BusinessDay 05 Sep 2019 by BusinessDay

Zenith Bank to redeem $500m Eurobond ahead maturity on robust dollar assets OLUFIKAYO OWOEYE

ier1 Bank, Zenith Bank, i s s e t t o re d e e m i t s $500m Eurobond ahead of its maturity date in April 2022 on the back of a strong dollar liquidity in its buffers. The

5-year Eurobond was issued on 30th May 2017. In a note to investors seen by BusinessDay signed by the Company Secretary, Zenith Bank said it has : “Launched an invitation to holders of the $500m 7.375% Notes issued by the company…to tender

Notes for purchase by the Company for the Purchase Price plus the Accrued Interest Amount.” Checks by BusinessDay show that naira equivalent of the bank’s dollar-denominated assets stood at N1.85trn ($5.14bn) in the first half of 2019, account-

ing for 32.63 percent of its total assets in the period. Aderonke Akinsola, banking analyst, said banks raise Eurobond for some reasons among which are to boost their dollar liquidity, meet their dollar related transactions for clients that need funding in dollars

for opportunities that they want to take advantage. According to Akinsola, now the bank is at a point that they are very liquid in dollar terms and the management feels that in-

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businessday market monitor

Biggest Loser

Biggest Gainer INTBREW N11.90

NESTLE N1250. 00 -3.85pc 27,319.64

8.18pc

Foreign Reserve - $43.35bn Cross Rates - GBP-$:1.22 YUANY-N 50.66 Commodities Cocoa

US$2,269.00

Gold

$1,561.70

news you can trust I **THURSDAY 05 SEPTEMBER 2019 I vol. 19, no 387

₦3,726,557.51 -0.12pc

$60.63

N300

Foreign Exchange

Buy

Sell

$-N 357.00 360.00 £-N 443.00 456.00 €-N 390.00 400.00

Crude Oil

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

www.

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

Spot ($/N)

362.40 306.95

0.14 13.23

NGUS NOV 27 2019 363.97

as Nigeria boycotts WEF, to recall envoy to SA FG issues travel advisory MTN, MultiChoice close shops across Nigeria

he effects of the Xenophobic attacks on Nigerians, other African nationals and their interests in South Africa widened across the continent Wednesday, threatening its fragile bonding, trade and business relationships. African intra-country trade is at about 15 percent of the total compared with 20 percent in Latin America and 58 percent in Asia, according to the African Export-Import (AFREXIM) Bank. AFREXIM said in a report last year that this could more than double within the first

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6M 0.24

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10 Y -0.12

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14.19

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14.31

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L-R: 20192020 AIG Fellow, Ifueko OmoiguiOkauru, and chairman, Africa Initiative for Governance, Aigboje AigImoukhuede. See story on P.2

NGUS FEB 26 2020 364.42

Xenophobic attacks threaten intra-African trade Joshua Bassey & Jumoke AkiyodeLawanson, Ifeoma Okeke, Lagos, Idris Umar Momoh & Churchil Okoro, Benin City, Ignatius Chukwu, Port Harcourt, Emmanuel Ndukuba, Awka

fgn bonds

Treasury bills

NGUS SEP 30 2020 365.47

Africa’s youth employment crisis is ticking time bomb, say experts at WEF Africa By Our Reporter

welve million African youths enter the already crowded job market annually and the continent’s leaders need to do much more to remedy the situation, according to the first plenary at this year’s World Economic Forum (WEF) on Africa holding in Cape Town, South Africa. The situation is made worse by

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Inside Board of PayAttitude Global appoints Babatunde Okeniyi as MD/CEO P. 2

Thursday 05 September 2019

BUSINESS DAY

news NNPC’s trading subsidiary relocates from London to Dubai DIPO OLADEHINDE

L-R: Teju Abisoye, acting executive secretary, Lagos State Employment Trust Fund (LSETF); Dele Martins, representative of LSETF chairman; Rabiu Onaolapo Olowo, commissioner for finance, Lagos State; Babajide Sanwo-Olu, governor, Lagos State; Herbert Wigwe, GMD/CEO, Access Bank plc, and Solape Hammond, commissioner for wealth creation, during the launch of the LSETF W-Initiative for women entrepreneurs in Lagos, yesterday. Pic by Olawale Amoo

PZ, NB, Guinness trade cash for credit amid weak consumer spending BUNMI BAILEY

igeria’s rough economic terrain characterized by a sluggish growth, weak purchasing power and squeezed disposable income, has prompted most consumer goods companies to start trading cash for credit in a bid to stimulate sales. This practice is now the trend in the industry, underscoring players’ efforts to drive sales by extending friendly credit conditions to distributors given their weaker sales and lower margins. Figures from the financial report of PZ Cussons for June 2018 to May 2019 show that trade receivables increased by 16 percent to N15.2 billion in 2019 from N13.1 billion in 2018, while revenue declined by 7.8

percent. Unilever also saw receivables jump 67.2 percent while revenue slowed by 11.6 percent. “They are doing this to make distributors take enough goods from them,” said Abiola Gbemisola, a research analyst at Lagosbased Chapel Hill Denham. “People don’t have money to spend and the companies are producing, so they have high inventory and a way of reducing their inventory is to give their goods on credit,” Gbemisola said. Trade receivables arise when a business makes sales or provides a service on credit. It represents the amount of sales, which have not yet been paid for by customers. Analysts say the trend is more prominent in the beer industry because a sizeable number of their distributors are finding it difficult to ac-

cess loans from banks. “Banks are reluctant to provide credit to them which is preventing them from buying more products, so the beer makers have no choice than to sell on credit,” Ayorinde Akinloye, analyst at CSL Stockbrokers, said. The financial report of Guinness Nigeria plc for the period July 2018 - June 2019, shows that revenue declined by 7.9 percent to N131.5 billion in 2019 from N142.9 billion in 2018 while receivables increased by 9.7 percent. For Nigerian Breweries (NB) plc revenue reduced by 1.4 percent to N170.2 billion in the first six months of 2019 from N172.6 billion in the same period of last year while receivables rose by 4.8 percent. Akinloye said players in the industry were accumulating more receivables

despite lower revenues, noting that their sales would have shrunk if they did not extend such credit facilities to their distributors. Data from the National Bureau of Statistics on Gross Domestic Product (GDP) by Income and Expenditure approach at 2010 purchaser’s values show that consumption expenditure of households has been declining at varying pace since it rose by 1.5 percent in 2015. Also, Nigeria’s per capita income declined to $2,049 in 2018 from $3,268 in 2014, according to the International Monetary Fund (IMF). Eronmosele Aziba, consumer analyst at Tellimer Group, a financial services provider, said that the trend was being noticed across the industry, adding that it was just an indication of the state of the economy.

Former FIRS executive, Ifueko bags AIG’s 2019/2020 fellow on exceptional contribution to public good Endurance Okafor

frica Initiative for Governance (AIG) on Wednesday announced the appointment of Ifueko Omoigui Okauru, former executive chairman, Federal Inland Revenue Service (FIRS) of Nigeria, as the 2019/2020 AIG Visiting Fellow of Practice at the Blavatnik School of Government, University of Oxford. Awarded to individuals from West Africa who demonstrated evidence of outstanding contribution to the public good, through exemplary leadership in public service, the AIG Fellowship was established between the Blavatnik School and AIG in 2016. “We look forward to welcoming Okauru as the new

AIG Fellow, and to learning from her invaluable experience of reforming and increasing the capacity of Nigeria’s tax authority,” Ngaire Wood, Professor and Dean of the Blavatnik School of Government, said. Okauru was the executive chairman of the FIRS and chairman of the Joint Tax Board from 2004 to 2012. During this period, she was a member of the President’s Economic Management Team, which had responsibility for driving Tax Reform as part of the Nigerian Government’s Economic Reform Agenda. During her tenure, she spearheaded comprehensive tax reforms culminating in the development of Nigeria’s first national tax policy, the www.businessday.ng

modification of tax legislation and marked improvement in the effectiveness of Tax Administration. “Our partnership with Africa Initiative for Governance continues to bring inspiring individuals to the Blavatnik School and to the wider Oxford community,” Wood said. The AIG Fellowships were established under a five-year partnership between the Blavatnik School and AIG based on the shared purpose of building good governance and public leadership. The Fellowships were instituted to enable Fellows expand their knowledge and leadership in the field of public policy and to, after their stay at the Blavatnik School, help drive AIG’s vision for transformational public sector leadership

across the African continent. Past recipients of the AIG Fellowships are Attahiru Jega, former Executive Chairman of Nigeria’s Independent National Electoral Commission (INEC) and Georgina Wood (Retired), immediate past and first female Chief Justice of Ghana. “AIG Fellows are selected on the basis that they have a record of professional excellence in public service,” Aigboje Aig-Imoukhuede, Founder and Chairman of AIG said, adding that “the appointment of Okauru continues AIG’s tradition of identifying West Africans who have exhibited outstanding performance in public service.

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iger ia National Petroleum Corporation (NNPC’s) trading subsidiary Duke Oil Service has relocated from London to Dubai in order to move closer to its Asian markets who are mostly buyers of Nigeria crude oil. Duke Oil, an international oil trading company wholly owned by NNPC, was established to serve as a vehicle for bringing NNPC directly in contact with the international oil market for strong internal competence and value-adding to its oil and gas business, NNPC said. Sources with knowledge concerning the matter told Reuters that in a filling with United Kingdom register of companies called Companies House, Duke Oil Services said it would wind down its operations in the second quarter of this year and move its office to an unspecified new country. Stakeholders said the move by Duke oil has tax advantages over keeping the office in London while placing the traders in Dubai

will also enable Duke travel more easily between the new office, Nigeria, Europe and Asia. India is a significant buyer of Nigerian crude, which is largely light and sweet, rich in gasoline and diesel and low in sulfur, and meets the needs of Indian refiners while Asian refineries are also increasingly selling refined oil products such as gasoline and diesel to Nigerian buyers. “Duke Oil has always being clouded under lots of issues surrounding corruption and irregularities so we hope this relocation will make them more transparent,” Charles Akinbobola, energy analyst at a Lagosbased energy firm Sofidam Capital said. Mele Kyari, immediate past general manager of state-owned NNPC’s crude oil marketing division said at a conference in Singapore last year that NNPC’s trading arm Duke Oil will be given more equity [up to 80percent] to directly trade and market the country’s crude in the next few years.

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Board of PayAttitude Global appoints Babatunde Okeniyi as MD/CEO ENDURANCE OKAFOR

he Board of Directors of PayAttitude Global, a foremost Payment Scheme with innovative technologies for payments and financial transactions with focus on mobile and digital payments, has announced the appointment of Babatunde Okeniyi as its Managing Director & Chief Executive Officer. Announcing the appointment, Francis Shobo, Chairman of the Board of PayAttitude Global & The Deputy Managing Director First Bank of Nigeria Plc stated that Babatunde Okeniyi brings to the Board of PayAttitude, over two decades of unbroken experience in Nigeria’s dynamic financial & Payments industry and will provide valuable insight to the Board and the Management of PayAttitude from his wealth of experience. He further noted that the appointment of Babatunde is one of the measures geared towards positioning PayAttitude Global as a leading Payment scheme within and outside Nigeria. Until his appointment, Babatunde was an Executive Director in UP(Unified Payments) where he had responsibility for Marketing and Sales. He worked previously in different institutions includ@Businessdayng

Babatunde Okeniyi

ing Citibank Nigeria and UBA Plc where he was General Manager and Group Chief Information Officer (CIO) for the group with branches in 17 African Countries. The new MD/CEO has attended key leadership courses in Harvard, USA and belongs to several professional bodies including International Academy of Cards and Payments, fellow, Institute of Credit Administration, fellow, Institute of Certified Management Consultants, fellow, and Institute of Directors, member. He is an alumnus of Lagos Business School, where he completed his Advance Management Programme (AMP), and also an alumnus of Obafemi Awolowo University (B.Sc.), University of Lagos (MBA), and certified engineer by the Nigerian Society of Engineers (MNSE) and the Council for the Regulation of Engineering in Nigeria (COREN).

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Lagos, Access Bank raise LSETF W-Initiative with N10bn JOSHUA BASSEY & HOPE MOSES-ASHIKE

agos State government, in collaboration with Access Bank plc, has raised the Lagos State Employment Trust Fund (LSETF) WInitiative with N10 billion. The fund is designed to support small-scale businesses with access to finance. Already, over 794 fresh beneficiaries of the fund were on Wednesday presented cheques by the state government, bringing the number of beneficiaries from the fund to 11,000 people. “We have increased the fund from N4 billion N10 billion. You can get loan of up to N5 million and the payback process is going to be split according to the convenience of each person. As the saying goes, ‘if you empower the women, you are empowering the nation,’” said Governor Babajide Sanwo-Olu at the presentation of the cheques. According to Herbert Wigwe, group managing director/CEO

of Access Bank, the idea is to support people who are looking for money, especially women and help them to set up their own businesses. “It is something we have been doing for the past 13 years and I think this partnership with Lagos State, which is basically put at N4 billion and we have increased it to N10 billion, the whole idea is to support small scale businesses in Lagos, which truly form the bedrock for economic growth,” Wigwe said. Access Bank, Wigwe said, is creating a structure that will enable it screen the applications of prospective clients, and “where the applications are not right, we will help them and if it is bankable, we will make sure we get it right. It is advisory, it is financial support, and it is all the things they require to set up a business.” Sometimes, it is not just about money, but all about helping people to understand how to set up financial statement and helping them understand how to run a business, he said.

Nigeria’s largest industry event offers free learning to construction professionals CHUKA UROKO

etween September 9 and 11, a major construction industry event will be holding in Lagos, Nigeria’s commercial nerve centre. Besides over 20 certified workshops to be offered at the event tagged ‘The Big 5 Construct Nigeria,’ free education programme will also be given to industry professionals. The workshops will cover project management, technology, sustainability, affordable housing, and architecture themes, while the project management sessions will also provide PDU points to attending PMI credential holders. The Big 5 Construct Nigeria is organised by DMG Events to respond to new development plans that are creating huge demand for international suppliers to bring their products and technologies to Nigeria. The event gathers exhibitors from around the globe and displays hundreds of construction products and innovative solutions. DMG Events is a leading organiser of face-to-face events and a publisher of trade magazines. It aims to keep businesses informed and connect them with relevant communities to create vibrant marketplaces and to accelerate their business across multiple platforms. The latest technologies for the building and infrastructure sectors from around the globe will be on display at the event while over 130 local and international companies will present their most innovative products to over 5,000 Nigerian industry professionals who are expected to visit the show. Expected at event are regional and global leaders like Palfinger, Cibes Lift, KELM, ABB, Philips, Crane, Eurotray, Tata, Hilti, and Magna Tyres. “We are extremely proud to open our exhibition’s doors to all industry stakeholders and provide the largest free and certified education agenda

for construction professionals Nigeria has ever hosted, ”said Portfolio Event Director at dmg events, Muhammed Kazi, in a statement obtained by BusinessDay. “As we aim to support the expanding requirements of the promising local construction sector, we trust the event will go a long way in serving Nigeria’s strategic development goals, providing top quality knowledge to the local community,” he said. To tackling one of the most pressing issues in the industry at the event is Taiwo Aiyepe, the senior architect for Lagos State Ministry of Works and Infrastructure, who will be conducting a workshop on ‘Building Collapse in Lagos: The Architect’s Place’. According to Aiyepe, there are a host of causes behind the collapse of buildings in Nigeria, including incompetence, the use of substandard materials, inadequate design, physical failure, and natural disasters. “By attending my presentation at The Big 5 Construct Nigeria, industry professionals and the general public will unlearn obsolete practices and will finally learn a few tips towards a paradigm shift to address the issue of building collapses,” he assured. Affordable housing will also be a major topic to be debated at the event’s educational sessions. The Creative Director at Lisa Interiors, Polola Oladipo, will be conducting a workshop on ‘Addressing Affordable Housing and Architecture in Nigeria’. She noted that Nigeria has a low home ownership rate, lower than that of Indonesia, Kenya, and South Africa. Some of the major factors that affect affordable housing in Nigeria, she said, included constraints related to the high cost of securing and registering land title, low financing, slow and complex administrative processes, and then high cost of land.

L-R: Paul Gbededo, MD/CEO; Joseph Umolu, company secretary, and John Coumantaros, chairman, all of Flour Mills Nigeria Plc, at the 59th annual general meeting of the company in Lagos, yesterday. Pic by Pius Okeosisi

MainOne celebrates graduation of 100 AI trainees, launches Reseller Programme in Edo

ainOne recently celebrated the graduation of 100 youths sponsored in Data Science and Artificial Intelligence (AI) training in partnership with EdoJobs. The 30-day training implemented through Coven Works, climaxed in a collaborative ‘Grand Graduation Ceremony’ held at the Edo Production Centre, with the graduates demonstrating projects completed using their newly acquired skills. EdoJobs is a Skills Development Programme initiated by the Edo State government to transform the wellbeing of the society and its economy by creating jobs and entrepreneurship opportunities for its citizens. The graduation ceremony themed “Edo Youths: Developing Solutions for the Future” celebrated the capacity and achievement of the students who participated in the trainings. The intensive 30day training, which focused on building talents in Data Science and AI, opened new possibilities in data analysis and critical thinking skills centred on tackling societal and industry problems, and seeded techpreneurs and job seekers with new potential. At the event, MainOne further underscored its efforts to work with the Edo State government to create more jobs by introducing its pioneer partners to its ‘Reseller Programme.’ The programme empowers current Edo State small business partners with an opportunity to distribute MainOne’s “SME-In-A-Box” product and services, specifically created to reach the Small and Medium Enterprises (SMEs) in Benin City. Discussing MainOne’s investment at the ceremony, Funke Opeke, the company’s CEO, said, “It gives us immense pleasure to celebrate future nation builders in Edo

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State, as we know that technology and Internet access create jobs and opportunities, either through access to work and skills, or the ability to use the technology to boost commercial activity.

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“We envision the fibre infrastructure in Edo State bridging the digital divide, with our goal of enabling q u a l i t y i nt e r n e t a c c e s s through our ‘Reseller Programme’ for as many small

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businesses that require such services in the state. We look forward to making Benin City one of the best-connected cities and ultimately Edo State one of the best connected in Nigeria.”

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news Insurance industry reports highest growth in 1 year at 5% in Q2 2019

ENDURANCE OKAFOR

… as NAICOM targets informal sector

subsector in the review quarter is thehighestsincethesecondquarter of 2018 but is however lower thanthe18.07percentgrowththat was recorded in the first quarter of 2018. A further probe into the data showed that the Q1 figure of 3.81 percent is the closest to the new record. Although Agusto & Co, a Lagos-based credit rating agency expects the sector to expand at a slower pace in 2019 on the back of a slowdown in economic activities. “Our forecast for insurance industry in 2019 is a 10 percent growthinGrossPremiumIncome (GPI),” Ada Ufomadu, a Senior Financial Institutions Analyst at Agusto & Co, told BusinessDay. The projected growth rate is 2 percentage points less than the 12 percent reported by the industry in 2018. In her remarks, Ufomadu said thebasisoftheprojectionwasthat “like we all know 2019 is a political year. Although it is a re-elected administration, it will take a while for them to settle in and we think it

mayslowdownabitonthesector.” The National Insurance Commission (NAICOM) plans broaden the number of people subscribedtotheschemethrough the use of simple, easy-to-understand, and affordable micro insurance products which will be mostly directed at the informal sector. Sunday Thomas, acting Commissioner for Insurance, said at the recently held 4th National Insurance and Pension Correspondents (NAIPCO) conference that the insurance commission has issued some guidelines to ensure that those not in the formal sector embrace financial services. Thomas noted that unemploymentrateinNigeriawasquite high, adding that this was a signal that the industry needed to move fast to capture the people in the informal sector. Also, the industry regulator recently increased the minimum paid-up share capital requirements for insurance and reinsurance companies by a minimum of100percentacrossallsegments.

He alleged that the people who were mainly into oil and gas, hotels, casinos, real estate, car dealership, bureau de change, among others, make phoney money through BEC Network. According to Magu, BEC Network means a situation whereby the emails of chief executives or officers in an organisation that may deal with foreign transfer of funds are targeted. Their emails will be intercepted. “Most category of people into this BEC are into oil and gas, casinos, hotel business, real estate, car dealers, bureau de change businesses, among others. “We have just today launched “operation rewire” in Benin. So many people heads will roll because you see innocent people before now thinking that they are doing legitimate businesses but deep inside or deep under it comes with phoney money. “Like, the lady we have just arrested in Benin City she has established business running

into millions of naira. Any moment from now we will round up her business. “This is the kind of surprising you will see. You will soon see us closing down motor dealers, rounding up hotels among others. “But all these are a result of BEC. It is a widely coordinated cyber crimes activities. It is not like Yahoo, Yahoo,” he said. As the fraudsters are busying perfecting the act of cyber crimes, the commission is also busying training its gladiators “so that all of us will meet at the political poll,” he said. He also added that the BusinessEmailCompromiseNetwork operated higher than the Yahoo, Yahoo boys, more coordinated and integrated into the society. “The G-guys are higher group of people who are already made it in life. You don’t see them dressing or acting like the normal Yahoo, Yahoo boys you see on the streets,” he said.

igerian insurance sector maintained upward trajectory in the second quarter (Q2) of 2019 to report highest growth since first quarter (Q1) of 2018. According to data released by the National Bureau of Statistics (NBS) analysed by BusinessDay, Insurance under Financial and Insurance sector grew by 4.48 percent in Q2 2019 from 2.58 percent in Q1 2019 and 1.23 percent in Q4 2018. Insurance is a sub sector of the Finance and Insurance industry. Unlike the insurance sub sector, financial institutions, the other half that makes up the industry, recordedadauntingperformance in the review quarter. Financial institutions in Nigeria shrank by 9.21 percent in the first three months of 2019 from a year earlier, and sustained the downturn with a contraction of 3.52 percent on a year-on-year basis, as compiled from NBS figures released Tuesday. The growth in the insurance

EFCC launches operation rewire to ambush corrupt politicians, business owners IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin he Economic and Financial Crimes Commission (EFCC) has launched operation Rewire, targeted at corrupt politicians. The operation is geared towards curtailing the activities of alleged “corrupt Nigerians” involved in Business Email Compromise (BEC) Network in the country. Acting chairman of the commission, Ibrahim Magu, who launched the project on Monday at a press briefing at the Benin City zonal office of the agency, said Nigerians who acquired wealth illegally were busy occupying political offices. Magu, represented by Muhtar Bello, head, Benin zonal office, said the people now controlled a lot of economic resources in the country, and disclosed that “businessmenandwomen”were inspiring to occupy political positions in 2020.

ROSATOM commits to nurturing Nigerian youths on nuclear techs KELECHI EWUZIE

etermined to raise the next generation of nuclear energy technology experts in Nigeria, ROSATOM, a Russia state-run nuclear energy corporation, has invited students and young professionals across Nigeria to partake in the fifth edition of its annual online video competition. The completion is devoted towards supporting interest in nuclear research and capabilities among young Nigerian and African scientists at large. Participants are required to research how innovative use of nuclear technologies can assist

in achieving the UN Sustainable Development Goals (UNSDGs) in Africa. The 2019 edition of the competition themed ‘Atoms for Africa,” is facilitated by EnerConnect as well as the African Young Generation in Nuclear and South African Young Nuclear Professionals Society. Dmitry Shornikov, CEO, ROSATOM Central and Southern Africa, while underscoring the company’scommitmenttowards nurturing young professionals in the field of nuclear energy and its other adaptations, said, “One of our key missions at ROSATOM is to assist the brightest young minds from across the globe to www.businessday.ng

work together in solving global challenges that will shape the future of energy and the world as we know it.” According to Shornikov, “This is a great opportunity for young people from very different walks of life who share a common passion to build a bright and sustainable future for Africa to discover more about various nuclear applications and their vast benefits for the region.” In a statement made available to BusinessDay, each participant for the programme billed to run up until September 30, 2019, is expected to make a short video about his or her findings on the topic and share on Facebook. https://www.facebook.com/businessdayng

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Of Ruga, monkey business and matters arising (2)

t times like these, it’s imperative to be careful about what to say and what not to say. However, a man who feels ”somehow” about ”something” but fails to express that ”somehow-ness” is gradually dying, even though he is still alive. This Ruga matter is obviously a handshake that has gone beyond the elbow! The Ruga matter shows clearly how our country is managed. If we are to believe the government’s laughable story, the programme was not officially articulated or sanctioned. The government wants us to believe that an unknown director and his/ her cohorts in the Federal Ministry of Agriculture just woke up one morning, moved down to Benue state, seized a large expanse of land and started the Ruga project. As Fela would say, “just like that!” Other officials like Garba Shehu jumped in to convince us that it was a part of the National Livestock Transformation Plan (which itself raises a red flag, because it is still all about namacracy!) and that parcels of land have been gazetted for the programme across the country, even in areas that do not have enough land for normal socio-economic activities! He even openly contradicted the Vice President whose office warehouses the NLTP and who declared that Ruga was not NLTP

and that he was not aware of its conception and operation. Our dear president at first expressed surprise about the Ruga project, just as he expressed surprise about the Onoghen affair and the failure of the IGP to report to Benue as directed at the height of sustained invasion by these same foreign herdsmen. The government likewise claimed to have suspended Ruga but about N3 billion is allocated for it in the 2019 budget, which the president signed reluctantly. Nothing happened to the officials of the Federal Ministry of Agriculture who seized and converted lands of their choice owned by people, , into an enclave for foreign Fulani herdsmen (FFH), who committed mass murder and mayhem in Benue state where it all began. Their indiscretion and insensitivity nearly caused a local World War III! Nothing happened to Shehu Garba who publicly contradicted and embarrassed the apparently helpless VP! One Elekwachi is of the opinion that using collective funds to build exclusive and ultra-modern LGAs for FFH is nothing short of apartheid! But it did not start with Ruga. The FFH are nomadic by naturethere is nothing wrong with that. But we, the good people of Nigeria, acting through the government, believe that it is not good for them and we have been doing everything possible to see them conform to our lifestyle which apparently is strange to them. We want to modernise them by fire by force and in doing so, give them preferential treatments that surprise and anger of others. We started the nomadic education for them (how far with that programme sef?); we have proposed an Fulani (Fulfulde) radio station (as different from introducing Fulfulde programmes on national radio) and now, we have to “forcefully” excise large chunks of land from all over the country to establish “exclusive”

settlements for them. These are FFH! It does not add up. After the war, Ndi-Igbo were abandoned to their fate with the luckiest ones receiving 20 pounds, businesses destroyed and their houses confiscated especially in the brotherly states like Rivers. In a desperate quest for survival, (an extension of what we termed winthe-war efforts during the Biafran war of independence), almost all of the youths went into commerce, abandoned schooling and were abandoned by schools. No efforts were made to establish after-hour schools for them but many of them appreciated the import of education and educated themselves. Today, a good number of them have managed to survive by dint of hard work. However, everywhere their shops and businesses are, there are always justifiable reasons to demolish, relocate and wrest these from them. The 20-80 rule (Pareto Principle) urges us to concentrate our efforts on the 20 percent activities and elements that yield 80 percent returns. And I ask, on what basis are we focusing all national attention and resources on the Fulani (local or foreign) and their cattle? The business model of these herdsmen is unknown but it is certain that they are not a part of the national economy. I went in search of their contribution to our distressed GDP and didn’t find anything. I admit I may not be good at searching for data on the web and allied platforms. But even without a proclamation from the National Bureau of Statistics (NBS), I make bold to say that these herdsmen and their nama, are not a part of our economy. Nobody knows the number of cattle they have, nobody knows the owners of these cattle, they do not have bank accounts, they do not rent houses and rarely do you see them getting involved in the local economy. They don’t even socialise with the “locals”. So, what is the socio-economic sig-

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We want to modernise them by fire by force and in doing so, give them preferential treatments that surprise and anger of others

nificance of these FFH that will warrant so much federal concentration over the years? Other matters: haunt for yahooboys, cobra effect, students as endangered species Of late, and long before the FBI infamous list, the Nigerian police prioritised the haunt for yahoo boys, especially on routes frequented by youths and students. Initially, only students with laptops were harassed. Eventually, any student or youth with Android phones, jagajaga hair and trousers became prime suspects. Woe betide that student if he drives a car, especially, fresh cars. Before long, the cobra effect – a scenario in which a solution to a problem complicates the problem – became operational. Last week, on a radio programmed a parent narrated how police at a checkpoint around Otta, ordered students with phones to come down from a transport vehicle and asked the driver to leave. Nothing had been found on the students and nobody bothered whether they had extra transport fare. Her son and driver who were on an errand to Ijebu-Ode were stopped. Unfortunately, the boy’s phone was dead. The policemen took the phone, charged it for about 10 minutes in the car and demanded that the boy and others: bail themselves with N5000. One of them who offered N4000 was asked to make it up! The mother made several calls to get her boy off the hook. It is not an offence to be a youth or student, to have an Android phone or a laptop or even to dress in these outrageous attires, at least, not in Nigeria. And yet we want the youths (and others) to believe that ‘the police is your friend’ rather than fiend. The police have a lot of work to do. Frank Mba, PPRO, over to you! Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

Recessions have become rarer and more scary

he world has seldom been worseequipped to fight a recession. Yet it has never had fewer recessions to fight. That makes the next global downturn difficult to imagine but it will most likely be a traumatic and unlooked-for event, more like the sudden outbreak of a new disease than the annual onset of flu. Recession alarms sounded loudly this summer thanks to an inversion of the US yield curve, which means rates on shorter-term debt are higher than those on longer-term ones. That came as the current economic expansion broke records and we experienced a global slide in measures of manufacturing sentiment. With interest rates trapped at zero or close to it across much of the industrialised world, central banks have little room to respond. Any slump in economic activity is a frightening prospect. Possibly, this bout of global weakness will be allowed to spiral into a US and global downturn. Yet that would defy the pattern of recessions in recent decades, which has changed both in cause and frequency. They are rarer and, when they do begin, the spark is more often a financial meltdown than sliding business activity or an economic overheat. Recession predictors have always had a terrible record but in the past, stopped-clock doom-mongers only had to wait a few years for their moment of glory. Now redemption can take decades. At 122 months, the current US

expansion is the longest on record, just ahead of the period from 1991 to 2001. The volatility of US output growth is lower than it has ever been Former US Federal Reserve chair Janet Yellen argues it is a “myth” that economic expansions die of old age. Longer expansions mean recessions have become rarer. In the 35 years after the second world war, there were eight US recessions; in the 35 years following that, there were four. Trends in other developed countries are similar. In the 1990s and 2000s, economists used to talk about a “great moderation”, the idea that output had become significantly less volatile since the early 1980s. But that proved embarrassing after the 2008 financial crisis and the phrase went away. The evidence since then, however, suggests the phenomenon is real. The volatility of quarterly growth in the US is now lower than it has ever been. Several explanations have been put forward. One is the decline of inventory cycles in manufacturing: the use of just-in-time techniques has reduced the need to adjust stockpiles. Another is the economy’s structural shift towards services. Demand for spinning classes, management consultancy, karaoke and plastic surgery may fluctuate with the overall economy, but unlike steel mills and automobile factories, they have no great cyclical dynamics of their own. A third and probably more important explanation is the success of central banks in stabilising inflation and averting boom and bust cycles.

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Most US recessions in the postwar years began when the economy got too hot, inflation picked up and the Fed increased interest rates to choke off demand. It is now decades since that last occurred. More recently, central banks have struggled with a lack of inflation, not too much. The current US expansion is now the longest on record - but growth has been anaemic in comparison with previous booms When policymakers do not fear inflation, they can provide stimulus to offset a slowdown. Indeed the risk is rather that they lack the ammunition to counter real shocks such as Brexit or US President Donald Trump’s tariffs on China. But they are certainly trying. The Fed is cutting interest rates, mirrored by India, Thailand, the Philippines and New Zealand among others in August alone. Fiscal stimulus is on the way in South Korea and the UK. China is set to do more. This is where many recession predictions go wrong. When the threat is obvious, the policy response arrives in advance. A bet that the current global slowdown will turn into global recession is in part a bet that these current stimulus efforts will fail. It is easy to follow this argument into a fallacy: policymakers will act to prevent a recession, so no serious recession is possible. In the early 2000s there was plenty of hubris along these lines — but 2008-09 was a brutal corrective. That recession began in the financial sector, with subprime loans and housing, just as the recession of 2001 began with the bursting

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of the dotcom bubble. The business cycle may have damped but the financial cycle of Hyman Minsky is still with us. Finance is the most probable source of the next downturn, when it comes. If real economic fluctuations are hard to predict, timing a financial crisis is next to impossible. Analysts may spot imbalances in markets but they can only guess at when and how they will unwind. There are some signs we are late in the current cycle. Asset valuations are high by historic standards. Private debt has risen a lot in China and some peripheral economies. The Trump administration is rolling back financial regulation. It all increases risk. But the signs of stress that often precede a crisis — wild ebullience or rising defaults — are not obvious. None of this means a recession will not occur — unpredictability is the whole point — but based on the pattern of recent downturns, there is little sign that one is already under way. What is certain is that an economic slump under present conditions would be exceptionally hard to fight. That is likely to be the pattern for future recessions: rare and terrifying.

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The 1951 elections: How Awolowo forced Azikiwe out of western Nigeria REMI ADEKOYA

ast week, we discussed the 1948 Igbo-Yoruba ‘Lagos Press War’ and its consequences for Nigeria’s sociopolitical landscape. Today, we’ll look at the events of 1951, which some scholars consider the official birth year of ‘ethnic politics’ in Nigeria. That year, the country got a new constitution, known as the Macpherson Constitution, which was historic in providing for the first Nigerian general election. It also vastly increased the powers of the three regional assemblies – western, eastern and northern – thus significantly upping the political stakes for the likes of Obafemi Awolowo, Nnamdi Azikiwe and Ahmadu Bello. Considering his widespread popularity and charismatic appeal, antiAzikiwe Yoruba elites now faced the realistic possibility of Zik leading the National Council of Nigeria and the Cameroons (NCNC) party to capture not just the eastern regional assembly but also the western one. In March 1951, Awo and his mostly Yoruba supporters established the Action Group (AG) party to prevent Zik from winning the western election, and in effect becoming the most powerful political leader in the entire southern Nigeria. Accordingly, the main themes in AG’s campaign messaging that year were opposition to Zik, the idea the west should be for “Westerners”, and the threat of “Ibo domination.” Awo’s Nigerian Tribune newspaper claimed Zik’s “political and social activities had this Ibo-domination inclination” for years. The paper also urged Zik, who was contesting a seat in the Yoruba-majority city of Lagos, to stay out of western politics since he did not belong to the region “by birth”. An editorial in Tribune stated it was

”an insult to all westerners” for Zik, an Igbo, to be contesting in their region. Why could he not go and contest in his eastern “homeland”? Meanwhile, AG campaign posters urged “true born” western Nigerians to vote AG because it stood for “western solidarity”. Clearly worried that AG’s tactics were proving particularly effective with Yoruba voters, Zik and his NCNC party insisted talk of Igbo-domination was absurd because their party “was founded in Yorubaland by the Yorubas” and “its first president Herbert Macaulay, was a Yoruba man.” NCNC also assured Yoruba voters that all its candidates standing in the Yoruba constituencies were Yorubas. Thus, in response to AG claiming NCNC candidates couldn’t be trusted because NCNC was an Igbodominated party, NCNC argued its candidates in the west could in fact be trusted because they were Yorubas. In effect, Zik’s party’s response to AG’s rhetoric helped further entrench the hegemony of ethnicity in Nigerian political discourse by legitimising the idea of ethnicity as the key organising principle of Nigerian society. This was a classic example of ethnic discourses feeding off themselves. Furthermore, in an attempt to discredit AG in the non-Yoruba areas of the west, Zik and his West African Pilot newspaper consistently accused Awo and his AG party of being ”tribalists”, who sought Yoruba-domination of the western region. However, since he was running for a seat in the Yorubamajority city of Lagos, Zik had to be savvy about suggestions of Yorubadomination agendas so as not to offend Yoruba voters. He thus resorted to clever rhetorical insinuations that such plans existed. For instance, addressing a rally at Obalende Square in November 1951, Zik suggested AG’s support for Nigeria’s tri-regional structure resulted from its “tribalist” agenda. He then argued thus: “In the

West region, we have the following linguistic groups: Yoruba, Edo, Ibo, Ijaw, Urhobo, Isoko, Itsekiri. Certainly, the evangelists of the Action Group cannot tell us that the Western region belongs exclusively to one particular linguistic or ethnic group, and they cannot claim that because any group is numerically superior to the others, therefore it can dominate the rest.” Without directly accusing AG of plans for Yoruba domination in the west, Azikiwe insinuated as such by drawing the attention of his audience to the prospect of domination by the numerically-superior Yorubas, cleverly placing the onus of proof on ‘tribalist’ AG politicians to persuade otherwise. This is a classic example of how savvy politicians introduce ethnicity into the political arena via subterfuge. A politician (Azikiwe) suggests his political rivals (Action Group members) view politics in ethnic terms (they are “tribalists”) and thus their policies (support for regionalism) should be interpreted in terms of what they hoped to gain for their ethnic group (Yorubas) by supporting those policies. Ethnicity thus ends up being politicized via claims others view politics through a purely ethnic lens. The 1951 election results revealed a country divided into regional party enclaves: the east dominated by Zik’s NCNC, the north by Ahmadu Bello’s NPC and the west by Awo’s AG. The western elections were, however, a close battle between NCNC and AG, and both claimed victory after votingday. Most candidates had stood without party labels, resulting in a brief period of confusion regarding which party some elected members would represent. When it emerged, AG had the majority, NCNC cried foul, claiming some members who pledged allegiance to it before the elections were lured by AG after the vote via corrupt methods. AG denied this, going on to form a regional government. Additionally, AG embarked on

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Clearly worried that AG’s tactics were proving particularly effective with Yoruba voters, Zik and his NCNC party insisted talk of Igbodomination was absurd because their party “was founded in Yorubaland by the Yorubas” and “its first president Herbert Macaulay, was a Yoruba man

a complicated political manoeuvre – clearly masterminded by Awo as a letter I uncovered in his personal archives revealed – to ensure Zik was not elected to the central House of Representatives from the western region’s House of Assembly, as used to be the practise at the time. This successful manoeuvring included turning some elected NCNC members against Zik with promises of well-paid political posts. In effect, Zik was forced to remain in the western assembly as an essentially powerless opposition leader, rather than head to the federal legislature to coordinate NCNC’s activities from there as his party had previously planned. The bitter nature of the 1951 western elections and Awo’s subsequent scheming to ”sink Azikiwe in the Western House” as he described it, was bitterly remembered years in NCNC and wider Igbo circles. Some point to this as the moment ethnic politics arrived Nigeria for good with the message for Zik being that he to his eastern homeland and leave the west to be run by westerners. And indeed, in 1953, Nnamdi Azikiwe returned to the east, refocussing his political career in his home region. When Awo ran for president almost three decades later in 1979 with a realistic chance of winning, it is said Zik, knowing he had no pathway to victory, decided to run anyway just to split the southern vote and make sure Awolowo never became Nigeria’s president. All in revenge for 1951. However, even before the 1979 election, the repercussions of 1951 would be felt in Nigerian politics as we shall discuss in this series. Perhaps we shall stop there for today. Next time, we will discuss the 1953 self-government motion which almost led to the break-up of this country and examine why Ahmadu Bello described the creation of Nigeria as a “mistake.” Till then, take care folks!

The personal example of Seyi Makinde

t is a commendable act of bravery that Oyo state governor, Seyi Makinde, publicly and fully declared his assets at a time when most public officials, including the president and vice president, hide behind the law to avoid making their full asset declaration public. The existing law only requires government officials to file a written declaration of their assets to the Code of Conduct Bureau (CCB). It doesn’t require them to make it public. However, with the freedom of information law, it is expected that interested individuals, the media and civil society organisations can request for the asset declarations of government official, interrogate them and hold them accountable in and out of office. But in reality, the CCB has stoutly refused to respond to legitimate requests for declaration of assets of public officials except in cases of political witch-hunts. This gives room for politicians to circumvent the law by making anticipatory and false declarations or even not making any at all. Of course, except in cases of witch-hunt, the CCB lacks the capacity to verify the claims of public officials; the media and civil society that should ordinarily verify these declarations are not allowed

to. This defeats the very essence of declaration of assets by public officials. Is it any wonder then that all corruption cases that have come to light involving public officials came out only because they have fallen out of favour politically? Of course, public declaration of assets is one of the safeguards against corruption. That is why the World Bank recommends that all countries embrace it to deter officials from perpetrating corruption. In countries where public declaration of assets is compulsory, there is a noticeable decline in cases of public sector corruption. With the exception of former president Umaru Musa Yar’adua and Ekiti state governor, Kayode Fayemi who declared his assets after leaving office, no public official has made full public declaration of his/her assets. Although president Buhari promised to publicly declare his assets in 2015, when the time came, he and his vice president, Yemi Osinbajo demurred and instead released only snippets from their declaration forms making verification of their claims difficult. The president hypocritically refers all those asking for full public declaration to the CCB, where they are certain to meet a brick wall. Makinde however, has chosen to thread

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the path of honour and transparency by going beyond the stipulations of the CCB law – and that is why he must be commended. Although the law allows public officials to make their declarations within three months of assumption of office, he submitted his before assuming office. By publicly declaring his assets, he has put himself in the public eye, making it difficult for him to get away with cases of conflict of interest. His companies are now known and difficult to benefit from contracts from the Oyo state government without public outcry. This is why Nigerians haranguing him over the value of his declared assets miss the point. Poverty is not a virtue, as we have seen in the last five years. No law prevents the rich or successful from vying for public office. Besides, only very few public officials since 1999 have publicly declared their assets. The governor therefore deserves commendation for threading that path of honour and transparency. What is more, those who have issues with the value or veracity of his declared assets are free to interrogate his claims now and when he leaves office. Truth is, the asset declaration law as it is in Nigeria does not serve any purpose because it does not deter officials from

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engaging in corruption and does not allow for leaders to be held accountable. Government officials continue to engage in open and blatant corruption, accumulation of wealth from state coffers and they often go scot free except in cases where they fall out of favour politically. If the government is really interested in curbing corruption and enthroning accountability in governance, then it must amend the law to make public declaration of assets compulsory. Until then, public officials should emulate the Makinde example by voluntarily making their asset declarations public to promote good governance and accountability.

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Thursday 05 September 2019

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

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Making good campaign promises on housing

ecause Nigeria is a country where, it s e ems, anything goes, it is easy for politicians to make spurious promises and never fulfil them. Housing is one of such promises. Muhammadu Buhari as the presidential candidate of the ruling All Pro gre ssiv e Congre ss (APC) promised, during his campaign, to provide one million housing units every year as part of efforts to fix the housing problem in the country. That promise remains unfulfilled four years after and may remain so for another four years simply because government has never tackled the problem the right way. Experience in Nigeria shows that, in matters of delivering mass h o u s i n g , g o v e r n m e nt is not a good “business man”. The government’s approach to housing as encapsulated in the minister’s blueprint tends towards welfarism which, in our view, does not work. It

is difficult to determine how many people government has to build houses for, and which state needs houses the most. Government’s interest in housing should be focused on developing a housing policy which will assist millions of citizens to obtain mortgages at decent interestrates. This is how most citizens acquire houses in countries with successful housing policies such as Singapore, South Africa and Malaysia. The housing situation in Nigeria is dire. There is a supply gap of over 20 million units and the level of home ownership is a little above 10 percent as against about 30 percent in South Africa, over 60 and 70 percent in US and UK respectively. Singapore, a once poor island in Southeast Asia, evolved from a third to first world economy between 1965 (when it gained independence from the British) and 2000. Under Lee Kuan Yew, the country’s first Prime Minister, the government transformed

huge swathes of urban sprawls and slums into wellplanned cities that spurred economic dynamism and growth. The country changed its housing story by simply creating a pool of funds into which everybody contributed monthly and from which everybody borrowed to buy flats or houses. That model succeeded not by magic, but because the government was determined, through a deliberate policy, to make it work. G overnment is expected to “top up” these contributions with, at least, N10 billion every year. A p o o l o f f u n d s i nt o which all workers must contribute 20 percent of their salary and from which they can also borrow to buy houses could be the impetus for 20 to 30-year low interest mortgages in Nigeria. As things stand the president risks being remembered for overseeing the des cent of Nigeria into the poverty capital of the world. This narrative can be changed with policies that enable private estate

de v elop ers build m ore houses and, by so doing, generate jobs for unemployed Nigerians. Sani Abacha is on record as a maximum ruler in Nigeria but he made a mark with the take-off of the Nigerian Liquefied Natural Gas (NLNG) which contributes today about 4 percent to the GDP. D espite his undemocratic antics as president, Olusegun Obasanjo as was responsible for telecoms revolution, pension reform and the Fiscal Responsibility Act as well as reduction of foreign debts, among others. Goodluck Jonathan as president was adjudged clueless but he kick-started the privatisation of the power sector. What mark, therefore, should Nigerians expect Buhari to make on the economy, beyond the minimal strides in power and infrastructure? The Buhari administration can replicate in the housing sector what Obasanjo did in the telecoms and pension sectors. But he must allow the private sector lead the way.

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Thursday 05 September 2019

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“Two fighting” in Owerri THE PUBLIC SPHERE

CHIDO NWAKANMA

hat started as a noble quest for retrieving the assets of the people of Imo state from a predatory governor and his cohorts sadly deteriorated in the last week of August into a street fight. The matter of Rochas Okorocha versus the Imo state Government and The People attracts so much passion on all sides. Unfortunately, the scenario last week reminds of the incidents of “two fighting” in primary and secondary schools. “Two fighting” is the refrain when matters get out of hand and become a violent fight. Students would deploy a colloquial verbal shorthand in reports to the class master or any authority figure that it is a case of two people fighting, “Two fighting” can get messy and involve more partisans in the class. The government of Imo state on Thursday, August 29, 2019, asked citizens to arrest on sight the immediate past governor of the state, Senator Rochas Anayo Okorocha. The offence was the assault on Mr Jasper Ndubuaku, a Special Adviser to Governor Emeka Ihedioha on Political Affairs. Ndubuaku heads the Imo

state Committee on the Recovery of Government Properties. Thugs attacked him at the site of a property belonging to Okorocha, tore his clothes and generally reduced from the deserved dignity of his person and office. There have been claims and counterclaims between the Imo state Government and the former governor on the procedure. While Ndubuaku claims the Committee got a court order warranting a search of Okorocha’s residence, the former governor claims it is untrue. The government has not shown the court order. Ndubuaku shared his ordeal with the News Agency of Nigeria (NAN). “We got a court order to recover stolen properties kept in Okorocha’s house, and when we got to his house on Thursday, armed thugs attacked us. There are twenty government vehicles in his house, four speedboats, one movable crane and generator sets, which we went to recover before the incident. We will not give up the battle. We will go back to his house because the property belongs to the Imo government,” he stated. It fell on the Secretary to the Imo state government, Mr Uche Onyeagucha to announce the fatwa of a citizens’ arrest on Okorocha. A former federal legislator, Onyeagucha also announced the placement of a security watch of Okorocha. Onyeagucha led citizens in the heat of passion to the Sam Mbakwe Airport Owerri where they planned a citizens’ hostile reception for Okorocha said to be coming into Owerri from Abuja. The former governor took

the counsel that he who fights and runs away lives to fight another day. Before then, to the benefit of the Imo state government, elders of Orlu land and the state cautioned the former Governor to ensure he does not disrupt the work of the assets recovery team. The Orlu Elders Council pledged their support to Okorocha and efforts to prosecute their son and former governor. Francis Dike, a Senior Advocate of Nigeria, who led the elders to Gerald Irona, the Deputy Governor, also called on Hope Uzodimma, a Senator and the gubernatorial candidate of the All Progressives Congress, to withdraw his electoral petition against the victorious Governor Ihedioha. Dike notably decried the perceived brazen theft of Imo state’s resources under Okorocha, but added, “This government should be ready for a probe when it leaves, and that is why we ask for probe and prosecution of Okorocha and his running dogs”. The Imo state government must do everything it can to ensure that no one reduces the matter of the recovery of the people’s commonwealth to “two fighting”. The task at hand has implications that go beyond Ihedioha versus Okorocha. Much more than politics is playing out in the street fights in Owerri. It is a continuation of the Igbo Wars (see The Igbo Wars 1-3 beginning here). The Igbo Wars concern politics, culture, strategy and the soul of a people. It is manifesting in various forms, including the IPOB outbursts, the Nuremberg mob and the no less dramatic matters.

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The Imo state government must do everything it can to ensure that no one reduces the matter of the recovery of the people’s commonwealth to “two fighting”. The task at hand has implications that go beyond Ihedioha versus Okorocha

was in Manchester speaking at a property talk show for Nigerians in diaspora when I read about the protest on the nomination of Seun Fakorede, a 27-year old nominated as commissioner in Oyo state. The protesters were said to have positioned that Seun is too young and his father is a member of the All Progressive Congress (APC). In a country where 93 percent of the population is below 55 years, appointing a 27-year old man to represent about 30.74 percent of people within the age bracket 25 -54 years is not a crime for a state that is forward-thinking. The claim that Seun’s father is an influential member of the opposition party makes the protest a mockery of drama by people who are unwilling to change. Seun Fakorede must have been nominated based on his perceived pedigree and ability to do the job. I knew little of Seyi Makinde before his election as the Governor of Oyo state. I was attracted to his Linkedin page when he was giving updates about his campaign. What I saw was a riot starter trying to do things in different ways during the campaign exercise and now that he is in office. I’m sure the Oyo people, being the residents of the political capital of the Yoruba nation must have seen the leadership quality of Seyi Makinde before deciding to sack the constituted authority and his party. The decision of the governor to be the first to publicly declare his assets (N50 billion), and now the nomination of a teenager (Seun is a teen in the context of the age of political appointees in Nigeria) as a potential commissioner is an indicator of a leader

going on a journey to creating a transformational legacy if the power of our political structure does not derail the focus. Appointing a 27-year old Seun is a radical departure from the norms especially in Oyo state where political awareness, alliances, mergers, computations and permutations for election outcome, slots for appointments is likely to be the highest among the states in Nigeria. Seyi Makinde is, therefore, a lion on a mission and no doubt this will add to the political credibility of Oyo state in the history of politics in Nigeria. To Seun Fakorede, you are another surprise appointee following the appointment of 23 years old Ossai Ovies Success in 2015 by Ifeanyi Okowa, Governor of Delta state. Your assignment is more significant since you met the governor via Linkedin. I am sure the governor is exercising his right to pick whosoever he perceives can help him achieve to his objectives. I know you have been nominated based on a credible record of achievement but being a political office holder is a different game in Nigeria. You are a torchbearer, and the outcome of the Makinde’s experiment –¬ with you as the prime specimen – will go a long to justify the need for a leadership change in our country. Presently, Nigeria is mainly a country of the youth under the leadership of the people whose time is gone in the evolution of events. We are being led by people who should be advisers and backbenchers while the youth are on the streets hailing and begging for the future they cannot see. Therefore, this is a clarion call on Seun

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Fakorede. As a new leader, you will be influenced by the existing paradigms of how things are performed in your ministry. Your focus is to be a leader in the real sense. A leader will adapt, innovate, change and ensure growth in his sphere of control within a limited time. A result-oriented leader focuses on relationships and results. Please focus on outcomes we can show the world that it is not business as usual in your ministry and that the youth of this country you are representing can take the lead. In your action, think of creating a legacy. A legacy is something you leave in others and not something you leave for them. Your first 90 days in the office should produce a diagnostic parameters to meassure the fundamental impact you will make. With these you w ill prove the protesters wrong and help in changing the mindset of our political gladiators. Your world and thoughts might be different from those you will be surrounded with but don’t drop the ball and allow the existing system to consume you. You must intentionally lead your team with the aim of increasing your sphere of influence and the elicit the needed support for your vision. To the leader in the Oyo state’s house of revolution, Governor Oluseyi Abayomi Makinde, you have started a riot of revolution. You have seen something in Seun Fakorede and the need to replicate the qualities that earned Seun’s your endorsement in the youth of your state is non-negotiable. Your state can be compared to Belgium based on population size but not on the scale of the economic activities and the achieve-

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Ndigbo are at a strategic inflexion point. The Igbo need to have conversations around many issues, notably the values that should guide and guard our society as well as acceptable conduct. It spills on to other topics such as political representation and the expectations of citizens of the political class. The matters are even more pressing nowadays with the Igbo in the fray everywhere there are positive and negative concerns about Nigeria and Nigerians. The ubiquity of the Igbo means they are one of the significant groups involved in the South African outrage against Nigerians in that country, in the successes of our sporting and academic teams across the world and the shame of the criminality of some Nigerians. In the matter of Okorocha, Ndi Imo repeatedly stated that some persons stole so much as to make the community take notice. They do not want any more of such. It is heartening that they are willing to stand by the government and to urge it to thread the correct judicial path. Imo state versus Okorocha matters to the whole of the South East. We await the omelette and accept that there would be many broken eggs, some oil spills and dirty cooking utensils until that delicious feast. Please stay focused, do the people right by doing the right things. Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

Seyi Makinde’s house of revolution

POSITIVE GROWTH WITH BABS

BABS OLUGBEMI ment of the Sustainable Development Goals (SDGs). I know you will give your state a unique identity within the next two years if the focus is on the SDGs and the National States Competitive Index where Oyo state’s worst areas for improvement are education, waste management services and corruption. The starting platform is education with Oyo state is in the middle tier in the WAEC’s table ranking 24th with 19 percent pass rate in 2014 and dropped to 26th position in 2016. I am happy that this was one of the priorities you mentioned in your inaugural speech. The focus is on creating legacies that will outlive you for the people of your state. No doubt, you have started well. I am sure the power of the electorates is manifesting, and you will manage the stakeholders better unlike the constituted arrogance of your predecessor against the youth, the future of your state. The people of your state cannot wait to start experiencing the Makinde-factor in all their areas of life.

Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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Thursday 05 September 2019

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

ECONOMY

Recession warnings pile up for battered manufacturing sector BALA AUGIE

he tough and unpredictable macroeconomic environment has pushed the Nigerian manufacturing sector to brinks of a recession and there is little to stop it from falling over the edge. The manufacturing sector contracted by 0.10 percent in the second quarter of the year, that compares with an expansion of 2.40 percent recorded in the last quarter of 2018, according to a recent report by the National Bureau of Statistics (NBS). Analysts attribute the protracted slow growth in factory activities to a weak consumer purchasing power, decrepit infrastructure, slowdown in construction and real estate activities, and huge levies by government. A high inflationary environment, hike in the price of fuel and incessant devaluation of the currency have subdued consumer spending as unemployment rate is at an all-time high of 23 percent. Nigerians are getting poorer and over 80 percent of a population of 200 mil-

lion live on $1.98 a day as the country has overtaken India to become the poverty capital of the world. “Consumption has been slow and that has manifested in the performance of trade”, said Johnson Chukwu, managing director and CEO of Cowry Asset Management Limited. Omotola Abimbola, consumer goods analysts CSL Stock Brokering Limited said that the lethargy reflects the monumental challenges of infrastructure as evidenced in the menacing gridlock at Apapa Ports. The restriction being imposed by the Federal Government and the Central Bank of Nigeria (CBN) to protect manufacturing is hurting the industry, according to Abimbola. The Nigerian economy is losing over N20 million daily as a result of the Apapa Gridlock, Seaport Terminal Operators Association of Nigeria (STOAN). If the N20 billion is multiplied by 12 months in a year, it then means that the country will lose N240 billion annually, which is more the combined internally generated revenue of eight states ( Kaduna, Edo, Oyo, Enugu, Akwa-

Ibom, Kwara, Ondo, Imo, Abia, Bayelsa, Plateau, Sokoto, and Benue). The trade sector’s year on year growth contracted by 0.25 percent, as consumer goods firms continue to suffer deteriorating margin. The listed firms are not able to deliver a higher return to shareholders in form of share appreciation and bumper dividend. The cumulative sales of the ten largest manufacturers quoted on the floor of the bourse dipped by 1.13 percent to N839.91 billion in June 2019,

the first slump in 3 years. Similarly, cumulative net income or profit after tax (PAT) fell by 42.87 percent to N51.44 billion in June 2019 from N90.05 billion the previous year. The industry average net margin, a measure of efficiency, fell tom 4.59 percent in the period under review from 8.77 percent the previous year as they are unable to turn each Naira invested into higher profit. Ayodele Akinwunmi, analyst at FSDH Limited

said that the contraction in manufacturing GDP is due to slow down in construction and real estate activities. He added that delay in the selection of cabinet members by President Muhammadu Buhari also spooked may have contributed to the economic lethargy. “There were no ministers in the three months after the president was sworn in for a second term in office, therefore, there were little activities to support growth,” said “If household do not consume,

firms will not produce,” The GDP of Africa’s largest economy expanded by 1.94 percent in the second quarter of the year, that compares with 2.10 percent in the corresponding period of 2018. Akinwunmi said the government needs to come up with a stimulus to spur the economy and attract foreign direct investment. Analysts at United Capital expect the momentum in the Nigerian economy to remain tepid in third quarter, with below population growth of 2.6 percent. “This is predicated on the continued operating challenges in the economy and absence of the implementation of major policy reforms thus far during the quarter,” said analysts at United Capital Limited. “Notably, growth in the Manufacturing, and Construction sector that largely depends on government spending should receive some boost in H2-19 as the newly formed cabinet set out to implement the 2019 budget. FG’s revenue challenges remain a huge downside risk growth in the trade activities amid rising debt servicing,” added analysts at United Capital.

COMPANY

Guinness to focus on spirit brands as sales from beer capitulate OLUFIKAYO OWOEYE

uinness Nigeria s e e m s t o h av e thrown in the towel as the beer ‘war’ in the country becomes more intense. After an unimpressive full-year result which saw the brewer’s net sales from its beer segment plummet as cash trapped consumers readjust their spending to value brands, Guinness Nigeria is set to drive its spirits expansion ahead of beer in the coming years while also focusing on segments it has a right to win namely Malta, Ready To Drinks (RTDs) brands. Guinness currently has five brands in the beer segment namely, Guinness Stout, Harp, Satzenbreau, Harp and the newly launched Guinness Gold. Figures from the released full-year 2019 result for the

period ended 30th June show sales volume from its Lager and RTD category fell by 47.0percent year-on-year driven by lower sales of Satzenbrau and Harp, while the Diageo-owned brewer recorded marginal 2percent growth on its spirits yearon-year, malt grew 4percent year-on-year and stout grew 1percent year-on-year. Until recently the beer market in Nigeria was a twohorse race between Diageo’s Guinness and Heineken’s Nigerian Breweries. Guinness, known for leading brands such as Guinness Stout, Harp, just to mention few, while Nigerian Breweries has brands such as Star and Gulder were brands that graced the table, however, due to an age shift, the new generation of beer consumers who are between the ages of 21-35 years have moved away from stout to other brands. Interestingly the battle

in the beer market became more intense with the entrance of the World’s largest beer maker, AB In Bev into the market. The year 2011 ushered in a disruption in the beer market with the arrival of SABMiller, which was then the world’s second-largest

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brewer, into the country, and its acquisition of majority shares in International Breweries Plc, makers of Trophy Beer, located in Ilesa, Osun-State. However, in 2017, AB InBev acquired 72.17% of SABMiller’s shares in International Breweries Plc, in a

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series of transactions which resulted in AB InBev acquiring controlling interests in the company. After the acquisition, a merger arrangement was later consummated with International Breweries Plc and two other local brewers: Intafact Beverages Limited,

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makers of Hero beer which is popular in the South-Eastern part of Nigeria, located in Onitsha Anambra State, and Pabod Breweries Limited, makers of Grand Lager, located in Port-Harcourt. All are now controlled by AB InBev. In a swift response to AB InBev’s entry into the Nigerian market, Nigerian Breweries Plc also acquired breweries across the country. The company recently introduced the Tiger Beer brand into the Nigerian market. The brewer has also regiged some of its brands such as Trophy to meet consumers demand and also introduced Budweiser into the market on the eve of the last world cup. Guinness has also bolstered its revenue base by leveraging its competitive advantage which is an array of spirit brands 13 in number and recently commenced the production of Baileys in Nigeria the first location outside of the UK.

Thursday 05 September

BUSINESS DAY

Retail &

consumer business

luxury

Abercrombie & Fitch’s Q2 net sales dropped as US-China trade spat heats up OLUFIKAYO OWOEYE

merican lifestyle retailer that focuses on casual wear, Abercrombie & Fitch’s second-quarter net sales decreased 0.2percent to $841.1 million, and increased 1percent on a constant currency basis compared to last year as the cloth retailer continues to feel the pain of trade spat between U.S and China. Comparable sales were flat against positive comparable sales of 3percent last year. Gross profit rate of 59.3percent was down 90 basis points to last year. Operating expense, excluding other operating income, of $537.8 million included $45.0 million of flagship store exit charges. Operating expense deleveraged 370 basis points and 470 basis points on a GAAP and an adjusted non-GAAP

basis, respectively, reflecting a 530 basis point adverse impact from flagship store exit charges. Operating loss of $39.5 million, operating margin decreased 470 basis points from last year to a loss of

4.7%, primarily driven by the adverse impact of flagship store exit charges of 530 basis points. Excluding asset impairment charges last year, adjusted non-GAAP operating margin decreased 580 basis

points or 530 basis points on a constant currency basis as compared to last year. Hundreds of U.S. businesses including retailers and footwear companies have urged President Donald Trump to scale back

rather than escalate tariffs on Chinese goods, warning they would jack up consumer prices and trigger job losses. To mitigate this risk, the teen apparel maker has been aiming to cut the amount of goods sourced from China

to below 20percent in fiscal 2019 from 25percent a year earlier. Fran Horowitz, Chief Executive Officer, said, trends improved throughout the second quarter, enabling it to deliver constant currency revenue growth and meet our previously-issued comp and gross profit rate outlook, while continuing to tightly manage expenses. “Importantly, we have had a solid start to back-toschool in the U.S. and we look forward to building on that momentum in the back half through exciting product and cohesive marketing campaigns,” Abercrombie & Fitch is a leading, global specialty retailer of apparel and accessories for Men, Women, and Kids through three renowned brands. For more than 125 years, the iconic Abercrombie & Fitch brand has outfitted innovators, explorers , and entrepreneurs.

company

PZ Cussons Nigeria’s full-year revenue tanked amid competition from rival brands

Z Cussons Nigeria Plc’s full-year revenue and profit for the full-year ending in May 2019 dropped impacted by low consumer demand, which in turn was driven by macroeconomic conditions as well as competition from rival brands. The consumer goods company said that revenue fell by 7.72% to N74.3bn from N80.6bn in 2018. Worsened by long delays at the Apapa port in Lagos, along with increased port fees ate into profits. Net profit declined by 40percent to N1.2bn, from N1.9bn in the previous year. Hardest hit by these conditions was the company’s Nutricima milk business, re-

sulting in a 73percent drop in operating profit for the year. Profits were also lower across the rest of the portfolio.

According to the company, aggressive competitor discounting in the milk business throughout most

of the year resulted in significantly lower revenue and the business moving from an operating profit to an

operating loss. It added that a full reassessment of the business model has taken place with greater focus now being placed on consumer pack innovation. The parent company said in July that a major overhaul was required to get the business back on track after writing-off £24.8m against its Nutricima milk business and its Australian brand five: am, which makes yoghurt and granola. It added that it will now focus on personal care and beauty brands because they represent its strongest brands across the geographies that offer it the best opportunities for revenue and margin growth. The company hinted at a slimming-down of its Ni-

Team Lead: Bala Augie, Olufikayo Owoeye; Analyst: Bunmi Bailey; Graphics: Fifen Eyemisanre Famous www.businessday.ng

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gerian operation, where the economy has suffered and disposable income has reduced, to cope with “current economic realities whilst still being ready to take advantage of future recovery”. The slimming down may involve selling off non-core brands, though it did not say which brands. PZ Cussons Nigeria manufactures a wide range of consumer products which includes electricals, personal and homecare products, and dairy brands under the Nutricima business line which includes Nunu, Olympic and Coast milk brands. The company celebrated its 120 years in Nigeria in May reaffirming its commitment to the country and economy.

Thursday 05 September 2019

BUSINESS DAY

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Thursday 05 September 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

GDP SPECIAL

The good, the bad and the ugly sectors in Nigeria’s second quarter SEGUN ADAMS

Leading sectors he top five sectors in the second quarter of 2019 grew at an average of 7.86 percent which is four times faster than the broader economy which slowed to 1.94 percent. The leading sectors were Water supply, Sewage, Waste Management and Remediation (14.35%); Information and Communications (9.01%); Transportation and Storage (8.02%); Mining and Quarrying (5.02%); and Accommodation and food Services (2.92%). Water supply, Sewage, Waste Management and Remediation Leading the pack, Water supply, Sewage, Waste Management and Remediation grew the fastest more than five quarters to expand at double digits for the first time since a 11.98 percent growth in the second quarter of 2018. Quarter-on-Quarter the sector expanded by 10.6 percent points from 3.75 in Q1. Average growth so far in 2019 is 9.05 percent, the third best among sectors. Information and Communications The second-best sector in the quarter was Information and Communications which has steadily declined for second straight quarter since it peaked at 13.2 percent in the fourth quarter of 2018. The Information and Communication sector slowed to 9.01 percent dropping 0.48 percent points. Year-on-Year the sector is 2.8 percent points lower. Average growth so far in 2019 is 9.25, the second best among sectors. Transportation and Storage

Fo r T r a n s p o r t a t i o n and Storage, the third best performing sector, growth halved in the second quarter from 19.5 percent noted in the first quarter of the year. The 8.02 percent expansion is the weakest in the sector in more than 5 quarters. Compared to the same quarter of 2018, Transportation and Storage growth has fizzled by 13.73 percent points. Average growth so far in 2019 is 13.76 percent, the best so far among sectors. Mining and Quarrying Rebounding from four consecutive quarters of contraction Mining and Quar-

rying grew by 5.02 percent, the fastest since it entered a recession (defined by two straight quarters of negative growth) in the third quarter of 2018. The latest growth figure is highest since 14.12 percent in Q1 2018. Mining has bounced from a 3.84 percent contraction a year ago and a 1.37 percent decline in the first quarter. Average growth of the sector so far in the year is 1.82 percent. Accommodation and food Services The Accommodation and Food services sector after seeing its best quarterly

performance in at least five quarters in the first three months of 2019 dropped to 2.92 percent, enough to see the sector round off the top five list. Year-on-Year the sector has expanded by 0.49 percent points and has an average growth of 3.54 percent so far in 2019. Lagging sectors The worst five sectors in the second quarter of 2019 had an average of negative growth of 2.91 percent. Real Estate (-3.84%), Public Administration (3.39%), Finance and Insurance (-2.24%), Trade (-0.25%)

and Manufacturing (-0.13%) Real Estate The Real Estate sector is the worst performing in the second quarter of 2019, dashing excitements of a rebound a reversal of a longstanding trend of negative growth in the first quarter of 2019. Growth in the first three months of 2019 was a 0.93 percent expansion. A 3.84 percent decline which is a U-turn on growth worsens the sector’s decline by 0.04 percent points from the same period of 2018. Average growth so far in 2019 is negative 1.45 percent, the third worst among

sectors. Public Administration Public Administration emerged the second-worst with a decline of 3.39 percent, albeit and improvement from -14.21 percent in the first quarter. The sector has been in a recession for more than five quarters and has an average growth decline of 3.39 percent so far in 2019. Finance and Insurance For the fourth straight quarter, finance and insurance sector has contracted after growth pared to 1.28 in the second quarter of 2018. With a negative 2.24 growth in the second quarter of 2019, the sector has improved by 5.36 percent points but is still in ugly shape considering it grew 13.30 percent in the first quarter of 2018. Average growth so far in 2019 is -4.92 percent. Trade Trade contracted for the first time in since the quarter of 2018 after it declined 0.25 percent in the latest quarter published in the National Bureau of Statistics (NBS) report. From the first quarter Trade declined by 0.6 percent points but year-on-year has improved by 1.89 percent. Average growth so far in 2019 is 0.3 percent. Manufacturing For the first time in more than five quarters, Nigeria’s manufacturing sector contracted according to the recently published data for Q2 2019. Manufacturing contracted by 0.13 percent after it started a slowdown from 2.35 percent in the last quarter of 2018. On a quarterly basis the sector declined by 0.94 percent points while year-on-year it worsened by 0.81 percent points.

MANUFACTURING

Manufacturing sector in free-fall as Q2 figures turn negative OLUFIKAYO OWOEYE

hese are not the best of times for Nigeria’s manufacturing sector as growth contracted by -0.13percent year on year, lower than the corresponding quarter of 2018 and Q1 2019. The growth rate of the sector, on a quarter-on-

quarter basis, stood at –4.41percent. The contribution to real GDP in Q2 2019 was 9.10percent, which is lower than 9.29percent recorded in the previous year and 9.79percent recorded in first quarter 2019. Recent results released by quoted companies on the nation’s bourse show that companies in the

manufacturing and consumer goods segment are struggling as profitability waned while the cost of sales have ballooned. The shrinking consumer wallet companies can no longer pass the cost to the final consumers who are price-sensitive and always ready to shift loyalty to cheaper brands. The big players in the

consumer goods space are also threatened by small player mostly unquoted companies cannibalising on their sales. The manufactur ing sector has 13 activities namely oil refining; cement ; food, beverages and tobacco; textile, and footwear; wood and food products; pulp paper and paper products; chemical

and pharmaceutical products; non-metallic products, plastic, and rubber products; electrical and electronic, basic metal and iron and steel; motor vehicles and assembly; and other manufacturing. The chemical and pharmaceutical products under manufacturing sector contracted -1.27percent in Q2 2019 from 1.66percent

in Q1 2019 and 1.52percent in Q4 2018. However, the cement subsector under grew by 1.58percent in Q2 2019 from 2.81percent in Q1 2019 and 0.98percent in Q4 2018. Food, beverage and tobacco sub-sector grew by 1.22percent in Q2 2019 from 1.76percent in Q1 2019 and 2.22percent in Q4 2018.

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

Thursday 05 September 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

FINANCIAL INSTITUTIONS

Tough times as financial services grind to a halt OLUWASEGUN OLAKOYENIKAN

hese are not the best of times for investment bankers operating in the financial services industry of the Nigerian economy as dampened investor appetite in Nigeria’s stock market further submerged the subsector into recession. Financial institutions in the country shrank by 9.21 percent in the first three months of 2019 from the same period a year earlier, and sustained the downturn with a contraction of 3.52 percent on a year-on-year basis in the second quarter of this year, according to figures released Tuesday by the National Bureau of Statistics (NBS). As a result, the financial institutions, a subsector of the finance and insurance sector, continued to wallow in recession, having recorded four consecutive quarters of negative growth. This impacted negatively on the performance of the broad sector to mirror woes of Nigeria’s financial institutions. “With the weak investor sentiment more or less, activities on that segment have not been impressive,” said Omotola Abimbola, macro and fixed-income analyst at Lagos-based investment bank, Chapel Hill Denham. “We haven’t seen capital market issuances, activity in the stock market shows things are not so good.”

The Nigerian Stock Exchange (NSE) lost as much as 12.23 percent of its value since the start of the year despite the listing of MTN Nigeria and Airtel Africa to the bourse. This compares with 8.96 percent wiped off from the NSE’s market capitalisation within January and September 3, 2018. From a 12.58 percent growth in Q1 2018, activity in the financial institutions subsector decelerated by 0.81 percent in Q2 2018. However, in the third quarter of the year, the segment contracted by 5.67 percent and slumped into recession in the last quarter of 2018 after shrinking by 2.13 percent. BusinessDay analysis of data obtained from NSE shows the activity level in the market, measured by the total volume of trade and value of traded stocks, slumped by more than half to 21.63 billion shares worth N212.73 billion in Q1 2019 compared with 44.91 billion shares valued at N435 billion transacted in the corresponding quarter of 2018. However, there was an improvement in the second quarter of 2019 as 32.42 billion shares worth N450 billion exchanged hands, all thanks to the listing of MTN Nigeria Communications Plc on the local bourse on May 16, 2019. Half-year gross earnings of United Capital Plc, a financial and investment services company listed on the NSE, fell for the first time in at least 7 years

to N3.23 billion in 2019 from N3.88 billion recorded in 2018. The weakened earnings were driven by a 48 percent decline in investment income on fixed deposits to N315.6 million, and fees and commission income earned from charges which fell by more than a quarter to N772 million in the period. This pulled the firm’s after-tax profit to a 3-year low of N1.67 billion. On the other hand, Nigerian commercial banks which are also part of the nation’s financial intuitions posted impressive results in the first half of the year. Available data gathered by BusinessDay show that twelve listed banks which have released their financial results for the first six months of the year jointly grew profit by 6.88 percent to N414 billion against N387 billion achieved in the comparative period last year. Abimbola pointed out that despite the increased activity in the commercial banking space, it was not enough to offset the unimpressive performance recorded by other components of the financial institutions. The banks also improved on their core responsibility of lending by boosting loans to customers in the review period. Guaranty Trust Bank grew deposits from customers by 6 percent to N2.4 trillion in H1 2019, while First Bank of Nigeria Holdings increased customer loans by 3.5 percent to N1.7 trillion.

L-R: Usman Ibrahim, chairman, infrastructure committee, Manufacturers Association of Nigeria (MAN); Ali S. Madugu, vice president, MAN; Ahmed Mansur, president, MAN; Hassan Adamu, guest of honour, and Francis Meshioye, chairman, Ikeja branch, MAN, during the opening ceremony of the 3days Made in Nigeria Products Exhibition in Lagos. Pic by Olawale Amoo

L-R: Ede Solomon Adegahi, husband to beneficiary; Josephine Adegahi, Food vendor and beneficiary; Popoola-Dania Oluwatoyin, category development & activation manager, PZ Wilmar, at the presentation of a Mobile Kitchen to Josephine in Abuja recently, courtesy of the Mamador Empowerment Initiative.

CONSTRUCTION

Construction slows despite infrastructure rhetoric ISRAEL ODUBOLA

igeria’s construction industry saw growth slow the most in the past three quarters despite government’s acclaimed commitment to address decrepit infrastructure which continues to hurt business growth and deter investment. Data released by the country’s statistics office showed that the sector expanded a marginal 0.67 percent in the second quarter of the year compared to 3.18 percent in the preceding quarter. This implies that the construction sector grew 1.92 percent mid-year 2019, lower than 3.06 percent expansion registered in similar period last year. Nigeria’s construction sector, one of the most vibrant in Africa, suffer setbacks from ‘corrupt’ government officials, which has stalled many developmental projects, industry players say. “Lack of will and misappropriation of few available funds are the bigger issues facing the industry,” said Olumide Akinyemi, project manager at Lagos-based Global Building

Limited. “Contractors don’t get paid on time, so how do you expect them to fund projects?” Akinyemi queried. The sector contributed 4.4 percent to Nigeria’s economic output in second quarter, up 4.1 percent three months earlier, but below African peers such as South Africa (15%) and Kenya (11%). Babatunde Fashola, at his ministerial screening at the senate chamber last month, tied the woes of the industry to cash shortage and called for the introduction of N10 trillion infrastructure bond to finance projects. Worrisome is the fact that government’s rising capital spending has no corresponding impact on economic growth. To put in context, public capital spending has surged 157 percent to N1.7 trillion in the three years through 2018, while the broader economy managed to grow by an average one percent in that period. Government has been relying on the domestic capital market and international investors for cash to finance budget by raising debt securities through the Debt Man-

agement Office (DMO). But analysts have raised eyebrows on Nigeria’s rising debt profile, even as debt servicing is expected to gulp 82 percent of Nigeria’s revenue by 2022. Last year, the state debt agency raised an N100 billion sovereign Sukuk bond to finance 28 projects across the country including the LagosIbadan Expressway and Second Niger Bridge. This followed after raising its debut N100 billion bond in 2017 which was over-subscribed by 6 percent. Nigeria’s construction unimpressive performance took a toll on companies’ evidenced by theirhalf-yearearningsscorecard which showed players struggled to improve profitability amid a significant jump in cost. While Julius Berger, the biggest listed player in the industry saw profit rise 9 percent mid-year 2019, Arbico incurred loss worth N38 million, after posting N71 million profits last year. “The cost of construction in Nigeria is one of the highest in Africa. This is even as over 65 percent of materials are sourced abroad. Foreign exchange is not smiling as well,” Akinyemi stated.

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L-R: Idia Aisien, Media Personality and DFA spokesperson; Yemi Amusan, Jakaranda Productions representative; Mai Atafo, Fashion Designer and Fashion Resource, DFA, and Felix King, CEO Oracle Experience, at the press cocktail event for Design Fashion Africa (DFA).

L-R Enyinna Nwigwe, Nollywood actor; Charles Odii, organizer of 25Under25 Awards; Omotola JaladeEkeinde, Nollywood actress; Bobby Michaels, Nollywood actor, and Ismail Olalekan, head, home and broadband, Airtel Nigeria, at the Airtel Sponsored 25 Under25 SME100 Awards, in Lagos.

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Thursday 05 September 2019

BUSINESS DAY

cityfile Some exotic cars confiscated by the Benin Zonal office of EFCC from suspects.

Insecurity: Miyetti Allah sign peace deal with Enugu community

iyetti Allah Cattle Breeders Association of Nigeria (MACBAN) and Ibagwa Nike community in Enugu East local government area of Enugu State have signed an accord to ensure peaceful coexistence. The development was the outcome of a town hall meeting between the community leaders and representatives of Miyetti Allah, led by the Sarki Hausa, Yusuf Sambo. The convener of the meeting and traditional ruler of the community, Igwe Emmanuel Ugwu, said that the meeting was organised to enable the

herders and their host communities to deliberate on ways to foster peace and avert future conflicts. The monarch, who is the grand patron of MACBAN in the South-East, said that the community had continued to pursue peace, in spite of alleged provocations from the herders. He said that the meeting would help to enlighten the herders on how to carry out their activities ahead of the take off of the newly recruited forest guards in the state. Ugwu said, “The forest guards are not under me and that is one of the reasons I called you in order not to have problems. So, this meeting is to protect you.”

He expressed wor r y over the activities of the herders who, he alleged, had continued to destroy farmlands in the community, in spite of the kindness shown to them. The monarch said that he broke down in tears after inspecting some farms destroyed by cattle and wondered why children were being deployed as herders. He said that the meeting would set up a committee to inspect the farms, evaluate the worth of the damage and negotiate compensation to be paid as a way to pacify frayed nerves in the community. “I want us to continue to stay together in peace. Try and protect the com-

munity where you live as we are protecting you,” Ugwu said. The Sarki Hausa commended the monarch for organising the peace meeting, adding that the nation would experience greater peace, if opinion leaders should take similar initiatives. He said that the herders had testified to the cordial relationship that existed between them and the community. “A situation where a leader will see settlers as part of their community is quite commendable. “I am delighted to hear from the herders that their businesses are flourishing in this community,” he said.

EFCC, BCOS to partner on anti-graft campaign REMI FEYISIPO, Ibadan

he Economic and Financial Crimes Commission (EFCC) and Broadcasting Corporation of Oyo State (BCOS) have agreed to partner in the fight against corruption and financial crimes. BCOS is state-own broadcasting outfit with reach across all parts of Oyo and beyond. It is also available on the terrestrial platform of the GoTV and other cable television service providers. The partnership was sealed when officers of the commission visited the management of BCOS at the Ile Akede, Orita-Bashoru, Ibadan, on Tuesday. The executive chairman of BCOS, Dotun Oyelade, who received officers of the

commission, said the partnership was necessary to further strengthen the fight against economic and financial crimes within the zone. “I watched one of your programmes last week, and I was elated about your proactiveness and what you have been able to achieve between January and now. According to him, the EFCC’s mandate is in tandem with the vision of Governor Seyi Makinde in waging war against corruption, and this was responsible for the governor’s creation of an anti-graft agency for the state days after his inauguration. “We cannot remain passive while the country, especially its youth are being destroyed by inordinate fiscal and financial ambition.” He pledged the station’s www.businessday.ng

readiness to deploy its resources in assisting the EFCC to get its anti-graft campaign delivered to the grassroots and every corner of Oyo State. Oyelade said the broadcasting station will forward a proposal to the commission to give effect to the partnership. “I can assure you that the BCOS has the advantage over all the media stations here. We assure you that as mutual stakeholders in the business of making Nigeria better, we will cooperate with your organisation,” he said. On his part, zonal head of the EFCC in Ibadan, Friday Ebelo, thanked the BCOS for assistance received over the years. He said the EFCC was always willing to partner

with relevant individuals and organisations to get its message effectively delivered to the right audience at the right time. He expressed worries over the increasing rate of crime among the Nigerian youth, saying the nation needed to act fast to help the younger ones divert their energy and creativity to areas that will benefit them and the larger society. “One main area where we seek collaboration with critical stakeholders like yours is reorientation of our youth. How we can recreate the good old values that our parents bequeathed to us. How we can allow our younger ones to be properly guided so that they can become beacons of hope for our dear country,” said Ebelo.

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Computer Village: Traders wants Lagos to create car parks

hop owners in Computer Village, Ikeja, have appealed to the Lagos State government to create designated car parks for its customers. Some of the shop owners said that designated car parks would reduce the traffic snarl in the area and enhance their businesses. The Lagos Computer Village is Nigeria’s online technology marketplace, where various technology and ICT needs such as laptops, desktop systems, brands and office solutions are sold. The issue of parking space has continued to be a source of concern as people from different parts of the state go to the market for bulk purchase or private use. Mike Ezekwe, who sells inverters, said that the creation of parks would reduce illegal parking of cars by the road side. “Many people who come to computer village are compelled to park by the road side due to the unavailability of parks and this is not good for safety of their vehicles.

“Parking of cars by the road side contributes to the traffic on Awolowo Road and its link routes. This affects businesses indirectly, therefore, if car parks are built it will reduce the menace,” he said. Chukwudi Nzekwu, a laptop dealer; said that creation of a car park would equally generate revenue for the government, in addition to creating a hitch free atmosphere. “If the government creates car parks, it will be another source of income generation for the state, since the money will no longer go into personal purse. “We appeal to the government to look into the issue as soon as possible because of its urgency,” he said. A mobile phone dealer, Chinedu Nwosu, in his view said that the parks would reduce the activities of touts in the area. “With designated car parks, the activities of touts will be curbed and cars that are parked illegally can be towed away, while those in the parks are secured,’’ Nwosu said.

Abia Poly: Unions threaten strike over unpaid salaries GODFREY OFURUM, Aba

oint Council of Non Academic Staff Union (NASU) and Senior Staff Association of Nigerian Polytechnics (SSANIP), Abia State Polytechnic, Aba chapter, has urged the management of the institution to shelve its plan to downsize of workforce, until all arrears of salaries are fully paid. They threatened to embark on an indefinite strike, if management of the institution carries out its threat to sack some of its members. The council in a joint statement issued after its meeting, held on August 29, 2019, gave management of the institution, 14 days ultimatum, beginning from (August 30, 2019) to clear all outstanding 16 months salaries (May 2018 to August 2019). They also requested that the released 2015 promotion list, be given financial backing, while all outstanding promotions from 2016 to 2018, be released with full financial commitment. They also demanded that all union members’ checkoff dues, duly deducted by management be fully remitted to affected unions @Businessdayng

-SANU, SSANIP and ASUP. Congress also frowned at the withholding of Abia Polytechnic Cooperative Society fund, by management, which according to them, is having adverse financial effect on cooperators, who had saved from their personal salaries for future use. Congress also demanded that management should release the fund to ameliorate the sufferings of cooperators. Chucks Nwachukwu, c h a i r m a n , S S A N I P e xplained that the council resolved that Abia Polytechnic management should shelve any planned downsizing of staff until all salaries are fully paid and related issues discussed and agreed upon. “The feelers coming to us had it that management has already concluded plans, typed the letters to relieve staff of duties, dismissing, sacking and declaring them redundant in the face of 16 months unpaid salaries. “And we are sounding it loud and clear to everybody that if Abia Poly management makes good this threat, any day, anytime and release these letters, we are going to shut down the school.

Thursday 05 September 2019

BUSINESS DAY

RESEARCH&INSIGHT

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

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Appraising Nigeria’s foam industry: Vitafoam as a case study ISAAC ESOWE

2018. Put differently, this means, its current assets cover its short-term obligations by 139 per cent; this figure is below the bench mark of 200 per cent. Current ratio, however, showed a 3-year downward trend in its growth pattern between 2016 and 2018. This suggests that the company needs to improve on its liquid assets when measured up with the industry average. In the same way, acid test ratio, a more pertinent measure of the ability of a business to meet up liabilities as they fall due, showed a five-year average of 0.27 times (this is below the bench mark of 100 per cent). Conversely, this

means only 27 per cent of the company’s short term obligations are covered by its liquid assets. Acidic ratio for the past five years displayed a downward trend. In 2018, this index stood at 0.20 times; the value declined by 16 per cent from 0.24 times when compared with preceding year (YoY). The company recorded an all-time high value of 0.40 times in 2015; this upward trend is attributed to decline in inventory by7 per cent from 15 per cent in 2014. During the same period, inventory management indices show an average holding period of 149 days. While inventory turnover declined slightly from 2.6 times in 2017 to 2.5 times in 2018. These observations therefore suggest the company has somewhat improved in its

12734BDN

here has been growing interest in the nation’s foam industry, due to the massive housing needs of the populace, which cannot be met without items such as beds, furniture made of foam materials. The housing deficit in Nigeria is put about 21 million units, and this goes to show that the market for foam and other bedded materials is huge. There are many players in this sector such as Vitafoam, Mouka foam, Vono foam, Sara foam, and a whole lot of unbranded foams. This analysis is based on Vitafoam Nigeria Plc because it is listed on the Nigerian Stock Exchange, meaning that information on its financials and board membership is readily available to analysts and other stakeholders. Vitafoam is one of the producers of polyurethane products in the country. It is listed on the Nigerian Stock Exchange (NSE) with a market capitalization of N5.4 billion early September. Its operations cover four main business units: flexible foam, rigid foam, technical products, and adhesives. The analysis has as its reference period from 2013 to 2018. We adopted key financial metrics such as solvency ratios, efficiency ratios and profitability ratios. Interestingly, revenue grew in 2018 when compared with the preceding years. In 2016, turnover as N13.6 billion and it grew by 30 percent to N17.7 billion in 2017 and by additional 10 percent to N19.5 billion in 2018. The growth in revenue within the period was higher than the GDP growth rate of the manufacturing sector which hovered around 2 percent during the period. The growth in turnover was in spite of the preponderance of low-income earners that constitute over half of the people living within the Nigerian economy and amidst stiff competitions from close rivals in the same industry. However, liquidity position of the foam industry is put at 200 percent for current ratio and 100 percent for acidic ratio, based on available data. Current ratio averaged 1.39 times over the past five years between 2013 and

efficient inventory holding management when compared with preceding years. Operating margin as a percentage of the total revenue revealed a fluctuating trend pattern. The margin, with a five-year average of 8 per cent up from 9 cent in 2013 to 11 per cent in 2018. This improvement was as a result of the reduction in the following cost – administrative expenses and distribution cost whose percentage growth on the average is lower than growth in gross profit over the five years under consideration. Again, profit margin has been flat; however, thereisanoticeablefluctuationtrendinthegrowth rate which suggests a downward trend over the past five years, which is as a result of increasing production costs evidenced in the upward trends in the cost of sales to turnover. Profit margin has been flat for two successive financial periods 2016 and 2017 respectively, comparatively; no growth was recorded within the review period, but in 2018 profit margin up by 6 per cent. Similarly, net income margin leapt by 2 per cent from a negative value of 1 per cent in 2017 to 3 per cent in 2018, the slight rise in net income margin in 2018 was due to an increase in sales which by geographical segmentation; Nigerian market contributed 99.9 per cent of total sales revenue. Return on Average Assets (ROAA) and Return on Average Equity (ROAE) – these ratios analyse the returns on total investment made in the company as a percentage of the value of its total assets and how well a company uses investments to generate earnings. Growth in ROAA has been consistent for the past 3 years with an average growth rate of 10 per cent within the considered period, the margin rose from 10 per cent in 2017 to 13 per cent in 2018. Similarly, ROAE recorded a resurgent growth in 2018 when compared with previous financial years. Dividend pay-out ratio, represents the percentage of net income that is distributed to shareholders in the form of dividends during the year. Investors are particularly interested on this ratio, so as to ascertain if the company is paying out a reasonable portion of its net income to investor. At N601.9 million net incomes for FY2018; Vitafoam Nigeria paid out 29 per cent of its dividend to investor while 71 per cent was retained as earnings.

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Thursday 05 September 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

N11.721 trillion

Week open (23– 08–19)

31,924.51 27,800.17

N13.524 trillion

2,351.62

Week close (30– 08–19)

27,525.81

N13.391 trillion

2,313.67

Year Open

Percentage change (WoW) Percentage change (YTD)

-0.99 -12.42

2,241.37

-1.61 5.40

The NSE-Main Board

1,456.29 1,096.85 1,095.92

-0.08 -23.88

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

778.95

1,112.65 1,087.68

332.70

105.63

529.47

222.34

1,741.24

1,087.44

951.55

321.18

106.85

526.11

198.41

1,736.83

1,091.19

925.65

778.95

-2.77 -1.87

-2.24 -23.25

-3.46 -19.49

1.15 -15.52

-0.63

-10.76

-29.74

-34.35

-0.25 -22.25

0.34

-2.72

-11.85

-23.34

FMDQ closes July with N16.36trn turnover in Fixed Income, Currency market …represents year-on-year increase of 24.89%

… T Bills, FX product segments major contributors to FIC market turnover

Iheanyi Nwachukwu

MDQ Securities Exchange Plc recorded turnover in the Fixed Income and Currency (FIC) markets for the month ended July 31, 2019 was N16.36trillion, representing a 14.44percent (N2.76trillion) monthon-month (MoM) decrease on the turnover recorded in June 2019 (N19.12trillion). The recorded turnover in July represents 24.89percent (N3.26trillion) year-on-year (YoY) increase from the turnover recorded in July 2018 (N13.10trillion), according to FMDQ Fixed Income and Currency Markets Monthly Report. Effect of recent transition to fullfledged Securities Exchange Following the recent transition of the Company from an OTC market to a full-fledged Securities Exchange, and the attendant change of name from FMDQ OTC Securities Exchange to FMDQ Securities Exchange Plc, the monthly markets’ report, though maintaining its profundity and continuing to provide one-stop holistic update on the markets, has been upgraded to reflect this new status. The erstwhile FMDQ OTC Monthly Report has been renamed as the FMDQ Fixed Income and Currency (FIC) Markets Monthly Report.

T Bills, FX product segments remained major contributors to FIC market turnover In the review month of July, Treasury Bills (T Bills) and FX product segments remained the major contributors to turnover in the FIC market, jointly accounting for 70.38percent of the total FIC market turnover in July 2019 and representing 34 basis points (bps) decrease in their joint contribution recorded in June 2019 (70.72percent). Total FX market turnover in July 2019

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was $14.53billion (N5.27trillion), representing 13.41percent ($2.25billion) MoM decrease. Analysis of FX turnover by trade type indicates MoM decrease across all categories, with InterMember trades recording the highest percentage MoM decrease at 24.95percent ($0.77billion), while Member-Client trades recorded the highest MoM decrease in dollar (nominal) terms, at 12.66percent ($1.32billion). Further, analysis by product type

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indicates that the MoM decrease in FX turnover was mainly driven by the 22.49percent ($1.93billion) MoM decrease in FX Derivatives turnover, with FX Spot turnover also reporting a MoM decrease of 3.94percent ($0.32billion). In July 2019, the 37th Naira-settled OTC FX Futures Contract (NGUS JUL 24 2019) with a total contract value of $398.87million matured and was settled, with the Central Bank of Nigeria (CBN) introducing a new contract, NGUS JUL 29 2020 for

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$1billion at $/₦363.38 to replace the matured contract. This brings the total value of OTC FX Futures Contracts offered and settled since inception to date to circa $17.66billion and circa $9.93billion in open contracts. In July 2019, the CBN Official Spot rate appreciated by $/N0.05 to close at $/N306.85. However, the closing rate for the Naira against the US Dollar at the Investors’ and Exporters’ (I&E) FX Window depreciated by $/N0.94 to close at $/N361.68, while the parallel market rate appreciated by $/N1 to close at $/N360 in July 2019. Fixed Income (FI) market (T.bills and FGN bonds) In July 2019, average OMO bills and T.Bills outstanding was N15.32trillion and N2.56trillion respectively, representing MoM increases of 2.40percent (N0.36trillion) and 0.20percent (N0.01trillion) respectively. Conversely, average outstanding FGN bonds recorded a MoM decrease of 2.49percent (N0.22trillion) to close at N8.62trillion in July 2019 from N8.84trillion in June 2019. Trading intensity for FGN bonds decreased from 0.18 in June 2019 to 0.15 in July 2019, while trading intensity for T.bills also declined to 0.35 in July 2019 from 0.43 in June 2019. Trading intensity in the T.bills and FGN bonds markets year-todate (YtD) stood at 3.10 and 0.97 respectively compared to 3.06 and 0.83 for the corresponding period Continues on Page 22

Thursday 05 September 2019

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United Capital Investment Views

Equities pullback gains

n the prior week, the equity market reverted into the negative region, with the NSE ASI losing 1percent week-on-week (w/w), settling at 27,526 points. The market par tially wiped out the rally triggered by cabinet formation in the preceding week, with year-todate (YtD) return weakening to -12.4percent. Similarly, market capitalisation lost N133.76billion in value, to close at N13.4trillion. Activity levels were also lackluster, as average value and volume traded fell by 32percent and 50percent w/w respectively. Across the major sectors, performance was mixed, with three of five sectors declining. The Oil and Gas index (-10.8percent) led the losers’ camp, owing to price decreases in SEPLAT (-18.8percent) and TOTAL (-5.5percent). The Banking (-3.5percent) and Consumer Goods (-0.6percent) index followed suit, largely due to selloffs in ZENITHBANK (-7.5percent), ETI (-9.4percent), INTERBREW

N70.3bn. Additionally, UBA declared a dividend of 20 kobo. For the consumer goods, Guinness and PZ published their FY 2018/19 results, both reporting an 8percent and 7.7percent decline in revenue respectively. Similarly, PBT for both companies fell by 28.6percent and 16percent, to N7.1billion and N1.9billion respectively. The companies declared a final dividend of 152 kobo and 15kobo respectively. Investor sentiment was positive this week, measured by a market breadth of 1.2x, however weaker than the previous week (3.0x). To that end, 21 stocks advanced, while 17 stocks declined. This week, we expect the market to react to UBA’s earning which came late Friday, as expectation shifts to remaining Tier 1 bank, ACCESS, likely to publish during the week. Overall, we expect developments in the fiscal space to weigh in on sentiments, as investors assess the direction of policy pronouncements. Money Market : Bulls reclaim reigns, CBN bows to

(-15.2percent) and DANGSUGAR (-5.3percent). On the flip side, the Insurance sector (+1.2percent) and Industrial sector (+0.3percent) i n d e x m ov e d u p w a rd s, buoyed by CONTINSURE (+11.54percent), MBENEFIT (+10percent), CCNN (+6.4percent) and WAPCO (+1.8percent). In the Telcos space, MTNN received buying interests, with an uptick of (+2.2percent) while AIRTELAFRI remains unchanged (0.00percent) for the second consecutive week. Notably, more earnings from the banking and consumer goods sectors were submitted. FIDELITY’s H1-19 figures showed a 12.3percent growth in gross earnings to N103.7billion and PBT jumped 15.7percent to N15.1billion. Likewise, UBA’s gross earnings grew 14percent to N294billion, with PBT up by 21percent to

pressure for higher rates The overall liquidity position improved in the previous week buoyed largely by inflows from FAAC as well as OMO maturities (N388.8bn) while NTB (N208.6bn) maturities were successfully rolled over by the CBN. Accordingly, average interbank funding rates (Overnight and OpenBuybacks) receded, down from 18.3percent to close the week at 9.9percent. At the primary market segment, the Apex bank conducted its bi-monthly Nigerian Treasury Bills (NTB) auction, wherein it successfully re-financed total maturing bills worth N208.6bn. The level of demand was positive as total bids came in at 1.4x the offered amount, tilted largely towards the high yielding 364day bills. Compared to the prior auction, stop rates were notched higher across the

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board. Rate on the 91-day bill spiked 140bps to 11.1percent amid weak demand. Similarly, rates on the 182-day and 364day bill rose 24bp and 89bps to 11.59percent and 12.89percent respectively. Meanwhile, the CBN resumed its OMO sales to mop up excess liquidity as a total of N388.8bn matured into the system on Thursday. Accordingly, the CBN conducted two consecutive OMO auctions, later in the week. The Thursday OMO auction was largely unsuccessful, as the Apex bank filled only c.N48.0bn worth of OMO, compared to N400.0bn offered. This was as the CBN refused to budge to investors demand for a higher interest rate. This prompted a second auction on Friday as the Apex bank bowed to pressure as average stop rates notched higher by 17bps to 12.29percent. Notably, the 364-day bill was up 50bps to 13.5percent amid massive demand. Thus, the CBN sold 55.5percent of the N400billion it offered to raise at the second auction. In the secondary market, buoyant system liquidity gave the bulls some leg to run as average NTB yields dipped 131bps w/w to 13.84percent. Looking ahead, we expect the CBN to maintain its liquidity tightening stance, especially as another N204.1billion OMO maturity is scheduled to hit the system on Thursday. In all, we expect the money market rates to reflect the direction of liquidity in the system. Bond Market: Sovereign issues bullish Performance at the secondary bond market was mixed with a bullish bias in the prior week. This was as some of the liquidity in the money market space filtered into the bond market. Most of the investors with excess funds hunted for bargain at the short end of the bond market. Accordingly, we saw massive buying interest in the FGN 2019 and 2020 notes. Meanwhile, we recorded a pocket of buying and selling interest at the longer end of the curve. In all, average bond yields compressed by c. 28bps w/w to close the week at 14.1percent. Elsewhere, we saw some renewed demand for FGN dollar notes as Brent price rebounded above $60/barrel and US-China trade tension cooled off.

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

Economy & markets

UAC to recapitalise, restructure UPDC …plans N15.96bn Rights Issue Iheanyi Nwachukwu

he Board of Directors of UAC of Nigeria P l c ( UA C ) a n d UA C N P r o p e r t y Development Company (UPDC) informed the Nigerian Stock Exchange (NSE), their shareholders and stakeholders that they are considering strategic initiatives involving a recapitalisation and restructuring of UPDC. These initiatives are still subject to the review and approval of the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange, and shareholders of both companies. UPDC commenced operations as department and subsequently a division within UAC focused on managing UAC’s real estate holdings. In 1997, UPDC was incorporated as a public limited liability company and certain assets held by UAC were transferred to UPDC via scheme of arrangement. UPDC’s shares were listed on the Nigerian Stock Exchange on November 19, 1998. In a Monday September 2

note and signed by Godwin Samuel, UAC Company Secretary and Folake Kalaro, UPDC Company Secretary, they are considering an equity capital raise of N15.96billion by way of a rights issue to repay its short term debt obligations. The Board of Directors believed that for UPDC to attain sustainability, the focus is on reducing outstanding debt to a level at which it is serviceable from reoccurring cash flows. “ T h i s w i l l re q u i re a significant cash injection which is to be raised through

the Rights Issue. Post the Rights Issue, UPDC’s only interest-bearing obligation will be its long-term bond with total outstanding balance of N4.3billion”, the company said. Meanwhile, the ownership structure reorganization will involve UPDC’s interest in UPDC Real Estate Investment Trust (UPDC REIT) being unbundled to UPDC shareholders via the allocation of REIT units directly to shareholders of UPDC in proportion to their post-Rights Issue holdings in UPDC (UPDC Unbundling).

FMDQ closes July with N16.36trn... Continued from Page 21 in 2018. T.Bills within the 6-12 months maturity bracket remained the most actively traded in July 2019, accounting for 48.79percent of the total Fixed Income market turnover. In July 2019, weighted average yields on the short-term, medium-term and longterm maturities decreased by 0.65percent, 0.80percent and 0.04percent respectively. This may be attributed to the increased interest in the fixed income market partly due to the bearish trend in the equities market, causing investors to reallocate investment to the fixed income market. Further, inflation-adjusted yield remained positive across the 6M-20Y tenor in the period under review. Money Market (Repurchase

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Agreements/Buy-Backs and Unsecured Placements/ Takings) Turnover in the Repurchase A g re e m e n t s / B u y - B a c k s segment of the Money Market has declined consistently over the past four (4) months from April 2019 where turnover stood at N4.09trillion to N3.38trillion in July 2019, representing a 7.34percent (N0.27trillion) MoM decrease, whilst recording a 38.21percent (N0.93trillion) YoY increase from the turnover recorded in July 2018 (N2.44trillion). Turnover in Unsecured P l a c e m e n t s / Ta k i n g s i n July 2019 was N0.15trillion, representing a 50.50percent (N0.15trillion) MoM decrease from the N0.30trillion recorded in June 2019, and a YoY increase of 404.93percent (N0.12trillion) from the turnover recorded in July 2018 (N0.03trillion). @Businessdayng

The MoM decrease in total turnover in the Money Market by 10.67percent (N0.42trillion) to N3.53trillion in July 2019 indicates a decrease in liquidity in the inter-bank market. Consequently, the average Money Market Over-Night (O/N) and Open Buy Back (OBB) rates increased by 58bps and 37bps respectively to close at 8.66percent and 7.87percent in July 2019 from 8.08percent and 7.50percent in June 2019. Market Surveillance Total number of executed trades reported on the E-Bond Trading System in July 2019 was 14,745 representing a 28.46percent (3,267) MoM increase from the number of trades executed in June 2019 (11,478), driven by a MoM increase in T.bills and FGN bonds trades by 26.34percent (2,652) and 43.65percent (615) respectively.

Thursday 05 September 2019

BUSINESS DAY

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Analysis

Stanbic IBTC Holding: Strong fundamentals spur analysts ‘buy’ rating …as business segments remain profitable, resilient Iheanyi Nwachukwu

ast week, Stanbic IBTC Holdings Plc published its financial results for the half-year (H1) period ended June 30, 2019. In the resulted earlier released to the investing public on the Nigerian Stock Exchange (NSE), the management of Stanbic IBTC Holdings Plc recommended an interim dividend of 100 kobo per share, the same amount paid as interim dividend in the halfyear period ended June 30 2018. The proposed interim dividend amounts to N10.241billion. The H1’2019 financial highlights The Group’s income statement shows gross earnings of N117.4 billion, representing 3percent increase (June 2018: N114.2 billion); Net interest income of N39.3 billion, down 2percent (June 2018: N40.2 billion); and non-interest revenue of N54.9 billion, up 2percent (June 2018: N53.8 billion). Also, its total operating income was relatively flat at N94 billion; profit before tax (PBT) stood at N44.7 billion, down 12percent (June 2018: N50.7 billion); profit after tax (PAT) of N36.2 billion, down 16percent (June 2018: N43.1 billion). Cost to income ratio was 53.2percent (June 2018: 51.9percent); return on average equity (annualised) was 28.5percent, while return on average assets (annualised) stood at the H1’19 period at 4.5percent. T h e G r o u p’s t o t a l a s sets decreased by 3percent to N1.619trillion (December 2018: N1.663trillion); gross loans and advances up 5percent to N479.7 billion (December 2018: N458.9 billion); gross non-performing loans increased by 6percent to N18.8 billion (December 2018: N17.7 billion); gross non-performing loan to total loan ratio stood at 3.91percent (December 2018: 3.9percent); customer deposits decreased by 14percent to N693.5 billion (December 2018: N807.7 billion); while deposit mix improved to 68.9percent (December 2018: 56.8percent) of current-and-savings-accounts deposits to total deposits. Analyst’s view on the stocks following its H1 scorecard Joshua Odebisi, equity research analyst at Lagos-based Vetiva rated

Yinka Sanni

as “Buy”, the stock of Stanbic IBTC Holdings Plc as noted in their August 30 report to investors. Vetiva research sets a target price (TP) of N48.36 as against N35 it closed the preceding day. Though the new TP shows slight decline from the N49 per share target the analysts had set earlier. “We marginally revised some of our estimates to reflect the miss across key line items. Particularly, we note that quarterly earnings run rate moderated marginally following higher impairment charges within the period,” said Vetiva researchers who also maintained their non-Interest Income target at N115.9 billion, “with the bank slightly outperforming our expectations for fees and commission and income from investments”. Capital and liquidity The group maintained adequate level of capital during the period. The group’s total capital adequacy ratio remains strong at 27.3percent (Bank: 21.7percent) which is significantly higher than the 10percent minimum regulatory requirement. The group maintained its strong liquidity position within approved risk appetite and tolerance limits. The group’s liquidity ratio closed www.businessday.ng

at 81.4percent (December 2018: 89.4percent), while the bank’s liquidity ratio closed at 67.9percent (December 2018: 78.3percent). This is above the regulatory minimum requirement of 30percent and indicates the group’s sound position to continue meeting its

“

Our liquidity and capital positions remain robust and well above regulatory limits. The Board has declared an interim dividend of 100 kobo in line with our commitment to delivering returns to our shareholders

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liquidity obligations in a timely manner. CEO’s comment Yinka Sanni, Chief Executive Officer, Stanbic IBTC Holdings said: “Our financial results in the first half of 2019 reflected similar trends encountered in the first quarter. The operating environment remained muted, regulatory changes coupled with the highly competitive landscape continued to impact overall returns. Still, our diversified business model continues to set us apart. Our business segments remained profitable and resilient although at a slower pace when compared to prior year.” “We recorded marginal growth across the major revenue lines, but the overall results were largely offset by lower impairment writebacks when compared to prior year. Our continued strategic drive to reduce cost of funds resulted in a further release of expensive deposits in the second quarter leading to low-cost deposits ratio of 68.9percent”, he said. “Loans and advances returned to growth in the second quarter mainly from the Communication and Oil & Gas sectors. Non-performing loans ratio is still within the acceptable limits. To further drive credit growth, in the retail space, we launched an instant credit solution named EZ cash loan/advance, which gives access to loans in less than a minute to pre-approved customers”, Sanni further stated. “This among other initiatives will enable us achieve the targeted loan growth for the year. The disciplined execution of our digital strategy has seen customers increasingly adopting and transacting on our digital platforms. The number of transactions performed by customers on our digital channels was up 26percent between H1 2019 and H1 2018. This translated into a year-on-year growth of 71percent in electronic banking fees. Moreover, we instituted a digital academy targeted at equipping staff with digital skills at various levels while also driving collaboration with Fintech players to position us for early adoption of innovative solutions”, he noted. “Following the launch of the micro pension initiative by the government earlier in the year, we deployed the RetireWell Individual Retirement Savings Account. We have put in place strong agency @Businessdayng

network in key locations to drive growth in this area and we have made good progress in this regard. “Assets under custody stood at about N7 trillion (up 42percent on 31 December 2018 position) while assets under management grew by 8percent to N3.5 trillion from the December 2018 position, as we continue to maintain our market leadership in these areas, among others. “Our liquidity and capital positions remain robust and well above regulatory limits. The Board has declared an interim dividend of 100 kobo in line with our commitment to delivering returns to our shareholders”, the CEO said. The Group’s outlook Despite the challenging business environment, Stanbic IBTC Holding intends to continue its proactive search for sustainable opportunities within its various businesses in the second half (H2) of the year. The Group said it will continue to drive accelerated lending to non-cyclical sectors of the economy as economic activities pick up while advancing its cost management initiatives to ensure it delivers decent returns at the end of the year. Stock trading information As at the close trading at the Nigerian Stock Exchange on Monday September 2, 2019 the stock closed at N38, heading to its record 52-week high of N53.25 as against a 52-week low of N33. The market capitalization of Stanbic IBTC Holdings plc is N389.14billion on shares outstanding of 10,240,552,945 units. About Stanbic IBTC Holdings Stanbic IBTC Holdings is a member of Standard Bank Group. Standard Bank Group is Africa’s largest banking group ranked by assets and earnings and has been in business for over 150 years. The direct subsidiaries of the company are: Stanbic IBTC Bank, Stanbic IBTC Asset Management Limited, Stanbic IBTC Pension Managers Limited, Stanbic IBTC Insurance Brokers Limited, Stanbic IBTC Trustees Limited, Stanbic IBTC Stockbrokers Limited, Stanbic IBTC Ventures Limited, Stanbic IBTC Investments Limited and Stanbic IBTC Capital Limited. These subsidiaries have their own distinct boards and take account of the particular statutory and regulatory requirements of the businesses they operate.

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PERSPECTIVE with AYODELE ONI

Proposed Sale of Equity in the Electricity Distribution Companies in Nigeria … Issues worthy of note

D Proem

espite the perceived and actual challenges in the electric power sector in Nigeria, as a consultant to both the private and public sectors, the writer is of the view that the privatization of the sector had since become apposite. The anticipated sale of forty per cent (40%) equity currently held by the federal government of Nigeria will also appear to be a laudable idea, provided that the sale is properly effected and the equity, sold to the right buyers. The Distribution Companies- Current Situation There are eleven (11) traditional electricity distribution companies (“Discos”) in Nigeria operating across the thirty-six (36) states and the Federal Capital Territory, Abuja. Apart from the Eko Distribution Company Plc. and the Ikeja Distribution Plc., about every

INSIDE An Employer’s Guide to Collective Bargaining in Nigeria 26

Prison advocacy group lauds Buhari, NASS on prison law

Non-profit, Non-governmental Organisations Basic Regulations 28

A&O’s transatlantic merger talks break down 29

Disco operates across three (3) to four (4) states. Each distribution network comprises of overhead lines, cables which are largely 11kV and 33kV, transformers, switchgears, service lines, meters, control equipment and other apparatus to support the distribution of electricity to industrial, commercial and domestic users. The Discos are strategic because, characteristically, they serve as the mid-point between generators (who expect payment from the Discos) and final consumers who are supposed to make the payment expected from the Discos, by the generators. Where the Discos are unable to bill for electricity power received or indeed receive payment for the volume of electricity made available to final consumers, then, on-grid power generation will not be profitable. Added to the challenge of collection is the issue

Ayodele Oni

around tariffs, which are not cost reflective. The effect of this non-profitability is that there would be no private sector investment, because every investor wants to make profit and no one would want to engage in a business knowing that such business would be operating at a loss, no matter the effort put into it. In other words, distribution

companies play a tactical role because, through their ownership of the sector’s entire on-grid customer base, they are the sources of all the revenues that drive the Nigerian Electric Supply Industry’s value chain. The Initial Disco Privatization Strategy When the Discos were first privatized in 2013, the privatisation strategy, involved a private sector operator acquiring controlling (60%) equity interest in any of the distribution companies with a view to rapidly improving its operational efficiency. So, unlike the traditional transaction approach where bidders merely bid on price for the equity shares, bidders bid on the basis of a trajectory of technical, commercial and collection loss improvements, usually during the first five years of post-privatisation operation. To emerge as a core investor, a bidder was required to submit

a proposal aimed at reducing the Aggregate Technical, Commercial & Collection (ATC & C) losses over a five (5) year period. The level of losses that a bidder proposes to reduce will be incorporated in the Multi Year Tariff Order (MYTO). MYTO will stipulate the annual investment requirement, allowable operational expenditure, approved rate of return on equity and other allowable expenses for each Disco. The intent was to appoint an operator with the best technical, financial and managerial qualification for reducing ATC&C losses. Despite the privatization of the Discos and formerly governmentowned electricity generation companies, not much improvement has been seen in the electric power sector. The Discos have not been able to make substantial improvements to the distribution networks they cover due to the Continues on page 27

NBA seeks involvement in AfCFTA negotiations, determination of CCT status OLUWASEGUN OLAKOYENIKAN

he 59th Annual General Conference (AGC) of the Nigerian Bar Association (NBA) adjudged as the most well-attended in the history of NBA has come, though ended, it’s not gone as the association has resolved to move recommendations made at the 42 sessions of the conference from discussions to taking deliberate steps for their actualization. The recommendations include the involvement of the NBA and the Office of the Attorney General of the Federation (AGF) in the African Continental Free Trade Agreement (AfCFTA) negotiations on services, owing to its potential impact on the legal profession upon full implementation; the determination of status of the Code of Conduct Tribunal (CCT) in the Nigerian system by the Supreme Court, among 16 others adopted at the conference. “The status of the CCT has remained a gray area in Nigerian jurisprudence which has given rise to great contention,” NBA said in a four-page communique issued at the end of the conference in Lagos. “With a view to resolving this great contention, the Supreme Court is urged to avail itself any opportunity to make an unambiguous determination on the status of the CCT, and clarify whether it is an www.businessday.ng

L-R, Paul Usoro, SAN, president, Nigerian Bar Association, Gbenga Oyebode, Chairman, Technical Committee on Conference Planning (TCCP) and NBA Ist vice president, Stanley Imo.

organ of the Executive or a quasijudicial tribunal capable of being vested with criminal jurisdiction.” Parts of the measures aimed at ensuring these resolutions become vital tools for resolving Nigeria’s current problems, developing legal practice, and taking the nation and by extension Africa into the future were to set up a monitoring process to track implementation of all recommendations and hold a monthly press briefing to keep the pubic abreast

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of progress made. The theme for 2019 edition of the AGC “Facing the Future” was carefully chosen to underscore the future of the legal profession, businesses, the judiciary and government amidst a rapidly changing world driven by fast-paced technological innovations and increasing external competition in a globalized world, according to NBA. “The conference achieved the objective of speaking to the task @Businessdayng

of ‘Facing the Future’ with new initiatives for taking our people forward,” NBA said. “In terms of the overarching policy objective, the message of the conference is to move from dialogue to taking positive steps.” A step in this direction, according to the association, would help NBA achieve its true potentials through scalable and sustainable solutions that would impact the daily life of Nigerians; and through solutions anchored on the true rule of law; fair treatment of women and youths; and inclusion of all in the benefits of technological innovation and new thinking. NBA noted it adopted the recommendations in “acknowledging the roles of the different stakeholders in ‘Facing the Future’ for the betterment of the legal profession, the Nigerian economy and the general public.” These recommendations comprise 11 relating to the Nigerian government and 7 others involving legal practice and other stakeholders. In addition to involvement in AfCFTA negotiations and determination of CCT status, judicial officers were encouraged to be independent and fair in the execution of their functions in order to bolster and retain investor confidence, businesses and the public in the judiciary, while the govContinues on page 27

Thursday 05 September 2019

BUSINESS DAY

LABOURLAW

LegalBusiness

An Employer’s Guide to Collective Bargaining in Nigeria INNOCENT IKHIDE EKPEN, ESQ.

igerian law recognises the freedom of workers to join trade unions in order to promote their welfare. One tool employed by the unions in achieving this objective is collective bargaining. This refers to a process whereby the workers’ union, through its accredited representatives, meets with an employer or group of employers to negotiate the conditions of service on behalf of its members working in an organisation or group of organisations. At the end of such exercise, the document, which is produced and signed by both parties, is commonly called a collective bargaining agreement (CBA). Much of the procedure of collective bargaining is governed by practice, not strict law. This makes the process fluid as there are no mandatory rules which regulate the conduct of the parties. Inevitably, this breeds uncertainty which is a nightmare for every business owner. However, notwithstanding the absence of special rules, the practice of collective bargaining has evolved over the years in Nigeria; and from experience, one can extract a template which will guide an employer who is going into compensation review discussions with employees’ union. Below are some useful practical tips on negotiating collective agreements with workers’ union in order to achieve the best possible outcome for the employer: Recognise that the process means more to the workers than a mere platform to obtain improved conditions of service. While it may seem that the overarching objective of the workers going into the negotiation is to obtain improved conditions of service, the employer must recognise that that is not the only driver. Generally, workers relish the sheer opportunity to sit around the same table and discuss with their employer. They derive satisfaction from participating in the process of determining adjustments to be made to their own compensation. For the workers, therefore, getting the employer to the table is already a win. This is because the engagement gives them a sense of shared ownership of the process and serves to reaffirm their worth in the organisation. Moreover, workers cherish the fact that notwithstanding operational demands, the employer takes their presence in and service to the organisation seriously and would always make out time to meet with them and discuss their demands. This, obviously, has nothing to do with whether the union’s demands would be met. However, it has everything to do with the employer according the workers respect and this enhances their human dignity. Assess the Charter of Demand Ahead of the negotiation, the union would normally submit a document to the employer containing a list of its demands. The document is referred to as the charter or schedule of demands and it is meant to form the basis of discussions during the negotiation. It represents the maximum expectation of the union for each round of negotiation. The charter of demand is one of the most vital items in the hand of the

employer while planning or preparing for the negotiation. Using the charter, an effort should be made to make a list of the demands, which are entirely new and those for which a review is sought by the union. Where the item is new, the employer must first determine whether to accede to the introduction of the new item into the compensation package, and if so, at what start rate. While assessing the charter of demand, it is helpful to look around for CBAs from other organisations that share industry similarity with the company. Although such CBAs are meant to serve as a guide only, they may come in very handy where the counter offer intended to be made by the employer is closer to those CBAs than the usually ambitious charter of demand submitted by the union. However, while a lot can be learned about industry-wide practice through the eyes of such CBAs, great care should be exercised in their use. The fact is that the economics and dynamics of two employers, albeit in the same industry, may not be the same. This underscores the rhetorical question often asked by some employers during the negotiation: ‘who are my peers?’ In any event, where the employer relies on the CBAs of ‘like companies’ during the negotiation, and the union submits to such persuasion, it is only a matter of time that the table would turn in subsequent rounds of negotiation. At that point, it might be difficult or even too late for the employer to demand to be treated differently from its ‘peers’. Fixing a Date for the Negotiation Typically, the life span of a CBA is 2 years. The negotiation for its renewal is expected to begin some months before its expiration. The hope is to have an agreement which will become effective upon the expiry of the old CBA. However, in practice, due to operational exigencies or other sundry reasons, the kick-off of the negotiation is often delayed. Many times, the process begins after the CBA has expired. Although the union usually expresses displeasure over this, the workers know that they do not have much to lose. To start with, there is a provision in the CBA which allows it to remain in force until a new one is concluded. More importantly is the consolation that the financial components of the new CBA take effect retrospectively. Bearing in mind that the period www.businessday.ng

of negotiation can be a disruptor of work schedule, the employer should take into consideration the calibre of staff required for the negotiation on both sides vis-à-vis operational demands before fixing a date for the negotiation. The aim must be to ensure the barest minimum disruption to the operations of the company. However, it is advised that the start time of the negotiation should not be unreasonably delayed and as much as possible, the employer should communicate any difficulties to the union before-hand. This enhances trust and reduces agitations on the part of the union. Duration of the Negotiation Collective bargaining, unlike conferences and workshops, does not often have a predictable time frame. The duration of the negotiation depends on a number of factors which include the scope of the negotiation as determined by the charter of demand, operational exigencies which may affect the availability of key staff during the negotiation, the style of negotiation of the union representatives, and whether the representatives of both the employer and the union have the authority to take on-the-spot decisions. Notwithstanding the above factors, however, it is advised that the employer should allocate a time frame for the negotiation and communicate this to the Union. The time frame should be short as that would signal to the Union that the employer is prepared to close out the negotiation within the shortest possible time. Have a Budget Prior to the negotiation, the employer should sit with its finance team and punch the numbers. Irrespective of whether the employer plans to concede to an upward review of the financial components of the charter of demand or not, there is need to make a budget. The employer would need to make two types of budget: the first is to take care of the expense incidental to the negotiation. This is because the union expects the employer to sponsor the meetings. This entails paying for the venue of the negotiation, providing accommodation and logistics support for the union executive, and refreshment during the negotiation. The employer is also expected to pay sitting allowance to the union executive for the entire duration of the negotiation. While it is worth adding that there

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is no legal obligation on the part of the employer to finance the meeting with the union, the practice appears to be a duty which has been imposed on the employer by industry-wide custom, particularly in the oil and gas sector in negotiations involving the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG). Any departure from it may fatally dent the effort at negotiation from the very start and earn the organisation the inglorious tag of being hostile to the union. This practice explicably draws strength from the assumed financial superiority of the employer over members of the union. Hence, the issue is not whether the employer should sponsor the negotiation, but how lavishly it would do so. The second budget is to take care of the items which the employer is willing to concede to in the charter of demand. It is difficult for an employer to go into a negotiation with a zero offer on all items. However, where the economics simply do not support an upward adjustment in compensation at the time, the employer may not be able to make any figure-based offer to the union. Save for such austere circumstances, the employer should go into the negotiation ready to add to what the workers already earn. Manage Expectations It is important that the employer understands the psychology of the employee when pay adjustment is demanded. The employee holds firmly the belief that the employer rakes in so much profit at the expense of the former, who credits himself with being substantially responsible for the revenue generated by the organisation. It is therefore typical of the employee to frequently exude the ‘but for me’ attitude during the negotiation. Of course, there is no truth in this, but that, sadly, is irrelevant. The important thing is to recognise that this belief fuels the visible anger of the employees during the pay adjustment discussions whenever they sense the ‘reluctance’ (the employer sees this as ‘inability’) of the employer to meet their expectations. The employee knows that he has no moral right to demand of his employer more than the latter has the capacity to give. Accordingly, by having a mental construct of a financially exuberant employer, the employee finds the justification to intermittently demand for more. The employer must therefore expect to receive a lot of half-truths about the fortune of the company from the union during the negotiation. This is one of the typical strategies of the union when its members come to the table. While this state of mind of the employee cannot be entirely corrected, it can be challenged. To curb this mentality, the employer must try to manage the very high expectations of the union by putting forward a contrary account of the financial situation of the company. Consequently, the employer should consciously deconstruct the financial state of the company. It seems quite simple, but it needs to be repeated to the union that it is not every payment the company receives that equals profit. The company services debts; pays rent/service charge, taxes/levies, and then ploughs back a portion of the profit into the business to enhance @Businessdayng

expansion or to acquire new technology. The Company’s vision usually requires significant capital outlay to meet, and this is often a work in laboured progress. In engaging the Union in this manner, the employer should demonstrate good faith by being frank and honest about the information that it is willing to share with the union. There must be the realization that members of the union may have internal sources within the Company who would verify the information made available by the employer. Therefore, while the employer is not under a duty to disclose every detail, it must ensure that the much it chooses to share is accurate. However, the employer should not expect to drive the union to the point of conversion at the table. Experience teaches that even though the workers do not openly admit their folly at the table, such superior contrary account rendered by the employer serves as a reality check when members of the union retire into private discussions to consider the counter offer made by the employer. Take Minutes Although, it is not inconceivable to conclude collective bargaining in one day, it is often impracticable. Negotiations are usually long drawn and could span weeks. As negotiations can be laboured and tortuous, it is imperative that timely, accurate and comprehensive minutes are taken, and a final version agreed on by both parties at the end of each day’s plenary. There is absolutely no wisdom waiting till the end to write down what has been agreed. In some negotiations, the representatives of the union who attend may change from time to time, and when this happens, the written text of what has been agreed ensures that those matters are not re-opened irrespective of the personal sentiments of the new representatives. One cardinal unspoken rule is that either party cannot go back on what has been clearly agreed upon from time to time during the negotiation, except by mutual agreement. To aid the application of this rule, there is need for documentary proof of what has been agreed by both parties. This avoids unnecessary back and forth, and ensures meaningful progress is made by the parties. There are a few things as frustrating as having to renegotiate an item which the parties have exhaustively discussed and reached agreement on. To be clear, the minutes should not just document what items have been agreed upon. It should also reflect every progress made, concession given, ground conceded, matters deferred, parts of whole for which agreement or understanding has been agreed, renewed offers and counter offers made, etc. The practice is for each side to appoint minutes’ taker and then compare notes before signing off at the end of the day. However, it is usual for some representatives to dismiss the idea of daily granular minutes by insisting that they are honourable people who would not renege on what has been agreed. The simple answer to this is that minutes are not a manifestation of lack of trust, but a necessity in the negotiation process Continues on page 28

Thursday 05 September 2019

BUSINESS DAY

RIGHTSWATCH

LegalBusiness

Prison advocacy group lauds Buhari, NASS on prison law

rison advocacy group, Prisoners’ Rehabilitation and Welfare Action (PRAWA), has commended President Muhammadu Buhari for signing the Nigerian Correctional Service Bill into law. In a statement by its Executive Director, Dr. Uju Agomoh, the civil society group described the new law as “a very progressive piece of legislation that will change the face of Nigerian prisons for the better.” Highlighting the benefits of the new law, Agomoh, who played a crucial role in facilitating passage of the Bill, also hailed the Controller General of the renamed Nigerian Custodial Service, Mr. Ja’afaru Ahmed and 8th National Assembly especially the leadership and members of the Committees on Interior “for their commitment in seeing to the historic passage of the Nigerian Correctional Service Bill.” According to the prison reform activist, the Nigerian Correctional Service Act “aims to achieve many set objectives including compliance with international human rights standards and good correctional practices. It provides an enabling platform for the implementation of non-custodial measures, enhances the focus on corrections, rehabilitation and reintegration of offenders, and establishes institutional and sustainable mechanisms to tackle high rate of awaiting trial persons in

Dr. Uju Agomoh

the prisons.” She said that the new law would tackle the detention of petty offenders in prisons by channeling such offenders through the non-custodial service. PRAWA provided the technical support to both houses of the National Assembly in harmonizing the eight original members’ Bills

in both houses into a single Bill and held technical workshops for the lawmakers with the support of Rule of Law and Anti-Corruption (RoLAC) Programme of the British Council funded under the 11th European Development Fund. “The new provision will save funds for the government and avoid

Proposed Sale of Equity in the Electricity Distribution... Continued from page 25

paucity of funds caused by a number of issues, chief amongst which is inadequate tariffs. Issues Worthy of Note Prior to Any Additional Sale of Equity Increase in Electricity Tariffs: A very pertinent step that many commentators and stakeholders in the electric power sector have continually suggested is the increase in electricity tariffs and the RegulatorNigerian Electricity Regulatory Commission (“NERC”) recently effected this with its retrospective adjustment of the tariff regime, to account for changes in macroeconomic indices for the years 2016 to 2018. Furthermore, NERC has promised to continue to undertake periodic reviews of electricity tariffs in accordance with the existing tariff methodology. The 2015 Multi Year Tariff Order provides for, inter alia, the biannual minor review of tariffs, taking into cognizance, 5% changes in foreign exchange rate, gas prices, consumer price index (inflationary trends) and available generation capacity. This appears to be a step in the right direction, especially when one considers that Nigeria has, for a long time, adopted a sculpting tariffing system such that investors in the electric power sector under-recover for a period of time (tariffs not costreflective or as cost-reflective as they should be) and then subsequently over-recover. For the sale of such equity in the Discos to be successful with the right entities participating, it is pertinent that tariffs are right, i.e. cost-reflective. Regulatory Approvals: It is germane to consider some corporate legal and regulatory issues relating to the transfer of shares in public companies. This is particularly

relevant as the Discos are public companies to which certain laws and regulations apply. Where the acquisition in the Disco is more than half of the issued share capital of the target Disco, or (i) the transaction documents grant the Genco the power to control the target Disco, the acquisition of such shares in the Disco will require the approval of the Federal Competition and Consumer Protection Commission. There are other sundry legal cum regulatory matters to be considered at the relevant time and the help of experienced professionals will be required at the relevant time. The Menace of Electricity Theft: Electricity theft in this part of the world, includes by-passing of meters, removal or damage of meters and illegal adjustment of meters. Furthermore, actions such as unauthorized and illegal direct connections to power lines also constitute electricity theft. The effects of the foregoing include amongst others, an increase in the cost of electricity for legitimate users. Ultimately, these acts curtail investments in the sector and thus, inhibit the muchneeded improvement in the sector. Where proposed investors do not see sufficient government efforts at supporting the private sector investors in reducing electricity theft through good legislation, corresponding punitive actions for breach of such legislation, the effectiveness of the court system in sentencing culprits, amongst such other issues. One, therefore, understands the plight of Discos when it relates to the billing of customers and the several complaints around energy theft. It is, thus, crucial that government continues to take steps to ensure an enabling environment for www.businessday.ng

the use of smart metering, thereby allowing customers to “Pay as they Go” for electricity consumed and effectively scrap estimated billings by Discos. Of course, substantial actions and funds need to be put in place to deploy technology to reduce electricity theft as is the case, elsewhere in the world. Continuous Grid Improvements and Enhancements: A recurrent issue is the insufficiency of the capacity of the grid to wheel power in adequate quantities to the electricity distribution companies has also been a challenge which if not properly attended to, could still make the sale (in this sense, sale to right mix of investors) of equity in the electricity distribution companies unsuccessful. Although, it is worthy of note that the erstwhile minister of power- Babatunde Raji Fashola, did put in a lot to ensuring that there were several national grid projects, to ensure the upgrade of the grid and it is now often reported that the grid may be able to wheel up to 7,000mw of electric power. Considering that the country, based on the rule of thumb, requires around 200,000mw electric power, it is germane that more is done to further enhance the national grid to be able to wheel more electricity. Although, there cannot and there should not be total reliance on grid power (as the writer even believes in electricity federalism), there is still an urgent need to continue to enhance the national grid. Dr. Ayodele Oni (ayodele.oni@ bloomfield-law.com), who specializes in international energy investment law, is a Partner in the Energy & Natural Resources Practice Group of Bloomfield LP.

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these petty and low-risk offenders being socialized into the criminal culture by hardened criminals,” said Agomoh. “It will also help fast-track implementation of the non-custodial provisions of the Administration of Criminal Justice Act 2015 and the Administration of Criminal Justice Laws of various States by providing the needed support in terms of manpower for the supervision of non-custodial sentences across the States and the FCT. This will encourage the courts to issue non-custodial sentences in deserving cases.” The prisoners’ rights advocate said the new law “will make the correctional service take a more active role in helping manage prison overcrowding by having them trigger an early warning system of alerting the judiciary, Ministry of Justice and other key stakeholders on impending prison congestion.” Agomoh applauded the provisions mandating separate facilities for young offenders and female inmates in all States of the Federation, adding that this would boost their wellbeing while being interned. She said: “Women make up about 2 per cent of the total prison population. This notwithstanding, there are many advantages of having separate custodial facilities for females. This will lead to improved job mobility for female prison officers as many can be made to head such prisons. At the moment, very few of them

get to head a mixed prison or a male prison. Heading a prison provides the needed experience for most officers and positions them for higher responsibility such as appointment as State Controllers and Deputy Controller Generals or Controller Generals as obtains in Rwanda, South Africa and Sweden. “Coupled with the establishment of Mental Health Review Board to assess cases of inmates with mental disability and provision of incentives to encourage inmates’ participation in training and vocational workshops towards their reintegration into the society, these initiatives will ensure that Nigeria benchmarks global standards in treatment of offenders.” Noting that the new law provides for persons with disability, improved internal and external security of prisons as well as external oversight of custodial facilities, Agomoh however noted that there is need for effective implementation of the new law to achieve desired results. Her words: “It is important that all stakeholders work towards supporting and advocating for speedy and effective implementation of the new law. There is need for training and sensitization of all key stakeholders on the law so that they can better understand it and the rationale for each provision. This will also highlight their respective roles in facilitating effective implementation of the law.”

NBA seeks involvement in AfCFTA negotiations... Continued from page 25

ernment was advised to explore alternative financing structures to bridge financing gap. Similarly, the conference urged the government to adopt the Voluntary Principles on Security and Human Rights, while it also resolved that the NBA should work with the Office of the Attorney General of the Federal (AGF) and Solicitor General of the Federation to amend existing laws and draft new laws to introduce appropriate structures that would advance the development interest of Nigerian lawyers and legal services delivery standards. The conference recommended that the legislature should enact laws that would balance the rights of freedom of speech, the government should increase confidence in the domestic business environment, imbue the principles of transparency and accountability to the citizens, and review and amend the Child’s Right Act 2003 to reflect current trends. The Nigerian government was urged to entrench gender equality in the nation’s constitution to eliminate gender inequalities, and also to adopt policies that support socioeconomic empowerment without reference to ethnic, religious or geographical location. It also added there should be holistic and total enforcement of the Criminal Justice Act 2015. On the part of the legal practice, NBA noted the prevalence of bullying and sexual harassment in the profession should be addressed in the Rules of Professional Conduct (RPC) of the legal profession, the Rule of Law should be respected, the patriarchal language of the Bar should evolve to recognize and @Businessdayng

embrace gender diversity in the Bar and the Bench, and the NBA should review the RPC for an improved and efficient disciplinary process. Furthermore, the conference stated that in recognizing the regulatory gap and obsolescence of several laws governing legal practitioners and the practice of law; and acknowledging the draft bills produced by the Body of Benchers and the NBA’s Legal Professional Regulation Review Committee, NBA would set up a committee to harmonize the two draft bills and commence the legislative process for the enactment of necessary laws. The 2019 edition of the NBA AGC held in Lagos witnessed a record attendance of 11,600 registered delegates, according to figures disclosed by the Chairman of Technical Committee Association on Conference Planning, Gbenga Oyebode, while briefing newsmen on the outcomes of conference. The figure excludes 209 speakers, panelists and guests from legal and business community, academia, legislature and the public sector who graced the event from different parts of Nigeria and around the word. In attendance were President Muhammadu Buhari represented by the Attorney General and Minister of Justice Abubakar Malami; the Chief Justice of Nigeria, Tanko Muhammad; Lagos State Governor, Babajide Sanwo-Olu represented by his deputy, Femi Hamzat; President of the International Bar Association and the conference keynote speaker, Horacio Bernardes; NBA President, Paul Usoro; heads of agencies and leaders of the Bars and Bench.

Thursday 05 September 2019

BUSINESS DAY

LEGALALERT

LegalBusiness

Non-profit, Non-governmental Organisations Basic Regulations OSEROGHO & ASSOCIATES

he continuing proliferation of Non-Profit (“NPO”) and Non-Governmental Organisations (“NGO”) with the controversies that have followed attempts to regulate these NPOs/NGOs to adopt best governance practices have unfortunately ignored existing statutory provisions which regulate the activities of NPOs/ NGOs. Security concerns that some of the NPOs/NGOs are now being used as conduits for, and sponsors of money laundering, corruption and terrorism activities has heightened these concerns An examination of some of the existing Laws and Regulations, especially the ones that are not too well known but are highlighted below, should enable all NPO/NGO stakeholders improve on their statutory compliance obligations and mitigate any default risks that may arise from their charitable activities. Incorporation Compliance To enjoy a distinct corporate personality, receive internal and external funding, and claim any tax or other exemptions or like benefits, most NPOs/NGOs usually apply for registration as Incorporated Trustees under Part C of the Companies and

Allied Matters Act (“CAMA”). Like any other incorporated entity, the Trustees of all NPOs/NGOs must not later than the 31st of December of every calendar year file with the Corporate Affairs Commission (“CAC”) an Annual Return disclosing among other information the corporate name of the NPO/NGO, the names, addresses and occupation of the principal officers of the NPO/ NGO, any changes to the NPO/NGO constitution and the particulars of any real estate asset or property held by the NPO/NGO during the reporting period. There are nominal fines for any failure in filing these Annual

Returns once every year. National Planning Commission Compliance The National Planning Commission Act established the National Planning Commission (“NPC”) to among other things determine and advise Government on policies which promote national unity, the integration of people and the sustainability of the nation. NPC also collates statistical data from both the public and the private sectors of the economy to enable NPC discharge its statutory functions. In furtherance of the above NPC statutory responsibilities, NPOs/

NGOs are required to register their corporate entity with NPC. Money Laundering Compliances All Designated Non-Financial Institutions (“DNFI”) of whom NPOs/ NGOs are some, are required as part of the compliance requirements under the Money Laundering (Prohibition) Act 2011, to register with the Special Control Unit Against Money Laundering (“SCUML”). NPOs/NGOs are also required to conduct financial due diligence on third parties with whom they have any financial transaction by collecting and verifying such party’s financial know your customer documentation. NPOs/NGOsarealsorequiredtoreport to SCUML, within one week of such transactionoccurring,thereceiptofany cash donation in excess of $1,000 (One Thousand US Dollars); and any financial transaction undertaken through any formal financial channel in excess of $10,000 (Ten Thousand US Dollars). There are also penalties for any default in filing these returns with SCUML. Tax Compliances NPOs/NGOs that are registered with CAC and with the Federal Inland Revenue Service (“FIRS”) enjoy tax exemption only from their charitable income, which were not derived from any trade, business or commercial activity.

The income and benefits earned by NPOs/NGOs personnel are however liable to Personal Income Tax deductions. NPOs/NGOs are also required by Law to deduct, holdback and remit the withheld tax in advance of making any payment, for any goods or services rendered to them by third party contractors, to the appropriate tax authority. Irrespective of its exemption from any tax obligations on its non-trading charitable income, every NPO/NGO is further required to file annual selfassessment Tax Returns with the Federal and State Tax Authorities. Charitable Humanitarian Projects undertaken by NPOs/NGOs, which must be not-for-profit and in the public interest are Value Added Tax (“VAT”) zero-rated; meaning that they do not bear VAT nor pay VAT on such goods and services. Conclusion Abuses of the Non-profit and Non-Governmental Organisations structures for fraudulent and terrorist activities will continue if some minimum compliance and enforcement of the existing Laws and Regulations are not undertaken by both the stakeholders and the Regulators. These lapses will continue to be to the determent of the laudable charitable work of genuine NPOs/NGOs.

An Employer’s Guide to Collective Bargaining in... Continued from page 26

to enhance clarity and speed. The fact that it is in a permanent state also serves to compliment the fragility of people’s memory. Stay Focused The employer must carefully guard the agenda of the meeting. This is because, there is always the tendency for the union to try and smuggle in matters that are outside the remit of the negotiation. For instance, the union may want to discuss issues surrounding the exit of some of their members from the Company or other issues which have nothing to do with the raison d’etre for the meeting. While there is no rule that precludes the resolution of such issues at that forum, the employer needs to instil discipline by demanding that the union must stay focused on the charter of demand. Otherwise, the employer would be sanctioning a precedent which it cannot easily break from in the future. Moreover, allowing such extraneous matters will only prolong the negotiation and drive up the cost associated with the process. Trade-offs Irrespective of the chronological order in which the demands are stacked in the charter, it is usual to step down some items which would require further deliberation (a practice referred to as ‘Keep in View’, or ‘KIV’ for short) and first focus on those items for which consensus is easier to build. Meanwhile, those easy items are useful as trade-offs to close the deal on items which are ordinarily problematic, and which tend to prolong the negotiation. In practice, this trade-off may be extended, offered or initiated by any side. A little huff here and a little puff there The employer should expect and in like manner extend the occasional threats, depending on the mood in the room. During negotiation, it is common to hear union representa-

tives use expressions like, ‘strike is a continuation of social dialogue’, to remind the employer that if their demands are not met, the option of cessation of work is always on the table. Such utterances usually provoke heated arguments because they tend to undermine the whole essence of the negotiation. In most cases, however, the threat is merely to shake up the employer a little and cajole him to be more amenable to the demands of the workers. On the part of the employer, it might be useful to remind the union that redundancy is a tool that can be resorted to if the demands of the union threaten to push the company over the cliff. Nobody wants to kill the goose that lays the golden egg. Unions exist to protect the jobs of their members and to seek the best terms and conditions possible. Unions dread presiding over the loss of jobs of any of their members. Consequently, they do not take the threat of redundancy with a pinch of salt and as such, this might make the union a bit more receptive to the counter offer made by the employer. Side meetings Holding side meetings with the leaders of the union is useful if properly deployed. Most times, the sheer number of union members involved in the negotiation makes progress rather slow. Although the union would usually have an anchor person, through whom the thoughts of the rest are meant to be channelled, the tendency is for other members to want to jump in and speak out of turn during the meeting. This inevitably hampers progress. Moreover, some union leaders naturally grandstand in order to show the rest of the troop that they are ready to defend the common cause with their last sweat. This attitude stalls meaningful discussions and makes negotiation drudgery. This is where side meetings with the leaders may prove helpful. During such ‘break out’, the employer is able to ‘sell’ its www.businessday.ng

counter offer in an atmosphere that is not charged and that is devoid of cheer leaders. Experience teaches that reason rather than naked emotion rule such meetings and results are quicker to obtain. However, care should be taken not to arouse the suspicion of other members of the union who might think that the employer wants to unduly influence the executive members and break their ranks. It is hard for the employer to convince the other members of the union that such meetings do not involve quid pro quo. While it is prudent to clearly state so, it should be recognised that a lot would depend on how much confidence the union leader commands among the members. Sadly, that is not in the hands of the employer. Dealing with deadlocks Have you ever been in one of those terrible traffic jams that you cannot imagine how it would all unravel? Yes, there may be similar moments during the discussions. As hard as one tries, there might be occasions during the negotiation when the parties hit a dead end. Sadly, there is no silver bullet to dealing with such situations. However, a few options to try include calling for a break to allow parties sleep on their respective positions vis-à-vis the other party’s; look for possible trade-offs that might cause the ice to thaw; wear out the other party by simply and consistently refusing to yield ground while trumpeting the basic fact that the employer’s ability to pay is the universally recognised driver of pay adjustment, or agree to a deferment on consideration of the particular item or items to the Joint Consultative Congress (JCC) which would be held at a later date. Of all the options suggested, the last one tends to appeal more to the union who would rather accept the prospect that another opportunity awaits to discuss the item, than abandon their demand entirely. In reality,

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the JCC hardly holds before the next round of negotiation becomes due. However, while the employer may have won a technical victory, the union would conjure up the spirits of those items during discussion on the renewal of the CBA with ferocious determination and earnest expectation. The union may tolerate no further excuses at that time. The presence of a lawyer A lawyer who is skilled in the art of collective bargaining is always an asset to have around the table, at least from the employer’s point of view. Such a lawyer should be conscious that he is not in the courtroom and therefore must tone down his legalese. Also, a little dress down might make the union members feel a bit more accommodating towards the lawyer. It is important to emphasise that the lawyer is not there to make business decisions for the employer or advise on the propriety of conceding to new items of compensation or by how many inches, if at all, existing items should be jacked up. Although engaged by the employer, the lawyer’s job reaches beyond serving the immediate needs of his client. His knowledge of relevant labour laws and how the courts have interpreted them, would help to guide the parties during the negotiation. Also, as the parties make concessions and retreat from their hard positions in the course of the negotiation, there would always be the need to rephrase clauses in the CBA and accurately capture the understanding of both parties. A lawyer’s training comes in very handy in assisting the parties to document their understanding in a way that avoids any ambiguity. Sadly, it is usual for the union members to initially resent the presence of a lawyer, and to even threaten to walk out of the negotiation if the lawyer does not leave the room. However, a combination of the employer’s insistence that the lawyer is an integral part of his team @Businessdayng

who is there to help both parties, and the tact of the lawyer in warming up quickly to the union members should make the union abandon its position. The day of the signing Once the parties have agreed on the items in the CBA or how to deal with those items for which no agreement has been reached, the next phase is to prepare the CBA for signing. This process should be dutifully undertaken. The draft must be collectively reviewed before the final version is printed out to be executed by representatives of both parties. This stage is also the time for making closing statements. For the employer, thank the union members for their time at the table and assure them that you are one big family. The members should be reminded that all their demands may not have been fully met in one negotiation, but some mileage has been covered. It is useful to also add that the agreement has a window for future review, particularly in the area of wage reopener. It is always good to leave the union members buzzing with hope for the future. Finally, the employer should express the optimism that the workers would return to their duty posts with greater vigour and renewed commitment to the service of the company. Negotiating collective agreements is never a walk in the park. It can be quite taxing not just for employers who are experiencing the process for the very first time but also for those entering discussions with the union on renewal of the CBA. The tips shared in this article were drawn from the practical experience of the writer and it is hoped that they would provide a useful guide to employers embarking on the tortuous journey of collective bargaining. • Innocent Ikhide Ekpen is a Senior Associate at Aluko & Oyebode and works out of the Port Harcourt office.

Thursday 05 September 2019

BUSINESS DAY

GLOBALREPORT

LegalBusiness

Partners reap bigger pay packets as City A&O’s transatlantic firms report rising profits and revenue merger talks break down

ong-running merger talks between magic circle firm Allen & Over y and US firm O’Melveny & Myers have been called off despite ‘compelling synergies’, the firms revealed on Monday September 2nd, 2019 The two firms commenced discussions early last year but encountered various hurdles, including the question of what the merged practice would be called. Had the merger taken place, it would have created a transatlantic giant with 3,000 lawyers and revenues of £2bn. O’Melveny was founded in Los Angeles and has over 700 lawyers in 15 offices around the world, including in Hong Kong, Beijing and Brussels. Its London

office is in the City’s Paternoster Square. A spokesperson for Allen & Overy said: ‘Allen & Overy and O’Melveny & Myers have held discussions about a possible combination and, despite agreeing that there were some compelling synergies between us and that it was sensible to explore a possible deal in some detail, we have mutually decided not to continue these discussions.’ Allen & Overy said its presence in the US remained its ‘highest priority’ and that it will ‘significantly increase [its] immediate focus on lateral individual and team hires, while remaining open to considering opportunities for larger combinations that may arise in the future.’ A spokesperson for O’Melveny

& Myers added: ‘O’Melveny has concluded that the firm’s best course is to continue executing on its strategic plan — which has led to an unmatched culture, deep client partnerships, and record financial performances.’ Several US firms have entered the London market through mergers in recent years. In 2017 UK-basedBond Dickinson joined with US firm Womble Carlyle Sandridge & Rice to form Womble Bond Dickinson. Meanwhile, in 2017 international firm Eversheds combined with US-based Sutherland Asbill & Brennan to create a 2,300-lawyer firm. Other examples include Norton Rose’s merger with Fulbright & Jaworski in 2012 and the three-way merger that created Dentons in 2013.

snap survey by the Law Society Gazette of City firms which have reported their annual results shows big rises in income and profits at many of the sector’s leading lights. Most have reported profit and revenue growth, while profit per equity partner (PEP) soared at international firms including Ashurst and Hill Dickinson.

Among the magic circle, Linklaters displayed the most impressive growth, with profit up 11% and PEP up 10.5%. However, Freshfields’ PEP came out on top, at £1.84m. Corporate firm Macfarlanes was a close second, reporting PEP of £1.73m. Figures disclosed by litigation firm Stewarts were less buoyant, however, with net profit and PEP falling for the second year in a row.

International firm acts for former PM in prorogation challenge

I Barry Vickery (left) with Jeremie Berton, group chief executive, in Qredible’s London office.

Euro lawyer-listing site throws cash at UK launch

pan-European lawyerfinding website is spending hundreds of thousands of pounds on web search engine rankings as it prepares to go live in the UK later this month, the Law Society Gazette revealed. Qredible will be the England and Wales version of the five-year-old Mon Avocat website, which charges French lawyers €1,000 a year for an online profile expected to generate leads. Qredible is initially targeting conveyancing and divorce practitioners, as these services are the most likely to be sought online. Barry Vickery, general manager, told the Gazette that the company plans to spend £800,000 on digital marketing over the next 12 months to ensure it appears at the top of web searches such as ‘Divorce lawyer near me’. The venture will compete with several other consumer-facing online lawyer-finding sites such

as Law Superstore, which was relaunched earlier this year, and MyLegalAdviser, set up in 2014. It is backed by French web entrepreneur Yannick Pons, who acquired Mon Avocat last year, along with services in Belgium and Italy. Pons made his fortune with the local classified advertising business Vivastreet. He is understood to have invested £1.2m in starting up Qredible, which is based in 8,500 feet of office space in central London with a development hub in Brighton. Annual subscriptions will cost £960 plus VAT for individual lawyers and £3,000 for firms, including two individual profiles. The site will aim to provide an average of two leads per month, Vickery said. ‘If there are poorly performing areas our account managers will work with the relevant individuals to improve their profiles or redirect marketing spend.’ To build critical mass, 250 lawyers will be offered listings without payment until the end of February. www.businessday.ng

One reason for the go-live timing is November’s regulatory changes allowing solicitors to provide reserved activities on a freelance basis. Vickery said the site will require listed lawyers to state their regulator, whether they are operating as freelances and level of indemnity insurance, along with prices. ‘We want to give the consumer a free one-stop shop in which to make an informed decision,’ he said. Meanwhile, it emerged this morning that the bar regulator has decided not to continue funding the consumer-facing Legal Choices website created by front-line regulators. A spokesperson said: ‘Having invested significantly in the Legal Choices website in recent years, the BSB has decided that it can best meet its aims to offer the public information about how to get legal help from barristers via its own website which it is currently redeveloping.’

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nternational firm Herbert Smith Freehills has become involved in the legal challenge to Boris Johnson’s decision to prorogue parliament for five weeks. Sir John Major, prime minister from 1990 to 1997, announced today that he will seek permission to intervene in a claim initiated by campaigner Gina Miller. He will be represented by Lord Garnier QC and Blackstone Chambers’ Tom Cleaver, instructed by Herbert Smith Freehills. In a statement, Major said: ‘I promised that, if the prime minister prorogued parliament in order to prevent members from opposing his Brexit plans, I would seek judicial review of his action. In view of the imminence of prorogation - and to avoid duplication of effort, and taking up the court’s time through repetition - I intend to seek the court’s permission to intervene in the claim already initiated by Gina Miller, rather than to commence separate proceedings. If granted permission to intervene, I intend to seek to assist the court from the perspective of having served in government as a minister and prime minister, and also in parliament for many years as a member of the House of Commons.’ Herbert Smith Freehills told the Gazette that Andrew Lidbetter, a dispute resolution partner who heads the firm’s London-based public law practice, will lead on the case. Miller confirmed this morning that a court hearing will take place on Thursday and she will be ‘adjoined’ by @Businessdayng

Sir John Major, prime minister from 1990 to 1997

Major. Miller has instructed London firm Mishcon de Reya, and Blackstone Chambers’ Lord Pannick QC and Tom Hickman QC, the same team who helped her defeat the government over the power to trigger Article 50. Meanwhile, in Scotland, campaigners seeking an interim suspension of Johnson’s prorogation order suffered a temporary blow. Joanna Cherry QC MP, the Scottish National Party’s spokesperson on justice and home affairs, said the court ‘refuses interim orders at this stage but indicates willingness to hear full arguments early next week. So there is no decision on merits as yet on our attempt to halt prorogation’. Cherry said her QC ‘has indicated that Johnson should lodge with the court an affidavit sworn on oath about the reasons for the prorogation’. A full hearing will take place on Tuesday.

Reported by the Law Society.

Thursday 05 September 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Nigeria, Iraq boost OPEC output, Gulf producers keep output flat Stories by OLUSOLA BELLO With Agency

igeria and Irag lifted up OPEC’s oil output in August for the first month this year as higher supply from both countries outweighed restraint by top exporter Saudi Arabia and losses caused by U.S. sanctions on Iran. a Reuters survey found. The 14-member Organization of the Petroleum Exporting Countries has pumped 29.61 million barrels per day (bpd) this month, the survey showed, up 80,000 bpd from July’s revised figure which was the lowest OPEC total since 2014. The biggest supply boost of 80,000 bpd came from Nigeria, Africa’s largest exporter, which is seeking a higher OPEC quota and in August continued to produce above its target by the largest margin. The second-largest rise of 60,000 bpd came from Iraq, which boosted exports

L-R: Zonal Manager, North East S.C.C Nigeria Limited, Michael Robin, Minister of Power, Sale Mamman, managing director, Transmission Company of Nigeria (TCN), Usman Gur Mohammed, Minister of State Power, Goddy Jedy-Agba with others, during the minister’s projects inspection of Kashimbilla Hydro-Power Plant, in Taraba State at the Weekend.

from both its northern and southern outlets according to the survey. The survey indicates Saudi Arabia is not deviating from its plan of restraining output by more than called for by an OPEC-led supply deal to

support the market. Despite calls this year from U.S. President Donald Trump on OPEC to raise output, the producers renewed the supply pact in July. OPE C ’s supply curbs should eventually start to sup-

port the price of crude, which has fallen from a 2019 high above $75 a barrel in April to $61 on last week on concern about slowing oil demand and economic growth, analysts at Commerzbank said. “Even the moderate de-

mand growth that can be expected is likely – given the considerable production discipline shown by OPEC – to result in an ongoing tightening of supply and to support rising prices,” Commerzbank analyst Eugen Weinberg said. OPEC, Russia and other non-members, known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from Jan. 1 this year. OPEC’s share of the cut is 800,000 bpd, to be delivered by 11 members and exempting Iran, Libya and Venezuela. In August, the 11 OPEC members bound by the agreement, which now runs until March 2020, achieved 136% of pledged cuts, down from 150% in July, the survey found. Two of the three exempt producers pumped less oil. Smaller increases came f ro m L i b y a , w h e re t h e country’s largest oilfield, El Sharara, resumed output on or around Aug. 8 following an outage. Kuwaiti output climbed slightly while remaining below its quota, the survey found. Saudi Arabia, which in

July cut supply even further below its OPEC target in a bid to reduce inventories, has kept output at a similar rate in August. The survey pegged Saudi production at 9.63 million bpd, down from its quota of 10.311 bpd. Fellow Gulf producer the United Arab Emirates also kept output flat and below its target. Among countries with lower output, Iran posted the largest decline of 50,000 bpd. The United States reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and six world powers. In a bid to cut Iran’s sales to zero, Washington in May ended sanctions waivers for importers of Iranian oil. In Venezuela, supply fell slightly due to the impact of U.S. sanctions on state oil company PDVSA and a longterm decline in production, according to the survey. July’s output was the lowest by OPEC since March 2014, excluding membership changes that have taken place since then, Reuters surveys show.

Prudent Energy deepens LPG market with N10.8bn facility

Axxela recognized as Midstream Company of the Year; CEO wins Innovative CEO of the Year Award

ederal Government efforts at deepening utilisation of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas has further been boosted as the N10.8 billion ($30 million) Prudent Energy 6000 metric tons facility located at the edge of River Ethiop in Oghara Delta State is set to go into full operations soon. The facility which is currently being test run is strategically located to service the south –South, South -East and some part s of the northern markets. It is also expected to impacts the price of LPG generally in the country as the market would now become competitive. LPG penetration is about 25 percent in a country with a growing population estimated at almost 200million people. The implication is that there is still huge opportunity to grow LPG consumption.

xxela Limited has been recognised as ‘the Midstream Company of the Year’ and its Chief Executive Officer, Bolaji Osunsanya, as the ‘Innovative CEO OF The Year’ at the 2019 Nigerian Business Leadership Awards, organised by BusinessDay Media. Accepting the award, Axxela CEO, Bolaji Osunsanya dedicated both awards to the company’s employees: “These awards validate our continuous drive to deliver value-adding energy solutions to our clients across West Africa, and our unwavering commitment to facilitate sustainable economic development in our

Olusola Bello, Team lead,

Commenting on this development, Abdulwasiu Sowami, managing director of Prudent Energy who is also the owner of Forte Oil plc told BusinessDay that there is a humongous opportunity for LPG business in the country with statistics indicating that the population is growing every day. He said for the past four years the government has been trying to spare head utilisation of LPG through the office of the vice president. According to him, the government has technically discouraged the Nigerian National Petroleum Corporation (NNPC) importing Dual Purpose Kerosene (DPK) and this has led to the reduction in consumption of the product. He said while interest in LPG has increased infrastructure to support this utilization has not been there as the country currently has a few LPG

Graphics: Joel Samson.

terminals. “In our thinking, we thought we needed to make the investment to be able to play and get some millage” The current government policy he said suggests that there will be a handshake between the government and the private sector, adding that even though there challenges he believes the company will be able to contribute its quota in LPG value chain. The Prudent Energy boss who said the company is currently getting the product from Tema, Ghana, stating that his company will put- in a bid for Nigerian Liquefied Natural Gas (NLNG) contract so that it can also be supplied LPG. He said however, looking at the current LPG requirement in Nigeria, NLNG is not meeting 50 percent of the local consumption hence the need

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to augment with a bit of import. “We are not part of the NLNG contract as at the time the last contract was renewed. The terminal was not ready. Secondly, NLNG does CIF, they do delivery. We have just put in documents for NLNG to come and inspect our facility so that in the next contract bidding our company will participate. But even at that we still augment with import,”he said. He also spoke of the company plans to invest in Bitumen as soon as the enabling environment is created. He said even though they plan to invest in Bitumen but they are looking at the economy stating that the good thing is that the Central Bank of Nigeria (CBN ) is now encouraging banks to start borrowing again. If things look better we are looking at next year for the Bitumen project.

NIPS comes up February 2020 become Africa’s premier busi-

igeria’s Federal Ministry of Petroleum Resources is set to host the 3rd Annual Nigeria Petroleum Summit (NIPS 2020). According to. Folasade YemiEsan, Permanent Secretary, Ministry of Petroleum Resources , the countdown for the 3rd edition of the annual NIPS conference/ exhibition has officially begun. The event which will take place in Abuja, the capital city of Nigeria, has rapidly grown to

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chosen markets. Every day, our people bring unrivalled professionalism, partnership and excellence to our business enterprise, and I dedicate these awards to everyone at Axxela, and say a big thank you to BusinessDay for recognising our efforts within the industry and across Nigeria.” Instituted to celebrate exceptional business leaders and organisations for their sustained commitment to excellence in enterprise and contributions to the economy, the Nigerian Business Leadership Awards are divided into two different categories: the global awards and sectoral awards.

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ness and technology conference for not just oil and gas but for also automobile,banking,andfinance, power (electricity), pipelines, LNG, infrastructure, engineering andconstructionamongstothers. Like the previous editions, the Federal Ministry of Petroleum Resources has the responsibility of hosting the next edition of NIPS from 9th to 13th February 2020 on behalf of the Federal Government of Nigeria.

Thursday 05 September 2019

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

5G: NCC chases wind at the expense of affordable internet FRANK ELEANYA, JOHANNESBURG

ollowing its claims in 2018 that Nigeria is ready to rollout 5G technology, the Nigerian Communications Commission (NCC) says it has now approved dedicated spectrums for the trial of the service in the country. The Executive vice chairman and chief executive of NCC, Umar Danbatta made the announcement on Wednesday during the maiden edition of the Digital African Week which held in Abuja. The commission said it is making available three spectrums; 26GHz, 38GHz, and 42GHz for the rollout of the services. The NCC announcement is coming at a time when the provision of internet connectivity to the majority of Nigerians especially those in the rural areas remains a problem and internet cost continues to drain meagre household incomes. The struggle is that telecommunication companies can hardly afford the investment to fully deploy broadband, without causing a massive financial hemorrhage and eventual disintermediation and death of these companies. While the trial of 5G may also mean the commission is forward-looking and should be commended, it is important to observe that countries approving trial of the technology have intentionally built the infrastructure to enable the rollout to a

certain level of efficiency. This is not the case in Nigeria where the burden of poor infrastructure that powers technology innovations has set many operators back in millions of dollars in investment. And considering the huge amount of capital required to deploy the infrastructure of an efficient 5G technology, the NCC’s move definitely amounts to putting the cart before the horse. 5G Technology is an umbrella term used to categorize the fifth generation of wireless communication, offering networks that are 100 times faster than 4G, support 100 times more devices and feature five times lower latency. It is important to note that in February 2019, Nigeria was ranked 107th out of 177 countries, down one place from the 106th position in January, in the mobile internet download speed on the Oo-

kla’s Speed test Global Index, this is despite seeing increased subscription numbers on 3G and 4G technology. The average mobile Internet download speed was 12.22 megabits per second in February down from 12.76 mbps in January. While 2G (second generation) wireless enabled texting capabilities, the 3G allowed mobile users to browse the internet at speeds previously only experienced with a desktop computer. 4G brought in a new economy of mobile applications. Sadly, although all the mobile network operators (MNOs) in Nigeria all claim to have 4G capabilities, only about 44 percent of Nigeria’s mobile subscribers are on 3G wireless and paltry 4 percent are using 4G services. A vast majority are still stuck on 2G plus the over 40 million Nigerians living in rural

areas who have no direct access to the internet. Operators have repeatedly accused the regulators, including the NCC and the Ministry of ICT, of taking no meaningful steps to address the infrastructure problem and other domestic issues like Right-of-Way, security and multiple license demands and taxations from states, in the industry. 5G technology, to be sure, comes with a unique architecture different from previous generations of wireless infrastructure. Importantly, the infrastructure transits from traditional large cell towers stretched over long distances to a network of smaller cells sited more closely together. According to politico.com, to make that infrastructure change, a country like Nigeria will likely need an estimated close to a million new cell sites by

2025 to remain competitive in 5G. Additionally, the new cells will have to be connected by a robust wire network. 5G antennas, while being able to handle more users and data, beam out over shorter distances. In that case, providing access to rural communities will be as much of a challenge as it has been with LTE. Even with antennas and base stations getting smaller in this scenario, more of them would likely have to be installed on buildings or homes, according to experts at futurithmic.com. Cities will probably need to install extra repeaters to spread out the waves for extended range, while also maintaining consistent speeds in denser population areas, the experts said. The jury is still out on whether the closer proximity of base stations will have any debilitating health problems on people. Medisease, a community of medical practitioners based in the US, have however noted that inasmuch as radiation emitted through 3G and 4G having low frequency and high wavelength, it does not therefore have enough energy which can damage the DNA of humans. There are some scientists who say that 5G technology radiation will not directly damage human DNA but it is likely to cause some other biological actions. “5G will not solve the problem of access to rural communities in Africa, as most of the technology will be based in urban

communities due to cost of deployment,” a spokesman for Liquid Telecom, told BusinessDay on the sidelines of the Internet Week event organised by Southern Africa Network Operators (SAFNOG) in Johannesburg. Cable companies with existing fiber-based wireline networks reaching communities across urban, suburban and rural communities may be well suited to meet the architecture requirements of a 5G network. But the authorities have yet to convince the carriers they have their interest at heart hence putting a strain on the relationship. Nigeria has five major cables ; MainOne, SAT3/SAFE; Glo1, ACE and WACS, landing on its shores with a combined capacity of 32.800Tbps, only 10 percent of the existing capacity has been utilized so far. NCC’s most latent ammunition is the growth of broadband penetration to 33 percent, however the number doesn’t even scratch the surface of the expected internet requirements for the country. Nigeria will not become a 5G capable or ready just by merely issuing spectrums and ignoring the deeper problems that has undermined the efficiency of previous generations of wireless services. NCC will do well to pay more attention to infrastructure development, policy initiatives and strategic partnership with states actors in order to reach more people and bring down the price of internet access.

tries may require proof of vaccination from travelers as a condition for entry. They may also take certain measures if an arriving traveler has no yellow fever certificate (or yellow card). Following an amendment of the IHR 2005 effective 11 July 2016, the validity of a certificate and protection offered by the vaccination changed from

10 years to the life of the traveler vaccinated. Vaccination is recommended for travelers aged 9 months and older. On 1 April 2019, the federal government under the Ministry of Health phased replaced the old ‘yellow card’ with a new electronic card which they issue to people who have been vaccinated.

Nigeria’s Yellow card website leaks thousands of data FRANK ELEANYA

here is strong evidence that the yellowcardnigeria. com, a service built for the Federal Ministry of Health to validate yellow cards has been compromised, BusinessDay can report. A visit to the website on Saturday showed that when a user input their

passport number on the ‘Check card Number’ page, rather than take the user to the login page, it opens directly to the data page where the user’s information has been stored. When you increment the number one by one, you are taking to different private information of other users on the website. BusinessDay has moni-

tored the website since Friday evening and by Saturday the Ministry is yet to respond to the situation which could potentially see millions of private information belonging to travellers fall into the wrong hands. A source told BusinessDay that an alert has been put on Twitter The yellow card is an i mp o r t a nt d o c u m e nt

which is given to a person after getting a vaccine against yellow fever disease. The World Health Organization (WHO) recommends that travellers are vaccinated to prevent the transmission of yellow fever (YFV) with specific requirements. The International Health Regulations (IHR) 2005, stipulates that coun-

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

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Thursday 05 September 2019

BUSINESS DAY

BUSINESS TRAVEL Emirates Aviation University introduces a special package for international students Stories by IFEOMA OKEKE

mirates Aviation University has introduced an “international student study package”, offering financial benefits and support to international students. The package includes 20 percent savings on costs for university accommodation, 15 percent discount on programme fees, and a complimentary Economy class return ticket per year on Emirates. The package will also offer the students free services for three persons from Marhaba, the world’s leading passenger services providers, free hotel accommodation for two adults for three days as well as a waiver for all visa administration charges. Ahmad Al Ali, Vice-Chancellor of Emirates Aviation University said: “Getting your kids settled in a new university and city can be a difficult

task for many parents. “The special package will give parents peace of mind and ensure a stress-free experience, as they help their children settle in Dubai. With the new benefits, students can easily visit their parents and enjoy a comfortable lifestyle while pursuing their academic and career goals at Emirates Aviation University.”

Studying abroad helps students develop powerful personal and professional relationships, long-lasting cultural ties, find new interests and experience life from a different perspective. Emirates Aviation University (EAU) believes that education is greatly enhanced by experience and exposure to different, real-life perspectives, and thus supports its

Ambassador of UAE to Nigeria, CEO Dubai Tourism to lead delegation to 15th AKWAABA Travel Market

he leading Tourism Destination in Middle East and Africa, Dubai will be attending the 15th Akwaaba African Travel Market 2019, scheduled to hold from 22nd -24th September at the Eko Hotels and Suites Victoria Island, Lagos Nigeria. Dubai has become the biggest destination for Nigerian Travellers with over 20 flights a day terminating in Dubai from Lagos and Abuja. It is believed that over 300,000 Nigerians pass through Dubai every year. This year, with more partners and delegates, Dubai will be launching a dedicated breakfast to meet the entire travel trade tagged ‘A glimpse of Dubai.’ About 22 companies and a high-powered delegation from the DTCM will engage Africa on Destination Dubai. Dubai will also be giving out lots of Prices and gifts to participants via Raffles. DTCM Delegation includes: Issam Kazim CEO, Dubai Corporation for Tourism and Commerce Marketing; Stella Obinwa, Director Africa, International Operations; Shae Brotherton -Senior Manager Integrated Experience Management; Tareq Binbrek Senior Associate, International Operations; Salim Ali Mohamed Dahman Senior Manager Campaigns, Campaign Management and Janelle Lewis Senior Manager, International Communications, PR and Communications. This comes as Gambia Tourism Board seeks to renew their presence in Nigeria. Abdoulie Hydara, the DG of the Gambia Tourism Board has confirmed that Nigeria is a very im-

portant market for Gambian tourism and the reason for “our attendance at the Akwaaba trade fair every year.” “Nigerians are known as high spenders and with the close proximity to the Gambia we have an opportunity to penetrate fully in this market. Many meetings are lined up during our presence in Nigeria to showcase what the Gambia has to offer to Nigerians. “Due to the importance we put in Nigeria, the Gambia tourism board will appoint a Destination Manager to represent the Gambia towards the promotion and marketing of destination Gambia in Nigeria. The Gambia has lots of investment

opportunities to offer to potential investors in Nigeria and the need to sell this among others In Nigeria. The director of marketing of the Gambia Tourism Board – Adama Njie has confirmed the importance of the Nigerian market in terms of our all year round tourism strategy,” Hydara said. With only four hours flights, the Gambia is an ideal place for Nigerians. The facilities available in the Gambia are in line with what most Nigerian travellers wants in a country. This ranges from shopping, Honey mooners, conferencing, unbeatable gastronomy, good and standard hotels to name a few.

L-R: Valentine Ede, MD auto renovo; Motors Pavir Singh, GMD CIG; Jubril Arogundade, GM Commercial CIG motors; KAyode Adejumo, GM southern region officially opening the showroom www.businessday.ng

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students and provides them with the best tools to benefit from unique opportunities academically and in personal development. EAU offers an extensive range of educational opportunities designed to provide students with the best aviation related specializations. Students can choose from vocational, undergraduate and postgraduate programmes that combine the highest standard of academics with the latest development in the field of aviation. The university programmes are offered in collaboration with Coventry University in the UK and accredited by different national and international institutions, including last year’s accreditation from the European Aviation Safety Agency (EASA) as a Maintenance Training Organization. Emirates Aviation University is the academic wing of the Emirates Group and one of the region’s most prestigious Universities – and it’s also one of the Middle East’s leading

educational institution for aviation related programmes. Growing from a small college to a fully-fledged university in 2014, it offers more than 35 programmes in various fields of study. This growth underscores the demand for quality higher education in the UAE, and EAU continues to expand and cement its position at the heart of aviation education excellence. EAU recently announced a new six-month internship programme with the Emirates Group for students who demonstrate extraordinary academic performance. The coveted internship programme, with one of the region’s largest and most successful organisations will help students combine academic study with practical, applied experience relevant to their education and career plans. Students who enrol from Fall 2019 onwards will be eligible for the internship programme in their final year of education.

Akwa Ibom government to grow tourism sector with Ibom Air …as Governor Emmanuel unveils newly arrived aircraft

kwa Ibom government has said that it would use its new airline, Ibom Air as vehicle to promote and grow tourism in the state. This was disclosed by Charles Udoh, the state Commissioner of Information; who said the state has a lot of tourism potential by its location, culture and development. Udoh said this plan would be galvanized by the newly appointed to take care of the Ministry of Culture and Tourism, stressing that creating the needed synergy to develop the tourism potential of the state would be easily achieved. Udoh acknowledged that by her geographical location, Akwa Ibom State is an end point, which must attract visitors, as people rarely pass in transit. Explaining that tourism flies on the wings of aviation, the Commissioner said, “The rising economic and tourism strength of Ethiopia, UAE, etc were driven largely by their airlines, which have massive government interest. “For many governments around the world to be doing this, it means there are underlining strength in it and Akwa Ibom will also ensure that this avenue is explored maximally.” He added that there are plans on ground to grow Ibom Air to deepen the Uyo hub as two additional aircraft were expected to be added to make a fleet of five. When this is done, the Commissioner said the management of the airline would Then we will look at @Businessdayng

the West Coast routes, like Libreville, Sao Tome and Principe, Equatorial Guinea etc. He expressed the belief that many travellers who do business and travel along these routes would always come to Uyo to shorten their trips, adding that tourism could equally flourish with such influx. He also disclosed that the state government has plans to create more activities and programmes that would attract people into the state. He explained that the reason this government is aggressively pursuing the second runway of the Victor Attah International Airport is to build a hub for the West and Central African destination in addition to the maintenance hangar, which when completed would attract more aircraft to the airport. The aim of developing the second runway with the main terminal building, is to start pushing to take over a lot of businesses driving traffic to Accra. This, according to the commissioner, “will eventually make Uyo the next aviation and tourism hub”. The Commissioner also explained that the positive disruptions created by the entry of Ibom Air would equally attract passengers and tourists to the state. “Ibom Air has come into the market with aircraft that are at most six years old thereby setting the standard in terms of age and quality of aircraft in Nigeria. Aircraft in Ibom Air fleet are newer and smaller. They carry at most 90 passengers. Break-even point is lower and consumes less fuel.

Thursday 05 September 2019

BUSINESS DAY

Corporate Social Impact

Why does it take a village to raise a child? Stories by ONUWA LUCKY JOSEPH

he short answer to that is that the child belongs to the village. If its parents are citizens of that village, their offspring becomes the responsibility of the village. And where the village willfully fails to do its duty, leaving the job to the immediate biological parents only, the whole village suffers from this dereliction when the child wanders away and stays astray. It was to avoid the possibility of collective shame that in the old days children were considered a collective responsibility. While the parents were the child’s immediate contact to the ways of its people, everyone chipped in, giving what we will today describe as sound bites of wisdom and direction, morsels the child internalised and grew up practic-

ing. This because the child had to be different from children from other villages. Anyone meeting the child needed be told where the child was from. He/she just evinced all the virtues associated with the tribe. Villages took pride in their ways and their products. Just in the same way that today’s atomized

parents think only of their own kids. It’s time we looked beyond the four walls of our own homes and extended the wisdom we’ve been privileged to garner over the years. Children coming in contact with us as adults should feel safe, no matter where they meet us: in buses, in the office, in places of worship, at school, wherever; they

should be able to ask us for direction, and protection and even provision, confident in the knowledge that we are parent figures who will not disappoint them. This is especially so where the child comes from a dysfunctional home and is looking to find his/ her way in the world. Life becomes an eternal dark alley for such a child when all they see is no one getting involved in helping give direction to their lives or when the people who seem to do so are only looking to take advantage of the child’s unfortunate circumstances. Today’s children need the Nigerian village to foster them. They need schools, they need their health, they need to play, they need to show their skills, their inborn talent that they are dying to showcase if only they’ll get the stage. They want to belong; to be Nigerians – not South West and South East and North West or South South or whatever. They just

want to know that this country will live up to the promise it so casually mouths of them being the leaders of tomorrow. We can’t afford for Nigerian children to be defined by deprivation. This country has too much. Individual parents may not, but overall Nigeria is brimming with wealth. Why should our kids see wealth only abroad? It’s not enough to say they should look inwards. They need guidance; they need direction by those whose palm kernels have already been cracked for them by the gods. A big component of this foster arrangement would be our corporates with their interventionist weight judiciously thrown in to ensure fair access to quality schools, health, recreation, special needs, etc. Our governments, by and large have not been the most responsible parents for the Nigerian child. Our corporates should not, by omission, leave the kids fully orphaned.

Rockets’ James Harden to Donate $240K+ to Renovate Houston Basketball Courts

ouston Rockets guard Ja m e s Ha r d e n a n nounced he is donating more than $240,000 to rebuild outdoor basketball courts in the city that were damaged by Hurricane Harvey. “Every day I wake up, I think about being legendary. Being the best basketball player I can be on the court. But on the flip side of that, I think, ‘How can I impact the world?’ Ultimately, I want to be a legend off the court as well, in the community,” Harden told those gathered at Houston’s Tuffly Park on Saturday. Harden previously donated $1 million in the immediate aftermath of Harvey, which devastated Houston and its surrounding areas in 2017. “We appreciate him, we love him,” Mayor Sylvester Turner said. “In our book, he’s always the MVP.” He continued: “That’s the beauty of our city. When you see these athletes, don’t just look at them as athletes. Look at them as community

citizens that are giving back to the community, and they’re paying it forward.” Harden said he hoped renovating the basketball courts would get more kids outside and off their phones: “Nowadays, everything is so social media-based, kids aren’t outside playing anymore. They’re on their phone or playing video games. No, [they] need to be active and have fun, and be kids. Courts is just the beginning. My ultimate goal is to change

Houston and make it better. “Obviously the hurricane affected this area greatly, and so this is one of the reasons why I wanted to bring some positive energy and some light on this community. It’s baby steps, but we’re going to get there. In a few years, we’re going to change this city around and make it legendary.” Harden has spent the last seven seasons in Houston, making seven All-Star appearances, earning six All-NBA selections and winning the 2018 NBA MVP. He’s finished in the top two of MVP voting each of the last three seasons, and his 36.1 points per game in 2018-19 were the highest total since Michael Jordan in 1986-87. Harden’s announcement came as part of his JH-Town Weekend, which is a charity event to benefit his 3 The Harden Way foundation. He will host a celebrity softball game Sunday that includes newly acquired point guard Russell Westbrook. (Culled The Chronicle of Philanthropy)

Marriott, the world’s largest hotel chain, is eliminating travel-sized toiletries JORDAN VALINSKY

arriott announced it is replacing travel-sized tubes of shampoo, conditioner and bath gel with larger bottles in an attempt to reduce plastic waste. The world’s largest hotel chain said the switch is part of a larger test that it implemented in some of its North American hotels last year. The change will affect roughly 500,000 guest rooms and will be made at most of its 7,000 hotels around the world by December 2020. Marriott owns several popular brands, including Courtyard, RitzCarlton, W Hotels and Sheraton. Marriott said the small bottles currently used aren’t usually recycled. Once the change is fully implemented, the hotel chain said it expects to reduce its plastic disposal

by 30%, or nearly 2 million pounds of plastic it sends to landfills annually. “Our guests are looking to us to make changes that will create a meaningful difference for the environment while not sacrificing the quality service and experience they expect from our hotels,” Marriott CEO Arne Sorenson said in a statement. Marriott said that one pumptopped bottle contains as much liquid as a dozen single-use bottles. The new bottles will be made

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from recyclable materials. Marriott’s rivals have also been making changes to benefit the environment. Businesses are facing disruption from climate change and customers are increasingly demanding that products and services are environmentally friendly. Last month, IHG (IHG), which owns Holiday Inn, said it would replace travel-sized tubes with bulk-sized toiletries beginning in 2021. Hilton (HLT) Hotels previously announced

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2 Unilag Dons Secure N540m Research Grant from the UK

r. Sunday Adebisi, Director, African Research Universities Alliance (ARUA), Centre of Excellence in Unemployment and Skills Development, and Prof. Timothy Nubi, Director, Centre for Urbanisation and Habitable Cities in the university have both secured a research grant to the tune of €1,200,000 (N540 million) from the United Kingdom Research and Innovation Global Challenges Research Fund. While Adebisi secured the grant for Partnership, Research and Capacity Building for Youth Unemployment Solutions in Africa Prof Nubi got his for African Research Network for Urbanisation and Habitable Cities. The grants, with a duration of 36 months for the research projects , starting from Sept. 1, 2019 to Aug. 31, 2022, are for the development of integrated solutions that will maximise employment opportunities and enhance the future of work in Africa. They are also to provide a strategic platform for developing research capacities in African institutions to address Sustainable Development Goals (SDGs), using a hub and spoke models that will increase collaboration among African teams from diverse disciplines. A major aim of the grant is to tackle the challenges of youth unemployment using a stakeholder network approach involving academic research institutes and nonacademic institutions with shared vision, interest, goals and objectives. @Businessdayng

“It will also provide sponsorship for academic training for seven doctoral students, six post-doctoral fellows as well as 15 faculty members distributed across African universities for capacity building in carrying out research on skills development for reducing youth unemployment in Africa. “This grant will also be used to create a one-high performing hub that has the capacity to raise external funds, firm partnerships, explore entrepreneurial activities as well as attract excellent mentors worldwide and anchor research network across African universities toward youth skills development, in a bid to achieve the SDGs. The trickledown programmes according to Dr Adebisi will also include their striving “to hold international conferences, workshops and pieces of training that will be attended by not less than two hundred participants every year for the duration of the project”. Adebisi said that the activities, under the ARUA Centre of Excellence, would be in collaboration with universities such as Coventry, Lancaster, University of Derby, University of Cape Town and universities of Ghana and Nairobi. The hope is that the Nigerian private sector and other Nigerian based think tanks and foundations will become more involved in the provision of grants to our tertiary institutions as they seek to fabricate solutions to academic and societal issues. We can’t afford to leave this in the hands of foreigners.

Thursday 05 September 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

The world can’t afford for the Amazon to go to blazes By ONUWA LUCKY JOSEPH

eft to Donald Trump and his Brazilian fellow right winger, Jair Bolsonaro, the Amazon is simply wealth untapped and therefore waiting to be tapped. The potentials for money from mining, logging, farming, ranching and other activities are just too tempting. So when the Amazon went up in flames, (more than 72,000 fires between January and August, with a menacing uptick since august 15th, 2019) Bolsonaro did little for too long until the noise became too loud for him to comfortably sit still. And even then his first act was to pick a quarrel with the French President who the Brazilian President thought was less than diplomatic in his utterances regarding the Amazon fires and his (Bolsonaro’s) response. However, largely because the Amazon straddles 9 other countries, namely Bolivia, Peru, Ecuador, Colombia, Venezuela, Guyana, Suriname and French Guiana, and also due to the noise from climate change activists and governments of other nations, there are a lot more hands on deck now to ensure the fires are effectively put out. Help has been accepted from the USA and Russia, amongst other nations that offered. As well, the armed forces of Brazil (which is home to 60% of the Amazon) is now heavily involved. Every year the Amazon forest shrinks in size. Understandably. It has too much of everything inside of it. Lots of minerals, lots of aquatic species - flora, fauna and avian – some of which cannot be

found anywhere else. In fact, they have not all been discovered as yet. The place is simply brimming over with life and what is seen as potentials for humongous wealth. Hereunder are some more facts about the Amazon as gleaned from softschools.com The Amazon rainforest is a moist, broadleaf forest. It covers most of the Amazon Basin in South America. The basin is 2.7 million square miles while the Amazon covers 2.1 million square miles of it. If the Amazon rainforest was a country, it would rank 9th in size. The Amazon rainforest accounts for more than half of the entire world’s remaining rainforests.

The Amazon rainforest is home to 10% of the known species in the world. The Amazon rainforest is home to more than 1500 of the bird species in the world. There are over 40,000 different plant species and approximately 2.5 million insect species in the Amazon rainforest. Due to efforts to fight deforestation in the Amazon, rates have been reducing slightly, but it is still an issue today. The droughts in 2005 and 2010 destroyed huge amounts of vegetation in the areas worst affected. It’s estimated that if the climate change were to increase the world’s temperature by only 3 degrees Celsius then 75% of the

Amazon would be destroyed. The Amazon rainforest is also referred to as the ‘Lungs of the Planet’ because it produces more than 20% of the world’s oxygen. There are approximately 10 million species of animals, plants and insects known to man and more than half of them call the rainforest home. There are approximately 3000 fruits that grow in the rainforest that are edible. Many plants around the world have medicinal qualities. Of the plants known to have anti-cancer properties, 70% are found in the rainforest. Amazon natives use rainforest plants regularly but 90% of the ones they use have not been studied by modern science.

ciation for environmental beauty or cleanliness. In the quest for making money amidst the social, political & economic downturn, we have traded basic necessities such as clean air & environment to potential hazards. Let’s pause for a moment ; this most neglected sector (Environment) is fundamental to a disease free and psychological balance of the human person, amongst other benefits. Why do Nigerians pay little or no attention to environmental cleanliness, but dress in expensive apparels and ride some of the world most expensive cars? I told myself, I am going to stay here and make a difference. Nobody will build Nigeria for us but Nigerians. We can make Nigeria Heaven here on earth, we can make Nigeria as beautiful and clean as most developed nations we strive to visit or reside in. It starts with a

mindset; it starts with you and me; that is my dream ‘ To make environmental cleanliness and sanitation a CORE PART OF OUR CULTURE. Yes, it is possible. We don’t need the government to clean up our homes, if we clean up our homes, we should extend it to our premises; to our streets, to our communities, to our local government areas; to our states, then round the country everyone is doing the same. I am an environmental activist. Join in your little way, let’s make the difference. YES WE CAN!!! This is what Clean & Beautiful Atmosphere initiative is about; we are an organization committed to creating a mind shift and a culture of environmental cleanliness in Nigeria and building strong institutional systems and frameworks for the sustainability of this culture. Visit our media platforms to know more about us and join on

In 1500 there were between 6 and 9 million Amazon natives. Today there are only an estimated 250,000 left. There are approximately 170 different languages spoken by the Amazon natives. It is believed that there may still be as many as 50 Amazon native tribes living in the rainforest that have never been in contact with the rest of the world. There are many dangerous species of snakes, spiders and animals in the Amazon rainforest. It is also home to the anaconda. The Amazon River is considered to be the life force of the Amazon rainforest. The toucan is the loudest creature in the Amazon. You can hear it as far as a half mile away. There are vampire bats in the Amazon rainforest as well as poisonous dart frogs. If you were caught in the rain in the Amazon you would have about 10 minutes to find your umbrella. The trees are so tightly packed that it can take 10 minutes for the rain to reach the ground below. The raging fires are one element in the vicious circle which stoke the greenhouse gases and which in turn lead to rising temperatures and longer dry seasons, and causing more fires which start the whole circle all over. The current fires are visible from space! Thumbs up to all the concerned countries and organisations involved in the fire-quenching exercise. With the Amazon generating more than 20% of the oxygen in the world, we can only wait with bated breath and hope that this endeavour of on behalf of the whole world is (wildly) successful.

TAKING A STAND

This is my dream & passion

LAURETTA ASEMOTA

ike many Nigerians, I grew up watching films or movies; got accustomed to the western lifestyle, traveled abroad a couple of times, but one question kept lingering all through my years growing up; we (Nigerians) watch films or movies shot in beautiful cities, we feel accomplished when we travel abroad and even feel superior

to those who are yet to travel beyond the shores of Nigeria. We admire beautiful cities; nature’s green; we travel on board aircraft and sometimes want to remain amidst the clouds where everything looks so pure, unruffled, peaceful and calm. But as soon as we disembark, we are faced again with environmental pollution (noise, air, improper solid waste disposal, dirty streets, the hustle & bustle, the traffic, etc.) Oh!! Is this all there is to life in Nigeria? Is there any way we can improve our surroundings/environment? Nigerians are some of the most intelligent, innovative, talented, hardworking and richest people in the world. Yet the blame-the-government-syndrome, lack of a national ideology & vision has left us in the pedestal of underdevelopment for so long. We have thriving movie & fashion industries but lack apprewww.businessday.ng

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this crusade. TWITTER : https://twitter. com/cleannigeriaup, FACEBOOK: https ://www. facebook.com/startswithallofus/ www.facebook.com/cleannigeriaup LINKEDIN: https ://www. linkedin.com/in/cabai-akacleanupnaija-45b991131/ INSTAGRAM: https://www. instagram.com/naijacleanup, https://www.instagram.com/ laurettaasemota/ EMAIL: info@beautifulnigeria.org, Lauretta@beautifulnigeria.org, cleanupnaija1@gmail. com WEBSITE: http://www.beautifulnigeria.org BE A MEMBER: https://beautifulnigeria.org/membershipform/

(For feedback, contact us at csr momentum@gmail.com/ 08023314782)

Thursday 05 September 2019

BUSINESS DAY

Garden City Business Digest

Child entrepreneurs emerge in Port Harcourt • As Early Flight Academy organizes business fair Ignatius Chukwu & Sam Esogwa

he outcome of the Port Harcourt Children’s Business Fair held last weekend at Elite Primary School, Woji, in Obio/Akpor Local Government Area of Rivers State, seems to give glimpses of a future of full entrepreneurship and the possibility of Nigeria transforming from a consumer to a producer nation At the event organized by Early Flight Academy, some young but upcoming manufacturers and entrepreneurs were revealed. These young kids whose ages range from three to 15, who are mostly primary and secondary school students, presented different types of products they manufactured. The products range from fruit juice to nut juice, head bands, beads, sandwiches, biscuit cereals, cup cake, art works, T-Shirt designs, and books. Earlier in her opening remark, the organizer of the programme, Akelachi Kejeh, said the exhibition was the culmination of intense two weeks training aimed at helping the children develop entrepreneurial skills. In a chat with Business Day, Kejeh, who is the Founder of Early Flight Academy, said

Child entrepreneurs emerge in Port Harcourt

she believes in raising the next generation of Africa’s entrepreneurs, leaders, innovators and change agents through her organization hence her decision to promote entrepreneurial education for young people between the ages of six and eighteen. Kejeh, who said she started Early Flight Academy in 2017, disclosed that they organize

different programmes to achieve their goals. One of such programmes, according to her, includes the Kids Business Boot Camp. She said since the organization took off in 2017, she has been the sole sponsor, and appealed to organizations, government agencies, ministries and multinational companies for assistance. She advised Nigerians to de-

velop entrepreneurship mindset which she said is key to eradication of unemployment. “I will say that entrepreneurship is indeed one of those powerful tools we can use to solve Nigeria and Africa’s problems - problems of youth menace, high unemployment rate. “If Nigerians and indeed Africans can go about and know that they are problemsolvers, we won’t just let things pass over. That’s what our academy is here for but we’re starting with the young people because we believe that they are the future,” Kejeh said. One of the judges, Mercy Bello Abu, the Founder of EPI, described entrepreneurs as world changers, risk takers and problem solvers, adding that the world is looking for such people. CEO/Founder of Palm Drive, a taxi booking company, commended Early Flight Academy for organizing the Port Harcourt Children’s Business Fair. The Palm Drive boss, whose company hosted the children on excursion during the training period, promised to be partnering with Early Flight Academy every year for the programme. One of the child entrepreneurs, George Emmanuella, who presented her novel, XOXO Girls, during the programme, won the first prize as best brand and presenter

Listen! Port Harcourt wants to go clean Port Harcourt by Boat

IGNATIUS CHUKWU

uddenly, Port Harcourt looks like in 1980. The roads are now ‘wide’ and clean. People now drive freely and pedestrians now walk like in London. Road users are thanking their stars and hailing Gov Nyesom Wike. Even opposition voices are nodding in admiration; so, Port Harcourt is Port Harcourt again? The problem is that over 500,000 stomachs are as empty as the streets. These are called street traders. They are the ones that do not have stalls and cannot afford it. Even if they could find one, they would hardly make ends meet by paying for them; but this is not Gov Wike’s fault. The economy is structured (bottom-up) this way: Underworld (gangsters and common criminals who do wrong things in the wrong way to earn income); the Black-world (those who do right things in a wrong way or in wrong spots - touts, gamblers, loaders, etc); Informal world (those who operate unstructured businesses such as traders and artisans); Formal world (those who operate structured businesses, corporations); Corporate world (the big businesses and multinationals that governments try to please); and the Public-Sector world (government-owned corporations). The message here is that when a government moves against street traders, taxi operators and all those who feed from

spaces considered as illegal spots, they inadvertently drive them underground to boost the number of the Underworld. This move usually pushes away the Informal-world and Black-world to join the Underworld. This way, the government of the day would celebrate the disappearance of the Black-world but may not know that these people have merged with the Underworld. The next moment, mugging and general crime will surge up. At this point, the roads will be clean, but the stomach will be rumbling; the roads will be smooth, but the stomach will be rough; the roads will be free, but the homes will be arrested by hunger. Of all the promises the young Turks serving then Gov Peter Odili made to themselves, the only two that are yet to be fully attempted are Operation Leave PH Streets and Informal Tax Drive. Between then and now, the new sets of rulers have executed Operation Away with Motorcycles; Away with shanty markets such as railways Market; they have attempted Operation Stop Hawking, etc. Each time they wanted to attempt Operation Stop Street Trading, Stop Kabu-Kabu, and Informal Tax

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Drive, political crisis would sweep through the state and they would hold back. Amaechi attempted Stop Hawking but political crisis and the ex- and serving militants invaded his space. He began to fight for his political survival till he left office. When Wike came, the table turned and the Hunter became the Hunted. It resulted in endless re-run of elections, repeat, re-enact, etc, till March 2019. Now that the coast seems clear, the original agenda from the days of Celestine Omehia is here for implementation. During the campaigns, some elders were said to have told Wike that they cared less about upland/ riverine rotation but more for Operation Restore Port Harcourt. These people hinted at an event in February this year that they would want to see such PH before they left this world. Wike has the force, the support, the political will and whatever is needed to drive this scheme to its logical conclusion. He started by crafting a law that would back the actions, knowing bones would definitely be crushed. Next, he set up a Task Force with a competent

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Ikwerre man in charge. Next, he set up a mobile court for summary trials. Yes, touts and kidnappers have included themselves into the Task Force. Some have procured towing vans, vests, and even guns. They started work even before the real task force began. They are dutiful workers. So, what would a trader do? Nothing! Just shut down. Do not expect any political party to condemn it and come to your help. What this means is that anybody who does not have a decent business (white collar or blue collar job) in the Garden City or whose business is not located properly in the business district would have to, eh, em, em, step aside. The city has no space for the dregs of the society, and most of them are even from outside the state. Whenever a people hold a meeting on Sunday, know that the matter is of utmost sacredness. The governor held a meeting this Sunday in the Brick House in PH with the Task Force members and probably the magistrates to man the mobile courts the next day. There, serious warnings on why this task must not be toyed with were dished out. Promises and threats were equally issued to the task force men. We need not say more. Those who have ears, let them hear! Every city has an aspiration. Port Harcourt wants to be clean, if not green. So, those not able to live in it, too bad. There is no going back. Anybody hoping to arrange wads to bribe his way back to the roads must be mad. The city is beautiful again. The people are happy, the government is happy, the governor is happy. But, there is something the 500,000 stranded traders can do. There is always the road that is there waiting for all the other roads to close. There is always an idea whose time has come. If you want to know it, come together and contact Port Harcourt By Boat.

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Thursday 05 September 2019

BUSINESS DAY

Investing in Rivers State International post-graduate scholarship 2019:

Shell and the ‘Best 13’ Ignatius Chukwu

ne evening in 2010, dinner was served. On dinner table were 10 young men and women brimming from ear to ear, so privileged in the entire Niger Delta region. They sat on same dining table and in the very home of the first Nigerian managing director of Shell Petroleum Development Company SPDC at Shell RA in Port Harcourt. Also feeling privileged were some five Nigerian journalists there to cover the departure of the first set of beneficiaries of the international postgraduate scheme just introduced by the company. SPDC leaders were upbeat because these were some of the fast feats to signpost the Nigerian leadership after many years of outcry for Nigerianisation of the company. The other was the relocation of front-end-engineering design unit from Aberdeen to IA in Port Harcourt. This is the sensitive unit that designs a Shell project to make it ready for bidding by contractors. It also serves as supervision tool during construction. Also of reckoning was the introduction of the Nigerian Content drive in Shell that culminated in the law of 2012, the Nigerian Fund set up to give access to Nigerian contractors to execute big jobs in Shell, and the ceding of 95 per cent of all contracts to Nigerian companies. This ranges above $1.5Bn worth of jobs in one year. All these were parts of steps to hand over the oil industry to Nigerians. And so, the 10 scholars sat happily to eat without being any hungry, because the excitement was huge. They had come through a rigorous screening exercise full of tests and essays. Only the best were needed, not just to qualify for the endless opportunities that stood waiting ahead but the arduous tasks that they never knew was to come; a task that has been described as one year of slavery. So, only the best brains, the fittest, and the most diligent in hard work would pass through the one year of pulsating task in another man’s land, the UK. The dinner may have ceased but the yearly scheme is on, and bigger, now 13 per year. This has emerged as the icing on the cake of various scholarship schemes operated by Shell for decades. It is said to be a response to the existence of gaps in the way technologists are produced in Nigerian universities and a way to produce industry-ready graduates. History of education endeavours: From the file, it was revealed thus: Shell Companies in Nigeria have a long history of supporting education through scholarships and other initiatives. Since inception in the 1950s, the Shell scholarship scheme has supported several thousands of “Shell Scholars” many of whom are among today’s captains of industry, thought leaders, traditional rulers, and officials of various arms of government. In 2018, approximately $5.9 million (N1.78 billion) was invested in scholarships by The Shell Petroleum Development Company of Nigeria Limited operated Joint Venture (SPDC JV) and Shell Nigeria Exploration and Production Company (SNEPCo).

L-R: Promise Eke (student), Gloria Udoh (Social Investment Manager, SPDC) and GM, Nigerian Content Development (NCD), Olanrewaju Olawuyi

Grants were awarded to 532 secondary school students and 430 university undergraduates in 2018. Shell companies in Nigeria have awarded 8,758 secondary and 5,165 university educational grants between 2011 and 2018. This includes 287 secondary school scholarships to people with special needs and physical challenges. Support for education is just one aspect of SPDC’s social investments in the Niger Delta, other communitydriven development programmes and initiatives, which focus on various themes as determined by benefiting communities, include community health, enterprise development, and infrastructure development. Igo Weli: 13 Niger Delta indigenes win SPDC JV scholarship to UK varsities The 13 indigenes of Niger Delta states of Bayelsa, Delta, Imo and Rivers that won the 2019 SPDC Joint Venture scholarship for a one-year master’s degree in three top-ranked universities in the United Kingdom gathered at a hall in PH. Officials said the latest awards bring the total number of beneficiaries to 92 since the inception of the scheme in 2010. “A lack of world-class research institutions and limited access to technology are key challenges in enabling Nigerians and Nigerian companies to play an even greater role in the oil and gas value chain. Therefore, the SPDC Joint Venture has, over the years, developed many scholarship programmes and other initiatives as part of our continuing efforts to develop indigenous manpower for the oil and gas industry,” SPDC’s General Manager External Relations, Igo Weli, said at the award ceremony in Port Harcourt on Thursday. Represented by SPDC’s Social Investment Manager, Gloria Udoh, Weli

explained that the scheme was targeted at host communities. “We have the national scholarship which caters for the entire country in addition to the scholarships offered by our deepwater business, Shell Nigeria Exploration and Production Company.” According to him, the fully-funded scholarship covers “all the direct and indirect activities leading up to the award of the postgraduate degree including visa fees, tuition, living expenses, other allowances and return flight tickets for a one-year Master’s degree in top-ranked partner universities. The partner universities are: Imperial College London; University of Leeds; and University of Aberdeen. SPDC’s General Manager, Nigerian Content Development (NCD), Olanrewaju Olawuyi, said the company was committed to country value-addition not just through scholarships but also through in-country manufacturing, supplier development, asset ownership and infrastructure development. Olawuyi said, “Our approach to developing local human capacity has evolved over the years as the challenges facing the industry and our businesses have changed. We look forward to their returning home and contributing to the development of the oil and gas industry and their communities.” One of the awardees, Ahante Promise, described the scholarship as “a life-time opportunity to further improve myself and compete equally with my peers all over the world. Shell is doing a great job and I am extremely grateful.” Another beneficiary, Woyinpreye Cliff-Ekubo, expressed appreciation to SPDC “for the opportunity and continuous support in ensuring human capacity development in Nigeria.” Gloria Udoh: The advice you can’t

overlook Gloria Udoh is not only a manager (Social Investment) in SPDC but a pastor, mother and sister to all Niger Delta youths. Her passion is so much that she often sponsors awards to best performers in some of the company’s schemes aimed at helping the youths of the region out of poverty into prosperity. Her biggest gift however is her piercing words of live advice to those who wish to break through faster. On this day, Udoh seemed in her usual best with words that create life in lives. She said: It is a huge privilege to study on scholarship, its a huge responsibility too. You may be one of the best in town but it is God that smiled on you. So, make yourself proud and then make the nation, Nigeria, proud. Henceforth, you alone will decide where the road leads you. If you must succeed, you must apply due diligence in your actions. Work as hard as you can but look up to Heaven from where success comes. People have different seasons of success but each man/ woman must keet working hard. Some start smart but may falter toward the end but some others come strong toward the end. Society may influence some; friuends can also influence you. Your goal must be in front of you, despite everything around. Leadership is about influencing people. So, you influence others, not others influencing you. Dangote is a household name in African today and a sign of success but he operates by some principles. For instance, he never forgot his beginning, his mother’s counsel. So, dont forget your parents while there. Keep touch with him. Do not forget your parents counsel, whether they are educated or not. Do not be carried away. Must : Must come back with MSc ; Must attend classes ; Must study ; If anyhing goes wrong, must reach Shell ; Must beware of plagyarism ; Must not waste the huge sums invested in you ; Must do your homework, submit, and crosscheck for playgyarism. Great insight from an almunus : He stood unassumingly like the lecturer he has become but his words turned the hall into huge excitement. Everybody wanted to hear every word that proceeded frm his mouth. He has been there, he saw it all, he has great tips for the Best 13, for all Nigerians going to study in the UK at that level ; Dont carry may books or clothes, you wont need them, you will end up throwing them away. Dont carry anything for anybody as you go. Make concrete arrangement to pick you up at the airport in London ; else you may suffer your first shock as I did. Be ready for one year of slavery ; there will be no breathing space, else,

Thirteen beneficiaries of the 2019 Shell Petroleum Development Company Joint Venture overseas postgraduate scholarship for host communities at the award ceremony in Port Harcourt ...on Thursday www.businessday.ng

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you return empty-handed. Assume you do not know anything and start afresh. You are meeting with people from all over the world from different educational backgrounds. The people you meet are on the fast lane. Form a group for reading. In your group tasks, work for everyone’s success because you succeeed or fail together. Do not miss any opportunity to earn a mark. Do every assignment and ensure you submitted.

Promise Eke

Promise Eke makes a promise : I will make Imo State proud in the UK I am Promise Eke from Ehime Mbano in Imo State. I am heading to Imperial College in the UK to pursue a Master’s Degree in Petroleum GeoSciences. I bagged my first degree in Geology at the Federal University of Petroleum Studies in Efurun, Warri, Delta State. I did my secondary school in the same Warri, at the Standard Model College. The tips they gave us today are a bit scary because of the realisation that any little thing can make someone return without a certificate. On the other hand, it helps to motivate someone, to serve as a cautionary measure and keep one on his/her toes to strive from one task to another. We have been told to regard it as one year of slavery and I am prepared for it. Weight : Yes, I can feel the weight of responsibility since I arrived here to find that I am the only beneficiary from Imo State. I promise, I will represent Imo well. I will show that Igbo is not about fraud. I will equallymake my parents proud ; and the only way I will do this is to strive to always come tops in my class and above all to bring back that certificate. My advice to young ladies everywhere in Nigeria is to explore what is in them and not allow limitations to stop them. I tell them, there is a lot in you. Do not recline to the thought that after school it is only marriage and ‘the other room’. No, bring out the best in you. A lot is locked up in you. Ladies are being exploited here, but I want you to know that you can do it. Do not feel inferior. Explore and be the best you can be. Ihedioha: To the Imo State Governor, I say, please help the youths of Imo State by creating funds for entrepreneurs and those with exceptional project ideas. Give scholarships and financial support. I know a lot of my colleagues out there needing funds to start something from their brilliant ideas. When I return : I intend to explore my professional field (Geo-Sciences) to help Nigeria unlock the numerous resources still locked inside the earth. Nigeria’s assets are in oil and gas and much needs to be unlocked still. It is Nigeria’s area of strenght and we must increase the reserves.

Thursday 05 September 2019

BUSINESS DAY

news

How Nigeria can fix its struggles to realise gas potentials DIPO OLADEHINDE

nchaining Nigeria’s gas potentials of over 202Tcf of discovered natural gas reserves worth $462.5 billion will require collaboration between the Federal Government and private sector,Gasexpertsandstakeholders have said. The private sector has the ability to innovate, capacity for domestic gas market and willingness to make long-term commitments, they point out. For this to happen, there are several challenges relevant stakeholders must overcome in order to successfullydevelopgrowthprojects in natural gas fields that are yet to be fully tapped. In the past, the entire laws and policies within the Nigerian petroleum sector were technically skewed in favour of oil, causing an unhealthyattentiontoitandneglect of gas resource. This is a narration thatisbeginningtochangehowever, although relics of the old regime can still be seen. Ademuyiwa Adegun, an Abujabased gas commercial advisor said the government should realise that it does not have to be a player in the gas sector. “Until government understandsthatitneedstobemore

export-oriented projects, storage for LPG, gas flaring, and the virtual pipelinespace.LayiFatona,managing director of ND Western Limited, a private company with operations inNigerDeltasaidhiscompanywas the first in eliminating gas flaring from daily production. “Thegasplantcanprocessallthe associated and non-associated gas thatweproduceandputinapipeline that goes to Bonny LNLG. Today, we are the only indigenous company thatisdeliveringgastoBonnyLNLG,” Fatona told BusinessDay. Ademola Luqman, a gas expert with a Lagos-based advisory firm said although the government has to do more in creating an enabling however there is need for more collaboration between the private and public sectors in order to maximize Nigeria’s gas potentials just like Mozambique. Despite struggles in full utilization of Nigeria’s gas reserves some big-ticket projects are emerging in the country, thanks to collaboration between private sector and government. Seplat Petroleum’s planned $700milliongasjointventurewiththe state-owned Nigeria Gas Company in Imo state is emblematic of what the government would like to happenmoreoften–ahigh-impactproj-

Analysis of an enabler than a player, we will not move forward,” Adegun told BusinessDay. Charles Akinbobola, energy analystataLagos-basedenergyfirm Sofidam Capital, said the government needed to make sure there is ease in attracting capital and also resolve the issues surrounding regulation which deals with ease of entry, ability to set up and licenses. Other stakeholders believe the government sector have to be bold aboutsolvingchallengessuchasgas pricing, unreliable gas supply, poor gas infrastructure, power sector liquidity issue, ineffective regulation of the energy value chain, and concentration and control of gas resources within a limited set of license holders in the country. Bolaji Ogundare, an investor whorunsNewCrossExplorationand Production Limited, an indigenous oil and gas firm, said the bigger challenge he and his peers worry about when dealing with government was the issue of multiple taxations. “These are things that scare investors because there is no clarity of purpose, unlike other countries that are creating a more enabling environment,” Ogundare said. On the part of the private sector, Adeoluwa Eweje, an International Energy Solution Consultant, said private investors need to spread investments along the gas value chain, for example creating a more robust pipeline network to improve reliability and security of supply. Bolaji Osunsanya, president of Nigeria Gas Association (NGA), told journalistsataconferencethatNigeria’s gas sector had over $55 billion worth of investment opportunities, thus indicatinggreatpotentialsforgrowthin the economy and in key areas such as exploration and production, processing,supply,anddistribution. “Turning natural gas into a profit-making venture would require huge investments in infrastructure to address the five component areas of gas availability, gas affordability, deliverability, funding, and legal and regulatory framework,” Osunsanya said. Industry sources say there are lots of investment opportunities in Nigeria’s gas sector ranging from gas processing plants, fertilizers andpetro-chemicals,gasterminals,

ect run by a home-grown company. The project, called Assa NorthOhaji South plant, will process wet gas from Niger Delta crudeproducing blocks 21 and 53. It is slated to have a capacity of 300mn cubic feet a day (f3/d) with the first supply due in 2021. The Assa North-Ohaji South is one of seven gas projects identified by the government in 2018 as critical to overcome a looming supply gap. Theyhavebeenfast-trackedtoprovide 3.4bnft3/dofgastoprovidefeedstock for 15 gigawatts (GW) of generation. Shell Petroleum Development Company(SPDC)statedinJunethat it had increased its gas distribution capacity by over 150 percent following the completion of its second gas train, the Agbara-Ota Capacity Increase Project in Ogun State. The company stated its expansion projects in various states would add more than 1GW of power to industrial parks and companies. Also, success in the export market demonstrates that gas production can be ramped up. Given a dependable customer base and a helpful operating environment there is no reason this cannot be replicated for the domestic market. Front-end engineering and design contracts were awarded in 2018 for a seventh train at the Nigeria Liquefied Natural Gas (NLNG) project on Bonny Island, which would add upto8mntonnesayear(t/yr)ofLNG capacity to the existing 22mn t/yr. NLNG and the Nigerian Content Development Monitoring Board (NCMB) had in March 2019, signed a content plan for the project agreement. NLNG’s managing director Tony Attah said to local media in late June that he expected the FID on the seventh train, which has been discussed for years, to be taken in October 2019. Over the years, successive governments have made efforts to transit domestic gas pricing to a market-led regime as evidenced by the Natural Gas Strategy, 2003; NaturalGasPolicy,2004;DraftNatural Gas (Fiscal Reform) Act, 2005, also known as Draft Downstream Gas Act; Gas Master Plan, 2008; and most recently the National Gas Policy, 2017, which articulates the pricing philosophy to be adopted in the domestic market.

L-R: Stephane Beuvelet, acting managing director, 9mobile; Mike Aigbe, deputy managing director, Vatebra Limited; Kayode Pitan, MD/CEO, Bank of Industry (BoI); Akeem Fahm, commissioner for science and tech, Lagos State; Abdulrahman Ado, executive director, regulatory and corporate affairs, 9mobile, and Simon Aranonu, executive director, large enterprises, BoI, during the commissioning of the Vatebra Tech Hub, Ajah, sponsored by the Bank of Industry held in Lagos, yesterday.

Africa’s two biggest economies take different turns on Q2 GDP growth figure SEGUN ADAMS & ISRAEL ODUBOLA

frica’s two biggest economies took different trajectories in the second quarter after growth data from their respective statistics agencies show different fates for the rival economies. While Nigeria saw growth slow 1.94 percent in the review quarter on account of 1.64 percent moderation in the non-oil sector, South Africa on the other hand, printed a 3.1 percent expansion as its economy rebounded from a 3.1 percent contraction in the first quarter. “South Africa has been chasing pro-growth policies and that is what they are benefiting from,” said Nnamdi Olisaeloka, an analyst at Lagos-based Zedcrest Capital. “Cyril Ramaphosa has been more inclusive of the private sec-

tor. This is what is remarkably absent in Nigeria’s case. Nigeria is still not championing policies that will boost private sector growth.” Olisaeloka posited. Nigeria’s non-oil sector remains uncompetitive and continues to suffer on account of structural challenges, which have marred economic diversification, employment and growth agenda. Decrepit infrastructure from power to the road combined with regulatory challenges, foreign exchange woes and paucity of credit to spur growth top list of setbacks for the Nigerian economy. Both economies continue to grapple with structural challenges, which continue to constrain domestic output, evidenced by their low contribution of manufacturing activities to GDP. For South Africa, the state-

owned power utility firm, Eskom, continues to battle with mounting debt staged by rising costs, crumbling infrastructure, falling revenue and mass-wide corruption. But growth in the second quarter was boosted by a return of more consistent electricity output, with Eskom managing to keep load shedding at bay. On the other hand, Nigeria’s power sector has been bedevilled with low liquidity and undercapacity to distribute sufficient power to its populace. “Nigeria’s low growth figure is a pointer to policymakers to start taking reforms seriously to strengthen investor confidence,” said Emmanuel Noko, senior economist at M&C Business Advisory. Big global central banks from North America to Asia have embraced monetary accommoda-

tion by slashing key lending rates to stimulate growth amid uncertainties in the global economy. But analysts say that the combination of low interest rates, rising debt profile and tradepolicy uncertainty has created an environment that neutralises the potency of monetary easing. “Declining natural interest rates have meant that monetary policy by itself won’t be enough to raise aggregate demand and lift inflationary expectations,” said America-based investment bank, Morgan Stanley. The disappointing Q2 puts the Central Bank of Nigeria in a dicey position to either cut rate to stimulate growth or hike rate to attract foreign investment at its next meeting scheduled for September 23 and 24. Olisaeloka believes that the central bank will most likely retain the policy rate at 13.5 percent.

Reforms: Edo rallies PHC coordinators to deepen impact of FG’s N-Health scheme

CBN to issue N1,002bn TBs in Q4

do State Primary Health Ca re D e v e l o p m e nt Agency (EDSPHCDA) has tasked state coordinators of Primary Health Centres (PHCs) in the state to engage beneficiaries of the Federal Government’s N-Health scheme in ensuring quality health care to Edo people. Speaking during the NPower Health Initiative State Facilitators’ Training, held in Benin City, the Executive Secretary, EDSPHCDA, Imuwahen Mbarie, urged executives of PHCs and their Monitoring and Evaluation teams to engage the N-Power Volunteers in some of their key functions, such as day-to-day operations as well as data collection and management in the facilities. She said the workshop is a training-of-trainers session designed to equip the PHC coordinators with relevant information and skills-set to be passed on to the N-Health volunteers posted to various PHCs in the state. She explained that the NPower Health, which is an

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initiative of the Federal Government, is aimed at curbing unemployment among youths, urging the Primary Health Centre (PHC) coordinators and monitoring and evaluation teams across the 18 Local Government Areas in Edo State to leverage the opportunity of additional hands to improve their services. A facilitator from the National Primary Health Care Development Agency (NPHCDA), Khadija Ishola, thanked the state governor for the support shown towards improving primary health care activities in Edo State. She added that the N-Power health volunteers would add to an effective workforce in the state after their training. She further reiterated that an audit will be carried out on the N-Power volunteers to determine their availability within their residents, noting that they must be made to work for the benefit of the people, which is the reason they are on the Federal Government’s payroll.

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HOPE MOSES-ASHIKE he Central Bank of Nigeria (CBN) plans to issues the Nigerian Treasury Bills (NTB) worth N1,002 billion for various tenor buckets in the fourth quarter of this year. The Nigerian Treasury Bills programme released by the regulator on Wednesday, show that the same amount will be maturing during the same period. However, the CBN noted that auction amounts are subject to change without notice. A breakdown of the NTB programme revealed that N9.62 million will be issued for 91 days tenor while the same amount will mature during the same period. Investors are expected to position for medium term investment as the Apex bank will auction a total of N90.18 million for 182 days tenor. The same amount will also mature over the same period. For the 364 days tenor, the CBN will auction the sum of N821.84 million to investors, while the same amount will @Businessdayng

mature in the fourth quarter. The CBN in the third quarter (Q3) 2019 issued a total of N809.4 billion worth of Treasury Bills for various tenors. The bearish sentiments in Treasury Bills secondary market ceased last week, following robust system liquidity (about N704.7bn positive as at Friday) that incited local demand across the yield curve. As a result, activities were largely bullish during the five trading sessions of the week as investors rallied for higher yields despite the CBN intervention at the Primary Market auction on Wednesday as well as its Open Market Operations auction on Thursday and Friday according to analysts Afrinvest Securities Limited. Major buying interests were witnessed at the short and medium end of the curve, particularly the 5-Dec-19 (-231bps), 9-Jan-20 (-228bps) and 24-Oct-19 (-205bps) maturities. Consequently, average yield across all tenors contracted by 140 bps W-o-W to settle at 13.8% from 15.2 percent the previous week.

Thursday 05 September 2019

BUSINESS DAY

news Africa’s youth employment crisis is ticking ... Continued from page 1

the fact that of this number only a tenth ever get the chance of coming close to anything like a job in Africa, where over 60% of the unemployed are youths.

Discussants at the forum, including the presidents of Botswana and Ethiopia along Oby Ezekwesili, a former Minister of Education in Nigeria, Jim Ovia, founder and chair of Zenith Bank as well as a Vice President of Google, were tasked with dimensioning the crisis and proffering solutions to it. The leader of Botswana called the problem scary and frustrating, and warned against the undesirable consequences of doing nothing, but acknowledged that the continent’s leaders need a re-think. “Political leaders in the continent should have a rethink, we need a conversation as the politics of today is not serving the people,” President Seretse Khama told the audience. Botswana is expanding access to the internet for youths so they can better leverage technology and the tools that it offers, he said. Ethiopian President SahleWork Zedwe spoke of elaborate economic reform in the large populated country, which she said would lead to creating about 3 million jobs in the next one year. “This is not the Africa we want and this matter of youth employment can become a

ticking bomb,” she said, saying, “African leaders have to change the way we are addressing the problem as leadership and governance are holding back Africa.” Ovia highlighted the power of technology and stressed how young Africans were raising significant capital from abroad for their tech start ups that were giving youths in the continent new hope. He said it was now critical that governments across Africa put in place the badly needed policies capable of expanding economic activity and growing jobs. Ezekwesili wondered how there could be the required collaboration and integration in Africa in the light of the xenophobic attacks that welcomed the opening of the forum in Cape Town. She blamed the misery in much of Africa on bad leadership and what she called “wacky politics” played by the continent’s uninspiring leaders that live for themselves. According to Ezekwesili, “Our political leaders need to be put in a room and told that they have failed our youths. The leaders must enthrone well tested market driven reforms and allow markets set incentives.” What is comforting about the economic crisis, which Africa faces, is that “we see some countries which have been here before pull themselves out of this misery,” she said.

Zenith Bank to redeem $500m Eurobond ahead... Continued from page 1

stead of carrying on books, they want to call back the Euro bond they have issued, since they are not deploying the dollar liquidity to areas that could generate income for them. “Recall of the Eurobond could be that the bank is not seeing dollar related lending opportunities, this takes it off from their cost of funding and interest expense,” she added. This would obviously also allow them to grow their earnings more as opposed to just having the cash lying idle and not deployed to income-generating assets when they could as well deploy it to settle their dollar liabilities. She further noted that this cannot be attributed to the 60percent Loan-Deposit Ratio policy of the apex bank. “This is a debt liability it is not a deposit liability expect the CBN comes to say they will be looking at loan to Total funding but since the policy is loan to deposit ratio, it has no effect,” she said. In 2018, Fitch Ratings revised its outlook on Zenith Bank’s (Zenith) Long-Term

Issuer Default Rating (IDR) to Stable from Negative and affirmed the rating at ‘B+. Also, S&P Global Ratings affirmed its ‘B’ long-term and ‘B’ short-term issuer credit ratings on the bank. In its recently released half-year result for the period ended 30th June 2019, Zenith bank’s noninterest income surged 23.9percent year-on-year to N109.73bn, Profit after tax grew 8.9percent yearon-year buoyed by fees on electronic products, which grew by 1.7times year-on-year and contributed 43percent to fee and commission income as compared to 22percent in half-year 2018. In the period, customer deposits increased 3.2percent to N3.81tn, driven by the 27.4percent and 4.6percent growth in domiciliary and savings deposits respectively. The Board of Directors of the bank also announced the payment of an interim dividend of 30 kobo per share, payable on September 4 to shareholders whose names appear in the register of members as at the close of business on August 29. www.businessday.ng

L-R: Linda Ochugbua, digital sales manager, BusinessDay; Moejoh Oluwaseyi; Adewale Adeboye; Jesutunmise Lawanson; Bola Adeeko, head, shared services division, The Nigerian Stock Exchange (NSE), representing Oscar Onyema, CEO, NSE; Solomon Obidipe; Ajoke Ajayi, and Myles Ekong, at the courtesy visit of 2019 BusinessDay CEO Apprentice winners to The Nigerian Stock Exchange in Lagos, yesterday. Pic by David Apara

Xenophobic attacks threaten intra-African... Continued from page 1

decade after implementing the African Continental Free-Trade Agreement or ACfTA, which Nigeria signed up to at an extraordinary summit of the African Union in Niamey in July.

However countries whose nationals have been hounded in South African cities by irate mobs this week responded in various measures, ranging from a cancelled football event with South Africa (Zambia), to boycott of the World Economic Forum that began in Johannesburg yesterday (Nigeria and others), and a threat to recall an envoy from South Africa – Nigeria. Other African countries whose leaders have decided not to show up at WEF include Rwanda, the Democratic Republic of the Congo and Malawi. Also, the Nigerian government has issued travel advisory to travelers, advising Nigerians to avoid travelling to high risk and volatile areas in South Africa until the situation is brought under control. A press release issued by Ferdinard Nwonye, spokesperson, Ministry of Foreign Affairs, Abuja, stated that the Ministry of Foreign Affairs would continue to protect the lives and properties of Nigerians in South Africa. “The Federal Government commends the arrest of some perpetrators in the dastardly act by the South African Police and call on a timely prosecution to serve as deterrence to others,” the statement said. In Nigeria, the country with the greatest stake in the tragic events, given the large number of its citizens involved, there was a flurry of government activities at the seat of power, Abuja, with the government digging deep

into its diplomatic tool bag for an appropriate response. Among the actions mulled by the Federal Government was that Nigeria, with the largest population in Africa and the continent’s biggest economy, was pulling out of the World Economic Forum meeting where Vice President Yemi Osinbajo was scheduled to represent the country in South Africa on Thursday. Nigeria also said it would recall its envoy to South Africa, which would send a strong signal to Pretoria that Nigeria would no longer broach such a mindless attack on its national. “The President is particularly distraught at the act of vandalism that has taken place here in Nigeria, in retaliation of what is happening in South Africa,” Geoffrey Onyeama, Nigeria’s foreign affairs minister, said. In response to the attacks on Nigerians in far-away South Africa, some Nigerians at home embarked on retaliatory attacks, venting their anger on South African organisations operating in Nigeria. As the attacks on their facilities, customers and some of their stakeholders that started on Tuesday night continued on Wednesday and spread to Nigeria’s major cities, these companies - MTN, MultiChoice and Shoprite took pre-cautionary steps and temporarily shut down physical shops, and restricted customer service activities to online and telephone channels. MTN Nigeria’s offices in Kano, Lagos, Port Harcourt, Uyo, Ibadan, Benin, Awka and other cities have been shut. In a public statement, MTN Nigeria stated that ; “while we remain committed to providing uninterrupted services, the safety and security of our customers, staff and partners is our primary

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concern. All MTN stores and service centres will therefore be closed as a precaution until further notice.” MTN Nigeria’s CEO Ferdi Moolman said the company “strongly condemns hate, prejudice and xenophobia and reiterate our unequivocal condemnation of all violence. We seek to connect people, bring people together and provide a platform for everyone’s voice to be heard. We are against all forms of bigotry and discrimination; they should have no place in society.” In a statement signed by Uto Ukpanah, company secretary, MTN, says it is engaging all relevant authorities in this regard and urges them to act swiftly to reduce tensions both in South Africa and Nigeria. BusinessDay learnt that MultiChoice and Shoprite have also declared holidays for its staff in cities across Nigeria. Reports also indicate that Stanbic IBTC Bank offices in Port Harcourt were shut. Other businesses reportedly shut down include PEP Stores and DST V in GRA 2. The timely intervention of security operatives in the early hours of Wednesday saved attempts by irate youths to attack Shoprite in Onitsha, the commercial hub of Anambra State in eastern Nigeria. MTN offices in the state, particularly in Awka, the state capital, were shut for business activities in the day, according to reports. An MTN staff in Awka under condition of anonymity told BusinessDay that junior staffs were directed to operate from their homes to avoid any negative occurrence. “We were told on Tuesday that only the senior staffs were expected in office, while we wait for further directives,” he said. MTN offices across Edo @Businessdayng

State, in Midwestern Nigeria, were shut down to forestall further attacks on the company, BusinessDay however, learnt that DSTV offices in the area opened for business. Stakeholders say that the companies took the right steps to ensure the safety of their staff, who are predominantly Nigerian. “It is very unfortunate that the xenophobic incident in South Africa has led to the shutdown of telecommunications service centres belonging to MTN in Nigeria. However, it is a good decision to ensure that there is no escalation of this situation. Currently, there is no negative impact on calls and services and we are encouraged that the Nigerian government intervened to condemn the attacks,” Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON) told BusinessDay in a telephone interview. While it tried to fashion an appropriate response to the attacks, the Nigerian government called on its citizens at home to refrain from attacking South African interest in the country, declaring, rather, that it wants to “”take the moral high ground on this matter,” according to Onyeama. “Mr President has pleaded and he is likely to make a statement on this, addressing the Nigerian people to please desist from acts of vandalism and aggression, destroying properties,” he said. The foreign affairs minister pointed out that while these businesses- Shoprite, MTN and others, were of South African origin, they were subsidiaries in Nigeria owned by Nigerians. Therefore, attacks on them were actually the property owned by Nigerians within Nigeria and the Nigerian who work there, he reasoned.

•Continues online at www.businessday.ng

Thursday 05 September 2019

BUSINESS DAY

news

AfDB appoints Anohu head of Africa Investment Forum James Kwen, Abuja

resident of the African Development Bank (AfDB), Akinwumi Adesina, has announced the appointment of Chinelo Anohu, an international corporate lawyer, as head and senior director of the Africa Investment Forum. The appointment of Anohu, a member of the London Stock Exchange Africa Advisory Board who also served as directorgeneral of the National Pension Commission of Nigeria for five years, took effect from September 1, 2019, the organisation says. With a formidable track record in formulating investment strategies, Anohu brings extensive knowledge of institutional investment practice and experience in attracting new capital, expertise in the development of innovative asset classes, spanning pension funds, sovereign wealth funds, private equity and private family wealth funds. The Bank is set to hold the 2019 edition of the Africa Investment Forum on November 1113, 2019 in Johannesburg, South Africa, after a successful inaugural edition last year attracted $39 billion in investment interests for bankable deals in Africa. The Africa Investment Forum has become the continent’s premier multi-stakeholder transactional platform for leveraging investments from the private sector, African and global financial institutions, global pension funds and sovereign wealth funds and other institutional investors.

It also provides an unparalleled platform for engagements with African Heads of State and Governments to discuss, in the Forum’s unique “Investment Board Rooms”, policy, business and investment incentives to close transactions in real time. “I am delighted that Chinelo Anohu is joining us as the Head and Senior Director of the Africa Investment Forum. Her can-doattitude, leadership, hands-on experience in working with global pension funds and institutional investors, and extensive global networks among institutional investors, will significantly position and help the Africa Investment Forum to drive its global agenda to attract more investments to Africa,” Adesina states. Anohu began her professional career as an Attorney with the global oil conglomerate, Chevron, Nigeria. She worked in legal and financial services in Nigeria and the United Kingdom before joining the Nigerian Bureau of Public Enterprises, the implementation agency for the reform and privatisation of state-owned enterprises. As a consultant assigned by the United States Agency for International Development (USAID), Anohu helped to restructure and privatise the Nigerian Telecommunications Limited, Nicon Hilton Hotel and Afribank, among several others. An adept and sound negotiator, she successfully worked with acquiring entities, liaising and managing complex relationships, including with the Nigerian National Assembly and labour organisations.

Investments flow into power sector may suffer setback over EFCC’s action Olusola Bello

takeholders in the power sector have warned that the flow of investments into the power sector may suffer setback if diligence is lacking in the way the Economic and Financial Crimes Commission (EFCC) is dealing with perceived cases of fraud or corruption in the sector. EFCC, they advise, should do its job diligently and desist from sensationalism and media trials that have far-reaching negative effects and negative perceptions indexes on investments in the Nigerian Electricity Sector/Power Sector Value Chain They say the planned sales of power plants by the government may suffer setbacks because of the actions of EFCC in recent time, especially the most recent one in which some officers of Niger Delta Power Holding Company (NDPHC) were allegedly clamped into detention over a contract the commission alleged the money had been diverted. But industry sources say the money was duly paid by NDPHC to the consultants working for it for them to give to the people the money is directly meant for. According to them, investments in the country are already endangered because of government actions, adding that the situation can further be com-

pounded by actions of the EFCC if care is not taken. The stakeholders, however, say they are not opposed to arrest and prosecution of people who go against the law by committing one crime or the other, but that thorough investigation must have been seen to be carried out to ascertain that they are culpable. The officials of NIPP/NDPHC were said to have on their own volition went to the EFCC headquarters to submit detailed reports/documents as part of the renewed probe of the power sector and only for them to be detained. Ayodele Oni, a Lagos-based lawyer and a stakeholder in the power sector, told BusinessDay that any country there was no rule of law international investors always avoid it. There is problem if there is no rule of law, and it is worse if the action of the agency is viewed from the point that those on trial are members of the opposition party, Oni said. According to Oni, were the money stolen or diverted, or spent on the projects they are meant to be used for? He said just as the previous administration spent so much but achieved very little in the power sector, so also the present government had spent a lot of money without realising any meaningful result yet. www.businessday.ng

L-R: Annabelle Degroot, MD/ CEO, International Breweries Plc; Baker Magunda, MD/CEO, Guinness Nigeria Plc/ vice chairman, Beer Sectorial Group (BSG), and Jordi Borut Bel, MD/CEO, Nigeria Breweries and chairman, BSG, at the official launch of Beer Sectoral Group (BSG) SMASHED Project (Breaking Underage Drinking) in Lagos, yesterday. Pic by Olawale Amoo

Mathematicians charge FG on National Data Management Tombari Kote, Port Harcourt

ctivities at the 56th Annual Conference of the Mathematical Association of Nigeria (MAN) are about now reaching concluding stages in Port Harcourt, the Rivers State capital, with a call on the Federal Government to take issues of statistical data and data management more serious. The august gathering hosted by Rivers State University, Port Harcourt, at the instance of the Rivers State Chapter of the Association, RIVERSMAN, has all activities including the National Mathematics Olympiad Competition for school children going on as planned with winners now emerging from the various categories of the competition. National President of MAN, S. A. Adeniran in his welcome address, noted that the many hurdles facing federal and state agencies in the country could be effectively resolved through proper application of mathematics. Adeniran said the MAN was an association that network all

mathematicians together within Nigeria. The association has made enormous contribution to the growth of her members and education as a whole. The MAN president expressed gratitude to RIVERMAN, and the management of the Rivers State University for accepting to host, and making the 56th conference of the body a success. Speaking during the official opening of the 56th Annual MAN conference, acting vice chancellor of the Rivers State University, Professor Opuenebo Binya Owei, thanked the association for choosing Rivers State, and the university as the host of the conference. Professor Owei said the teaching and learning of mathematics were important, especially as a foundational course, as without a credit pass in mathematics students cannot be admitted into institutions of higher learning in the country. It is also the basic foundation of the studying of science related courses and should be properly taught in primary and secondary

schools in the country, she said. Professor Ndowa Lale, vice chancellor, University of Port Harcourt presented the keynote address. The event main theme: ‘Mathematics and Entrepreneurship Education for National Development’ has also been described as apt and timely considering the development challenges facing the country. Sub-themes as: Mathematics in Vocational Education and Skills Acquisition; Mathematics and Growth for Small and Medium Scale Enterprises; Mathematics Creativity for Basic, Secondary and Tertiary Education; Gender Issues in Mathematics and Entrepreneurship Education; Mathematical theories and Models for National Development; and Data Management in National Development. Lead papers were presented by. Doris Omeodu, Ph.D, - Gender Parity in Mathematics and Entrepreneurship Education, and Professor Dulu Appah – Data Management in National Development.

Participants say the conference has given them opportunity to share knowledge with other researchers in the area of mathematics and the sciences, as the attendees are drawn from all areas of study, especially the sciences. On the primary category of the MAN Olympiad quiz competition result, Enugu State emerged first position, followed by Rivers State, second position, Osun and Ondo, took third and forth positions, respectively. On the junior secondary category Ogun and Plateau states took first and second positions, followed by Kaduna and Delta states that took third and forth positions, respectively. Ogun, Lagos and Enugu states emerged first, second and third positions in the senior secondary school category, respectively. The 56th annual conference dinner and annual general meeting of the body as well as election of new officials to run the affairs of the association is now expected to hold today.

CBN, EFInA, SANEF in new push for 80% financial inclusion by 2020 Onyinye Nwachukwu, Abuja

entral Bank of Nigeria (CBN), Shared Agent Network Expansion Facilities (SANEF), and Enhancing Financial Innovation & Access (EFInA) have commenced fresh collaboration to aggressively drive the financial inclusion targets set out by the apex bank. CBN targets to bring at least 80 percent of Nigerian adults into the financial services net by 2020, and then raise that number to 95 percent by 2024, according to new milestones set by Godwin Emefiele, the CBN governor. Latest figures by EfInA put Nigeria’s financial inclusion rate at 63.2%, meaning that as much 36.8 percent adults still lack access. At a Financial Services Agents Forum for North-Central on Wednesday in Abuja, Ashley Immanuel, EFInA head of programmes, said their last survey showed over 36 million adults in Nigeria were still completely financially excluded.

“They do not use bank accounts, Microfinance Banks, may be they save under their pillows, they borrow from family and friends. They do not use any form of financial system,” she stressed. According to Immanuel, EFInA is working to expand financial inclusion and help Nigerians have access to financial services that meet their needs. “We are focusing on agents because they are a crucial part of that inclusion because a lot of Nigerians say they do not have any bank branch or ATM near their homes both rural and urban areas, or people are busy to go queue up in banks, and agents can help solve these problems,” she said. Stressing the enormity of work to be done, she cited 2018 EFInA nationwide survey that showed only 3 percent of adults had used a bank agent in the past year. Only 1 percent said they used a mobile money agent. The quarterly forum was jointly organised by SANEF and EFInA and supported by the CBN, brought together top

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agents of various agent network providers on the way forward. She said the forum was one of their strategies to grow agent banking further. “We want to better understand how we can better support the agents, hear their primary challenges, and ultimately work out how we can all create a better environment for them to thrive, and empower other people in various communities,” she said. Joseph Attah, head, financial inclusion secretariat at the CBN, raised increasing concerns that the country might miss set targets except there was a strong collaboration. “CBN is therefore working with agents to close the gap,” Attah who was represented at the event said, but stressed the EFInA’s survey, that found 36.6 million Nigerians do not have access to financial serves. The 2020, 80 percent financial inclusion target means 70 percent of payment penetration; 60 percent of savings penetration; 40 percent of pension @Businessdayng

penetration; 40 percent of credit penetration, he said. “But right now, we are 1.9 percent pension penetration. It is becoming increasingly obvious that we cannot achieve our targets, so we need to change our approach.” He said with that in mind, the CBN and other stakeholders were banking on agents to close this gap and drive a more inclusive payment ecosystem, noting direct correlation between financial inclusion and GDP. Uche Uzoebo, head of distribution and engagement, SANEF, said the essence was to have a central point for financial inclusion and to deepen the financial access in the country. She said objectives of SANEF included creating 500,000 financial access points/agents by 2020, driving bank accounts/BVN to 70 million and to reach 80 percent Financial Inclusion by 2020. Henry Chukwu, programme specialist, Agent Networks and EFInA sounded optimistic that the 2020 target would be met with a good collaboration.

Thursday 05 September 2019

BUSINESS DAY

POLITICS & POLICY ANN condemns attacks on Nigerians in South Africa, berates FG’s slow responds INIOBONG IWOK

he Alliance for New Nigeria (ANN) has condemned the spate of xenophobic attacks on Nigerians in South Africa, saying that the attacks were cruel and inhuman. The party urged the Muhammadu Buhari administration and the All Progressives Congress (APC) government to move beyond lip-service and take decisive actions to stop the attacks and killings of Nigerians in South Africa. In a statement to the media, Wednesday and signed by Emmanuel Dania, the national chairman of the party, the party said the failure of the Buhari administration to act had exaggerated the situation. The party further expressed sadness over the reprisal attacks in Lagos on South African interests and businesses in some parts of Nigeria which had led to the killing of an innocent Nigerian. According to the statement, “The recent happenings and the attacks on Nigerians living and doing business in South Africa is

Emmanuel Dania

regrettable, it is a dastardly cruel and inhuman act. “The Alliance for New Nigeria condemns these actions in every form it may appear to have been described

and calls on the government of the All Progressives Congress led by President Muhammadu Buhari to stop the talking tough and start taking decisive actions.

“The reprisal attack in Lagos on South African interests has led to the killing of an innocent Nigerian who is only vexed at the inept attitude of the government and who in a bid to resolve to self-help has come under the fire of the Nigerian Police. This is sad and disheartening.” The party further berated the Federal Government for not placing value on the lives of it citizens, stressing that the attacks which had continued for some time could have been curtailed if the NigeriaN government was more proactive. “The time is now for Nigeria to begin to place value on the lives of every Nigerian regardless of where they live and do business in the world. It won’t take anything for the Federal Government to make arrangements to secure our brothers and sisters in South Africa and not all the talking tough we are tired of. “When Nigerians see their government taking a position, we are confident that the call for every Nigerian to stay calm would yield the corresponding action and not the empty talks made by different representatives of government without any visible action”.

One killed as gunmen disrupt Kogi PDP guber primary VICTORIA NNAKAIKE, Lokoja

t has been confirmed that at least one person was killed during the People’s Democratic Party (PDP) gubernatorial primary election in the shooting that took place in the early hours of Wednesday. An eye witness at the venue gave the name of the victim as Abdulahi Loki Ibrahim from Koto-Karfe Local Government Area of the state. But the party’s publicity secretary, Bode Ogunmola who confirmed the killing, however could not ascertain if the victim was a delegate, adding that he had since been buried according to Islamic rites. When our correspondent contacted the state police command, the PPRO, DSP William Ayah said the command had no report of any shooting. In a related development, Governor Yahaya Bello has condemned in strong terms the invasion of the PDP primary election venue in the early hours of Wednesday by gunmen.

Bode Ogunmola

According to a press statement made available to journalists in Lokoja and signed by his Chief Press Secretary, Muhammed Onogwu, Bello expressed his disappointment with the unholy development, saying that such dastardly acts were an affront to security of lives and property which he

said are the primary achievements of his administration, adding that it is one thing the people of Kogi have come to take for granted in recent times. Governor Bello however, berated the opposition PDP for failing to keep the law, especially as the rival All Progressives Congress (APC)

which is the governor’s party had demonstrated less than a week ago that such events could hold without unsavory incidents of any kind. He also said that details of the shooting were still sketchy but noted that the gunfire incident may not be unconnected with the usual do-or-die politics of some of the opposition aspirants whose desperation to win at all costs has led to such violence and crises in the state, including this one. The governor equally directed the security agencies to get to the roots of the matter immediately, declaring that it portended grave danger to the state’s gubernatorial elections scheduled for November 16, as he promised to update the public as soon as he has been fully briefed by the law enforcement agencies. Bello has equally commiserated with the injured delegates and the families of an alleged dead victim as he assured the people of Kogi State that this is one incident which will not be swept under the carpet no matter the status of those involved.

Oseke commends Bayelsa APC for peaceful guber primary SAMUEL ESE, Yenagoa

s the All Progressives Congress (APC) conducted it’s governorship primary election in Bayelsa State on Wednesday, August 4, the member representing Southern Ijaw Federal Constituency in the House of Representatives, Preye Oseke has hailed the peaceful exercise. There was concern that the party would be unable to conduct the primary election due a court injunction over the conduct of direct primary, but with the ruling of the court, a direct primary election held. The exercise held simultaneously in all the 105 wards across the right local government areas of the state to elect the party candidate for the November 16 governorship election. All card carrying members of the party turned out in their numbers to cast their votes all over the state as Oseke who is the returning officer for Southern Ijaw Local Government Area said party members were voting for any of the six aspirants whose names are on the

ballot. Results would be collated in Yenagoa, the winner announced and the name forwarded to the Independent National Electoral Commission (INEC) to beat Thursday’s deadline for submission of names of candidates. His words: “The direct primary is going on peacefully in all the 17 wards in Southern Ijaw Local Government Area. Virtually all registered and card carrying members of the All Progressives Congress (APC) are coming out to vote candidates of their choice. “The election has been peaceful and members of APC in the grassroots are very enthusiastic knowing that this is an opportunity for us to take over government in Bayelsa State and they have come out in their teeming numbers to cast their votes for the aspirants of their choice hence they have come out in their numbers to vote for their choice aspirants. “The expectation is glorious because Bayelsa State has to connect to the centre because we want development.”

PDP guber primary: Agbedi denounces alleged harassment, intimidation of delegates SAMUEL ESE, Yenagoa

he Onward Restoration and Transformation Campaign Organisation of Frederick Agbedi has denounced allegations of harassment and intimidation of delegates to Tuesday’s governorship primary election of the People’s Democratic Party (PDP) in Bayelsa State. In a statement on Monday signed by Miriki Ebikibina, director of publicity of the campaign organisation alleged that aspirants were also being restricted from speaking to the delegates contrary to earlier agreement between the party and aspirants. Ebikibina said: “This is contrary to the decision reached by the party and the aspirants that the delegates be camped together at strategic locations for the purpose of unhindered access to them by the aspirants who are the major financiers of this arrangement.” He further stated that the development is contrary to past conduct of PDP primaries at both national and state levels, describing it as an unfortunate and sinister motive of preventing the delegates from having access to their families. According to him, some

of the delegates had on “conditions of anonymity complained of inhuman treatment meted out to them through the instrumentality of security operatives who subjected them to untold hardship.” He pointed out that the delegates were respected men, women and youths, party faithful and loyalists who only want to carry out their civic and party obligations by freely exercising their franchise stressing that the development is regrettable and condemnable. The campaign organisation called for a halt in the unholy acts and the perpetrators called to order while commending the maturity and resilience of the delegates “who intend to vote for the candidates of their choice despite the intimidation and harassment. The campaign organisation called on the PDP leadership at all levels to immediately address the ugly and embarrassing situation ahead of the primaries for a free, fair, credible and transparent primary election. As tension continues to mount towards the primaries, there are also allegations that delegates are being compelled to take oaths though it has not been independently confirmed.

Thursday 05 September 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

DEMETRI SEVASTOPULO IN WASHINGTON

our days before the US imposed sanctions on an Iranian tanker suspected of shipping oil to Syria, the vessel’s Indian captain received an unusual email from the top Iran official at the Department of State. “This is Brian Hook . . . I work for secretary of state Mike Pompeo and serve as the US Representative for Iran,” Mr Hook wrote to Akhilesh Kumar on August 26, according to several emails seen by the Financial Times. “I am writing with good news.” The “good news” was that the Trump administration was offering Mr Kumar several million dollars to pilot the ship — until recently known as the Grace 1 — to a country that would impound the vessel on behalf of the US. To make sure Mr Kumar did not mistake the email for a scam, it included an official state department phone number. The remarkable outreach by such a high-ranking official was not an isolated case. Mr Hook, who heads the state department’s Iran Action Group, has emailed or texted roughly a dozen captains in recent months in an effort to scare mariners into understanding that helping Iran evade sanctions comes at a heavy price. “Iran knows that the success of our pressure campaign depends on vigorous enforcement of oil sanctions,” Mr Hook told the FT. “We have collapsed Iran’s oil exports in a short period of time. We are working very closely with the maritime community to disrupt and deter illicit oil exports.” The offer to Mr Kumar marks a new front in the US “maximum pressure” campaign designed to

US offers cash to tanker captains in bid to seize Iranian ships

Washington mixes bait and threats as ‘maximum pressure’ campaign against Tehran becomes unorthodox

According to US officials, the US has started using the ‘Rewards for Justice’ programme to target Iran’s Islamic Revolutionary Guard Corps © FT montage

starve Iran of cash and persuade Tehran to come to the table to negotiate a broader deal than the nuclear accord that Iran signed with the Obama administration and world powers in 2015. It came 11 days after the Iranian tanker was released by Gibraltar,

Five Star and Democratic party government to be sworn in on Thursday

taly’s president has given the green light to a new coalition government which is expected to be less confrontational towards the EU, pushing the anti-migrant populist leader Matteo Salvini’s League party back into opposition. After a meeting in Rome between president Sergio Mattarella and Giuseppe Conte on Wednesday, the new government is expected to be formally sworn in on Thursday. Mr Conte will lead the coalition between the Five Star Movement and the Democratic party (PD) as prime minister. “There is a parliamentary majority and a government has been formed,” Mr Mattarella said in a press conference. Mr Conte said: “We will devote our best energies, our skills and our passion to making Italy better in the interest of all citizens.” He said that veteran PD member of the European Parliament Roberto Gualtieri would serve as economy minister in the new government, while Five Star leader Luigi Di Maio would be foreign minister in a cabi-

net divided almost equally between the two parties. Italian government borrowing costs fell sharply as investors priced in a less hostile relationship between the eurozone’s third-largest economy and the EU now that Mr Salvini’s party is no longer in government. His coalition with Five Star, which collapsed in August amid mutual recriminations, lasted 14 months. The spread Italy pays to borrow for 10 years compared with Germany touched its lowest level since May 2018, the month before Mr Salvini entered government. Italy’s 10-year yield fell to 0.83 per cent, capping a powerful rally which has seen it plunge from more than 1.8 per cent just a month ago. Mr Salvini, who triggered the collapse of his party’s coalition with Five Star last month by calling for a vote of no confidence in Mr Conte, railed against the new government as a stooge of foreign powers. “A government born in Paris and Berlin . . . without dignity or ideals,” he wrote on his Facebook page after the announcement of new ministers. “They will not be able to escape the judgment of the Italians for much longer — we are ready.” www.businessday.ng

British territory ordered its release last month despite a last-minute US legal bid to seize the vessel. Mr Hook’s emails showed the US was not giving up. His offer to Mr Kumar, whose vessel is now known as Adrian Darya 1, came under “Rewards for Justice” — a 1984

South African businesses in Nigeria face retaliatory attacks

Italy’s new coalition gets green light from president MILES JOHNSON IN ROME AND TOMMY STUBBINGTON IN LONDON

where it had been at the centre of a stand-off between Iran and the west. The vessel was seized by British commandos off Gibraltar in July on suspicions that it was carrying Iranian oil to Syria in breach of EU sanctions. After Iran said the oil would not go to Syria, a court in the

programme to combat terrorism. According to US officials, the US has recently started using the programme in its efforts to target Iran’s Islamic Revolutionary Guard Corps, and will offer rewards of up to $15m for information that helps the US disrupt Iranian illicit activities. “With this money you can have any life you wish and be well-off in old age,” Mr Hook wrote in a second email to Mr Kumar that also included a warning. “If you choose not to take this easy path, life will be much harder for you.” In the intervening two days, the US had watched as the Adrian Darya 1 made “doughnut” shape manoeuvres at sea that suggested Mr Kumar might have been deciding how to react. After the captain failed to respond, Mr Hook emailed him to say that the US Treasury had imposed sanctions on him. Mr Kumar did not immediately respond to a request for comment. The US campaign comes as Iran threatens to take more steps by Friday to breach commitments made in the 2015 accord if Europe does not provide the financial rewards Tehran was guaranteed under the deal. While France, Germany and the UK are desperate to prevent Iran from going down that route, they are hamstrung by US sanctions.

Incidents follow xenophobic aggression against foreigners in Johannesburg and Pretoria NEIL MUNSHI IN ABUJA

frica’s largest telecoms operator said it had temporarily closed hundreds of shops in Nigeria, as South African-owned businesses were targeted in retaliation for the spate of xenophobic attacks against foreigners living in South Africa. MTN Nigeria, part of South Africa’s MTN Group, said its Nigerian stores would shut until further notice after they were targeted by looters and arsonists. Branches of South Africa’s Shoprite grocery chain in Nigeria were also attacked on Wednesday, leading to the temporary closure of some outlets. “The safety and security of our customers, staff and partners is our primary concern,” MTN Nigeria said on Wednesday, adding that it condemned “any acts of violence, prejudice and xenophobia”. The closures followed the wave of attacks on foreigners and foreign-owned businesses in South Africa, including on Nigerians, which prompted Abuja to warn that it would take “definitive” action to protect its citizens.

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Muhammadu Buhari, Nigeria’s president, said on Wednesday that he had dispatched a special envoy to South Africa to discuss the rising violence, and pledged to raise the issue with counterpart Cyril Ramaphosa during next month’s state visit. Mr Ramaphosa also condemned the looting of foreign-owned shops and torching of buildings and vehicles in Johannesburg this week, which followed similar incidents in the capital Pretoria. Nigeria’s government said it would boycott a World Economic Forum in Cape Town, which vicepresident Yemi Osinbajo had been scheduled to attend. Zambia and Zimbabwe have also issued warnings for their citizens in South Africa. Lai Mohammed, Nigeria’s minister of information and culture, said on Tuesday that attacks on South African companies in Nigeria were self defeating “because the investors in such companies, especially MTN and Shoprite, are Nigerians”, along with the majority of workers. The Nigerian arm of MTN listed in Lagos in May at a $5bn valuation and accounts for more than a quarter @Businessdayng

of the group’s roughly $9bn in annual revenues. The company did not disclose the exact figure, but the closure would affect several hundred MTN-owned stores and could affect thousands more third-party stores with MTN branding, if their owners choose to close. In a text message to its roughly 60m subscribers, MTN said its call centre was still available. A number of Nigerian civil society groups have called for a boycott of big South African companies operating in the country, including MTN, Shoprite and MultiChoice, the satellite TV provider. Tiwa Savage, a Nigerian pop star, said that she had pulled out of a music festival in Johannesburg sponsored by MultiChoice’s DSTV brand scheduled for later this month. “I refuse to watch the barbaric butchering of my people in SA,” she wrote on Twitter. In Abuja on Wednesday, young men burnt tires on the main road in front of a Shoprite store, which police had to secure from looters. The rioters also attempted to block traffic and smashed the windows of passing cars.

Thursday 05 September 2019

BUSINESS DAY

NATIONAL NEWS

What next after crushing Tory defeat on no-deal Brexit? Way cleared for emergency legislation to prevent UK leaving EU on October 31 GEORGE PARKER, POLITICAL EDITOR

oris Johnson on Tuesday night suffered a crushing defeat as Tory rebels joined forces with Labour and other opposition parties to seize control of the House of Commons agenda and derail his Brexit strategy. The defeat clears the way for MPs to vote on Wednesday on emergency legislation which aims to prevent Mr Johnson from taking Britain out of the EU on October 31 without a deal. It could also herald a general election. The prime minister said the legislation should be called “Jeremy Corbyn’s surrender bill”, because it would force him to go on bended knee to Brussels to seek an extension to the Article 50 exit process, with the EU laying down the terms. What actually happened on Tuesday night? The so-called “rebel alliance” of opposition MPs and anti-nodeal Tory MPs succeeded in taking control of the Commons order paper, allowing them to introduce a bill on Wednesday aimed at putting a legal block on a no-deal Brexit. Mr Johnson lost by 328 to 301, a serious setback for a prime minister who tried to bully MPs into backing him. He warned rebels that if they did not back him, they would lose the whip and face deselection as Tory candidates at the next election. He argues that unless the EU thinks he is serious about leaving the bloc whatever the circumstances on October 31, he will not be able to secure a better deal at the Brussels summit on October 17-18. Will the anti-no-deal legislation become law? The MPs of the “rebel alliance” should be able to turn their procedural victory on Tuesday night into a legislative triumph on Wednesday, when the bill to stop a no-deal Brexit is rushed through its Commons stages. The bill, which would require Mr Johnson to seek a Brexit delay until January 31 if he cannot secure an exit deal in Brussels, will then head to the House of Lords, where it could face a more complicated passage. Tory Eurosceptic peers could filibuster to try to delay passage of the bill but, ultimately, they are not expected to block a measure passed by the elected chamber. The bill would then, in normal circumstances, go to the Queen for royal assent. Can the government do anything to stop it? Mr Johnson repeated on Tuesday that he would never request a delay to Brexit, raising speculation that he might try all manner of tricks to stop the bill reaching the statute book, including refusing to send the bill to Balmoral for royal assent. Tory rebels do not trust Mr Johnson or his adviser Dominic

Cummings, who has promised to use “all necessary means” to deliver Brexit. But the prime minister insisted: “We will, of course, uphold the constitution and obey the law.” One entirely constitutional option would be for Mr Johnson to seek an early election — the route he proposed last night — thus attempting to persuade MPs to agree a dissolution of parliament before the bill has become law. Will Boris Johnson call an election? That is what he threatened on Tuesday night, if MPs persist in pushing through their anti-nodeal legislation, in spite of insisting on the steps of Downing Street on Monday: “I don’t want an election, you don’t want an election.” The prime minister would hold a poll on October 14 or 15, allowing him to seek a working Commons majority and then travel to Brussels for the EU summit to gain a better deal — or proceed to a nodeal exit if he cannot secure one. The prime minister wants to trigger the election before the antino-deal legislation reaches the monarch at her Highland castle for royal assent. A five-week election campaign would immediately ensue. Can he actually call an election? Under the 2011 Fixed Term Parliaments act, Mr Johnson would need the support of two-thirds of MPs to trigger an early election. That would mean he needed the backing of Labour MPs to carry out his plan. Labour and other opposition parties crucially want to put the anti-no-deal law on the statute book before a snap poll. Jeremy Corbyn also says he wants an election but he will seek cast-iron assurances from Mr Johnson that the poll will take place on October 14 or 15, well before Brexit day. Labour fears that Mr Johnson, once he has secured a dissolution of parliament, could advise the Queen that the election be held after Brexit day on October 31. Downing Street has promised that would not happen — and says it legally could not happen. Would Mr Johnson win an election? The prime minister’s advisers believe that the Tories could “crunch Corbyn” in an election, which would see Mr Johnson present the Conservatives as the party of Brexit and the champions of “the will of the people”. But Mr Johnson could not be sure of coming back with a Commons majority. While opinion polls suggest that he might take some seats from Labour in its Leave-voting heartlands, the Tories could lose seats elsewhere. The Tories could lose most of their 13 seats in Remain-voting Scotland, could suffer defeats to the resurgent Liberal Democrats in the south, and Labour remains strong in big cities, including London. The election result would be highly uncertain. www.businessday.ng

Hong Kong chief Carrie Lam formally withdraws extradition bill

Leader’s announcement rebuffed as inadequate by pro-democracy activists

FT REPORTERS

ong Kong chief executive Carrie Lam has withdrawn the controversial extradition bill that sparked three months of fierce protests and plunged the city into its worst political crisis since the handover from British to Chinese rule two decades ago. The bill, spearheaded by Ms Lam, would have allowed criminal suspects to be transferred to mainland China for the first time, but her concession on Wednesday was rebuffed by pro-democracy activists as “too little, too late.” Ms Lam had previously suspended the proposed law and pronounced it “dead”, but protesters continued to demand its full withdrawal. Civil Human Rights Front, the group behind the protests, said the withdrawal of the bill, which was one of the demonstrators’ five demands, would not be enough to quell public

anger. “We will continue to fight until all the five demands are fully implemented,” it said in a statement. Alongside the withdrawal of the extradition bill, the protesters want an independent investigation into allegations of police brutality, universal suffrage in the territory, the dropping of charges against all arrested protesters and for protests not to be classified as riots. Online chat forums circulated screen grabs from Winter on Fire, a documentary film about the 2015 Ukraine protests that is popular among the Hong Kong demonstrators. The screen grabs read: “If we accept the government’s conditions, our friends who have died won’t forgive us.” Joshua Wong, leader of pro-democracy group Demosisto and face of the 2014 Umbrella Movement, rejected Ms Lam’s move. “Too little too late,” he wrote on Twitter. “Carrie Lam’s repeated failure in understanding the situation has made this announcement completely out of touch — She needs to address ALL Five Demands.”

Ms Lam is understood to back an inquiry modelled on a UK panel, set up after the 2011 London riots, to understand the root causes of the Hong Kong protests, according to two people familiar with the matter. The panel will operate under the auspices of the Independent Police Complaints Council. “Let’s replace conflicts with conversations, and let’s look for solutions,” Ms Lam said in a televised address. She did not comment on the inquiry. Starry Lee, a pro-Beijing lawmaker, called the move a “step forward”, adding that continued violence would be damaging to Hong Kong. Hong Kong stocks gained sharply on Wednesday afternoon following local media reports of Ms Lam’s decision, with the Hang Seng index closing up almost 4 per cent, its best day in 10 months. The gains erased its losses for the year to date, after spending weeks as the only developed market stock index tracked by Bloomberg in negative territory for 2019.

Investors seek sustenance in alternative proteins Growing awareness of meat’s environmental impact is feeding demand elsewhere EMIKO TERAZONO IN LONDON

lobal investors are showing greater interest in alternative proteins, such as plant-based substitutes and lab-grown meat, as the climate impact of agriculture and food production comes under the spotlight. Environmental experts have started to highlight the impact of agriculture, especially the livestock sector, on rising greenhouse gas emissions as well as land and water use and deforestation. The world’s food system, including agriculture and land use, accounted for 25 to 30 per cent of emissions from 2007 to 2016, according to the latest IPCC report. “The focus until now has been on

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fossil fuels but we’re starting to look at food and the supply chain,” said Eva Cairns, investment analyst at asset manager Aberdeen Standard Investments. “We need to see companies in food diversifying [from an animal-based supply chain],” she said. The successful flotation of plantbased meat substitute group Beyond Meat earlier this year has also highlighted investment opportunities in alternative proteins as a way for food companies to be part of the solution. Plant-based proteins, including meat and dairy, are also seeing high demand from consumers, partly due to health reasons but also because many environment specialists believe a change in diets can mitigate the effects of greenhouse @Businessdayng

gas emissions. Emma Lupton, analyst at BMO Global Asset Management, said: “We’re really assessing what the risks might be and what the opportunities might be. We really want to see that a company is innovating and that it is thinking about the future in all different kinds of scenarios.” The Fairr initiative — Farm Animal Investment Risk and Return — is an investor advisory and research network supported by asset managers who manage a total of $16tn. It has been running an investorbacked engagement programme with leading food companies and supermarket chains, raising awareness and monitoring the diversity of protein sources away from an overreliance on meat, dairy and fish.

Thursday 05 September 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

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Deutsche Bank chief warns on damage from likely ECB rate cut Christian Sewing says lowering borrowing costs would deepen splits in society MARTIN ARNOLD IN FRANKFURT

eutsche Bank’s chief executive has warned about the negative side effects of a likely cut in interest rates by the European Central Bank next week, arguing it would do little to stimulate the economy but would deepen divisions in society. Christian Sewing told a banking conference in Frankfurt that an expected lowering of eurozone interest rates further into negative territory “may make refinancing cheaper for governments but it will have serious side-effects”. The head of Germany’s biggest bank said: “Few economists, at least, believe that cheaper money on this level will do anything. “This fits in with what we get from listening to our customers,” he added. “Medium-sized companies tell me clearly: they will not invest more just because the loan will be 10 basis points cheaper.” He also warned of a “split in society” because negative interest rates favoured those who own assets and have access to cheap loans by pushing up the price of houses and market securities, while penalising Germany’s many savers. Citing a Deutsche estimate that negative interest rates are already costing savers €160bn a year, Mr Sewing said: “The worrying thing is that central banks have little money left to effectively curb a real economic crisis.” The comments indicate how next week’s expected monetary stimulus package from the ECB, which economists forecast will include a further interest rate cut and resumption of its bond-buying programme, is likely to stir up political controversy in Germany. His criticism of ultra-loose monetary policy was backed up by

Martin Zielke, head of his main German rival Commerzbank, who was speaking at the same event. “Banks’ interest margins are under pressure in this environment and that’s not going to change,” Mr Zielke said. “I don’t think it is a particularly sustainable or responsible policy.” Some banks have passed the cost of negative rates on to companies and other financial institutions that hold deposits with them. But most have not done so for households, fearing that consumers could move their money to a cheaper rival or withdraw it as cash. This has squeezed banks’ profit margins, particularly those that rely on retail deposits for a large part of their funding, adding to the woes of a eurozone banking sector that still has not fully recovered from the 2008 financial crisis. The ECB is expected to mitigate the cost for banks of lowering its deposit rate in September by introducing a tiering system that excludes a portion of excess deposits from negative rates. This would be similar to rules already in place in other countries with negative deposit rates, including Japan, Denmark and Switzerland. German banks estimate that negative interest rates cost them €2.4bn a year — a third of the total cost for all eurozone banks. Deutsche and Commerzbank are both seeking to cut expenses to boost their flagging profitability, having examined a potential merger earlier this year. Deutsche this year announced 18,000-20,000 job cuts and a retreat from parts of its struggling investment banking operation. However, with Germany on the brink of a potential recession — hit by the disruption of the US-China trade war, the UK’s plan to exit the EU and the turmoil in the carmaking industry — the country’s banks are braced for tough times ahead.

WeWork unwinds $5.9m payment to CEO’s investment vehicle Shared office space provider also adds woman to all-male board ahead of IPO ERIC PLATT IN NEW YORK

eWork owner The We Company said on Wednesday it had unwound a $5.9m payment it made to an investment vehicle managed by its chief executive Adam Neumann for use of the trademarked word “we”. The payment, as well as several loans the company made to both Mr Neumann and the WE Holdings investment vehicle, raised criticism from analysts and wouldbe investors in the group ahead of its looming initial public offering. The lossmaking provider of office space, which is expected to kick off a roadshow for its IPO as soon as next week, also said it would add a woman to its all-male board of directors. Frances Frei, a professor of

technology and operations management at Harvard Business School, will join the board once the IPO is complete, the We Company said in a filing to US securities regulators. Ms Frei previously served as a senior vice-president at ridehailing app Uber and since March had provided consulting services to WeWork. “Frances brings to our board of directors extensive experience researching and advising on corporate strategy, operations and culture, which our board of directors believes gives her particular insight into strategic planning and leadership,” the company said. The We Company said it intended to add another member to its board within a year of the IPO, “with a commitment to increasing the board’s gender and ethnic diversity.” www.businessday.ng

Lagarde calls on European governments to launch fiscal stimulus ECB president-elect warns that greater co-operation is needed to tackle populism MARTIN ARNOLD IN FRANKFURT AND MEHREEN KHAN IN BRUSSELS

hristine Lagarde has called on European governments to cooperate more closely over fiscal policy to stimulate the stuttering eurozone economy, in her first public appearance as president-elect of the European Central Bank. Ms Lagarde, who is set to succeed Mario Draghi at the Frankfurt institution this autumn, made the comments in an address to the European Parliament on Wednesday as part of her nomination process. Telling MEPs that “central banks are not the only game in town”, Ms Lagarde urged richer eurozone governments with low deficits to bolster their crisis-fighting capacities by spending during downturns. “I’m not a fairy”, she said. In remarks aimed at rich economies like Germany and the Netherlands, she said governments who “have the capacity to use the fiscal space available to them”

should spend on improving their infrastructure. “It’s a majority of countries in the euro area”, she said. “There is clearly co-operation to be had if all the institutions in Europe — and the eurozone in particular — want to respond to the threat of populism.” Noting that she had been present when Mr Draghi promised to do “whatever it takes” to save the eurozone at the height of the 2012 sovereign debt crisis, Ms Lagarde said: “I hope I never have to say something like that — I really do — because if I do it will mean that other economic policymakers have not done what they have to.” Her comments come ahead of an expected further wave of monetary loosening by the ECB next week, which could include cutting interest rates further into negative territory and restarting its €2.6tn bond-buying programme. Other major central banks — including the US — have also recently moved to loosen monetary policy. This has prompted some economists to warn that central banks are running out of tools to

fight recessions as interest rates are already at record low levels. Ms Lagarde’s comments reflect broader pressure on governments in Germany and elsewhere to take some of the burden by launching fiscal stimulus measures. The eurozone’s attempts to create a common budgetary instrument for crisis times -pooling money in a central pot to help out troubled economies — have been beset by divisions. Countries led by the Netherlands have pushed back against the initiative, which was championed by Emmanuel Macron. The budget does not yet have a size or any spending priorities. Ms Lagarde said the “embryonic” eurozone budget would not be enough to help stabilise the bloc during a major downturn and urged EU policymakers to bolster the instrument. European Commission officials are also exploring ways to revamp the EU’s stability and growth pact budget rules, which have been criticised for being overly complex and forcing struggling economies into austerity.

Starbucks forecasts 2020 earnings below target Coffee chain blames absence of a tax benefit and slower share buybacks PETER WELLS IN NEW YORK

tarbucks warned earnings growth in the 2020 financial year will come in below its forecasts, sending shares down nearly 5 per cent in premarket trade. Patrick Grismer, chief financial officer, in a presentation at a retailing conference hosted by Goldman Sachs, said adjusted earnings growth in the upcoming financial year would probably be below the company’s longer-term target of 10 per cent. That compares with a previous

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forecast, provided at the company’s investor day last December, for growth of “at least” 13 per cent in the 2020 financial year. Factors including a one-time tax benefit and the pulling forward of share repurchases that are supporting earnings in the 2019 financial year will not be around in 2020. Mr Grismer said the company’s operating growth model remained “intact”, though. The company revealed in July that like-for-like sales during its third quarter — from the start of April to the end of June — rose 6 per cent from a year earlier, the highest quar@Businessdayng

terly figure since 2016, boosted by solid growth in the Americas, China and Asia Pacific. That prompted Starbucks to upgrade its outlook for the 2019 financial year — a forecast it reaffirmed on Wednesday. Adjusted earnings would grow about 16 per cent to a range of $2.80 to $2.82 a share for the current financial year ending September 30. Shares fell as much as 4.9 per cent in pre-market trade, before trimming declines to be down 3.2 per cent. They closed at a record $99.11 in July and are up 50.3 per cent so far in 2019.

Thursday 05 September 2019

BUSINESS DAY

ANALYSIS

Uber and Lyft hit new lows amid fears of California law Bill set for imminent vote could force car-booking companies to treat drivers as employees CAMILLA HODGSON AND PATRICK MCGEE IN SAN FRANCISCO

hares of Uber and Lyft dropped to record lows on Tuesday as investors digested the implications of a proposed California law that could upend their business models by forcing them to change how they treat drivers. A vote on Assembly Bill 5, the California law that could transform the employment status of drivers from independent contractors to employees, is expected as early as Wednesday. Advocates say such a change would give drivers much-needed protections, such as a guaranteed minimum wage and the right to paid leave. There is currently no minimum dollar amount drivers are guaranteed to earn, nor a minimum percentage of the total cost of a ride they can expect to take home. “It looks like we are getting closer and closer to it being codified into law,” said Tom White, tech analyst at DA Davidson Research. “This will certainly be an issue for Uber and Lyft, particularly if other states follow their lead.” Lyft shares closed at $45.42, down 7.3 per cent on the day and 42 per cent lower than their closing peak on their the first day as a public company, March 29. The company’s market value is now $13.3bn. Uber shares fell 5.7 per cent to $30.70, down 34 per cent from a peak of $46.38 on June 28. When the company went public this year it had hoped for a valuation of up to $55 a share, which would have valued it above $100bn. It is now worth about half that, $52.2bn. Both lossmaking companies have pushed back strongly against California’s proposed law, which could magnify their tax bills and

outgoings. Uber and Lyft listed the possible change as a risk factor to their businesses in documents filed prior to going public. The companies initiated a lastditch effort to reach a deal with California legislators on August 29, when they proposed a minimum wage of $21 per hour of driving, including expenses, as well as benefits that could include sick and holiday pay and the ability to organise. But with the likelihood of a California Senate vote rising, the chances of reaching a compromise is waning. The Senate is expected to approve AB 5 in the coming days, following which the bill must be signed into law by the state governor. Uber and Lyft have said they will challenge the new law if it does pass. Last week, the companies teamed up with food delivery service DoorDash to put a combined $90m towards supporting a ballot measure in November 2020, which would seek to exempt them from reclassification and lay out alternatives. Joe Renice, 71, an Uber driver in the Bay Area who has completed more than 20,000 rides, said he was against the proposed law and believed it would actually hurt the drivers most in need. “The supposition is that it’s better for drivers, but it will be worse because Uber and Lyft are public companies, and when a company goes public the parameters they operate in are defined by lawyers to protect stockholders.” Uber typically takes a 25 per cent cut of fares. If it is forced to pay a higher minimum wage, then drivers who underperform would be the chief beneficiaries, on paper. But this assumes Uber hires them, and with the amount of data at its fingertips, it is more likely such drivers will simply not be hired, Mr Renice said.

US presses ahead with redirecting money for Mexico border wall Trump administration shifts $3.6bn from military projects for 175 miles of barrier LAUREN FEDOR AND AIME WILLIAMS IN WASHINGTON

he Trump administration is pressing ahead with plans to redirect billions of dollars from military projects to help pay for the US president’s Mexico border wall. Defence secretary Mark Esper began briefing lawmakers on Tuesday of his plans to divert $3.6bn, effectively defunding 127 unspecified military projects. The funds will reportedly be used to support 175 miles of wall between the US and Mexico, reducing the need for the thousands of military and National Guard members stationed along the border. Donald Trump has made building a border wall between the US and Mexico a hallmark of his presidency. The fight over funding the wall prompted a five-week partial government shutdown late last year. In February, Mr Trump de-

clared a national emergency in order to divert billions of dollars in federal money towards building a wall, after Congress reached a bipartisan budget deal providing just $1.4bn to the project. The controversial manoeuvre prompted a series of legal challenges, but in July the US Supreme Court, by a 5-4 margin, lifted a lower court order blocking the president’s plan to use billions in military funds for construction. Nancy Pelosi, Speaker of the House of Representatives, called the latest decision “unacceptable and deeply dangerous”. “The president is negating the constitution’s most fundamental principle, the separation of powers, by assaulting our congressional ‘power of the purse’,” she said on Tuesday, adding: “Cancelling military construction projects at home and abroad will undermine our national security and the quality of life and morale of our troops, making America less secure.” www.businessday.ng

Labour takes aim at shareholder capitalism The party wants to change the way companies are owned. But are its ideas fuelled by 1970s nostalgia? JONATHAN FORD IN LONDON

t might not have been his intention, but Julian Richer recently became a socialist hero. In May this year, the owner of the hi-fi and TV retail chain, Richer Sounds, did something that does not happen very often. He transferred his controlling stake in the business with its 53 stores to a trust for the benefit of its 530 staff. It was not a political gesture. Mr Richer, 60, has no children and simply wanted to ensure that the company he built up over 41 years had a stable succession. “My father dropped down dead at 60, so I was keen for this to happen in my lifetime,” he explains. Creating an employee trust a bit like John Lewis Partnership, the famous UK retailer, wasn’t an easy choice. It cost Mr Richer the chance to sell for the highest price to private equity or a trade buyer. Instead he flogged the shares to the trust at concessionary rates. He did so partly to reward his employees who had helped him build the business. But it wasn’t just sentiment: Mr Richer also felt they would be better stewards of the business than a distant and financially driven investor. “We own 90 per cent of the stores as freeholds, and I didn’t want someone selling those off at the first opportunity to pay a dividend,” he says. Employee ownership has historically been the minority choice among British businesses. With its £200m in sales for the last financial year, Richer Sounds is one of the largest of the 350-odd companies to have adopted the employee ownership trust (EOT) model. But it is a path the Labour party hopes to encourage many more to take in the future. Under Jeremy Corbyn’s leadership, Britain’s opposition is seeking not just to change corporate governance, but the way British companies are financed and owned. “It is about building a new mod-

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el of economic democracy,” says James Meadway, an economist and former adviser to the shadow chancellor John McDonnell. “We need to look beyond the old dichotomy of ownership between private sector and public sector, and engage with the wide range of options that lies in between.” Ownership has always been central to Labour’s credo. Ever since Sidney Webb, the social reformer, wrote Clause IV of its 1918 constitution, calling for workers to secure control of “the means of production, distribution and exchange”, such questions have preoccupied the party’s thinking on economic issues. True, there was a hiatus under Tony Blair and Gordon Brown, when these ideas were dropped as outmoded, and the “filthy rich” enjoined to pay their taxes. But under the leadership of Mr Corbyn they have come roaring back. Much of the public focus has been on nationalisation as the flagship of this new ownership agenda. In the autumn of 2017, Mr McDonnell promised to bring “ownership and control of the utilities and key services into the hands of people who use and work in them”. Labour has identified natural monopolies such as water, electricity transmission and rail, as well as the Royal Mail postal service, as targets for state buybacks. But the agenda goes far beyond nationalising utilities. Labour thinkers believe they can tap into the same desire to “take back control” that drove the Brexit vote to push through far-reaching changes designed to give staff a greater say in the places where they work. “Just as nationalisation underpinned the postwar consensus and privatisation drove Thatcherism, new pluralistic and democratic models of ownership will be vital to moving beyond neoliberalism,” says Mathew Lawrence, an influential figure in Labour circles and founder of the Common Wealth think-tank. Part of the strategy is to pro@Businessdayng

mote alternative structures to the dominant public limited company model, which Labour argues leans too much towards the primacy of external shareholders. The idea is that worker ownership could spur greater productivity by allowing workers to participate financially in its fruits. Placing a lock on the assets — workers would get the economic and voting benefits of ownership, but not the right to sell the shares, under the Labour proposal — would create the commitment that is often absent in conventional shareholder ownership. Proponents such as Rebecca Long-Bailey, the shadow business secretary, claim this would limit the ability of owners to push down wages and cream off excess profits — a traditional critique of shareholder capitalism that has been revived loudly in recent years by academics such as Thomas Piketty. She also believes it could help industry adjust to the sweeping changes that lie ahead as Britain deals with such challenges as artificial intelligence and decarbonisation. “A worker would have a very different decision mechanism in looking at their job over the next 20-30 years as against a shareholder who may have a very short-term measure,” says Ms Long-Bailey. Such an approach includes forgoing dividends if workers could see investments being raised that would increase productivity and make them better off. “It is something that already happens in workplaces where there is high worker engagement,” she adds. Evidence suggests that companies with greater levels of worker ownership are both more stable and willing to tolerate long payback horizons on investment. A review by Cass and Manchester business schools in 2017 concluded that such firms had “either superior or similar economic performance” to non-employee owned firms. This became more marked at times of economic stress.

Thursday 05 September 2019

BUSINESS DAY

ECONOMIC MONITOR briu@businessday.ng

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

08098710024

What does the mining sector data imply for the economy? AMAMCHUKWU OKAFOR

n Nigeria, the solid mineral sector is experiencing a revisit and therefore increasing government and private sector attention following the herald of economic diversification and industry reforms since 2016. The 2018 State Disaggregated Mining and Quarrying report published by the Nigeria Bureau of Statistics(NBS) counted 43 different solid minerals across the states of the federation. Still, the mining sector contribution to GDP has been improving despite stagnating growth rate in the mining sector. Recent data from the Nigerian Bureau of Statistics (NBS), Nigeria’s Gross Domestic Product (GDP) grew by 1.94% in Q2 2019. The mining and quarrying sector contribution to GDP was 8.84 percent, a decline of 11.47 percent from Q1 2019 and 28.3

8.97%, slightly higher than 8.71% recorded in the corresponding quarter of 2018 but lower than 9.29% recorded in the first quarter of 2019. The graph below shows that crude petroleum and natural gas accounts for the most fractions in the mining sector GDP,

Sources: NBS, BRIU

percent in corresponding quarter a year-ago. The real sector grew by 5.02% (year-on-year) during the second quarter of 2019. This was 8.85% points higher compared to the same quarter of 2018 and 6.38% points higher than the first quarter of 2019. On a quarter on quarter basis, the growth rate recorded was –0.72%. The contribution of mining and quarrying to real GDP stood at

followed by quarrying. The representation in graph 3 shows that trend in the subsectors: the production of crude petroleum and natural rises and falls in the same pattern as quarrying, even though latter rises and falls faster. The trend also reveals some seasonality in quarrying as it falls to sharply in Q1 and picks up in Q2. More so, there has been a significant uptick in the activities around metal

ores and coal mining since the Solid Mineral Roadmap in 2012 and 2016 – notwithstanding, the seasonal deep in coal mining every Q3 and Q4 for metal ores activities since 2015. Snapshot of solid minerals output by regions The total output of solid minerals in Nigeria across states and regions in 2018 stood at 55.8 million tons compared to 45.8 million tons in 2017 and 43.44 million tons in 2016. South West followed by North Central tops the list with a total output of 20 million and 18.21 million tonnes respectively – accounting for 35.82 percent and 32.62 percent respectively. The data from NBS shows that limestone alone accounted for 48.7 percent of the total production of solid minerals in 2018. Granite (17.24 percent), laterite (9.08 percent) and clay (7.21 percent) are among the largest solid mineral production. The laggards include topaz, ruby and garnez. Ogun State, South West Nigeria retains the largest solid mineral output across the country. It is the major bolster in the region in terms of solid mineral production. Ogun State accounts for 29.53 percent of the total output in 2018- a 41.95 percent decrease from 2017. In 2017, the state claimed 50.89 percent of the total national output. The graphics below show a declining output since 2017. Kogi State is another top performer in terms of solid mineral production. Like Ogun in the South West, it is the major anchor in the North Central. It recorded significant output growth of 189.45 percent between 2017 and 2018 contributing 27.1 percent to the total national output

Sources: NBS, BRIU analysis www.businessday.ng

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in 2018. Other top performers include Cross-River and FCT with 6.25 percent and 3.4 percent contribution to the national output respectively. Plateau State – North Central – has the largest varieties of mineral deposits with a count of 19 different solid mineral en-

in terms of output with a total production of 2 million tonnes representing 3.69 percent of the total national production. Whereas Ebonyi State is the lead performer in the region with significant production in granite and lead, Imo is the least performer with recorded production in sand dredging alone. Nationwide, the least performers across region include Borno (8403.30 tonnes), Rivers (19548.68 tonnes) and Yobe (41,591.49 tonnes). It is not clear whether the limitation in production in Borno and Yobe is due to the insurgency in the region or the quantum of minerals available, but the overdependence on crude-oil exploration crowd-out interest in other sectors. Remarks Based on the foregoing, there is room for progressive investments across regions dwelling on the mineral demographics. The positive trend in real GDP

Sources: NBS, BRIU

dowments. It, however, accounts for only 0.16 percent of national output. Nasarawa, another state in the North Central takes the second position in the count of mineral deposits with a total count of 13 different solid minerals. It suggests that the vast land in the region is richly endowed with a variety of mineral resources. The South East is the least

Sources: NBS, BRIU analysis @Businessdayng

connotes positive efforts and feedback in the sector.However, the production output in limestone, granite and clay suggests that explorations are lopsided towards cement and construction material components. It may be necessary to look into other diverse mineral endowments of economic importance; rely on the private sector participation to expand the base of production.

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Thursday 05 September 2019

BUSINESS DAY

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Thursday 05 September 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Wednesday 04 September 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 232,821.23 6.60 -1.49 210 81,853,000 UNITED BANK FOR AFRICA PLC 215,456.35 6.30 -1.56 216 8,740,385 ZENITH BANK PLC 549,438.64 17.50 -0.29 326 27,503,369 752 118,096,754 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 163,323.58 4.55 -3.19 285 19,279,875 285 19,279,875 1,037 137,376,629 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,809,940.53 138.50 -1.07 137 3,807,980 137 3,807,980 137 3,807,980 BUILDING MATERIALS DANGOTE CEMENT PLC 2,687,288.02 157.70 -1.44 71 1,528,212 LAFARGE AFRICA PLC. 240,811.54 14.95 4.18 101 40,645,251 172 42,173,463 172 42,173,463 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 234,024.40 397.70 - 17 22,023 17 22,023 17 22,023 1,363 183,380,095 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 13,074.52 4.90 -9.26 17 2,804,000 17 2,804,000 17 2,804,000 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 17 2,804,000 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 39,682.66 41.60 - 20 42,485 PRESCO PLC 44,800.00 44.80 - 12 10,236 32 52,721 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,260.00 0.42 - 6 65,558 6 65,558 38 118,279 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 688.30 0.26 - 1 810 JOHN HOLT PLC. 217.92 0.56 - 1 4,290 S C O A NIG. PLC. 1,903.99 2.93 - 1 560 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,054.47 1.01 1.98 56 13,705,684 U A C N PLC. 14,406.48 5.00 9.89 73 6,310,996 132 20,022,340 132 20,022,340 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,486.00 18.55 - 9 8,632 ROADS NIG PLC. 165.00 6.60 - 0 0 9 8,632 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,130.68 0.90 9.76 4 153,511 4 153,511 13 162,143 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 10,804.71 1.38 - 1 100 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 81,701.28 37.30 -9.90 19 89,749 INTERNATIONAL BREWERIES PLC. 102,290.76 11.90 8.18 26 509,300 NIGERIAN BREW. PLC. 404,243.40 50.55 -1.84 53 1,731,549 99 2,330,698 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 100,000.00 20.00 -0.25 86 767,041 DANGOTE SUGAR REFINERY PLC 105,600.00 8.80 3.53 80 763,865 FLOUR MILLS NIG. PLC. 55,355.12 13.50 - 57 277,755 HONEYWELL FLOUR MILL PLC 7,850.90 0.99 -1.00 17 646,211 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 34,442.70 13.00 - 17 776,854 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 257 3,231,726 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,467.28 9.30 - 10 79,137 NESTLE NIGERIA PLC. 990,820.32 1,250.00 -3.85 49 178,241 59 257,378 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,366.12 4.29 - 12 290,548 12 290,548 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,425.81 5.90 - 32 207,229 UNILEVER NIGERIA PLC. 169,190.41 29.45 - 11 4,007 43 211,236 470 6,321,586 BANKING ECOBANK TRANSNATIONAL INCORPORATED 141,291.54 7.70 - 30 103,229 FIDELITY BANK PLC 46,359.68 1.60 1.27 103 5,920,149 GUARANTY TRUST BANK PLC. 769,625.34 26.15 -2.79 199 5,148,325 JAIZ BANK PLC 11,196.41 0.38 5.26 7 366,150 STERLING BANK PLC. 66,217.96 2.30 -2.17 31 3,470,916 UNION BANK NIG.PLC. 203,845.27 7.00 6.06 25 305,108 UNITY BANK PLC 8,182.54 0.70 - 12 164,836 WEMA BANK PLC. 22,758.93 0.59 1.69 28 1,234,510 435 16,713,223 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 60 AIICO INSURANCE PLC. 4,435.33 0.64 - 16 1,202,527 AXAMANSARD INSURANCE PLC 18,165.00 1.73 -3.89 23 737,352 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 0 0 CONTINENTAL REINSURANCE PLC 16,907.57 1.63 - 3 70,400 CORNERSTONE INSURANCE PLC 3,682.38 0.25 - 4 59,758 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,050.56 0.28 - 12 1,069,224 LAW UNION AND ROCK INS. PLC. 1,675.57 0.39 - 0 0 LINKAGE ASSURANCE PLC 4,160.00 0.52 8.33 9 464,000 MUTUAL BENEFITS ASSURANCE PLC. 2,346.27 0.21 -4.55 3 250,980 NEM INSURANCE PLC 10,032.96 1.90 - 15 133,238 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,637.45 0.49 - 1 3,716 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 2 202,100 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 500 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 100 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,817.79 0.36 -5.26 23 674,571 114 4,868,526

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MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,583.90 1.13 - 2 10,350 2 10,350 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 2,265.95 0.20 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,900.00 3.95 8.82 52 1,017,902 35,291.19 6.00 - 6 21,759 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 30,694.20 1.55 -1.29 40 1,425,797 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,029.07 0.20 - 6 5,215 STANBIC IBTC HOLDINGS PLC 389,141.01 38.00 - 19 39,541 12,060.00 2.01 0.50 74 1,834,483 UNITED CAPITAL PLC 197 4,344,697 748 25,936,796 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 817.22 0.23 - 1 10,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 1 10,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 9,388.62 4.50 - 1 127 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 9,447.42 7.90 6.04 18 198,654 MAY & BAKER NIGERIA PLC. 3,450.47 2.00 - 8 119,514 949.58 0.50 - 10 194,121 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 37 512,416 38 522,416 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 2 187,001 2 187,001 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 534.60 4.95 - 0 0 TRIPPLE GEE AND COMPANY PLC. 282.12 0.57 - 1 100 1 100 PROCESSING SYSTEMS CHAMS PLC 1,174.02 0.25 4.17 14 2,938,423 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 0 0 14 2,938,423 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 5 5,030 5 5,030 22 3,130,554 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 5 4,185 CAP PLC 17,325.00 24.75 - 21 96,243 CEMENT CO. OF NORTH.NIG. PLC 228,696.92 17.40 - 21 133,779 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 1 200 1,156.20 9.40 - 1 10 PREMIER PAINTS PLC. 49 234,417 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,730.05 1.55 - 17 167,366 17 167,366 PACKAGING/CONTAINERS BETA GLASS PLC. 29,873.33 59.75 - 1 22 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 22 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 67 401,805 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 3 3,144 3 3,144 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 1 555 1 555 4 3,699 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 1 6,500 1 6,500 INTEGRATED OIL AND GAS SERVICES OANDO PLC 47,860.94 3.85 -1.28 57 2,206,224 57 2,206,224 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 20 22,866 CONOIL PLC 11,658.40 16.80 - 28 47,585 ETERNA PLC. 3,455.98 2.65 -5.36 9 86,675 FORTE OIL PLC. 19,341.84 14.85 -9.73 107 1,710,973 MRS OIL NIGERIA PLC. 5,729.98 18.80 - 4 4,000 TOTAL NIGERIA PLC. 33,952.18 100.00 - 28 17,948 196 1,890,047 254 4,102,771 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,387.46 4.05 - 3 3,625 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 1 11,952 4 15,577 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,681.65 1.29 -9.79 3 185,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 41,042.18 5.40 - 0 0 TRANSCORP HOTELS PLC 3 185,000 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 211.68 0.35 - 0 0 LEARN AFRICA PLC 1,072.32 1.39 - 2 5,122 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 487.49 1.13 - 6 83,519 8 88,641 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 530.46 0.32 - 0 0

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industry Insight

BUSINESS DAY Thursday 05 September 2019 www.businessday.ng

Emerging trends in Nigeria’s manufacturing sector ODINAKA ANUDU, MICHAEL ANI & GBEMI FAMINU

n September 4 (yesterday), the Flour Mills of Nigeria had its annual general meeting in Lagos. Its group financial statement showed that revenue fell 3 percent to N527.4 billion in March 2019, as against N542.7 billion in March 2018. Profit from continuing operations slumped by 71 percent to N4 billion, from N13.61 billion in the previous year. The revenue and the profit were fairly good, considering the tough environment in which the conglomerate and other manufacturers operate. Many manufacturers have released their financial statements in recent times, with lamentations on why their top- and bottom-lines headed south. Dangote Sugar’s 2018 result showed a group turnover N150.4 billion, a 26 percent decrease over N204.4 billion in 2017. Both profit before tax and profit after tax also fell. Smuggling and Apapa gridlocks contributed to the decline experienced by the company in 2018. Guinness Nigeria recorded N131.5 billion in turnover in the year ended June 30, 2019 , which was a decline of 8 percent when compared with N143 billion in the corresponding period of 2018. The decline cut across both the domestic and export sales. In the domestic market, Guinness Nigeria realised N124.9 billion, a decline of 7.9 percent when compared with N135.7 billion it made in the same market during a corresponding period in. 2018 Nigerian Breweries sales fell by 5.9 percent. Local sales in the financial year ended December 31, 2018 stood at N324.20 billion, representing 5.9 percent decline. Sales, however, rose by 57.4 percent from N121.03 million in December 2017 to N190.5 million in December 2018. Okomu Oil has had its margins shrink as poor sales and smuggling of palm oil weakened revenue. In fact, the entire palm oil industry is struggling to stay afloat. The profit of palm oil maker slumped by 57 percent in the first half of 2019. Okumu Oil posted a profit of N2.53 billion for six months to June 30, about half of the N5.94 billion announced as profit in the same period last year. In the six-month period, the palm oil maker saw sales drop to N8.57 billion as against N12.94 billion last year. Revenue weakened by some 34 percent in the review period. Many manufacturers struggle to raise their margins in Africa’s biggest oil producing nation, with purchasing power heading increasingly south. The economy sluggishly grew at 1.94 percent in the second quarter of 2019, from 2.10 in the first quarter, according to the National Bureau of Statistics (NBS). Ninety-eight million Nigerians

are in multidimensional poverty and cannot afford to buy a number of products made by Nigerian manufacturers. Unemployment rate in Nigeria increased to 23.10 percent in the third quarter of 2018 from 22.70 percent in the second quarter of 2018, according to the NBS. The Nigerian manufacturing sector, which is supposed to be an engine of growth to create jobs and solve the country’s poverty problem, headed southwards in the second quarter of 2019, according to the latest data released by the NBS. Since the 2016 recession that crippled business activities and brought the economy to its knees, the sector has continually recorded an inconsistent movement, reporting modest growth and later on contracting. The sector appeared to be getting a facelift after it limped 1.36 percent in the first quarter of 2017—as the country began to heal from the shock of a 2014 oil price collapse that made the central bank devalue the naira—after a four-quarter of negative growth. After picking up in the first two quarters of 2017, the sector plunged back into a negative trajectory, recording -2.85 percent growths. In Q4 2017, growth in the manufacturing sector was positive at a 0.14 percent as economic activities gradually returned to normal and companies got more dollars at their disposal to command more inputs. However, for the first time since the fourth quarter of 2017, the sector contracted by -0.13percent year on year, lower than the corresponding quarter of 2018 and Q1 2019, showing that it is not the best of times for manufacturing companies as the sector faces a number of challenges. The growth rate of the sector, on a quarter-on-quarter basis, stood at –4.41percent. The contribution to real GDP in Q2 2019 was 9.10percent, which is lower than 9.29 percent recorded in the previous year and 9.79 percent recorded in first quarter 2019. The shrinking consumer wallet means companies can no longer pass the cost to the final consumers who are price-sensitive and always ready to shift loyalty to cheaper brands. The big players in the consumer goods space are also threatened by small players, mostly unquoted companies cannibalising on their sales. The manufacturing sector has 13 activities namely oil refining; cement ; food, beverages and tobacco; textile, and footwear; wood and food products; pulp paper and paper products; chemical and pharmaceutical products; non-metallic products, plastic, and rubber products; electrical and electronic, basic metal and iron and steel; motor vehicles and assembly; and other manufacturing. The chemical and pharmaceutical products under manufacturing sector contracted -1.27percent in Q2 2019, from 1.66percent in Q1 2019

and 1.52percent in Q4 2018. However, the cement subsector under grew by 1.58percent in Q2 2019 from 2.81percent in Q1 2019 and 0.98percent in Q4 2018. Food, beverage and tobacco sub-sector grew by 1.22percent in Q2 2019 from 1.76percent in Q1 2019 and 2.22percent in Q4 2018. The Manufacturers Association of Nigeria (MAN) recently released the 2019 second quarter (Q2) Manufacturers CEOs Confidence Index (MCCI), where 400 chief executives of firms made clear their positions about the Nigerian economy. According to the survey, the majority (76 percent) of the CEOs interviewed were of the opinion that the rate at which commercial banks lends to manufacturers discourages productivity in the sector. Only 12 percent disagreed. The NBS’s recent MSME report shows that 85 percent of businesses could not have access to external financing within 2013 and 2017. In fact, only 5.3 percent of SMEs had access to bank credit, even with 40 percent of them having relationships with banks. Due to high inflation rate and the monetary policy rate, deposit money banks give out loans at 20 to 35 percent interest rates per annum with a usually 12-month tenor, while development banks like the Bank of Industry capable of issuing loans at single-digit interest rates lack the required capital to keep up with its activities. As a possible solution, MAN advocates policy measures from the CBN that will lower the cost of borrowing and increase productivity in the sector. “The current CBN policy aimed at increasing loan to the real sector of the economy to stimulate production, is a step in the right direction and should therefore be

conscientiously,” respondents in the survey said. The report further buttresses the 2019 World Bank’s Doing Business Index, which scored Nigeria 52.89 out of 100 points and giving a ranking of 146 out of 190 countries surveyed. Ninety-four percent of chief executives of manufacturing companies across the country reported that congestion at the ports significantly affects productivity negatively. The CEOs complained that delays in clearing raw materials and machinery often result in high demurrages which increase production costs and slow down manufacturing operations. The report taps inadequate space inside the ports, weak trade facilitation infrastructure, poor road network and the associated traffic gridlock as critical issues that require government attention. A 2018 report by the Lagos Chamber of Commerce and Industry (LCCI) had supported the CEOs point. The report by the LCCI had disclosed that 5,000 trucks seek access to Apapa and Tin Can ports in Lagos every day even though they were originally meant to accommodate only 1,500 trucks. In the first quarter survey, 92 percent of CEOs said multiple taxation was their biggest impediment. But in the second quarter, the number rose to 95 percent. “This is substantiated by the numerous taxes, levies, fees and other charges that manufacturers pay to agencies of the federal, state and local governments,” the report says. “Consequently, there is the need to streamline multiplicity of taxes and ensure that only approved taxes/ levies/fees are charged,” the association recommended. Furthermore, half of the respondents disagreed that government capital expenditure implementa-

tion encourages productivity in the sector. The CEOs’ perception rested principally on the delay in budget approvals, low implementation of budgetary provisions, award of contracts to foreign firms and dearth of basic infrastructure such as inefficient port infrastructure, inadequate electricity supply, deplorable road networks, and low patronage. “This therefore confirms the need to review the infrastructure development plan to deliberately stimulate sustained productivity in the real sector,” it adds. The report further shows that foreign exchange access is still a critical challenge for many manufacturers, as 46 percent disagreed that the rate at which the sector sources foreign exchange (forex) has improved. Many manufacturers have high inventories, with MAN attributing it to shrinking wallets, smuggling, and counterfeiting of Nigerian-made products. Only 21 percent of CEOs agreed that patronage of Nigerian manufactured products has improved as a result of the implementation of Executive Order 003. The Order mandated all government establishments to make Nigerian manufactured goods first choice in public procurement processes. Economists suggest that efforts must be made to lift people out of poverty through radical reforms, such as revolutionising the power sector to activate SMEs and create jobs. “The way forward is entrepreneurship,” said an economist. “Support entrepreneurs to grow,” he said. “For companies, create an enabling environment. Remove barriers to trade and government hold on electricity, foreign exchange and petrol markets ,” he suggested.

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