Lagos. According to secretary of the award committee, Ifeoma Favour Emeka, the award is designed to celebrate quality conform-

ance to customer need and promote awareness of the important contributions that quality makes toward a nation or organisation’s growth and prosperity. “In a global economy where success depends on quality, innovation and sustainability, the award is your chance to reinforce these, as the foundation of your organisations and brand for their achievements in improving business performance,” she told BusinessDay in Lagos.

Monday 05 November 2018

LegalPerspectives

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BUSINESS DAY

Odunayo Oyasiji

Case Review

Civil Design Construction Nig. Ltd. V. Scoa Nigeria Limited (2007) Lpelr-Sc.216/2001

hat to note: This matter bothers on issue of hire purchase. It addresses the issue of whether a hirer can under common law repossess the hired goods without an order of court. Fact: The plaintiff/appellant (plaintiff at the trial court and appellant before the Supreme Court) bought an Ingersoll Cyclone Water Well rig with registration No. LA 2632 WD from the defendant/respondent for the sum of N431,842.00 under a Hire Purchase agreement. The rig became his after he fully paid for it. The appellant also bought another rig with registration number LA 8509 WD under hire purchase agreement from the respondent for the sum of N514,482.00. The appellant paid the sum of N414,482.00 while the sum of N100,000 in two instalment of N50,000 each remained unpaid. The facts of the foregoing two transactions were not disputed by the parties. There is a third transaction which is the main source of the dispute in this matter. The transaction is about road scrappers. The appellant claimed that it bought a road scrapper each on 26/1/84 and 10/2/84 for the sum

of N159,903.00 and fully paid for them. He claimed that they later agreed that the money paid for the two scrappers be credited to the appellant on account of the purchase by the appellant on hire purchase terms of one new rig and two service rigs. He further stated that the respondent told him that they cannot carry out the agreement. On this basis, he claimed to have instructed the respondent to sell the scrappers and refund the amount paid

on it to him. The respondent on the other hand contended that each of the scrappers were sold for N177, 162.00 and that the appellant is still owing the sum of N34,518.00 on the two scrappers. The respondent further stated that the appellant bought two other scrappers without making any deposit. Rather, he deposited its rig No. LA 2632 WD as security. The respondent claimed that the appellant instructed that

the four scrappers be delivered to Sokoto Agricultural Development Project (SADP) and that they have delivered them as instructed. The appellant denied ever giving such instruction. It was on the basis of the foregoing that the appellant instituted this matter at the High Court of Lagos State. Judgement was given in favour of the appellant at the trial court while the respondent was favoured at the Court of Appeal.

This is because the rig No. LA 8509 WD is a mechanically propelled vehicle intended or adopted for use on roads and duly registered as a motor vehicle. He further submitted that the position of the Court of Appeal that the transaction was governed by common law as the agreement did not incorporate the provisions of Hire Purchase Act since it did not state that repossession will not be possible after the payment of 3/5th of the purchase price is an erroneous one. This is because section 2(c) of the Hire Purchase Act and the schedule to it were reproduced verbatim. Also, Clause 6 of the agreement contains restriction of owners right to recover goods, it is only in the Hire Purchase Act that such restriction exists. No such restriction exists under common law as long as the hirer is in default with regards to the payment of instalment. Therefore, the

agreement is governed by Hire Purchase Act and that it is wrong for the respondent to have repossessed after the payment of 3/5th of the purchase price. He argued that even if common law is to govern the agreement, repossession cannot happen after the payment of 50%-60% of the purchase price without recourse to the Court. The counsel to the respondent submitted that the transaction is not within the purview of the Higher Purchase Act. He stated that the failure to state in the agreement that the respondent cannot repossess after the payment of 3/5th of the purchase price is a confirmation of the fact that the parties do not want the Hire Purchase Act to govern the transaction. Judgement The court held that “even under the common law, if it were to apply to the facts of this case, which I do not

Issues for determination

he counsel for the appellant submitted the following issues for determination“1 In the circumstance of this case, and in particular having regard to the issue of estoppel and the presumptions of law that arose in this case, was the Court of Appeal right in holding that the Common Law as opposed to the Hire Purchase Act, (Cap. 169 L.F.N) governs the transaction relating to the motor rig registered as LA 8509 WD? 2 With regard to the plaintiffs 2 scrappers and the reliefs sought for their conversion/detinue what reliefs should the Court of Appeal have awarded in the circumstances of this case? 3 In the circumstances of this case, what is the correct measure of damages for the seizure of the plaintiff’s rigs? 4 Was the award of the sum of N108,324.16 to the defendant made on the cor-

rect principles of law?” The respondent submitted the issues below for determination“1. Whether there was evidence to support the award of damages made by the Court of Appeal. 2. Whether the Court of Appeal was justified in making a fresh appraisal of evidence already appraised by the trial court. 3. Whether the Court of Appeal was right when it held that Exhibit D3 was inadmissible and evidence of fact not pleaded.” Arguments/ SubmissionsThe appellant while arguing issue 1 submitted that the fact that 100,000 naira still remains unpaid with regards to rig No. LA 8509 WD is not in dispute. He noted that the sum of N414,482.00 had been paid. He stated that the transaction was governed by Hire Purchase Act and not Common law as claimed by the Respondent.

concede, the respondent cannot seize or repossess the rig without recourse to the court, It is therefore not the case that if the common law applies, the respondent can repossess the rig by seizure or otherwise than as provided by law, particularly as it is in evidence before the court that appellant had paid up to 60% of the purchase price of the rig in question which fact has not been disputed by the respondent. I therefore hold that the Hire Purchase Act applies to the transaction between the parties and that as it is admitted that appellant has paid 3/5th of the purchase price of the rig in issue the respondent cannot in law repossess the rig otherwise than in accordance with the law”. The court further held that “Even under the common law, it is settled that a hirer cannot repossess the hired goods without an order of court. In the instant case, it is not disputed that the respondent never obtained the leave of the court before seizing the rig in issue. In short, in either way, the respondent’s seizure of the rig in question was in breach of contract and therefore condemnable. It is therefore clear, and I hereby hold that the respondent having seized rig No. LA 8509 WD in violation of the provisions of the Hire Purchase Act cannot recover the outstanding installment of N100,000.00” Conclusion From the above judgement of the Supreme Court, it is established that recovery or repossession based on default with regards to payment of instalment is not an automatic right under both common law and Hire Purchase Act. Recourse must be had to court when attempting to recover a property that is subject of hire purchase after the person has already paid 50 to 60 percent of the purchase price. This is even expressly spelt out under the Hire Purchase Act i.e. after payment of 3/5th of the purchase price recourse must be had to court before the property can be repossessed.

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BUSINESS DAY

Monday 05 November 2018

CityFile FG seals 40 filling in Anambra stations for defrauding customers Emmanuel Ndukuba, Awka

he Federal Ministry of Industry, Trade and Investment has sealed 40 petrol filling stations in Anambra State for defrauding motorists. Cordelia Nwachukwu, the chief legal metrology officer, Weights and Measures department of the ministry made this known while addressing newsmen in Awka on Friday. Nwachukwu said the audit and surveillance team which arrived Anambra on October 29, inspected about 100 outlets across the 21 council areas in the state. She decried the short-changing of unsuspecting customers by marketers who use substandard petrol pumps. “The marketers’ reasons of high running cost, evaporation, mechanical error and shortage in supply from tanker drivers are not acceptable. “We have been here since one week on audit and surveillance on oil and gas sector in Anambra.

Some of the suspected kidnappers, armed robbers, rapists and other criminals paraded by the Police in Kaduna.

NAN

Police nab 2 over employment scam

642 out of 100,000 pregnant women T die from child birth in C’River MIKE ABANG, Calabar

German Foundation Konrad Adenauer Stiftung has raised the alarm that no fewer than 642 out of 100,000 pregnant women die annually from child birth in Cross River State. Cosmos Ohaka, lead presenter gave the figures in Calabar during a one-day seminar for opinion leaders held at the Transcorp Hotel aimed at establishing a social security system in the state that will

be of help to the less privileged persons. He said the figures are higher than all the states in the South-south region and is only better than ten states in the entire federation. Cosmos further revealed that records show that there were as many as 419.270 out-of-school children in the state in 2016. According to him, the implication of all these is that a large proportion of the population are unable to provide basic necessities for themselves and their families, noting that they therefore require support from

the government in form of social security. Kas resident representative in Nigeria Vladimir Kreck said the German Foundation had been in Nigeria for over 15 years promoting the ideals of democracy and social security system through partnership with the relevant stakeholders such as labour leaders, employees, Nigerian Bar Association (NBA), Nigerian Union of Journalists (NUJ), and civic society among others. Over 21 participants took part in the one-day seminar for the establishment of social security in the state.

Ford Foundation engages Forward Africa to train Aba shoemakers, others GODFREY OFURUM, Aba

n an effort to improve the quality of made-in-Aba shoes, belts and bags, the Ford Foundation, one of the largest private foundations in the world, has engaged Forward Africa, a management consulting firm, to improve the skills of artisans in the Aba Finished Leather Cluster (FLC). Consequently, about 264 artisans from the cluster have been selected to participate in the first phase of the training programme, sponsored by the Ford Foundation to improve their skills. The 1st phase of the training targets 14 zonal chairmen of the Leather Products Manufacturers Association of Abia State (LEPMAAS) and their secretaries as well as line chairmen of LEPMAAS, drawn from all the products lines and services. The training, which is scheduled to

run from November 12 to November 15, 2018, is in line with the capacity building programme of LEPMAAS, to improve their products and practices that support small businesses. Henry Uzoechi, project supervisor, Forward Africa, told CityFile in Aba that the training curriculum was drawn from courses in the executive enterprise education for entrepreneurs. He stated that the training would be conducted in partnership with Oluaka Training Institute; a Central Bank of Nigeria (CBN) approved Entrepreneurship Development Institute (EDI). According to him, the training is aimed at equipping Aba finished leather cluster (LEPMAAS) zonal leaders (chairmen and secretaries) and Line chairmen with very relevant information required by them and their cluster members to improve on their micro businesses and become

advocates for supports to other small businesses. He explained that the training content will include modules on effective communication, group dynamics, products standards, marketing and e-commerce, entrepreneur’s finance and business record keeping and partnership. Ford Foundation West Africa, intends to improve capacity of artisans in the Aba finished leather cluster. This is to enable majority of the artisans to qualify for the N500 million Bank of Industry (BoI) loan, to support the sector to produce seamlessly and improve quality. As a strategic partner on the programme, Ford Foundation, would ensure the provision of capacity development activities to the artisans to align with the organisation’s focus, to promote equality, ensure inclusive economic and free expression for citizens.

he police in Niger State have arrested two men who specialised in defrauding unsuspecting members of the public on the pretence of giving them employment. Commissioner of Police in the state, Dibal Yakadi, made this known in an interview with journalists in Minna on Friday. He said that the suspects – Elija Olawale, 40, of Engusu, Kwara and Timothy Oyewole, 25, of Ede, Osun, were nabbed on October 17 for allegedly duping one George Elada of National Examination Council (NECO) headquarters, Minna. Yakadi said that suspects also duped six other persons of N1.5 million. He explained that Oyewole impersonated Head of Department, Human Resource, Nigeria National Petroleum Corporation (NNPC), Kaduna, and promised to offer the victims appointment in the Corporation. According to him, the duo collected N350, 000 from Elada alone, and failed to give employment to him and the other persons as promised. “We recovered the sum of N 1.5 million from the suspect, which he obtained from the seven people,” Yakadi said. He said when the employment was not forthcoming, Elada reported the matter to the command which promptly put the suspects under surveillance. He said operatives of Security Intelligence Bureau (SIB) in the command trailed the suspects to Akure, Ondo state, where they were apprehended. The commissioner advised the public to refrain from giving out money to individuals with the intention of securing employment for them. He also advised them to desist from disclosing information directly or indirectly related to their bank accounts, saying that many people had fallen victims and lost huge sums of money to unscrupulous elements. NAN

42 BUSINESS DAY NEWS Nigeria has an infrastructure problem only... Continued from page 1

the 70 percent international

benchmark; yet, public investment in infrastructure from 2007 and 2017 was about 3.6 percent of GDP, lower than the African average of 4.3 percent. The impact of weak spending on infrastructure is as clear as day, with the density of Nigeria’s road network only one-ninth of India’s and power output that is 10 percent of South Africa’s. The decrepit state of infrastructure has pushed up the cost of doing business in Nigeria and made the country less competitive, helping African peers from Egypt to Ghana steal a march on Africa’s most populous nation in attracting foreign capital. “The reality is that the government alone cannot finance the infrastructure gap in Nigeria, making it difficult to achieve sustainable development,” Ebrima Faal, a senior director at AfDB Nigeria, said during the recent Africa Investment Forum (AIF). Africa Development Bank (AfDB) estimates that Nigeria needs to spend $100 billion (N30.6 trillion)

annually over the next 30 years to get its infrastructure at par with the needs of the country, yet in 2017, the country only spent N1.4 trillion ($3.3 billion) on capital expenditure. That’s 4 percent of the AfDB requirement. This year, budget estimates show that Nigeria plans to spend only N2.8 trillion ($7.7 billion), which is perhaps a sign that the government can’t meet its infrastructure financing needs without tapping private capital. “At a time when public sector finances are extremely pressured, there is therefore a critical need to change the current funding mix and create partnerships to finance infrastructure and other projects in Africa,” Faal said. The need to adopt Public Private Partnerships (PPPs) to bridge a yawning infrastructure deficit is hardly a new counsel in Nigeria; but it has hardly taken off, to the frustration of businesses and households in Africa’s most populous nation. Millions of small businesses in Nigeria lose large chunks of their profits togeneratingpowerindependentlyand

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move their merchandise on congested roads within a country with insufficient sea ports and limited rail infrastructure. The country’s crumbling infrastructure not only comes at a steep cost for businesses, it also takes a heavy toll on a cash strapped government faced with record low revenues. State infrastructural regulatory agency, Infrastructure Concession Regulatory Commission (ICRC) estimates that the country loses N2 trillion each year due to inadequate infrastructure. That’s 74 percent of the Federal government’s total earnings of N2.7 trillion in 2017. Well-structured Public-Private Partnerships (PPP) could provide higher infrastructure investment efficiency, and at the same time, free up government resources for other areas. “The truth is that PPPs are necessary. The government simply does not have enough money to bridge Nigeria’s infrastructure gap,” Akinkunmi Akingbade, a development economist, said. “PPP initiatives have succeeded all overtheworld,includinginNigeria.The Azura Edo Independent Power Project (IPP) and the Murtala Muhammed

Airport 2 are success stories of the PPP journey in Nigeria,” Akingbade said. PPP failures like the Lekki Toll represent a failure of government and implementation, rather than an encouragement to abandon the approach, according to Akingbade. Earlier in July, Nigeria Vice President, Yemi Osinbajo while speaking at the Second Capital Market Stakeholders’Forumsaid,“thenationrequiresthe capital market to raise long-term funds necessary for infrastructure funding.” This thinking has been further reechoed by many other economists in the country who have urged the federal government to turn to private capital to fund infrastructure projects around the country. However, an enormous amount of private funds is already invested in government debt. Banking assets in the country has flattened out at 30-31 percent of GDP since 2010 with significant amount already invested in government backed securities. Up to 68 percent of Pension funds are currently invested in FGN bonds and treasury bills, leaving the country with limited domestic funds to still invest in more government securities.

Monday 05 November 2018

“Over 80% of non-bank assets are in FGN debt instruments, if the FG created specific project based infra bonds these funds could be used to fund the infrastructure gap as against financing largely fiscal recurrent deficits,” said Wale Okunrinboye, head of research at one of the biggest pension funds in the country, Sigma Pensions. Nigeria’s best option to raise investments in infrastructure is to attract foreign capital into the country at a time when there is massive capital outflow of foreign capital from emerging and frontier markets due to tightening monetary policy in US and UK. Since 2013, foreign capital to GDP has dropped from around 4.3 percent to 3.3 percent in 2017. In fact, foreign capital to GDP was as low as 1.5 percent during the recession in 2016 as investors rushed out of the country. Nigeria’s infrastructure Master plan shows that the country needs to raise its infrastructure stock to GDP from around 25 percent of GDP to around 70 percent, however with limited options forfurthermoppingupdomesticfunds, the best alternative seems to be look outward to fund local infrastructure.

Nigeria’s onshore-offshore oil production... Continued from page 2

L-R: Seun Tubi, technical assistant to the MD of Bank of Industry (BoI ); Emmanuel Egbuta, state manager, Lagos State office, BoI; Ike Eze of Lagos Angel Network (LAN); Bunmi Lawson of LAN; David Richard of LAN; Sunday Afolami, regional manager, Pic by Pius Okeosisi Lagos, BoI, and Segun Olukoya of LAN, during the Lagos Angel Network workshop in Lagos.

Mixed reactions trail HSBC, UBS Nigeria... Continued from page 2

not because they would be missed in Nigeria, rather as one of the top 10 banks in the world, they command market power such that news about them may move markets,” Bongo Adi, a development economist, said. “So we are concerned about the negative contagion that may follow this news. Never forget that market runs on irrational exuberance that this sort of news carry and this is a time when our FDI isn’t doing well and the news of this exit doesn’t help,” Adi said. While the CBN said Foreign Direct Investment (FDI) to Nigeria declined by 29 percent to N379.84 billion naira ($1 billion) in the first half of the year, from N532.63 billion naira in the same period a year earlier, state-funded data agency, the National Bureau of Statistics (NBS) had earlier reported a 4.5 percent increase to $507.96 million in the first half of 2018 from $485.75 million the same period a year ago. FDI inflow to Nigeria is way below requirements for a country tipped to be the third most populous nation by 2050 with a population exceeding that of the United States. Nigeria’s FDI per capita was barely $5.6 in 2017, compared to $107 in Ghana, $78 in Egypt and $58 in South Africa, according to data from UNCTAD. Atiku Abubakar, the Presidential aspirant of Nigerian opposition party, PDP, said “(It is) always a sad

day for our country when such entities pack up. FDI is a key component to economic growth.” “My administration will attract more FDI by making the CBN stronger and independent and banish multiple exchange rates and promote a market-led economy,” the 71 year old former vice president, who will do battle with incumbent President Muhammadu Buhari of the APC at the 2019 polls, said on twitter. Abubakar has remained silent after his party publicised his plans to crash retail petrol prices lower, even though the current N145 per litre comes at a huge subsidy cost to government, calling to question his pro-market ideology. On the implication of the exit of HSBC and UBS from Nigeria, some analysts say it adds to the bad reputation of the country to foreign investors following a regulatory clash with its biggest non-oil Foreign investor, MTN, late August. A situation that the finance minister, Zainab Ahmed, even described as “damaging” at a private sector conference last month. “When you are struggling to raise foreign capital these are not the type of events you want to be linked to,” a money manager who sits in South Africa told Business Day. The central bank had accused the local units of Standard chartered, Citi bank and Standard bank, as well as local lender- Diamond bank

of illegally aiding MTN to repatriate $8.1 billion using false Certificates of Capital Importation (CCIs). MTN and the banks denied any wrongdoings but the banks were fined N5.9 billion among them while MTN got a court injunction to stop the apex bank from forcing it to repatriate the $8.1 billion back to the country. The matter is still in court but Nigerian authorities have since softened their stance on the accusations admitting the manner in which it was handled was a mistake. Other analysts however say the perceived impact of the exit of both banks (HSBC and UBS) has been largely exaggerated. “They had desk offices in the country at best and there is no official data on foreign capital imported through them because they never operated full-fledged banking operations,” an investment researcher at a local Pension Fund told Business Day. Stanbic IBTC, the local unit of Standard bank of South Africa, imported the largest capital into Nigeria in the first half of 2018 ($6.1 billion or 51.7 percent of the $11.8 billion total imported into Nigeria in that period) followed by the local unit of London-based Standard Chartered bank ($1.7 billion or 14.4 percent of the total) and local unit of US lender, Citi bank, ($1.2 billion or 10 percent of the total). HSBC and UBS did not import any capital.

•Continues online at www.businessdayonline.com

ments of over $45 billion in Deepwater development, saying that the $16 billion Egina deepwater development has provided significant impetus in offshore development activity. “We are shooting for later this year” on a final investment decision at the Zabazaba development, as some contractual details are being finetuned,” Kachikwu said on Monday during an interview with Bloomberg. The nation doesn’t plan to issue any new offshore licenses before elections due in February, he said. Analysis on lists of projects sanctioned for commissioning between 2010 and 2020 showed that FID on major deepwater development projects have stalled as hopes of return of deepwater field development activities fell off the table following disputes over the implementation of the existing 1993 production contracts that spurred the first phase of exploration investment in the terrain. For instance, Shell operated Bonga Southwest and Aparo deepwater development project which was originally planned to start producing 225,000 barrels of oil and 15 million standard cubic feet of gas per day by 2020 is yet to scale through FID as an initial evaluation of the well results indicated that the recoverable reserves discovered with Bonga Southwest were large enough to form the basis for a new deepwater development in OML118. The company which leads protests against fiscal inconsistency in the country also pulled down planned Bonga North development earlier proposed to deliver 100,000 barrels and 60 million standard cubic

feet of gas per day. Italian Eni and Anglo-Dutch Shell are working with Nigeria National Petroleum Corporation (NNPC) to reach FID on Zabazaba and Etan deepwater fields located in oil prospecting lease (OPL) 245 offshore Nigeria in the Niger Delta of the Gulf of Guinea, in water depths ranging from 1,200m-2,400m. According to offshore technology, the Zabazaba and Etan fields are estimated to hold a combined total of 560 millionbarrelsofoil-equivalent(Mboe). ExxonMobil is also not active with existing plans for three deepwater development projects envisaged to increase production by 230,000 barrels per day. The company’s Satellite Field Development Programme was planned to come on stream as from 2020 with 80,000 barrels per day but no progress has been made on the FID. Also, the American oil major is yet to decide project timelines and budget estimates for development of operated Bosi deepwater field expected to deliver 135,000 barrels per day and 260 million standard cubic feet of gas per day from deep offshore. The company which is also the country’s offshore industry champion has been unable to ignite negotiations on development of operated Uge deepwater field which was earlier planned to start production of 110,000 barrels and 20 million standard cubic feet of gas per day by 2020. Chevron is also silent on development plans for operated Nsiko deepwater field which has projected estimate for production of 110,000 barrels of oil from the deep offshore by 2020.

Power producers kick as N701bn intervention... Continued from page 2

out how the businesses called DisCo, Genco are doing, you will shake your head,” James Momoh, chairman of NERC said in an interview with BusinessDay. Momoh further said, “We have not seen the impact of that investment. Remittances are still very low. This is a sign that the DisCos are not doing well. “In most cases, we have not seen new technology introduced to improve operational efficiency. We have not seen meters and that is why we are engaged in metering. We have also not seen a full participation between the customers and DisCos

in terms of what they will do to get out of the hole.” According to the government’s plan, the N701bn fund will assuage the huge debt to gas suppliers GenCos cannot meet because DisCos are not making enough remittances. This will allow DisCos the opportunity to improve their collections and as the fund depletes, they would have been able to settle their market obligations. “The plan was that they will make the DisCos to improve their remittance by the end of December but the remittance has gotten worse than even when they started it, we are asking questions but no one is answering,” Ogaji said.

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BUSINESS DAY

Live @ The Exchanges Top Gainers/Losers as at Friday 02 November 2018 GAINERS Company

Market Statistics as at Friday 02 November 2018

LOSERS Opening

Closing

Change

Opening

Closing

Change

N615.5

N625

9.5

MOBIL

N176.5

N162.7

-13.8

TOTAL

N198

N200

CCNN

N22.5

N20.25

-2.25

DANGCEM

N203

N204.9

1.9

N11.05

N10

-1.05

N7.9

N8.35

0.45

FIDSON

N5.1

N4.6

-0.5

N23.2

N23.55

0.35

UACN

N9.4

-0.4

SEPLAT

ACCESS ZENITHBANK

Company

ASI (Points)

32,124.94

DEALS (Numbers)

2,816.00

VOLUME (Numbers)

239,117,563.00

VALUE (N billion)

2.849

MARKET CAP (N Trn

11.728

FRC inaugurates audit regulation working group Stories by Iheanyi Nwachukwu

he Financial Reporting Council of Nigeria (FRC) last week inaugurated its Audit Regulation Working Group. The group is saddled with the responsibility of improving audit quality in the country which is expected to enhance economic growth. Membership of the Group and subject matter experts were drawn from the Office of the Auditor General for the Federation, the Federal Ministry of Justice, Forum of Small and Medium-sized Audit Practitioners, Nigerian Accounting Association, the Securities and Exchange Commission, Federal Ministry of Trade and Investment, Association of National Accountants

of Nigeria, the Institute of Chartered Accountants of Nigeria as well as some international and national

accounting firms. Speaking during a meeting of members of the Group in Lagos, the Ex-

ecutive Secretary /Chief Executive Officer of the FRC, Daniel Asapokhai, said audit corporate re-

L-R: Atedo Peterside, founder/former chairman, Stanbic IBTC Bank Plc; Tokini Preterside, founder/CEO, ART X Lagos; Adeyeye Enitan Ogunwusi, Ooni of Ife, his wife Shilekunola Naomi Ogunwusi; Herbert Wigwe, group managing director/CEO, Access Bank Plc, and Babajide Olusola Sanwo-Olu, Lagos State APC governorship candidate, during the VIP opening and cocktail night of the 2018 ART X Lagos, at The Civic Centre, Lagos.

porting supports the orderly functioning of the capital market and helps companies in raising capital from other sources and improves confidence in the integrity of financial statements. Commenting further, Asapokhai noted that effective public oversight of audits would improve audit quality and support economic growth. According to him, the FRC’s goal is to improve the quality of statutory audits in Nigeria by taking steps “to improve the independence of audit firms and auditors from the entity being edited; enhance the informational value of the audit reporting to investors; promote a more dynamic and competitive market for audit services and foster convergence of standards with Nigeria’s largest trading partners.” On his part, the Chairman of the FRC, Adedo-

tun Sulaiman, noted that the Working Group would provide technical assistance to the FRC in releasing a comprehensive set of rules over the next several months, to better regulate in the interest of members of the public, the independent audit of corporate financial reporting and more effectively transition the oversight of audits in Nigeria from the Professional Accounting Organisations to the FRC. “The Working Group will assist the FRC to assess the state of audit regulation in Nigeria, develop new requirements for audit firms and auditor registration, regulation of broader assurance services, the practice reviews and inspection of audit firms provided for in Sections 60 and 61 of the FRC Act as well as requirement for the conduct of different assurance engagements,” he added.

Flour Mills posts N202.92bn revenue in H1 of 2018

PEARL throws up top market performers for awards

he PEARL Awards, Nigeria’s premier Awards institution rewarding outstanding and excellent performance by market players and companies quoted on the Nigerian Stock Exchange has unveiled nominees for her Awards Nite billed for Eko Hotels and suite Sunday November 25, 2018. Having run for 23 years and endorsed by the Security and Exchange Commission in

lour Mills of Nigeria Plc. (FMN) Group has announced its unaudited half year (H1) results for six months ended September 30, 2018. The group increased its market share in some product categories, in a somewhat challenging environment with lower consumer spending. The result at the Nigerian Stock Exchange (NSE) shows that the Group’s revenues were N269.74 billion, compared to N298.44 billion of the same period last year, with an increase in the Group’s share of the market.. The Group recorded a 49percent increase in selling and distribution expenses of N4.13 billion, compared to N2.77 billion of the same period last year, as it increased its marketing spend. The Group recorded a growth in investment in-

come of N290 million, a 6percent increase when compared to N270 million of the same period as last year. The increase being attributed to short term investments. The Group recorded a notable drop in its finance cost from N16.27 billion in Q2, 2017 to N11.23 billion in Q2, 2018. This represents a 31percent drop which is due to settlement of overdraft facilities and replacement of high interest yielding loan facilities with cheaper loan facilities. Flour Mills of Nigeria Plc (the Company): recorded a revenue of N202.92 billion, compared to N216.77 billion of the same period last year. The 6% reduction in revenue is mainly due to a minor drop in sales volume which is precipitated by the persistent traffic challenges in Apapa. Administrative ex-

pense was N7.55 billion, compared to N5.87 billion in the same period as last year. The 29percent increase is mostly driven by increase in employee cost and other general expenses. Commenting on the result, Paul Gbededo, the Group Managing Director said: “In the face of persistent economic challenges and a difficult operating terrain, we continue to pursue our growth strategy to gain market share in all key product segments. Operations in Apapa continues to suffer major setbacks in traffic and logistics challenges, impacting in a marginal drop in our volume and top line activities. With improved marketing and promotional activities for most of the key food businesses, we envisage new gains in the remaining part of the year, as we continue to focus on innovative products that deliver on great consumer experience.”

2003, The President of PEARL Awards Nigeria, Tayo Orekoya told the media that; “Since inception and to date, we have been guided by the principles of fairness, transparency and objectivity in our selection process while our scientific approach in determining nominee companies remains unassailable.” shortly before he unveiled the 2018 award nominees. Adding that, “We are not unaware of the huge responsibility placed on our shoulders as a result

of the reliability on our sense of judgment by investors and shareholders alike, but are determined to continue to play our part with every sense of fairness, objectivity and equity.” “The Nigerian capital market, particularly investments in the Stock Exchange has recently been undergoing a most harrowing experience with sustained losses in share values, resulting in huge depletion of wealth to equity stakeholders.

Stanbic IBTC Group grows third-quarter profit by 59%

tanbic IBTC Holdings, a member of Standard Bank Group, has announced its nine months unaudited group results for the period ended September 30, 2018 reporting profit after tax of N59.76 billion, an increase of 59percent for the corresponding period in 2017. The result at the Nigerian Stock Exchange (NSE) show gross earn-

ings of N168.80 billion, an increase of 9percent (September 2017: N154.22 billion); Net interest income of N58.44 billion, down 7percent (September 2017: N62.95 billion); non-interest revenue of N79.97 billion, up 24percent (September 2017: N64.28 billion); total income of N138.42 billion, an increase of 9percent (September 2017: N127.23 billion); profit before tax of N70.38

billion, up 54percent (September 2017: N45.65 billion); and profit after tax of N59.76 billion, an increase of 59percent (September 2017: N37.67 billion). The company’s cost to income ratio stood higher at 52.1percent (September 2017: 48.1percent); return on average equity (annualised) was 39percent; while return on average assets (annualised) was 5.5percent.

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German development bank invests €31m subordinated capital in InfraCredit HOPE MOSES-ASHIKE

German Infrastructure Credit Guarantee Company Limited has announced the successful closing of a €31 million (USD Equiv) subordinated capital investment by its new investor, KfW Development Bank in InfraCredit. InfraCredit is a specialised infrastructure credit enhancement facility established by the Nigeria Sovereign Investment Authority (NSIA) in collaboration with GuarantCo (a member of the Private Infrastructure Development Group (PIDG), to provide guarantees that enhance the credit quality of local currency debt instruments issued to finance eligible infrastructure projects in Nigeria. KfW, the largest development bank in Europe and a public law institution existing under the laws of the Federal Republic of Germany with its headquarters in Frankfurt, and InfraCredit have agreed to pursue the common goal to enhance infrastructure investments in Nigeria by supporting private infrastructure enterprises.

In pursuance of this joint objective, KfW is investing a 10-year €31,000,000 (USD Equivalent) subordinated unsecured capital in order to strengthen InfraCredit’s guarantee capacity, enable InfraCredit achieve its targeted capitalisation and bolster its balance sheet. The investment is accompanied by a Technical Assistance Grant to support InfraCredit’s market development and capacity building programme. The investment promotes an innovative catalytic second loss paid-in capital incorporated into InfraCredit’s capital structure, and its repayment will be subordinated to the payment of all senior indebtedness including beneficiaries of its credit guarantees in the event of any bankruptcy, liquidation or other similar events. The subordinated unsecured long-term capital will rank as qualifying capital for financial leverage purposes. In a statement the managing director/CEO of InfraCredit, Chinua Azubike, said, “We are pleased to receive KfW, a highly reputable international development finance institution, as one of InfraCredit’s investors. KfW

is a unique DFI with the appropriate motivation and risk appetite to support innovative financial institutions like InfraCredit that foster market development and leverage additional capital from private institutional investors.” According to Michael Wehinger, first vice president, West Africa and Madagascar of KfW, “InfraCredit’s mission of mobilising private capital from local sources for private sector investments in local infrastructure is of importance to KfW. We believe that the management team with the support of the board have the experience, the right attitude and a very strong commitment to make InfraCredit become an important player in the Nigerian capital market and an important accelerator for private investments. “I am proud that from today KfW on behalf of the Government of Germany is able to support InfraCredit, not only by enlarging InfraCredit’s capital base with the subordinated capital but also with substantial technical assistance funding to support a sustainable growth of InfraCredit.”

A1 NEWS

BUSINESS DAY

NERC set to approve 94mw embedded power plant for Lagos OLUSOLA BELLO & STEPHEN ONYEKWELU

he Nigerian Electricity Regulation Commission (NERC) has reached advanced stages in the process of approving a 94 megawatt embedded power project to be sited in Apapa, Lagos. People with knowledge of the proceedings say the commission would give its approval to the partnership between Eko Electricity Distribution Company (Disco) and Power House International, a Nigerian infrastructure consulting company this week. NERC officials working on the project were expected to have concluded due diligence checks on the documents filed for the partnership by the week ending October 26, so that the documents can be presented to the commissioners for approval. The $93 million project will be dedicated to Apapa to serve both residential and commercial purposes at affordable tariff. Unlike previous arrangements where embedded power projects in Lagos have stalled after the bid process, this one according to sources has taken into consideration

all the necessary shortfalls and improved on them, and it is good to go. James Momoh, the chairman of NERC, who spoke exclusively to BusinessDay on the matter, praised the arrangement between Eko Electricity Distribution Company and Power House International, the promoter of the project, assuring the public that the project would fly this time around. “I think what I will just say is to cheer you up and give you some good news. For the first time the commission is going to consider one of the applications that the Eko Disco has submitted under the competitive procurement, the procurement of 90 megawatts from Power House International. The timeline for this project to come on-stream has not being specified.” “The commission is only checking to ensure due diligence. This is between Eko Disco and Power House International. This is just one out of several IPPs. We really appreciate what Eko did to allow us to at least have a good story to tell about this effort to collaborate competitively and cooperatively. They have allowed this new market.”

Embedded power generation projects in the past have ran into challenges because investors saw the risks outweighing rewards. Potential investors want guarantees, first, from the DisCos. “This is because once a generating plant is developed it cannot be moved. When an investor looks at the financials of the DisCo and is not comfortable with what they see then chances are that they will not go ahead with the project. This is why investors interested in embedded generation seek power purchase agreement (PPA) with Nigeria Electricity Bulk Trading Company (NBET) because with this there is federal government guarantee and there is also World Bank guarantee”. Chuks Nwani, vice President, Power House International Limited, told BusinessDay on phone that the project is dedicated to Apapa alone. Nwani said the company is not just generating power alone but it will also attempt to enhance the existing infrastructure within it operational areas. Such infrastructure as distribution lines, substations and feeder pillars would be enhanced or reinforced to perform better.

A2 BUSINESS DAY NEWS

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These countries can still buy oil from Iran as sanctions kick in

espite the hardline rhetoric, eight countries including United States of America’s allies South Korea and Japan, as well as India will keep buying Iranian oil after sanctions kick in today (November 05) on waivers from the U.S. Concerns that a total ban would spur a further rally in the price of crude led Iran’s biggest oil customers (all in Asia) to seek for sanction waivers to allow them to continue buying some of Iranian oil. Oil prices rallied this year to a four-year high above $85 per barrel on fears that Washington may want to cut Iranian oil exports to zero. South Korea and Japan have received waivers along with India, which rely heavily on Iranian supplies, Bloomberg reported. India, the second-biggest importer of Iranian oil is cutting back, while signalling

that it would not shut down the trade completely. And India’s government is not just buying crude from Iran. It is also preparing to buy missile defences from Russia, another sanctionable offense in Washington’s eyes. It is unclear how much crude those eight countries would be allowed to buy from Iran, whose oil exports have plummeted from an average of more than 2.5 million barrel per day in recent weeks, Reuters reported. “The waivers granted to these eight countries show that the market needs Iran’s oil and it cannot be pulled out of the market. I don’t know whether these waivers are permanent or temporary” state TV quoted Ali Kardor, Iran’s Deputy Oil Minister as saying. However, Goldman Sachs said it expects Iran’s crude exports to fall to 1.15 million bpd by the end of the year. During a previous round of

sanctions at the start of the decade, Iranian oil exports declined at times to below 1 million bpd. Among other countries closely connected to Iran’s energy system is Iraq, which imports gas via a pipeline. The United Arab Emirates imports large amounts of Iranian fuel oil to power ships and Egypt imports oil from Iran from the Sumed pipeline. The biggest oil importer from Iran, China is a wild card in Trump’s calculations. It is a competitor, not amenable to the kind of pressures that can be applied to allies. Beijing has rejected the U.S. request to stop buying Iranian crude, Chinese officials say, though it has agreed not to ramp up purchases. Although, a Chinese official told Reuters that discussions with the U.S. government about waivers were ongoing and that a result was expected over the next couple of days.

Illegal helicopter charter flights spark row in aviation sector IFEOMA OKEKE

elicopter operators have raised alarm over involvement of choppers in the fleet of Nigeria Police Air Wing in the conduct of charter flights without the required permit for such operations. According to Nigerian Civil Aviation Authority (NCAA) regulations, helicopters in the fleet of the Nigeria Police Air Wing are not authorised to engage in “reward and hire,” which in aviation par lance is charter operations. Sources close to scheduled operators say the involvement of Police Air Wing Helicopters in hire and reward operations is not only jeopardising the interest of commercial operators, which have proper permit, licences and approvals to carry out charter flights. They say the involvement of the Police Air Wing Helicopters is undercutting their market share, resulting in reduction of the cost of charter. In particular, they say such illegal operations have brought down the cost of hiring to Bell Helicopters to a ridiculous 20 percent the value of such flights. They allege that such illegal operations by the Police Air Wing can push scheduled operators out of business if not checked. Investigations reveal that helicopter charter shuttles, for which commercial operators charge $105,000 is being allegedly carried out by the Police Air Wing for a paltry $30,000. The operators have however complained to the industry regulator, NCAA, to probe alleged infractions by the Police Air Wing. A source close to commercial helicopter operators

says though helicopters in the Police Air Wing are meant for government services under the Nigerian Civil Aviation Regulations, but they however been allegedly used for commercial services. The source says: “The helicopters in the fleet of the Nigeria Police Air Wing are meant for government services and under the Nigerian Civil Aviation Regulations can only operate for the services of Nigeria. “They cannot operate as

a scheduled, non scheduled private operator with airline operating permit or air transport license and air operators’ certificate, but sole with special permit under civil aviation. “Instead the Police Air Wing is using their helicopter to conduct commercial charters without the required insurance or permit. This is dangerous as it may be jeopardising the interest of all commercial operators with the proper permit.”

Monday 05 November 2018

FG has spent over N2.7trn on infrastructure - Osinbajo ODINAKA ANUDU

ice President Yemi Osinbajo says the Federal Government has spent over N2.7 trillion to service the country’s infrastructure needs. Osinbajo says the amount represents the largest capital expenditure in the country’s history despite earning 60 percent less in the previous five years. At the opening ceremony of the 2018 Lagos International Trade Fair, Osinbajo said, “We have focused on roads, power and our new rail network, among others. The Federal Government has been committed to policies and reform efforts geared at enhancing diversification and structural reform of the economy through massive investment in infrastructure and human capital.” The Vice President said these policies had successfully enhanced productivity, increased the share of manufacturing in Nigeria’s total export earnings and reduced Nigeria’s susceptibilities to shocks. “Our focus on infrastructure extends to both hard and soft infrastructure, par-

ticularly trade facilitation, quality infrastructure and the ease of doing business reforms. We have taken on the infrastructure challenges that have stifled SME growth and development in the country by seeking innovative ways to bridge the significant infrastructure gap and at the same time, creating an enabling environment,” he said. Plans are also on the way to facilitate an innovative product in collaboration with Google incorporated to provide free WiFi in public places, he said, pointing out that the service is currently in six different locations in Palm Shopping Mall, Landmark Centre, MM2 (the domestic airport), the Computer Village and the Ikeja City Mall. “The more interesting part is that we are asking them to roll out a market across a Nigeria. In the next few months they will be in Onitsha Main Market, Gbagi in Ibadan, Kuto Market in Abeokuta, Kaduna Central Market, the Sura Market and the Lagos Abuja International Airport. “We think that by democraticising access to the internet, especially in public

places, and in markets, so many more people can do their business and more people can receive information and this information can cheaply be delivered to them. An enabling business environment is critical. “We have also enhanced our electronic visa process, which allows any eligible business traveller coming into Nigeria to attain visa within 48 hours of applying and meeting the conditions. “This is in addition to a renewed mandate of a 48hour visa processing timeline across all our missions abroad. Many of those companies coming into Nigeria can get visas on arrival and that process is the one that has been tried and tested,” he said. Also speaking at the event, Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), said the chamber had adopted a generic theme tagged, “Connecting businesses, creating value,” for the Lagos International Trade Fair, stressing that the theme is chosen to underscore the importance of relationship and interactions among businesses for the purpose of wealth creation.

Monday 05 November 2018

BUSINESS DAY

Monday 05 November 2018

BUSINESS DAY

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CEO INTERVIEW

Monday 05 November 2018

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BUSINESS DAY

Bola Onadele. Koko Managing Director/Chief Executive Officer, FMDQ OTC Securities Exchange

Interview with Private Sector Leaders

Fmdq’s conceptual identity is prosperity

“The Managing Director/Chief Executive Officer of FMDQ OTC Securities Exchange, Bola Onadele. Koko, in this interview, shares his views on the need for the market stakeholders - government, regulators, banks, Nigerian corporates, foreign investors, Nigerians - to effectively harness the potential and opportunities inherent in the Nigerian debt capital market (DCM).

ith 2018 now in its 4th quarter and the year almost drawing to a close, how will you say FMDQ and its markets have fared so far and what can one expect in the final quarter of the year? Thank you for the two-in-one question to which I shall endeavour to provide a comprehensive response. However, before I do that, I will like to, on behalf of FMDQ Board and Management, commend the BusinessDay Media Limited (BusinessDay) for its unalloyed support to FMDQ since its launch on November 7, 2013. The year 2018 began for us at FMDQ with great optimism for the markets, amidst a period of continued and gradual recovery from economic headwinds which had hitherto stagnated the markets. The high crude oil price, the Central Bank of Nigeria (CBN)’s Investors’ & Exporters’ (I&E) Foreign Exchange (FX) Window, amongst others, have motivated the Nigerian economy to steadily shed off the recessionary trends. In the FMDQ markets (i.e. the fixed income, currency and derivatives markets), turnover for the first nine months of the year totalled c. N132 trillion, about 28% increase when compared to the same period last year. The market will really be excited with a 2018 annual turnover of N160 trillion. The debt market size stood at c. N26 trillion as at September. The FX and FX derivatives markets performed reasonably better than we all expected, and I must commend the efforts of the CBN for sustaining its FX hedging product, the Naira-settled OTC FX Futures. Indeed, the imminent quiescence and stability in the Spot FX market, untypical of periods of political uncertainty, can partly be attributable to the availability of the CBN’s risk management product. Away from the quantitative, the OTC Exchange has also continued to add depth and breadth to the markets by championing and deploying strategic initiatives which have direct and indirect effects on developing the nation. From the pioneer listings of the Federal Government of Nigeria (FGN) Sukuk and FGN Green Bond on FMDQ’s platform, to the listing of the first infrastructure bond in Nigeria - the Viathan Funding PLC Power Bond - our markets have shown huge potential in bridging the funding gap required by government and the private sector to boost development of the economy. The Viathan

Funding PLC Power Bond, just like the FGN Sukuk which is targeted at construction and rehabilitation of roads in the six (6) geopolitical zones, are both welcome developments given the huge infrastructure deficit which the country is burdened with. In addition to these, the value of programmes in the FMDQ commercial paper (CP) market crossed the ₦1 trillion mark in July, showing not only a growing interest by corporates seeking to prosper their businesses but the increased renewed confidence in the Nigerian CP market; even as we welcomed the quotation of the largest CP issuance on FMDQ – the ₦50 billion Dangote Cement PLC CP Notes – in July. This was the first time, since 2009, the Dangote Group – the largest indigenous industrial conglomerate in Sub-Saharan Africa – approached the domestic debt markets to raise finance; and FMDQ provided that reliable and efficient platform where these were realised. We are optimistic that other corporates would key into the CP market as an alternative source of funding and tap into the array of opportunities availed by the Nigerian debt capital markets (DCM), particularly in the light of the regulatory provisions and standards like Basel 3 and International Financial Reporting Standard 9 (IFRS 9). FMDQ has further strengthened its collaboration with the market and key stakeholders, especially the CBN and the Financial Markets Dealers Association (FMDA), and one of the values created by this conscious effort was the launch of the FMDQ Proprietary Market System, Q-ex, and the introduction of a settlement solution for the fixed income market in June. FMDQ’s Q-ex was successfully integrated with the CBN’s Scripless Securities Settlement System (S4), enabling, for the first time ever in the history of the Nigerian financial market, straightthrough-processing for settlement of sovereign fixed income trades, thereby facilitating the much-needed operational efficiency in the FMDQ fixed income market. In similar vein, FMDQ’s wholly-owned clearing subsidiary, FMDQ Clear Limited (FMDQ Clear), having been registered by the Securities and Exchange Commission (SEC) in November 2017, was operationalised in January 2018 to act as a central clearing house providing post-trade workflow efficiency in the FMDQ markets. FMDQ Clear is particularly central to the take-off of the FMDQ derivatives market which is a much-awaited evolution, and one which will further propel the Nigerian financial markets onto the global space. Furthermore, the

global financial markets landscape has continued to evolve, and the tenets of sustainable finance have become further entrenched into the broader markets’ activities. Nigeria is most certainly not left out in this new dawn as, in July, FMDQ, in partnership with Financial Sector Deepening (FSD) Africa and Climate Bonds Initiative (CBI), formally launched a 3-year Nigerian Green Bond Market Development Programme. Looking ahead into the coming months, and ahead of the 2019 elections, it may be expected that the scepticism of foreign portfolio investors may lead to a dump of investments with the associated capital flight and this will perhaps test the strength of the I&E FX Window. Whilst this test is something the markets may not need to be apprehensive about, given the resilience which the Window has shown in its over 18 months of activity, I would say that sound market initiatives, for example, the Naira-settled OTC FX Futures product, and the high crude oil price may have made for the likelihood of relatively stable markets for the remainder of the year. Having said this, however, as a nation, it is crucial that conscious efforts are made by the government, responsible agencies and market stakeholders to diversify the economy and lower the high dependency on foreign inflows, and indeed, crude oil, which goes without saying. For the financial markets, the urgent need to launch a robust derivatives market to enable investors in these markets access to a plethora of hedging products to manage their risk exposures is even more imminent and cannot be overemphasised. FMDQ, as part of its mandate, has taken up this responsibility in support of the development of Nigeria and the financial markets and is working assiduously towards delivering a viable Nigerian derivatives market and has, this year, already commenced activities in this regard. That was comprehensive as promised. You mentioned that the FMDQ commercial paper market has hit the ₦1 trillion mark. With the recent issuance by Dangote, are we seeing more issuers in this space? What could be the driving force, if any? The commercial paper, as an investible asset class, has been in the Nigerian market for well over three, if not four, decades now. However, the level of irregularities and operational deficiencies which characterised this market during the period prior to 2009 did not only

severely hamper its growth into the world-class market it should have been, but also saw the sharp decline of the then budding market from trillions worth to bottom zero levels by 2013. With the formal launch of FMDQ in 2013, came a commitment, as part of our market development initiatives, to resuscitate the Nigerian CP market and working with the market stakeholders, especially, the rating agencies and the highly supportive CBN, we set out to revive and transform this market in line with the FMDQ “GOLD” agenda; GOLD being an acronym which FMDQ has become known for and which stands for Global competitiveness, Operational excellence, Liquidity and Diversity. Predicated on the CBN’s “Guidelines on the Issuance and Treatment of Bankers’ Acceptances and Commercial Papers (2009)”, FMDQ came on board and championed the necessary market reform; providing adequate governance and information transparency and restoring the muchneeded confidence required by

investors to actively participate in this market. So, issuers now have a renewed opportunity to grow their businesses and meet short-term funding obligations through a viable and cost-effective means for the achievement of their business objectives/goals. So far, about twenty-one (21) CP Programmes have been registered on the FMDQ platform and are well over the ₦1 trillion mark. To the recent issuance by the Dangote Cement PLC, this was long-awaited and in fact, overdue. FMDQ works hard to offer benchmarks to the market as part of its market organiser role. The Dangote Group is one of those institutions we engaged to create benchmarks for the Nigerian debt capital markets and the market is excited they finally responded. Indeed, this was testament to the increased confidence in the CP market, arguably due to the improved governance and transparency brought about by the advent of the FMDQ Quotations Service. Furthermore, with the current market conditions making shorter-term funding more favourable, and the commendably efficient processes which have continued to result in a quick time to market, for which the FMDQ Quotations Service avails, we have indeed seen more issuers tapping into the CP market. I

cannot overemphasise that the DCM is the powerhouse where every business should derive its energy to operate from. Soon enough banks will no longer be able to apply short-term funds to finance long-term assets per the implementation of global regulatory provisions and standards i.e. the Net Stable Funding Requirement. It is therefore commendable that at such time when banks, non-bank financial institutions and small and medium-scale enterprises alike are striving to prosper despite the economic headwinds in the country, the CP market can be looked to and corporates tapping this market are able to build confidence in their brands as well as raise their corporate profiles ahead of tapping the market for longer-term debts such as bonds. We are optimistic that the appreciation of brand equity and leverage will motivate our banks, especially the national icons, to support us in establishing benchmarks in a highly transparent manner through the quotation of their Bankers’ Acceptances on FMDQ. Indeed, on a larger scale, FMDQ is also positioned to work with local and international export-import banks to facilitate an efficient Bankers’ Acceptance market.

BusinessDay has closely followed the news on the planned introduction of derivative products into the Nigerian financial market by FMDQ. When is the market likely to take off and what products should the market anticipate? As I previously noted, a crucial step towards managing the uncertainty which the financial markets pose for investors and issuers the world over is via risk management products offered in the derivatives market. For a country like Nigeria, a derivatives market is not only long overdue but very much-needed to support the effort of the government and key stakeholders such as the CBN in managing capital flight and related volatilities. If you recall, in 2016, working with the CBN, the centrally cleared Naira-settled OTC FX Futures was introduced into the market – the first of its kind in Nigeria – as one of the means to address the FX crisis which was crippling the Nigerian economy. As at October 2018, when the 28th contract matured, the total value of matured OTC FX Futures contracts, since the inception of the market in June 2016, stood at circa $12 billion; with a total of about $17 billion worth of contracts executed on the platform so far. There are cogent lessons from operating this product for slightly over two years now. 1. Hedging instruments help to calm the spot markets because they promote business planning, as well as attract, protect and retain capital. 2. The CBN, as a market participant, is central to financial market development. 3. Central clearing mitigates systemic risk and with a clearinghouse, like FMDQ Clear, the CBN no longer has to carry the burden of being the lender of last resort for the defaults in the financial markets. A market mechanism operated with world-class standards will mitigate financial market-induced systemic risk. 4. Our markets can be worldclass if having imbibed market philosophy, we adopt market principles as the basis for our economic initiatives. This does not stop us from offering rebates where highly necessary. 5. Regulatory support, as exhibited by the Securities and Exchange Commission, improves the capital markets landscape and growth. I am not saying the current construction cannot be improved upon. It can, and we will build on it to develop a sustainable world-class futures market. Championing the development of the Nigerian derivatives market by FMDQ could therefore, not have come at a better time. From the engagement with the market stake-

holders and relevant regulators, to the gap analysis and feasibility study conducted, and finally to the launch of the Project Plan, the FMDQ Derivatives Market Development Project (“the Project”) has been quite interesting and has continued to incite ideas and enlighten us at FMDQ on the need for and importance of risk management to our markets. We have gained valuable insights into the base challenges facing the introduction of derivatives in our market - from the awareness and educational gaps which need to be bridged in order to build support and capacity amongst the market participants, to the depth of the legal and operational frameworks required for the introduction of derivatives products. It is common knowledge that people are naturally opposed to change and as with every change process, there is bound to be some ‘teething’ problems. Recognising that the introduction and active trading of derivative products are central to aligning our markets to international standards, we have however, taken key steps to address these concerns and intensely drive the knowledge and need for derivatives into our markets. FMDQ and its promoters – the FMDA, banks and CBN – carry out a rigorous assessment of the multiplier effects of initiatives before lending their support. A derivatives market will bolster functional capacities, create many jobs and attract capital, financial and human, to the Nigerian financial market. We therefore, set out working on these pre-requisites and have since made considerable progress in this regard. In addition to developing the requisite market architecture and system and promoting the establishment of the required legal framework to support the effectiveness and efficiency of this market, we are also developing draft Rules and Guidelines to govern the activities of this market to ensure credibility is maintained as is the case with others within FMDQ’s purview. In addition to this, we are proactively driving market education for all stakeholder groups to ensure uniform understanding of our objectives of making our market globally competitive. FMDQ has hosted a series of 2-day training sessions for different categories of market stakeholders, drawing from a wide array of experiences and functions such as Treasury (including Asset/Liability Management), Investment/Portfolio Management, Risk Management and Compliance, Finance, Strategy etc., as well as the financial market regulators. In the coming months, a similar training is being

planned for the media and other stakeholders who are central to the success to the derivatives market. With FMDQ’s commitment to improve the breadth and depth of products available to market participants looking to manage their exposures to different market factors – interest rates, FX rates, etc. the OTC Exchange is set to finalise and rollout a series of derivatives, from interest rate futures through to swaps, effectively minimising financial losses from operational lapses and inefficiencies and providing the markets capacity to respond to financial stress risks. Engagements will therefore continue with key stakeholders to boost development of in-house appreciation of and technical knowledge on derivatives, and sensitise market participants and the public in general, on derivatives and the FMDQ derivatives market. Timing unfortunately may be highly dependent on key legislation being passed. Congratulations once again on the set up of FMDQ Clear. Do you believe the market is mature for this initiative and infrastructure? Thank you very much. You see, with the different types of risks, including counterparty, credit and settlement risks, that can potentially burden the fixed income, currency and derivatives markets - where FMDQ is set to introduce a complement of products – I will say that the introduction of FMDQ Clear has been long overdue and there is no better time than the present for the implementation of this crucial market infrastructure. Indeed, when we look at the product depth and sophistication obtainable from other climes, particularly risk management products, you will see that Nigeria, with the size of its current market and innate potential, is lagging way behind, but we are determined to fix this country. The Nigerian repurchase agreement (repo) market today, where market participants essentially borrow cash for short dates using securities as collateral, has not developed to the extent it possibly can as investor confidence in that market is not at the level whereby market activity, and thereby turnover, is considerably increased. The introduction of repo with collateral management by FMDQ and the attendant risk management and operational efficiencies via FMDQ Clear, will address the concerns of risks, among others, that have hampered growth in the market, thereby promoting markets

integrity and facilitating increased transactions amongst market participants. A centrally cleared repo market will inspire confidence and encourage pension fund administrators to avail on the opportunity to boost the return on the managed retirement savings. Today they hold these securities without any opportunity to apply them to generate more income. Currently, FMDQ Clear offers post-trade services for the Nairasettled OTC FX Futures contracts, being the pioneer derivative product developed and launched into the markets in 2016, facilitating trade matching, risk management (margining), collateral management and settlement. FMDQ Clear is the first financial markets Central Clearing House in Nigeria, and its operations are critically aimed at addressing pertinent issues which have continued to hinder the growth and development of the Nigerian fixed income and derivative markets, including but not limited to risk mitigation, capital efficiency and market data integrity, whilst ensuring safety, stability, confidence and inclusiveness in the marketplace. A key requirement of the G20 recommendations for OTC derivatives, post the 2007/2008 financial crisis, is the institution of pre-and post-trade transparency as well as central clearing and recording of the transactions. As a crucial step towards vertical integration, having successfully met the stringent requirements laid out by the SEC, FMDQ Clear is therefore, a critical and much-needed financial market infrastructure essential for efficient workflows and the provision of post-trade services. From reducing pre-settlement risks, enhancing productivity gains and optimising the allocation of resources amongst market participants, FMDQ Clear addresses some of the key drivers for the development of the markets. The high standard which FMDQ has instituted into its operations will undoubtedly bolster and position FMDQ Clear into a globally recognised Central Clearing House and in the near future, a Central Counterparty, acting as the buyer to all sellers and seller to all buyers. FMDQ Clear is, no doubt, a worthy addition to the Nigerian capital market ecosystem and I believe that its operations will support the growth and alignment of the Nigerian markets to its global counterparts. Continues tomorrow

BUSINESS DAY

Monday 05 November 2018

BUSINESS DAY

A10 BUSINESS DAY

C002D5556

Monday 05 November 2018

FINANCIAL TIMES

World Business Newspaper

No Russian money’ in Brexit donation, says Arron Banks Leave.EU founder says funds came from UK businesses Laura Hughes

he pro-Brexit donor Arron Banks has insisted his £8m funding of a proLeave referendum campaign involved “no Russian money” and was generated by UK limited companies. His comments come after the National Crime Agency announced it was investigating Mr Banks and a number of other people and groups associated with the pro-Brexit campaign group Leave.EU. Th e E l e c t o ra l C o m m i ssion referred Mr Banks to the NCA after it found evidence to suspect the funds came from Rock Holdings, a company controlled by Mr Banks that is based in the Isle of Man. Because it is offshore, it would be barred from donating to the campaign. It said there were “reasonable grounds” to suspect Mr Banks was “not the true source” of £8m in loans and donations made in his name to Leave.EU and other pro-Leave groups. Speaking on Sunday Mr Banks said the money came from a UK-registered group, Rock Services. He said the company had “all sorts of revenues”, which he did not detail. He told the BBC’s The An-

drew Marr Show: “There was no Russian money and no interference of any type. I want to be absolutely clear about that.” Mr Banks said the money came from Rock Services, a

S Korea names Goldman economist to help bolster ties with Pyongyang Kwon Goo-hoon appointment comes as discord rises between the US and Seoul to fray in recent weeks over Bryan Harris the crucial next steps for dealing with Pyongyang. Seoul is outh Korea has named pushing for greater economic a senior Goldman Sachs engagement, while Washington economist to help bolster has maintained a hard line on economic ties with North Korea enforcing sanctions in an effort amid growing signs of discord to spur the denuclearisation of between Seoul and Washington North Korea. over how to deal with PyongLast month, the US Treasury yang. Department warned several The announcement of the South Korean banks against appointment of Kwon Goo- doing business with Pyongyang hoon to a presidential advisory after the lenders announced committee came just days after an array of unification-themed North Korea warned the US financial products, some of it could resume the develop- which were aimed at potential ment of its nuclear arsenal if customers north of the border. Washington refused to wind South Korean media last back stringent international week reported that the US emsanctions on Pyongyang. bassy in Seoul had also directly The commentary carried in contacted several of the counstate-run media also criticised try’s largest conglomerates to the US for putting “pressure” caution them against breaking on Seoul over its efforts to pro- sanctions on the North. mote inter-Korean economic The US embassy declined to co-operation. comment. Relations between South Korea and the US have begun

Continues on page A11

UK limited company, and was “generated out of insurance business written in the UK”. “Contrary to some of the press reports in the FT [Financial Times] and other Remain-

leaning publications, we insure nearly half a million customers a year — the size of Manchester”, he said. “We turn over £250m of premiums, it’s a sizeable business.”

Mr Banks also suggested he would now vote to remain in the EU, and that it would have been better not to “unleash these demons” on the UK.

UK business leaders call for ‘people’s vote’ on Brexit deal Letter signed by 70 corporate figures says country faces ‘blindfold or a destructive hard Brexit’ Laura Hughes

ore than 70 business leaders have signed a letter demanding a “people’s vote” on the final Brexit deal negotiated by UK Prime Minister Theresa May. In the letter to the Sunday Times newspaper they warn of the economic harm that would follow “either a blindfold or destructive Brexit”, ahead of the launch on Thursday of a new campaign group, Business for a People’s Vote. It has been signed by John Nelson, former chairman of Lloyd’s of London, Lord Myners, the former chairman of Marks and Spencer, Martha Lane Fox, Lastminute.com founder, and Richard Reed, the co-founder of Innocent Drinks. James Daunt, chief executive of Waterstones and Justin King, former chief executive of Sainsbury’s, also signed the letter. “The business community was promised that, if the country voted to leave, there would continue to be frictionless trade with the EU

and the certainty about future relations that we need to invest for the long term,” the letter said. “Despite the prime minister’s best efforts, the proposals being discussed by the government and the European Commission fall far short of this, and they are not nearly as good as the current deal we have inside the EU. The uncertainty over the past two years has already led to a slump in investment, which will make our country poorer.” “We are now facing either a blindfold or a destructive hard Brexit. Given that neither was on the ballot in 2016, we believe the ultimate choice should be handed back to the public with a people’s vote.” It comes after hundreds of thousands of people marched through central London last month to demand a new referendum on the UK’s membership of the EU. Organisers of the people’s vote march said 700,000 people attended the demonstration. The letter was co-ordinated by the

campaign group. Mrs May’s government has ruled out a second referendum on membership, saying it would be an undemocratic denial of the result of the June 2016 Brexit referendum, which voted 52-48 in favour of leaving. The main opposition Labour party also officially remains opposed, although Keir Starmer, shadow Brexit secretary, last month said the party had not ruled out supporting a new vote. Lord Myners, the former City minister and a signatory of the letter, said: “Any deal will be made from a position of weakness where we have surrendered our principal negotiating cards. It will be half-formed, casting a long shadow over business confidence, damaging investment and hurting both enterprises and their employees for years to come.” A Downing Street official said: “The prime minister has been clear — no second referendum. “We had a people’s vote — it was in June 2016.”

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NATIONAL NEWS

FT S Korea names Goldman economist to help...

Barclays and Lloyds among worst performers in EU stress tests

Continued from page A10

Against this backdrop, Seoul on Sunday announced the appointment of Mr Kwon, a Hong Kong-based economist with Goldman Sachs, to chair the presidential committee on Northern Economic Cooperation, an advisory post that also encompasses economic relations with Russia and north-east China. “He is going to provide us with new insight and imagination to create the new growth engine of our economy by pushing ahead with northern economic co-operation, such as energy links and the development of a northern sea route,” said Yoon Young-chan, a spokesman for the presidential Blue House. Amid sluggish growth at home, Seoul has increasingly looked to North Korea, with its untapped markets, substantial mineral deposits and inordinately cheap workforce, as well as Russia as the potential means to kick-start its domestic economy. President Moon Jae-in hopes he can end South Korea’s “island” status by establishing cross-border energy and transport links with North Korea, Russia and China. The plans for engagement with North Korea, which were outlined in a speech this summer, could add more than 1 percentage point to South Korea’s annual gross domestic product and would create more than 700,000 jobs in the next five years, according to a study by the IBK Economic Research Institute. Mr Kwon is also known for his bullish outlook on the potential long-term benefits of economic integration with North Korea. In 2009, the economist authored a report outlining how a unified peninsula “could overtake France, Germany and possibly Japan in terms of GDP in US dollar terms, should the growth potential of North Korea be realised”. The two Koreas are expected to break ground on new road and railway links before the year ends, despite lingering concern about the projects in Washington. North Korea, meanwhile, has repeatedly criticised the US’s continued enforcement of sanctions, saying they run contrary to the spirit of the agreement reached between the two nations in Singapore in June. On Friday, a commentary in state media warned that if the US kept “behaving arrogant without showing any change in its stand”, North Korea could revert to its policy of developing nuclear weapons. “It is worth recalling that such a view has already begun to appear in North Korea,” the report said.

A11

Region’s top 48 banks have enough capital to withstand worst-case Brexit scenarios

Caroline Binham and Stephen Morris

Warren Buffett’s Berkshire Hathaway buys back $928m of shares Move underlines difficulty Omaha conglomerate has had in finding attractive deals Eric Platt

arren Buffett’s Berkshire Hathaway repurchased $928m of its stock in the third quarter, a telling shift by the company that underscores the difficulty its chief executive has had finding attractive deals that fit his investment philosophy. The move comes months after Berkshire gave Mr Buffett and vicechairman Charlie Munger more leeway in their ability to buy back shares, as its multibillion-dollar cash pile sits idle. Mr Buffett has lamented an acquisition frenzy over the past two years, a frenzy that Berkshire has largely sat out. The sprawling conglomerate, which owns the Geico insurer, BNSF railroad and NetJets private jets businesses, last clinched a major acquisition in 2016 when it purchased aircraft parts maker Precision Castparts for $37bn, including debt. Since then, investors have been left waiting for its next big takeover. Berkshire and Brazilian private equity group 3G Capital last year failed to secure a $143bn agreement to combine consumer goods giant Unilever with Kraft Heinz. Only months later, Berkshire saw its multibilliondollar bid for a unit of Texas utility Energy Future Holdings rejected. In his most recent annual letter to shareholders, Mr Buffett said that

sensible purchase prices remained the key barrier to nearly every deal the company had reviewed in 2017 and likened Berkshire’s dealmaking restraint to a drought. During that drought, the company’s cash levels have climbed to roughly $104bn. Another measure of the group’s dealmaking firepower, so-called float — insurance premiums the company has collected before it has settled claims — rose $2bn from midyear to stand at $118bn at the end of September. Investors will now watch to see if share repurchases become more frequent, as Mr Buffett has promised to stick by his longstanding principles when buying up companies. “We will stick with our simple guideline: The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own,” Mr Buffett wrote in February. Berkshire last repurchased shares in the fourth quarter of 2012, when it spent more than $1bn to buy a large block of stock, according to James Shanahan, an analyst with Edward Jones. The year before it spent $67m purchasing its own shares. “Six years have passed since the last time they bought back stock,” Mr Shanahan said on Saturday. “Now they have demonstrated a willingness to do it and that is even more powerful given the market volatility in the fourth quarter.”

He added that he expected buybacks to become more frequent, which will put a “soft floor” under the Berkshire share price in the future. The purchases in the third quarter included 225 shares of class A stock and more than 4m class B shares. As the third quarter demonstrated, Berkshire’s core businesses continue to throw off cash. Earnings and revenues climbed across the $509bn conglomerate, with BNSF benefiting from a strong US economy and a lower tax rate. Overall, operating earnings from the wide variety of businesses that Berkshire owns nearly doubled from a year earlier to $6.9bn, or roughly $4,186 per share. Analysts had expected the company to report operating earnings of $3,827 per share. Berkshire said it suffered catastrophe losses of $372m in the third quarter relating to Hurricane Florence, which blew through the east coast of the US, and typhoon Jebi, the strongest typhoon to strike Japan in a quarter century. The company said a hurricane that hit the southeastern US was likely to cause losses between $350m to $550m in the fourth quarter. Nonetheless, the insurance division swung to a net underwriting profit in the period, after suffering more than $1.4bn in losses a year prior. Geico continued to add new policyholders and was able to increase customer rates.

Emerging markets become more able to withstand a crisis Developing economies appear more robust, but China slowdown is biggest threat James Kynge

he frequency of crises in emerging market economies has declined from eight to 10 per year in the 1980s and 1990s to two to four per year more recently as the finances of developing nations have become more robust and sophisticated. However, the biggest risk stalking the asset class comes not from a national crisis, but a sharp slowdown in the Chinese economy, according to research from Capital Economics. Several steps taken by developing countries to insulate themselves from risk have limited the potential for contagion from the two current crises in Argentina and Turkey. Over the years, they have ditched currency pegs in favour of floating exchange rates, inflation has been brought under

better control, fiscal policy is generally more disciplined, financial regulation has improved and much more debt is issued in local currencies. In addition, they have pared back vulnerability to a squeeze on their foreign debts. As the chart shows, the ratio between countries’ external financing requirements and their foreign exchange reserves is far lower these days than during the Latin American crisis of 1982 and the Asian crisis of 1997, according to Capital Economics. This means they are on average much better able to pay off foreign debt, even if the value of their own currency is falling against the US dollar. Even Turkey and Argentina — which have suffered tumbling currencies and financial turmoil this year — are better able to repay foreign debts with their hard currency reserves than the countries

caught in the Latin American and Asian crises had been. “The risk of a rerun of the ‘classic’ EM crises of the 1980s and 1990s is low,” said William Jackson and James Swanston, authors of the Capital Economics report. But if the next EM crisis is unlikely to emerge through the classic agency of a hard-currency debt squeeze, then where do the big risks lie? Capital Economics suggests a focus on China and the potential that its growth trajectory could experience a “hard landing.” Policymakers in Beijing are grappling with the slowing Chinese consumer economy and the drag from the trade war with the US. The country’s economic growth eased more than expected in the third quarter, and figures last week showed factory output fell to its weakest level in more than two years in October.

arclays and Lloyds Banking Group were among the worst performers in the EU’s banking stress tests, in a blow to the British lenders as they struggle to improve their profitability and deal with the potential fallout of Brexit. The results nevertheless found that the region’s top 48 banks had enough capital to withstand the worst-case Brexit scenarios. Barclays, Lloyds, Italy’s Banco BPM and the German state-owned NordLB had their loss-absorbing buffers fall to the worst levels in the doomsday scenario modelled by the European Banking Authority. This included a severe recession that would leave the bloc’s economy 8.3 per cent smaller than it otherwise would have been. “In a surprise set of results, UK banks have fared worse than their European counterparts as IFRS9, combined with high levels of unsecured debt, took its toll on capital,” said Rob Smith, Banking Partner at KPMG UK. “However, you have to consider that the UK was tested against a far more severe scenario than most other countries. In spite of the heavy losses, UK banks still withstood the incredibly tough test,” he added. Barclays, Lloyds, along with Royal Bank of Scotland, also accounted for three of the top five biggest deteriorations in the test, which gauged the hit to their key capital measure, known as the fully loaded common equity tier one (CET1) ratio. “The UK was the most affected geography, both in terms of adverse CET1 depletion and ending CET1, driven by the severity of the scenario” for them, said Javier Garcia, a banking expert at Oliver Wyman. “Italy impacts are surprisingly low, which is likely driven by a scenario that was not capturing recent market events.” While the results do not reflect well on the UK’s banking system, none of the banks dipped close to the unofficial 5.5 per cent level that analysts use as a de facto hurdle rate. The test is also based on a snapshot of balance sheets at the end of 2017 and therefore does not take into account any actions taken by the banks since then to shore up their capital. Analysts had predicted that the UK sector would be vulnerable to credit losses, and credit risk was one of the main drivers for the total €226bn that the 48 banks hypothetically had wiped off their balance sheets as a result of the scenarios. One of the common themes “is that many of the banks performing less well are weak in terms of profitability,” which means they would generate less in earnings to cover losses on loans in another crisis, said Mario Quagliariello, the senior EBA official leading the tests. “Profitability remains the challenge for the European banking sector.” While there is no pass-fail in the EBA’s stress tests of banks’ balance sheets, the results are important because supervisors use them to calculate whether banks need to increase capital and how much they can pay out in dividends.

A12 BUSINESS DAY

Monday 05 November 2018

BUSINESS DAY

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NEWS YOU CAN TRUST I MONDAY 05 NOVEMBER 2018

fivethings

Insight Atiku is giving hostages to fortune in quest for power GLOBAL PERSPECTIVES

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

ongratulations are in order! So, allow me, first, to congratulate Alhaji Atiku Abubakar for securing the nomination of the People’s Democratic Party (PDP) to run for president next year. This gives Atiku another, probably his best, opportunity to try to become Nigeria’s president. Next year’s elections will be Nigeria’s sixth since returning to civil rule in 1999. Atiku, Nigeria’s vice president from 1999 to 2007, was a vice-presidential candidate in the first two of these elections, a presidential aspirant in another two and a presidential candidate in the remaining two. This shows that Atiku, a recurring decimal in Nigeria’s electoral history, is not a diffident leader. He wants, intentionally and decidedly, to be president of Nigeria. In theory, that’s a good thing. Surely, when someone has been trying actively and unrelentingly for nearly 12 years to govern his country, the assumption must be that he has a vision for the country’s future that he would pursue if elected into power. Nigeria has had too many diffident leaders, who never sought to be president, but had it thrust upon them, and then failed woefully in office. Shehu Shagari, Umaru Yar’Adua and Goodluck Jonathan were in that category. They did not prepare to be president and ballsed up the office when they got it on a platter. So, the theory is that a deliberate, intentional and dogged seeker of the office of president is better than an accidental or fortuitous occupier of that office. However, that theory doesn’t necessarily hold true. Current experience shows that doggedly seeking to be president does not mean that a person will perform well if elected. Like Atiku, President Buhari was an unrelenting chaser of the office of president. He ran for the office three times before being elected on his fourth attempt. Like Atiku, Buhari had also held a high office before, in his case as a military head of state, and, thus, presumably, knew a thing or two about running Nigeria. What’s more, by persistently running for the office of president, in four consecutive elections, it’s not beyond the realm of imagination to assume that Buhari was fully prepared for the office, ready to hit the ground running, with a vision to move Nigeria forward. But what did we get? Buhari had no ministers in the first seven or eight months of his presidency. When he eventually appointed his ministers, they were, with a very few exceptions, of poor-tobelow-average abilities. In his first

two years in office, Buhari’s handling of the economy was akin to Nero’s fiddling while Rome burned. One policy error after another made a bad economic situation worse. The economy has now tanked, growing at a miniscule 1.5%. Unemployment, poverty and inequality are ravaging the country. Insecurity hasn’t gone away! So, our theory has been disproved. In Nigeria, a determined seeker of the office of president is not necessarily better than a serendipitous holder of the office. There is hardly any difference, in terms of performance, between Buhari, a tenacious seeker, and Shagari, Yar’ Adua and Jonathan, who were accidental occupiers of the office. Which brings us to Atiku, another determined and intentional seeker of the office of president. He says he will be different. He says he will turn Nigeria around or, according to his campaign slogan, “get Nigeria working again”! But should we believe him? Well, in my view, he is trying too hard. He appears so determined to win next year’s presidential election that he is making outlandish promises without thinking them through. The phrase “giving hostages to fortune” means making statements or promises that could prove difficult to live up to and that could create problems for you later. But that’s what Atiku seems to be doing in his determined, some would say desperate, quest for power! To be sure, Nigerians need a high level of political awareness, consciousness and even scepticism to mediate the campaign effects of next year’s elections. These were lacking during the 2015 elections. In 2015, for most Nigerians, Jonathan was beyond the pale and it was anyone but Jonathan, and so few scrutinised Buhari closely. Similarly, now, a lot of Nigerians are appalled by

Buhari’s incompetence, and for them it’s anyone but Buhari. As a result, few are subjecting Atiku to real scrutiny. Yet, given that, as The Economist magazine recently predicted, Atiku might win next year’s presidential race, it becomes particularly important, imperative even, that real, probing questions are asked about him. For instance, why is it that Atiku, if he is extremely rich as most people assume, paid only N10.8m in tax over the past three years? As Professor Itse Sagay, a lawyer and academic, puts it, that “doesn’t show any difference between Atiku and me in terms of tax payment”. Should that be the case? And what’s the truth about Atiku’s alleged status in America? These are legitimate questions that any American

or British political office seeker would be asked. Why should Nigerian political office seekers be any different? Anyone who wants to govern this country must be an open book. The secrecy that surrounds the lives of Nigerian political leaders, such as about the nature of Buhari’s illness and the current status of his health, is not acceptable in a democracy. But these are discussions for another day. Let’s return to Atiku’s

‘

He appears so determined to win next year’s presidential election that he is making outlandish promises without thinking them through... He is even undermining his promise to run a lean government and a free market economy with a pledge to reduce petrol price from N145 to N87, thus returning to fullblown subsidies

election promises. The International Centre for Investigative Reporting (ICiR) has been doing a good job of tracking Atiku’s election promises. So far,

ICiR has identified 10, including the pledges to end Boko Haram, religious violence and pro-Biafra agitation. Note the word “end”! But there are two overarching promises through which the credibility of Atiku’s election pledges must be judged. The first is the promise to serve only one term in office. In an interview with Thisday newspaper, Atiku said “If I am elected as president in 2019, I give an undertaking that I would only do one term”. The subtext was that Atiku reckoned he could only win by promising to do only one term, given that, by 2023, the North would have been in power for 8 years under the current dispensation, and power should then, under the informal powersharing understanding, return to the South. Recognising that

Nigerians would not believe him, given that previous leaders who made the same promise broke it, Atiku said: “If there is an iron-clad legal document that binds me, I am willing to publicly commit to it”. That smacks of desperation! Let’s face it, if Atiku wins, he would break the one-term-only promise. Obasanjo did, Jonathan did and Buhari did. No “iron-clad legal document” supersedes a constitutional provision that allows a president two terms in office. But the question is why would Atiku, who has been trying to be president since 2007, say he would do only one term when the opportunity to govern Nigeria is now within his reach? Well, as I said, it’s about desperation to win. But, more seriously, it undermines the credibility of his other election promises. A president who promises to do only one term becomes a lame duck from his first day in office as his end date has been predetermined. What’s more, he has no incentive to deliver because he faces no reelection pressures. Which takes us to Atiku’s second outlandish pledge: to restructure Nigeria in six months! Atiku said at Chatham House in London that “If you give me six months, I know I will be able to achieve a fast level of restructuring”. Really? Atiku is a genuine advocate of political restructuring, and if he wins in the South it would mainly be because of his commitment to that cause. But it’s disingenuous to say he would restructure Nigeria within six months. Restructuring Nigeria requires elite, cross-party and cross-ethnic consensus, and, so, cannot be done by one party riding roughshod over others. The Economist predicted that next year’s elections would be close and that if Atiku wins, his government “will be fragile”. Surely, in those circumstances, he won’t have the massive support to push through a restructuring agenda. Truth is, as I have said previously, Nigeria can’t be restructured without a government of national unity. But Atiku says he would restructure Nigeria through executive orders. For instance, in one interview, he said: “I do not need a constitutional amendment to transfer universities from the federal government to the state government. I only need an Executive Order”. Given that most federal universities are created by statutes, it’s not clear how he would transfer their ownership by mere executive orders. President Jonathan couldn’t even change the name of the University of Lagos to MKO Abiola University by executive order! All of this shows that Atiku is muddling through in a determined attempt to persuade Nigerians to elect him president next year. He is even undermining his promise to run a lean government and a free market economy with a pledge to reduce petrol price from N145 to N87, thus returning to full-blown subsidies. Atiku is indeed trying too hard to be president. He is giving hostages to fortune and runs the risk of winning on the basis of promises he can’t live up to. That would disappoint Nigerians and undermine democracy. But it won’t matter - would it? - if he will do only one term!

for your new week

Fascinating business facts

20%

ince peaking in mid-May, Nigeria’s FX reserves have dropped by $5.9 billion, or 12 percent, to $42 billion. In that time, yields on the Nigeria’s one-year naira treasury bills have soared more than 450 basis points in that time to 16.6 percent, the highest level this year. Now analysts are asking what price does Nigeria have to pay to keep the currency stable? With elections just around the corner, Nigeria might just need as much as 20 percent to convince fixedincome investors to roll over. Will the CBN might get nervous if reserves dip below $40 billion, which analysts could happen as soon as this month, especially with investors getting jittery about February’s elections.

$93bn

pple will stop reporting unit sales after weakerthan-expected demand for pricier new iPhones riled the market. Apple shares fell 7 percent in extended trading on Thursday to close at $222.22 in New York but leaving the stock up 31 percent this year. The Cupertino, California-based technology giant expects fiscal first-quarter 2019 revenue to be between $89 billion and $93bn but analysts were looking for $92.7bn.

$200m

anzanian President John Magufuli says he slashed his government’s wage bill by two-thirds simply by removing so-called ghost workers from the payroll since coming to power three years ago. The state now spends $103.5m on salaries, a third of what it used to pay out in 2015, Magufuli told an economic forum at the University of Dar es Salaam. “We have made savings after removing ghost workers,” he said. “These changes have made us unpopular because that was the old Tanzania and that’s why we decided to make changes.”

830,000 barrels

he US will let eight countries -- including Japan, India and South Korea -- keep buying Iranian oil after it re-imposes sanctions on the OPEC producer today. While the Trump administration’s goal remains to choke off revenue to Iran’s economy, the temporary waivers are being granted in exchange for continued import cuts so as not to drive up oil prices. Brent crude has fallen about 15 percent from over $85 a barrel last month on increasing speculation that at least some nations will get waivers, as well as signs that other OPEC members will pump more to offset any supply gap. Turkey that imports about 830,000 barrels daily could be among countries getting an exemption, Energy Minister Fatih Donmez told reporters in Ankara.

96 hours

orocco, struggling with an influx of African migrants seeking passage to nearby Europe, has imposed a new rule requiring such travellers to fill out an online travel form for approval at least 96 hours before leaving home. The procedure on a website carrying the Moroccan Foreign Ministry logo applies to a range of African countries whose citizens currently can enter Morocco without visas, except for Algeria and Tunisia. The new procedure “aims to facilitate passenger traffic ... It will help Moroccan authorities know in advance the identity of travellers before boarding (planes),” reads a document issued by Morocco’s embassy in Mali and seen by Reuters.

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