BusinessDay 06 Aug 2018 by BusinessDay

Shared agent networks: Much talk, but still no action

ne of the most critical components of a successful strategy to deliver financial inclusion is the establishment of a network of agents that can act

on behalf of financial institutions and other service providers to deliver their services to the poorest Nigerians, living in the most remote and currently underserved areas. The higher

news you can trust I **MONDAY 06 AUGUST 2018 I vol. 15, no 111 I N300

the population, the more agents are required, and Nigeria, as the most populous country in Africa, and on track to be one of the

Editorial

most populous in the world, has a clear and urgent need. This requirement has been made even more urgent over the last decade as the model adopted by financial services institutions

he World Bank has urged the Nigerian government to put more energy into attracting private sector investments into the economy and cut down on excessive borrowing. The warning, again on the rising debt is coming as authorities insist that debt levels

Cautions against excessive sovereign debt

Plastic waste chokes Lagos despite potential billion naira recycling industry

... Industry unprepared as Dec. 2019 deadline looms he new International Maritime Organisation (IMO) decision to lower its global marine fuel sulphur limit to 0.5 percent in 2020 could cost Nigerian shipping companies over N1.8trillion in installation costs for exhaust gas abatement systems, an option which seems the most prac-

BD INVESTIGATIVE SERIES

he Lagos environment is increasingly being choked with plastic waste, despite the potentials for a multi-billion naira recycling industry. Millions of tons from plastic waste accumulated over time continue to pile up in the environment, with some buried in landfills even though science Continues on page 46

Sulphur cap regulation to squeeze Nigerian shippers by N1.8trn ISAAC ANYAOGU

Continues on page 46

CALEB OJEWALE

Continues on page 12

Reduce borrowing, tap private investments - World Bank tells FG ONYINYE NWACHUKWU, Abuja

to serve their customers have changed. From an approach where the branch was at the centre of customer engagement

Continues on page 46

Inside Stock prices retreat as NSE 30 operating margins drop P. 2 L-R: Simon Hughes of International Banker Awards; Obeahon Ohiwerei, GMD/CEO, Keystone Bank; Sule Abubakar, deputy managing director, Keystone Bank, and Omobolanle Osotule, divisional head, marketing and corporate communications, Keystone Bank, when the bank was conferred with the “Best Innovation In Retail Banking Nigeria 2018” and The “Best Customer Service Provider of the year Africa 2018” at the International Banker Awards in London, recently.

Keystone Bank wins Africa’s Best Customer Service Provider 2018 P. A8

Nigeria’s political chess game gets more complex Owede Agbajileke & Innocent Odoh

…asAkpabiodefects, Kanodeputygovernorresigns, ObasanjosaysnotoAtiku

igeria’s political outlook has never been as uncertain as it is currently, as the country’s politicians shift between parties faster than

they have ever done in the past. In what looks like the most significant defection that will be hitting the People’s Democratic Party (PDP), Godswill Akpabio,

the former governor of Akwa Ibom State and minority leader in the Senate, has concluded arrangements to defect to the All Progressives Congress (APC).

The move has sent shockwaves through the political environment as Akpabio is seen as one of the leading

Continues on page 46

businessday market monitor Commodities

NSE

Bitcoin

Brent Oil

Biggest Gainer

$73.06

BETAGLAS N85.80

Cocoa

US $2,114.00

Biggest Loser

OKOMUOIL 10.00pc N76.00 36,499.67

- 6.17pc

₦2,613,311.53

FMDQ Close (Rate & Prices)

Everdon Bureau De Change -2.41pc

Buy

Sell

$-N 357.00 360.00 £-N 471.00 479.00 €-N 410.00 418.00

Foreign Exchange

Market Spot ($/N) 3M I&E FX Window 362.67 -0.25 CBN Official Rate 305.95 11.24

2 BUSINESS DAY NEWS

6M -0.01 12.43

5 Years 10 Years 20 Years 0.01 0.05 -0.04 13.74

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nalysts expect the Central Bank of Nigeria to stabilize declining treasury yields during the second half (H2) of the year in a bid to prevent continued capital flight and restrict inflationary pressure. This may be achieved by stabilizing the open market operation (OMO) stop rates which began declining in July last year. ARM Securities analysts say that they do not envisage any further downtrend in OMO stop rates as the CBN will try to maintain current monetary and exchange rate stability than undertaking risk that may lead to possible negative outcomes. Abimbola Omotola, fixed income and currency research specialist, Ecobank, asserted that “Central Bank will continue to use OMO policy instrument to keep system liquidity tight to prevent any major exchange rate fluctuation because Nigeria has some structural liquidity issues based on flat capital

inflows that come in every month which could cause a bit of imbalance in the foreign exchange market if not mopped up by the CBN.” “Since around May when the capital flight began, we have been seeing a steepening of the yield curve due to political risk that Nigeria is facing as election approaches and also the broad based weak sentiment for emerging and frontier market assets; with portfolio managers trying to reduce their duration position therefore CBN will try to maintain OMO stop rates,” he also added. Nigeria’s capital markets have seen high NGN liquidity in the banking system in recent weeks, driven by lower inflation rate, the redemption of T-Bills (N26.6bn of 364-day T-Bills redeemed on 21 June 2018) by the Debt Management Office (DMO), maturing OMO Bills amid relatively less aggressive mop-up and the statutory inflow from the Federation Account Allocation Committee (FAAC). Continues on wwwbusinessday online.com

New factories emerge in 2018 as local input sourcing rises to 63% ODINAKA ANUDU

oor handling of the Nigerian economy has not deterred manufacturers from expanding capacities and factories this year. Amid factory expansion, manufacturers are also looking more inwards for their raw materials, leading to a significant rise in local input preference to 63.2 percent between 2017 and this year, as against 51.1 percent in 2016, latest data from the Manufacturers Association of Nigeria (MAN) show. Manufacturers say governments at all levels must review land laws and protect their investments with consistent policies and cheap funds. Beloxxi, on February 9, this year launched the second and third phases of its biscuit lines in Agbara, Ogun State. Beloxxi Industries is one of the largest biscuit makers in Nigeria with a capacity to produce 40,000 metric tons (MT) per annum, amounting to 28 million cartons. The biscuit firm in 2016 closed an $80 million deal with a consortium of 8 Miles (London), African Capital Alliance (Nigeria) and KFW DEG Bank (Germany). The investment is raising the company’s capacity from 40,000MT to 80,000MT while the staff strength is over 3,700. “Access to capital is a major

challenge facing us. We also need to localise the value chain in manufacturing,” Obi Ezeude, CEO of Beloxxi’s Industries, said during the commissioning of the lines by Nigeria’s vice president Yemi Osinbajo. On the same day, a N4.1 billion Nestle Milo Ready-to-Drink (RTD) beverage plant was also commissioned by Osinbajo in Agbara. The plant manufactures Nestlé Milo Ready-To-Dr ink (RTD) beverage in 180ml cartons and has a yearly production capacity above 8,000 tonnes. “This new production plant is a true reflection of how Nestlé creates shared value for all, by providing good jobs, sourcing 80 per cent of our inputs with local farmers and investing in the development of rural communities,” said Mauricio Alarcon, managing director and CEO of Nestlé Nigeria. A new 30,000 metric tonnes per annum cocoa processing plant in Ikom, Cross River State, is over 60 percent completed and may be commissioned in December, according to BusinessDay checks. “This is the first cocoa processing plant that will process cocoa beans to chocolate,” Ben Ayade, Cross River State governor, said last month. Continues on wwwbusinessday online.com

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NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018 0.00 362.23

0.00 362.68

0.00 363.58

Monday 06 August 2018

L-R: Femi Otedola, chairman, Forte Oil plc; Emmanuel Ihenacho, chairman, Integrated Oil & Gas, and Ladi Balogun, group chief executive, FCMB Group plc, exchanging pleasantries during the launch of the Personal and Business Banking proposition of FCMB Bank (UK) Limited in Lagos.

CBN to stabilise yields in H2 to prevent capital flight, inflation uptick DAVID IBIDAPO & EMEKA UCHEAGA

Currency Futures ($/N)

fgn bonds

Treasury Bills

Stock prices retreat as NSE 30 operating margins drop Emeka Ucheaga, Olalekan Ipele & Oluwatosin Dokunmu

tocks continued its downward march on F r i d ay a s o p e rat i n g margin reported in second quarter results show a marginal decline for NSE 30 companies. NSE 30 index quarter to date performance was down 5.47 percent at market close on Friday as half year results failed to lift market sentiments. NSE 30 companies are 30 of the most capitalized companies on the Nigerian Stock Exchange and account for more than 95 percent of the total equity market capitalization. Operating margins fell by 30 basis points from 34.6 percent in Q1 2018 to 34.3 percent in Q2. In recent times, investors have been fairly accurate in predicting operating margin direction before the results were announced. In mid-2015, stocks were already trending lower before Q4 2015 results showed a decline in NSE 30

operating margins from 18.7 percent in Q3 to 16.6 percent in Q4. Stocks hit its lowest point in Q1 2016 before the NSE 30 operating margins dropped sharply to a low point of 12.7 percent as the economic recession in 2016 negatively affected industry financial performance. Before the economic recovery began to show up in firm financials in the second half of 2017, stock prices had already begun to accelerate in early 2017. A sharp rally in stock prices from Q1 2017 was followed by a similar jump in operating margin from 14.48 percent in Q3 2017 to 30 percent by Q4 2017. Although the stock market opened this year strongly, it has since declined considerably from its January highs. Operating margins also peaked in Q1 2018 as investors continued their winning streak on betting the future direction of NSE 30 operating margin. Perhaps the significant decline in stock prices this year could be

a signal of lower operating margins by third and fourth quarter of the year. “We don’t expect operating margin of companies in the NSE 30 to improve during the second half of the year,” said Foluso Adigun, Head of financial advisory at GDL asset management. “We think margins may remain flat or even decline as spending is expected to contract with the continued monetary tightening by CBN who want to ensure that election spending does not cause an uptick in inflation during H2.” “The third quarter is critical for companies who want to have a decent full year performance. If they miss earnings estimates in Q3, their margins could be hurt severely. Investors have already priced in a slimmer operating margin. In fact, we think prices may rise marginally in H2, but not enough to wipe out the losses suffered earlier in the year.” Continues on wwwbusinessday online.com

Gross dollar reserves resume decline as foreign inflows, crude slide DAVID IBIDAPO & SOBECHUKWU EZE

or the first time since June 2017, BusinessDay analysis reveals that gross official reserves have begun to decline month on month. The first decline was seen in July after reserves fell by 1.40 percent from US$47.8 billion to US$47.12 billion month on month. As at the first day of August 2018, data released by the CBN showed that there was a further decline by 0.10 percent from US$47.12 billion to US$47.07 billion. FBNQuest analysts say the reason for the decline was the repayment by the FGN of US$500 million to holders of a maturing Eurobond which is yet to be refinanced. Further investigation by BusinessDay reveals the possible resultant effect of decline in Brent crude oil price, exiting of foreign and domestic portfolio investors and reduced crude oil export. The Brent crude oil price has declined by 8 percent to $73.32pb after reaching a peak of $79.80pb as at May 2018. Analysis reveals that during the same period crude oil price began

to drop, foreign reserves also began to fall to end the month of July at US$47.12 billion. In the last 2 months, oil production in Nigeria has lagged the projected production of 2.3 million barrel per day, benchmark of the 2018 budget. May production stood at 1.82 million b/d while June production stood at 1.89 million b/d. Lower crude oil production means lower oil exportation levels and this translates to lower inflow into the foreign reserve accounts of the federal government. FMDQ data revealed that I&E FX window (NAFEX) weekly transactions have dropped to the range of US$750 million and US$900 million in contrast to US$1 billion as at late June 2018. BusinessDay analysis reveals that July 2018 had the lowest foreign inflow in I &E FX window. In search for greener pastures i.e. international markets with higher yields, Nigeria has experienced lower investment inflows and higher foreign investment outflows coupled with political risk as the 2019 general elections draw closer. Keeping foreign investors in the country may mean raising yields as this would make investment in Nigeria look attractive to foreign investors.

Ayodele Akinwunmi, head of research and strategy at FSDH merchant bank ltd explained that Nigeria recorded the lowest foreign inflow in July 2018 since August 2017 in the I&E window, therefore the drop in inflows have led to the decline in the nation’s gross reserve within the same period. In July 2018 total inflows amounted to US$1.6 billion. So far the force majeure of Shell petroleum Development Company of Nigeria (SPDC) has led to decline in oil output which could impact negatively on the gross reserves of the country. Dolapo Ashiru, a Lagos based investment analyst told BusinessDay via phone that the short fall in oil production could be responsible for the decline in the gross reserve of the country. According to him, “it is nothing to be alarmed about as our main source of external revenue is crude oil production and as long as crude oil prices remain high above our budget benchmark and production remains high, there is no problem.” Continues on wwwbusinessday online.com

Monday 06 August 2018

BUSINESS DAY

Monday 06 August 2018

BUSINESS DAY

6 BUSINESS DAY NEWS

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Monday 06 August 2018

Nigeria losing over N3.6trn to lack of agro-export opportunities - report IFEOMA OKEKE

recently published report states that Nigeria is losing about N3.6 trillion to export opportunities from agricultural commodities due to lack of operational and investment opportunities. The report states further the need to resolve these challenges to help create new jobs, reduce cost of perishables, and provide healthy food to aid food security, among other benefits. According to the report obtained from a recent workshop on Agro Air Lo-

gistics with the sub-theme ‘Enhancing Air Transport Support for Perishable Goods’ at Airport Business Summit and Expo 2018, operational and investment gap between the agro perishable industry and the aviation sector is hindered by myriad of factors. The official document signed by Fortune Idu, managing director of FCI International Limited, listed the challenges to include: distance of production site to the market, high prices of perishable goods coming from loss along the supply chain, insecurity hindering sustained production and

FG, IOM repatriate 9,438 Nigerians from Libya - Dabiri-Erewa KEHINDE AKINTOLA, Abuja

equel to the pleas by some trapped Nigerians in Libya via a viral video on July 8, the Federal Government, working with the International Organisation for Migration (IOM) has identified their detention camps and offered to bring all the willing Nigerians back home. This news was contained in a statement by Abike DabiriErewa, special assistant to the President on Foreign Affairs and Diaspora, in a statement signed by her media aide, AbdurRahman Balogun. It would be recalled that a video went viral on July 8, 2018 showing some Nigerians trapped in Libya begging the Federal Government to urgently come to their rescue. In the video where the stranded Nigerians who veiled their faces said their final destination was Europe but were intercepted by the security agencies in Libya and locked up in dehumanising conditions. In the video, Nigerians were told how they were being tortured to death daily under a dehumanising condition, pleading for urgent evacuation from the Federal Government and prominent religious clergies in Nigeria. “We are dying here. Come and rescue us. Europe is our final destination but we are trapped in Libya subjecting us to inhuman treatment,” they pleaded in the video. According to Dabiri-Erewa,

information from Nigeria Mission in Tripoli confirms that the Nigerian migrants have been traced to Osama Detention Centre Zawiya, Libya, where the Nigeria Mission in Tripoli and IOM have processed 116 of them online for repatriation back to Nigeria. Regrettably, she said 24 of them have refused to come back insisting they must get to Europe. “Let me reiterate that President Muhammadu Buhari will continue to ensure that all stranded migrants willing to return are brought back,” she assured. She noted that most videos being spread through social media could not be verified, those with concrete information were sent to relevant agencies to look into, as in this particular video. She recalled how President Muhammadu Buhari early this year directed immediate evacuation and repatriation of Nigerians from Libya back home, and were still being brought back. Besides, those that are brought back are being profiled and enrolled in various technical and vocational training centres with relevant agencies and NGOs. She appealed once again to Nigerian youths to avail themselves the opportunities abound in the country as against risking their lives to search for non-existing and deadly greener pastures abroad. So far, about 9,438 migrants have been repatriated from Libya in collaboration with the IOM.

FAAN condemns invasion of Sokoto airport runway by political loyalists IFEOMA OKEKE

ederal Airports Authority of Nigeria (FAAN) says it condemns in absolute terms the invasion of the runway of Sultan Abubakar III International Airport, Sokoto, by loyalists of some politicians who broke through the airport fence in a bid to receive their political masters. The unfortunate incident, which occurred on Friday, August 3, is said to be a gross violation of the security and safety arrangements at the airport, as thousands of political loyalists violently accessed restricted areas at the airport, breaking down the airport fence in the process and

resisting all security machinery in place. Henrietta Yakubu, general manager, corporate affairs, said the authority’s team of aviation security officers were able to curtail the situation and normalcy was restored at the airport. “The airport environment is a highly regulated environment and should be seen as such. “As the 2019 general elections is drawing closer, the authority will like to advise the general public, especially politicians and their supporters to ensure compliance with all rules and regulations at the airports, as we will not compromise security and safety at our airports for any reason,” Yakubu said.

evacuation. Others are multiple levies, poor transportation, poor logistics infrastructure, power, relatively crude local market, poor access to international the market, lack of comprehensive agro air logistics policy, clustering and touting at the freight corridor, de-marketing of Nigeria and lack of professional manpower placements. More, as revealed by the report are: Low government support to private investors, discontinued previous air cargo projects by Federal Airports Authority of Nigeria (FAAN) and

Osinbajo to inaugurate Lagos MSME business clinic JOSHUA BASSEY

ice President Yemi Osinbajo will on Tuesday inaugurate the Lagos Micro, Small and Medium Enterprises (MSMEs) Clinic. Olayinka Oladunjoye, Lagos State commissioner for commerce, industry and cooperatives, who disclosed this weekend, said the twoday event, billed to hold at Teslim Balogun Stadium, Surulere, between August 6 and 7, was an initiative of the Office of the Vice President in partnership with the Federal Ministry of Industry, Trade and Investment as well as 11 other federal agencies. According to Oladunjoye, the event will further complement the efforts of the Lagos State government towards the development of MSMEs in the state, assuring that the administration of Governor Ambode will continue to implement policies that will favour the growth of the sector “As it is evident to all, the present administration in Lagos State is leaving no stone unturned to ensure even development of all sectors and the MSMEs Clinic will never be an exemption,’’ Oladunjoye stated. She expressed confidence that the programme would go a long way in raising a new set of entrepreneurs while the existing ones would be guided on the best steps to take to add value to their efforts. The commissioner added that the state government was also providing windows of opportunity for owners of micro, small and medium enterprises to enhance their capacity building to access appropriate financial facility. She pointed to the establishment of the N25 billion Lagos Employment Trust Fund (LSETF) as one of the initiatives through which the state was empowering entrepreneurs with capital to revive moribund ventures, boost trade and as well help to start new businesses.

non-expansion of the air cargo apron of the Murtala Muhammed International Airport (MMIA) project currently abandoned. If these challenges are resolved, the report states that there will be more new jobs, new airport revenue, reduction in cost of perishables, healthy food to mitigate food security, increased revenue for airlines, support to government plan for ranching, creation of investment opportunities into special cargo services and promotion of investments into cold chain logistics. Recommending some ways to close the gap, the re-

port states that there is need for stronger government policy on agro perishable air logistics and that there should be an establishment of a perishable goods unit in all airports to enable all airports capacity provide support for warehousing, handling and transportation of the perishable cargo through the country and beyond. “There is also need for the establishment of onestop quality inspection machines along the air logistics chain that allows shippers to access customs, quarantine, Standard Organisation of Nigeria (SON) and National

Agency for Food and Drug Administration and Control (NAFDAC) services for both local and international freighting. “We need to promote further development of the Airport Free Trade Zone to strategically drive the perishable air cargo potentials under private public sector agreement. “That Federal Ministry of Transportation, Aviation to advocate for the revisiting and review of the past air cargo programme of FAAN in order to implement the project under a PPP arrangement as government has already invested capital.”

Monday 06 August 2018

BUSINESS DAY

Monday 06 August 2018

9 NEWS

Monday 06 August 2018

BUSINESS DAY

Apapa gridlock: Case for Eastern ports as alternative JOSHUA BASSEY

takeholders are becoming increasingly agitated over the nearabandonment and inactivity at Nigerian Eastern ports while congestion remains the order of the day in Apapa, where two of the nation’s seaports are located. Within the last seven months, several meetings held to discuss a workable solution to the logjam in Apapa have not failed to raise questions as to why governments over time seem not bothered by the recurring huge losses associated with the traffic crisis that continues to bedevil the port city. Industry stakeholders - business owners, importers, maritime and transport operators say the staggering sums of money being lost to the gridlock should give a nation in dire need of development and growth cause to worry. Aliko Dangote, president, Dangote Group, puts the losses to businesses and residents of Apapa as result of the imbroglio at about N86 billion on a daily basis. Dangote, while inspecting a section of Ijora-Wharf road being jointly rehabilitated by AG Dangote, Flour Mills plc, and Nigerian Ports Authority (NPA), at the cost of N4.3 billion, condemned the challenges posed by traffic jam on the major routes leading to the nation’s largest port. “People don’t really understand how much money businesses are losing because of the gridlock here; if you quantify it in billions, it is 20 times the cost of this project every single day,” Dangote said. Stakeholders’ concerns border on why the ports in Onne, Rivers State, Warri, Delta, Calabar, Cross River State, among others, remain grossly under-utilised, such that the Apapa and Tin Can ports now account for 75 to 80 percent of shipping activities, serving an estimated 200 million population. In recent meetings over the ugly experiences in Apapa, speakers admitted the challenges of the Eastern ports to be narrow and shallow water channels, as well as insecurity, as it relates to the activities of pirates, but they also observed that these challenges were not insurmountable. According to them, what is required is the political will by the Federal Government to dredge the channels and improve the level of maritime security in that part of the country. The point of the argu-

ment, according to many of the stakeholders, is that it makes no economic sense that goods are cleared in Lagos, and trucked by road to Onitsha, Aba, Port Harcourt, Enugu, Nnewi and other cities within the old Eastern region, whereas ports closer to these cities are left idle. This, to them, increases the cost of doing business, with the final consumers paying through their noses to access goods and services through the value chain. Remi Ogungbemi,

president, Association of Maritime Truck Owners (AMATO), during the recent meeting convened by Vice President Yemi Osinbajo in Lagos, added a perspective to the ongoing debate. According to Ogungbemi, the Apapa ports with their limited facilities and infrastructure are overstretched as they handle cargoes in excess of their capacities. He explained that while the volume of cargoes and shipping activities had increased over the decades, infrastructure within the

ports had not seen any significant expansion, hence inspection and clearing of goods were slow, resulting in thousands of trucks making their way to ports being held down on the roads. He believed the spill over from the Apapa ports could be accommodated at ports in Rivers, Cross Rivers, Delta and other states, if those ports were revived and made to function optimally. His views are shared by Akinwunmi Ambode, the Lagos State governor, who

said it was high time the Federal Government developed ports in other states, so as to free Lagos, particularly Apapa, of the current mess. At a town hall meeting at Iberekodo, Ibeju Lekki, last week, Ambode said the federal authorities needed to do everything to revive existing ports in other states to end the perennial traffic congestion in Apapa. “It would be unfair to Lagosians if I don’t talk about issues relating to traffic management and integrated transport man-

agement, most especially what we have witnessed in the last one week in Apapa. “It is bad that we still use trucks to lift petroleum products from Apapa to other parts of the countr y. As it is now, other ports in Nigeria must begin to work immediately to decongest gridlock in Lagos. We believe that this will allow the roads to become free. We don’t need to continue to use tax payers’ money to build road that were destroyed by tankers.”

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Monday 06 August 2018

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90 [ninety] candles for Dr. J.K. Randle BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

• Continued from last week

n learning of the presence of the High Commissioner of Britain at the candle light ceremony, Dr. Eke Eke adopted “fizzing” to deliver his heartrending letter to the envoy for onward transmission to Her Majesty Queen Elizabeth II and Prime Minister, Mrs. Theresa May. Madam Prime Minister Theresa May, 1. My Name is Eke Eke. I was born in Nigeria, but I hold a British passport and live in England with my family. 2. I am writing to draw your attention and that of the British government to the continuing ethnic cleansing of Nigerian villages by Fulani herdsmen terrorists and the apparent inability of the Nigerian government to respond in the way any other honest and democratic government, facing such existential crisis would respond under the circumstances. 3. Clashes between Fulani herdsmen and farmers have been taking place in Nigeria for many years. In the past, the government usually intervenes to ensure justice. However, since the election of Muhammadu Buhari, a Fulani, as president of Nigeria, Fulani terrorists armed with AK 47 have been invading villages, cleansing it and occupying it. This is both a new development, disconcerting and does not augur well for the future of Nigeria

as one united country. 4. I feel compelled to speak out because of the escalation of this pogrom, the ethnic gap it is opening in the Nigerian society, the continuing loss of innocent lives, the increasing obvious complicity of the Nigerian government under Rtd. Major General Muhammadu Buhari and the government’s campaign of misinformation and deception. 5. The claim by the Nigerian president that the herdsmen committing crimes against humanity by sacking villages, killing children, women and men, burning houses and internally displacing people in Nigeria are from Libya is not correct. One can only imagine his motive for misrepresenting the facts. All the evidence suggests that the Fulani terrorists are nomadic Fulanis. 6. Most Nigerians know that the terrorists are Fulanis sponsored by the Miyetti Allah, an organisation made up of powerful Fulani cattle owners from northern Nigeria, who are also Muslims. 7. The president of Nigeria Mohammad Buhari, a Fulani, is a lifelong Patron of this organisation and was the chairman before he was elected president. Below are the names of the current Chairman and members of the Board of Trustees of Miyetti Allah: a). Chairman Board of Trustees, His Eminence, Mohammad Sa’ad III Sultan of Sokoto b). His Royal Highness AlhajiMuhammaduSanusi II Emir of Kano member c). His Royal Highness AlhajiAbdulmuminiKabirUsman Emir of Kastina Member d). His Royal Highness Alhaji (Dr) ShehuIdrisAbubakar Emir of Zazzau member e). His Royal Highness AlhajiMuhammaduBarkindoAliyu Mustapha Lamido of Adamawa member. These are the men behind the declaration of sharia law in northern

Nigerian army and police refuse to protect villages at risk and often arrive after the killings to prevent reprisal attacks. They have also refused to disarm the terrorists; even though they know their camps Nigeria and the people, who can end Fulani herdsmen terrorism in Nigeria today, if they decide. They are the men, who have kept silent, while Christian girls are abducted and forced into marriage with Muslim men in northern Nigeria. 8. It is no secret that Northern Nigeria has an Islamic agenda, which it kicked off by declaring sharia laws in Northern Nigeria. It has also weaponised Islam to pursue its political ambition of controlling the whole of Nigeria. It is this ambition that is behind President Buhari’s attitude to both Boko Haram and Fulani herdsmen terrorisms. 9. The evidence would also suggest that the Nigerian army and police under president Buhari have become complicit in this pogrom. President Buhari retired over 200 army officers from the south, when he took office, and all his senior security officers are Muslims from the north. This is in a country with over 250 ethnic groups. You can only imagine the distrust this singular act has created in the Nigerian polity. 10. So far, the Nigerian security forces are behaving exactly the way the Sudanese security force was behaving, when the Janjaweede were attacking and displacing the people of Darfur. Nigerian army and police refuse to protect villages

at risk and often arrive after the killings to prevent reprisal attacks. They have also refused to disarm the terrorists; even though they know their camps. They have failed to bring the terrorists to justice, even when some have been arrested. The police chief, has tried to justify the actions of the terrorists. The President has generally kept silent after terrorist attacks and has sought to justify the rights of Fulani herdsmen to graze their cattle on farms, while being silent on their victims. Recently, Rtd. Lt General T Y Danjuma, one time Nigerian defence minister, whose tribe has been severely affected said that the Nigerian army is complicit in this evolving and deepening crime against humanity and urged the people to defend themselves. I fear that this may be the beginning of descent of Nigeria to Somalia kind of lawlessness. 11. Fulani herdsmen terrorism in Nigeria is a well-planned ethnic cleansing of minority population to create grazing grounds for cattle by the Miyetti Allah and Fulani settlement from where they intend to launch war to conquer the whole region. This is consistent with the historical modus operandi of the Fulanis. It is unlawful. It is immoral and should not be accepted by the civilised world. 12. I believe that Britain, being responsible for the amalgamation of northern and southern Nigeria protectorates in 1914, should now lead in helping the different ethnic nations it coupled together for administrative convenience to achieve peaceful coexistence. 13. As the Prime Minister of Great Britain and Northern Ireland, you are in a privileged position to speak truth to power in Nigeria by advising president MuhammaduBuhari to abandon his jihad in Nigeria and govern for all the ethnic groups. 14. President MuhammaduBuhari’s current attempt to use the organs of the Nigerian State to serve the sectarian interest of Fulanis all over West Africa

should be condemned. I believe that Britain should impress on President Buhari the need to implement his party promise of restructuring Nigeria into a true federation to give six Nigerian regions the degree of autonomy they need to develop at their pace. This would seem the only single action that would prevent the implosion of Nigeria. 15. I believe that it is time for the British government to demonstrate that it cares for all Nigerians, including the Christians, who have been paying the blood price of the sectarian polices of President MuhammaduBuhari and Islamic and ethnic agendas of northern Nigeria. 16. The facts would suggest that that President MuhammaduBuhari is not being honest with the World about his Islamic and ethnic ambitions for Nigeria. So far, Buhari’s government is the most sectarian and nepotistic government Nigeria has seen. He has injected unhealthy dose of ethnicity and extreme Wahhabi Islam into the Nigerian polity. 17. Immediately he took office, several Shia Muslims were massacred by the Nigerian army and their leader is still in detention. He recently declared the Indigenous People of Biafra, (IPOB) a terrorist group, even though the group is going about its agitation for self-determination in a non-violent way. At the same time, he has refused to declare the world’s 4th most dangerous terrorist group, Fulani herdsmen, a terrorist group in Nigeria. 18. The British government and people should also know that President Buhari is presiding over a very corrupt government and that all that a corrupt politician in Nigeria needs to do to escape being harassed is to join APC, President Buhari’s political party.

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Crowdfunding renewable energy solutions in Africa

CALEB ADEBAYO Caleb Adebayo is an Associate with the law firm of S.P.A Ajibade &Co. His interests are at the intersection of Energy, Finance and Environmental Law. He can be reached at calebadebayoc@ gmail.com

he statistics of energy access and availability on the African continent is worrying, perhaps even alarming, and definitely a cause for continent-wide concern. Only seven countries in Africa have energy access rates of up to 50 percent (the lowest among emerging markets across the world), and Nigeria, the much peddled big brother of the continent is not one of them. The rest of the region has an average grid access rate of about 20 percent, and even when there is access, there is never enough to go round. This means that on the average, about 625 million people in Africa do not have access to energy. There is an increase in investments coming into Africa, and the

infrastructure deficit, especially in the area of energy, is crippling these investment opportunities. Certainly, the continent is in a dire energy crisis that it needs to fix, and it does have the energy resources it needs to fix it. While the quest for an energyrich Africa is at the front-burner of the discourse on economic development, there is side-by-side the global conversation on climate change, sustainability and clean energy; a constant reminder of the continent’s commitments to international treaties and various regional, and sub-regional agreements on environmental protection. This means that Africa has to grapple with development while putting sustainability into consideration for every step of the journey. This has driven the move for cleaner energy forms like gas and renewable energy in recent times. Unlike fossil energy projects however, which (while having their own peculiar challenges) are a familiar terrain for investors, renewable energy (RE) projects do not spell certainty of any kind. Apart from the fact that they are expensive to undertake and there are very few bankable RE projects on the continent, the immediate metrics and mathematics for investing in fossils look better than that of an RE project. Thus, accessing bank

loans, project financing, syndicated loans, and equity for RE projects have proved a tad difficult. Yet seven of the ten most suitable countries for renewable energy potential are in Africa, so it is only a no-brainer that the continent should drive investment in that sector. With the rising challenge of financing RE projects, there has been a foray into innovative and alternative means of financing for which Private Equity (PE), Venture Capital (VC) funding, Pension funds, Sovereign Wealth funds, and Green Bonds have been explored. An alternative financing method that has not been explored as much though, is crowd funding. Crowd funding is a financing method that uses the power of digital and mobile technology and the internet to pool resources from a large number of people, in varying amounts to fund projects. The routine thought that follows the mention of crowd funding is a Gofundme or Kickstarter account entreating people to fund a charity project or a humanitarian cause. While this is part of what crowdfunding is, it is not all of it. Crowd funding in fact includes investing in projects and ventures, through pooling capital from various individuals while offering them return on investments (ROIs) either in form of equity or debt. In this form, it is usually referred to as investment crowd funding. The crowd funding market, unsur-

prisingly, is doing pretty well around the globe, as most people are seeking new forms of investment outside traditional means; also because technology and the internet have disrupted a lot in the investment market, and finally, because projects are actively exploring new methods of funding that do not have the bottlenecks of bank loans and other traditional methods. In fact the global value of crowd funding in 2015 stood at $34.4 billion, topping the global investments in VC funding in the same year which stood at $30 billion. Sadly though, Africa contributes only less than half of one percent to the global crowd funding market. Still, there are prospects for crowd funding Africa’s power sector, especially with the rise of mini-grids and off-grid projects, Independent Electricity Distribution Networks (IEDNs) and the Renewable Energy Feed-in-Tariffs (REFITs). Many African countries too, realising the benefits of privatisation, have tapped into it for their core industries including energy and this has enabled private players to get more involved in investment. The investment appetite for African projects by foreign investors also works for the continent in many ways. The global call to combat climate change is an enabling factor for tapping into the need for social good in crowd funding RE projects. Crowd funding in Africa has mostly

been explored in Eastern Africa, and even that, has not been done on a large scale. However, the results from that sub-region show that if explored in-depth by the continent, there are very favourable prospects. With crowd funding, the need for sustainable and clean energy is met while simultaneously solving the problem of financing. Essentially, it will serve as a commingling of technology, finance, energy and social good, birthing a formidable solution for the continent. The Ubuntu and community spirit of Africa also sits well with this form of financing, as it piggy-backs on local involvement in finding solutions. Furthermore, with high interest rate and constrained access to credit in Africa, crowd funding will provide a viable option for small off-grid projects requiring financing. While it is appreciated that there are challenges to crowd funding in Africa, especially with the continent’s legal regime, high level of technological illiteracy and low level of confidence in online platforms and mobile technology, the possibilities are enormous. It is an area the region should explore to close its energy infrastructure gap, encourage investments and avoid the deleterious effect of carbonintensive development.

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Monday 06 August 2018

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No dancing at the DisCos

ANTHONY OSAE-BROWN Osae-Brown is the editor of BusinessDay @osaeB

or more than a month now, our prepaid meter (I am one of the few lucky Nigerians to have to a prepaid meter) developed fault that makes it impossible for us to load new units on it. We reported to Ikeja DisCo and we were told that the monitor of the prepaid meter needed to be replaced and that it will cost N15,000. We promptly paid the N15,000 but for more than a week now, we have been waiting for Ikeja DisCo to come in and fix the monitor. We called the customer care unit but they could not give us a date when they will come in and fix it. After failing to get them to come and fix the meter, our units completely ran out last Friday morning. We were wondering what to do when they suddenly showed up that same Friday unannounced. My wife had to turn back on her way to the Island to give them access to the meter to load the new units. The behaviour of Ikeja DisCo reflects one of the saddest part of the privatisation of

power assets in the country. This is the fact that little has changed five years after the privatisation took place. Even the basics like improved customer service that was expected with privatisation has not happened. The customer facing Distribution Companies (DisCos) still behave like a public sector company. Five years after privatisation, the DisCos can still not tell their consumers when the lights will be off and when it will be available. Most of their staff - and perhaps it is largely because they are inherited from the defunct Power Holding Company of Nigeria (PHCN) - still talk and behave like public sector workers. The behaviour that made power consumers dislike the PHCN is still prevalent in the new DisCos. Not surprisingly, many Nigerians also now dislike the DisCos and that is because nothing has changed except management. What is even more annoying about the DisCos is the estimated billing system which they continue to perpetuate. It is difficult to understand why obtaining an electricity meter is not a routine exercise five years after privatisation. One would have expected that five years after the power sector was privatised, any customer that needs an electricity meter should be able to walk to a DisCo to obtain one without any stress. Sadly, that has not been the case. Instead, electricity meters are scarce and even where available, you need to know someone or bribe your way to get one, despite the fact that you are going to pay for it. The impression has been

The DisCos may have a perverse incentive for estimated billing. The opaqueness of the estimated billing system creates an accountability loophole, since the billing is not based on actual power consumed by a household or actual power sold to a household created that the DisCos are deliberately denying people access to electricity meters so that they can continue the unjust and opaque ‘estimated’ billing system. The DisCos may have a perverse incentive for estimated billing. The opaqueness of the estimated billing system creates an accountability loophole, since the billing is not based on actual power consumed by a household or actual power sold to a household. This raises the question of who audits the estimated billing system? Which third party ensures that all billing fully reflects power consumed or sold and that actual amounts collected for estimated billings are not understated by the DisCos to the

Nigerian Bulk Electricity Trading (NBET) for the purpose of not fully paying for power purchased. But why DisCos have been largely disappointing since their emergence on the scene, there are also external circumstances, beyond their control, which has made their performance even worse. The elephant in the room remains the current tariff structure imposed on the DisCos by the government. All the assumptions on which the current tariff structure was based on has since been overtaken by events. Even though the Nigeria Electricity Regulation Commission (NERC) claims that it has not abandoned the Multi Year Tariff Order (MYTO) on the basis of which tariffs are supposed to be determined, the commission has left tariffs unchanged despite the fact that the assumptions that determined how tariffs were set have changed over the period. Under MYTO, the National Electricity Regulation Commission (NERC) was supposed to be reviewing the tariff structure bi-annually based on changes in specific indicators including the rate of inflation, exchange rate, inflation rate in the United States, gas price, and generation capacity. Despite changes in most of these variables, especially in the exchange rates and the inflation rate, the country’s tariff structure has not been reviewed upwards since 2015. The consequence is that DisCos have been forced to sell power at non-market reflective rates. This has also resulted in the DisCos not being able to pay for the power they are supplied and the

consequent build-up of debts in the power sector, now estimated at more than N1 trillion. As far as the power sector is concerned now, the country is in a difficult situation. The DisCos need higher tariffs to become viable and raise the necessary funds to invest in infrastructure and pay down their accumulated debts. The government is afraid of giving in to higher tariffs because it will be politically unpopular to do so. The people want power but the government is not sincere enough to tell them that the only way you can get stable power is if they are willing to pay a higher rate. Riding on the insincerity in the power sector, power generation continues to deteriorate and the economy continues to suffer. At the end of the day, both the DisCos and the government, which still owns 40 percent of the power companies, need to sit up and put the long term interest of the country above their short term political ambitions, something that is usually difficult for politicians to do, but which, in this case, is the most sensible thing to do. The government should also fund massive ‘smart metering’ scheme to enable better collection and accountability in the power market. The truth is that most Nigerians are ready to pay up on their bills if they are sure the billing is fair. The few that may want to bypass the meters should not be a justification for poor metering and the consequent estimated billing.

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Ayodele Fayose: What if he defects to All Progressives Congress (APC)?

FRANCES IYOHA Professor Iyoha is of the Department of Accounting, Covenant University and Research Fellow, the Institute of Chartered Accountants of Nigeria (ICAN). He wrote viafoiyoha@ican.org.ng

hose who profess to be politicians in Nigeria are neither validly elected nor appointed but inordinately selected by political godfathers. Thus, only a few of the so-called politicians are humble and resourceful. The rest could be regarded as deviants, demented, disrespectful and prodigal. It is, therefore, not usually considered abnormal when persons in high political offices are wasteful in words, actions and resources. Evidence abounds of governors who are lamentably prodigal in the face of stinging scarcity of resources. They often take the callous and selfish stand that

the problems of the masses are none of their concern. This is not surprising as most of them were brought up in poverty of resources and mind. They lack the sense of lively imagination and blind to observations thus, lifting the country’s dishonour to unimaginable heights. They want everything they touch to turn into gold in the manner of king Midas- who, according to Greek mythology, was a king who lived in Phrygia in the eight century B.C. King Midas eventually got all that he wanted including his daughter Aurelia, turning into a golden statue. The result: he realized he didn’t want what he got. This is a great mistake which politicians in Nigeria make and which ruins them. They look only at the things that are seen and temporal and have no care for the future. As far as they can see and believe, posterity is not a priority. They, therefore, set themselves up to accumulate and spend as much and as fast as possible and in no time become political prodigal sons. In wellorganized societies, political office is a life of self-denial and a course of public interest duties. The duties could cost one all that

is dear- reputation, liberties, wealth or even life itself. Politicians in Nigeria greatly abhor all of these and prefer to be notoriously renowned for prodigious strength derived from lawless and bestial lifestyle and I wonder why Fayose’s case is a toast. Many a governor cast in his mould have reigned, ruined, departed and perhaps resting in ‘pieces’ without being desired. Why is his case different? Is it because he has the wisdom or lack of it to know what to say and a mouth with which to say it as it should be said or otherwise? I got worried for Ayo Fayose, when after the APC candidate was declared winner of the Ekiti governorship election, the EFCC was said to have taunted him: “we will see you soon.” The statement clearly shows that the EFCC is, without doubt, appearing to be an instrument of cruelty and vendetta and whose imagination and thoughts are becoming inclined to evil. Without holding brief for Fayose, I believe it would have been better and neater for EFCC to wait patiently until he leaves office instead of ‘laying ambush’ in advance, thus giving the impression of a biased umpire. Notwithstanding the intrigues

from the EFCC, there is always a way out of every situation. Even in the Bible, all sins and blasphemes except blasphemes against the Holy Spirit will never be forgiven because it is an eternal sin. There is no eternal ‘political sin’ that cannot be forgiven. After all, empirical and anecdotal evidence abound that politicians in Nigeria are suffering from political-credibility fatigue. For Fayose, the music will soon be over and I guess he will not delight in the melody that will linger on. I will advise that he exercises the option of the prodigal son and return ‘home’ into the willing arms of a politically loving father and extricate himself from the portfolio of adversaries waiting to take a pound of flesh and perhaps spill some blood. When the prodigal son in the Bible (Luke 15:11-32), came home, he was welcomed with the best robe, a ring on his hand and shoes on his feet and they began to merry. This implies that the worst of sinners, if repent, shall find mercy and such mercies, I believe abound in APC for political ‘wayward’ returnee children. APC, though currently suffering from reversal of fate, is a home not just for ‘saintly’ politicians

but also for political loquacious sons seeking remission of sins. If Fayose defects and I believe the time is auspicious, the unbridledtongued chairman of APC will change his tune, build glorious concepts around and canonize him a political saint. What a glorious way to return to a solid ground from a shifting soil! This is not to directly or otherwise suggest that the APC is a haven for political prodigal sons. It is that every prodigal son has the right to return home without shame, provided he has repented of all extravagant political idiosyncrasies. After all, there is nothing shameful in what is gainful. We have seen many successfully ‘returned’ home without shame and Fayose’s case should not be any exception that could have the potential to defile the rule. But he has always been daring and could decide to ignore the roaring of the political lions looking for whom to devour without mercy. Even at the best of times, defection is lucrative. It would certainly be more lucrative in a period of storm. The choice is his.

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Editorial

Monday 06 August 2018

Shared agent networks: Much talk, but still no action

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Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

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

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

Continued from front page

and so required extensive branch infrastructure across all regions of the country to one which is increasingly light on fixed assets and heavy on technology. At the same time, poverty levels in Nigeria have been rising, as the population grows and the economy fails to match its pace of expansion. Technology alone cannot fill the gap that the branch leaves behind, or never filled. To provide services to people who are currently excluded from the financial system, you need to be able to interact with them in person to provide, at a very basic level, a location where they can put cash into the system in exchange for a service or simply as a deposit into an account. Until every Nigerian has a mobile money, or bank account, this requirement will continue to exist and it is representative of the challenge that is faced in many other countries. Agent networks can act as branchless banks or serve as a proxy for banks without branches in certain areas. From wherever they operate, they enable customers to transact – often by turning cash into e-money and back again. Agents play a critical role not only in handling transactions but in identifying, acquiring and educating new customers, as well as delivering a customer experience that keeps customers coming back. They are typically most valuable in rural areas and places that don’t have formal financial institutions to bring financial services to those people, but also offer value in large bustling metropolises where branch access also constitutes a challenge and agents can significantly enhance operational efficiencies. The concept of the agent network first appeared in Nigeria, in 2009, and the first Mobile Money licences were issued by the Central Bank of Nigeria in 2011, including

guidelines on agent network operations. As well as the responsibilities of agent bankers and other parties involved, it also states the requirements that need to be realized before a license can be issued. The guidelines also highlighted two types of agent networks that would operate in Nigeria, namely; bank led agent models and non-bankledagentmodels.Thebankled model is for agents that have direct ties to formal financial institutions or commercial banks. The non-bank led model is for agents with direct ties to mobile money operators that have been duly licensed by the CBN. There are currently 31 mobile money operators with licenses issued by the CBN. However, despite a number of different amendments to the regulations, including the introduction of guidelines on shared agent, and super-agent structures, Nigeria’s financial inclusion targets have not been met, and since 2014, Nigeria has declined on both the World Bank and EfINA’s assessments of progress towards financial inclusion. Clearly, something with the current model is not working. Despite significant levels of investment, and multiple funding rounds, the largest agent networks do not exceed more than 10,000 active agents, with the vast majority of those actually operating, delivering services in semi-urban or urban areas. While financial inclusion numbers in these areas, in particular the South West region, have improved to levels aligned to national targets, inclusion in more rural and poor regions like the North West and North East have deteriorated aggressively. In July 2018 the CBN and a number of commercial banks released a document that addressed the need for a Shared Agent Network Expansion Fund Initiative. This initiative is supposed to introduce an extra 500,000 agents by 2020 to cater to a further 60 million Nigerians in rural and underdeveloped areas. While laudable in its objectives, and the size and scope of its ambition, once we dig beneath the surface of

the headline, there are questions that needtobeaskedabouttheoperational realism of the project. This is because the banks or new independent operators need to create almost entirely new business units to establish and manage agent networks from scratch. This is a disincentive for banks who already have multiple levels of operations and costs and will need time and new investment to achieve the scale required. To put it in context, if it has taken millions of dollars of investment and over 7 years for the existing licence holders to build networks of just 10,000 agents, how long will it take to achieve 500,000? Is the target to do so by 2020 really viable? The business plans that the Shared Agent Initiative project team, steered by the banks, have envisaged is a process that adds over 20,000 agents every quarter, shared between existing operators who are being asked to add 3-4,000 new agents every 3 months. But what has actually changed in terms of regulation and the business models being applied? While some finance is being made available from the Central Bank’s SME financing scheme (which was never intended to provide funding for this purpose), to provide low cost debt to agent network operators, the scale of the financing is woefully inadequate compared to the scale of the challenge. The SANEF initiative was announced in February 2018, and we are now in August. How many agents have been added? How is progress being tracked? Less than 5% of the target of 500,000 agents are currently active in Nigeria. With the Central Bank’s issuance of a circular recently requiring banks and agent bank license holders to report daily transaction levels through agent networks, this should be easy to assess. Those numbers need to be made public, and progress needs to be monitored closely. We do not have time for failure. To achieve the 2020 goals of Nigeria’s financial inclusion strategy we need immediate improvements.

The challenge that SANEF faces goes beyond achieving simple numbers.Agentnetworksmustbecarefully calibrated to ensure strong profitability of the agents in order to be sustainable. You cannot just create 500,000 agents; they need to have transactions, and expansion must be carefully calibrated so you are growing customers as you grow agents. Each agent needs 100-200 customers transacting regularly in order to be profitable. If they do not have this volume of business, they will turn their attention to something else, creating a poor perception of the business for future initiatives. We must ensure that we do not damage future sustainability in our haste to achieve unrealistic numbers using the wrong structure. Doing so not only fails to achieve commercial objectives, but fundamentally reduces the potential impact that the project can have on Nigeria’s declining rates of financial inclusion, and so deepens our existing challenge. What may be Nigeria’s biggest hindrance to the expansion of mobile money and shared agent networks is the insistence on using bank-led models as the main driving force behind shared agent networks. In other countries that have successfully implemented mobile money, like India, Ghana and Kenya, a key difference is that other industry players, who have already invested in customer facing infrastructure in the target areas, are invited to participate. FMCG companies, ecommerce players, telecoms providers and distribution networks participate. For them, it is simply a business expansion. But for the financial services industry, it must be built from scratch. It is simple logic, that expanding and leveraging existing infrastructure will deliver results faster than a Greenfield project. If Nigeria is truly serious about achieving the goals of its financial inclusion strategy in the timeframe it has set out, it needs to open up the sector to other players, and allow the fastest possible expansion of the industry.

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Monday 06 August 2018

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Monday 06 August 2018 In Association With

Open Voices

Western civilisation is an idea worth defending—and reapplying We need liberal values of freedom and markets more than ever, says Joe Lonsdale, an entrepreneur and investor

n recent decades, the idea of “Western civilisation” has found few fans on American campuses. In a haze of ethnic studies programmes and Stanford’s chants of “Hey, hey, ho, ho, ‘Western Civ’ has got to go!”, many people have lost sight of the principles that make “the West” exceptional. Like all civilisations, the West’s evolution included terrible violence, such as the subjugation of the native populations in North America and the slave trade. Its history was often ugly and racist, from the idea of “the white man’s burden” that was used to justify colonialism to the pseudoscience of eugenics. These noxious episodes lead critics to claim that Western principles are vacuous: a mask for unrepentant imperialism or merely the philosophy of a simpler age. But that is plain wrong. In fact, the core ideas of the West hold many of the answers that we seek today in response to a populism which rages on the left and on the right. Instead of being the source of society’s ills, the values of Western civilisation are part of the cure. They are needed now more than ever. Instead of being the source of society’s ills, the values of Western civilization are a part of the cure. For most of history, the average worker earned $1-3 a day – even at the peak of Roman prosperity. Only a select few had rights to accumulate and hold property, and all faced the threat of violent

expropriation. Fear and bondage reigned until the 17th and 18th century enlightenment thinkers aligned around natural rights to one’s person and property. In a passage that captures of the soul of the modern West, John Locke wrote: The State of Nature has a Law of Nature to govern it, which obliges everyone: And Reason, which is that Law, teaches all Mankind, who will but consult it, that being all equal and independent, no one ought to harm another in his Life, Health, Liberty, or Possessions. (“Second Treatise on Government”, 1689.) Locke’s moral insight is “liberalism”, a principle of mutual restraint inspired by the inviolable rights of others to design their own lives. Freedom is life in accordance with reason; reason compels us to respect the freedoms of others. By respecting the rights of others, we guarantee our own.

This Enlightenment thinking was put into practice in the Glorious Revolution in 1688 in Britain, and especially in the founding of America, where Locke’s liberalism formed the backbone of the new republic. To be sure, in practice there were deep contradictions— the founders were simultaneously freedom fighters and slave-owners—but the institutional architecture was in place. The West’s new framework of property rights and political freedoms unleashed a surge of creative energy, enabling a three-century miracle of growth, prosperity and unimaginable wonders of innovation. It didn’t have to happen that way. The natural order of things is for life to be “solitary, poor, nasty, brutish and short” (in the words of Thomas Hobbes, a contemporary of Locke). Western civilisation is a great artifice: a liberal framework that enshrines property rights, allowing us to restrain most forms of tribalism, participate in free markets and prosper by serving others regardless of their identities. These political rights of treating people equally and letting them get on with their business had a hugely beneficial effect on society and the economy. Consider that historically speaking, it is actually unnatural for the best ideas to dominate and spread, thus allowing entrepreneurs to displace incumbent, vested interests. More common is for force or hierarchy, not the meritocracy of ideas, to win. However, the West established a cultural and legal

environment where a competition of clever ideas and activities could flourish. The Western edifice of science and knowledge bolstered and fed off the upward spiral of prosperity, enabling our civilisation to fund healthcare, education, infrastructure and other trappings of modernity. Yet today Western civilisation faces a crisis of confidence, a hollowing out of the liberal order. Our society’s failure to adhere to liberal tenets of open markets and a contest of ideas imposes painful costs on the economy and on working-class Americans. The illiberal economy, particularly in America, has given rise to a host of ills: The West’s new framework of property rights and political freedoms unleashed a surge of creative energy * Restrictive zoning ordinances make the cost of living in highgrowth cities prohibitive. This hurts millions of people and shuts tens of millions of others out of the most dynamic areas of our country. *The healthcare system is like a cartel that limits new medical schools, doctors, and innovative forms of competition. Cronyism, ludicrous tort law, local monopolies by hospitals, and a dense mesh of rules and restrictions create a “cost disease” that wastes $1 trillion a year. * The prison system, fueled in part by a misguided “war on drugs,” incarcerates millions of people— disproportionately minorities— with horrific recidivism rates, ruining lives and communities. * Education, a national experiment in centralised control and funding, is unequal, mediocre and leaves students unprepared for a complex economy. * A maze of over a million federal regulatory commands, with thousands of new “guidance documents” released every year, and a comparably vast net of state-level regulation, make entrepreneurship expensive and difficult. This regulatory sand-trap favours the wealthy and powerful (who can afford armies of lawyers) over small businesses.

Britain’s third party

Entryist dads: the Lib Dems plot internal revolution The Liberal Democrats could make a vehicle for despairing centrists

NE is 46 years old, the other is a pensioner. One can dance Bhangra, the other is a ballroom guy. One is prime minister of Canada, the other is leader of Britain’s Liberal Democrats, who have just 12 MPs. Justin Trudeau and Sir Vince Cable are quite different, but the Lib Dem leader hopes to learn a trick or two from his Canadian counterpart. Mr Trudeau’s Liberal Party jumped from third place to government in four years, after poaching votes from its rivals on left and right.

What can it teach the Lib Dems? Without a long career stretching before him, Sir Vince, 75, has the freedom to shake up his party. One plan under discussion in Lib Dem circles would give non-members a vote on the party’s next leader, a system the Liberals used during Mr Trudeau’s selection. Another idea is to copy the Liberals in doing away with the requirement that the party leader must be an MP. (One nonMP mooted as a possible standardbearer is Gina Miller, an anti-Brexit campaigner, although both she and the party deny this.) Sir Vince’s team has been in touch with one of Mr Trudeau’s advisers who helped to devise some of the party’s reforms. The diminished Lib Dems are hardly a “natural governing party”, as Canada’s Liberals are known. But for all their faults, they may still represent the best hope for Britain’s beleaguered moderates. The far-left and the unions have a tight grip on Labour, while the Conservatives’ fate is determined by MPs with a penchant for psychodrama and a small collection of Rotary Club members and tombola-spinners in the home counties. By contrast, the Lib Dems Continues on page 15

Monday 06 August 2018

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In the line of fire

The world is losing the war against climate change

Continued from page 14

Rising energy demand means use of fossil fuels is heading in the wrong direction

ARTH is smouldering. From Seattle to Siberia this summer, flames have consumed swathes of the northern hemisphere. One of 18 wildfires sweeping through California, among the worst in the state’s history, is generating such heat that it created its own weather. Fires that raged through a coastal area near Athens last week killed 91 (see article). Elsewhere people are suffocating in the heat. Roughly 125 have died in Japan as the result of a heatwave that pushed temperatures in Tokyo above 40°C for the first time. Such calamities, once considered freakish, are now commonplace. Scientists have long cautioned that, as the planet warms—it is roughly 1°C hotter today than before the industrial age’s first furnaces were lit— weather patterns will go berserk. An early analysis has found that this sweltering European summer would have been less than half as likely were it not for humaninduced global warming. Yet as the impact of climate change becomes more evident, so too does the scale of the challenge ahead. Three years after countries vowed in Paris to keep warming “well below” 2°C relative to preindustrial levels, greenhouse-gas emissions are up again. So are investments in oil and gas. In 2017, for the first time in four years, demand for coal rose. Subsidies for renewables, such as wind and solar power, are dwindling in many places and investment has stalled; climate-friendly nuclear power is expensive and unpopular. It is tempting to think these are temporary setbacks and that mankind, with its instinct for selfpreservation, will muddle through to a victory over global warming. In fact, it is losing the war. Living in a fuel’s paradise Insufficient progress is not

to say no progress at all. As solar panels, wind turbines and other low-carbon technologies become cheaper and more efficient, their use has surged. Last year the number of electric cars sold around the world passed 1m. In some sunny and blustery places renewable power now costs less than coal. Public concern is picking up. A poll last year of 38 countries found that 61% of people see climate change as a big threat; only the terrorists of Islamic State inspired more fear. In the West campaigning investors talk of divesting from companies that make their living from coal and oil. Despite President Donald Trump’s decision to yank America out of the Paris deal, many American cities and states have reaffirmed their commitment to it. Even some of the sceptic-in-chief’s fellow Republicans appear less averse to tackling the problem (see article). In smog-shrouded China and India, citizens choking on fumes are prompting governments to rethink plans to rely heavily on coal to

electrify their countries. Optimists say that decarbonisation is within reach. Yet, even allowing for the familiar complexities of agreeing on and enforcing global targets, it is proving extraordinarily difficult. One reason is soaring energy demand, especially in developing Asia. In 2006-16, as Asia’s emerging economies forged ahead, their energy consumption rose by 40%. The use of coal, easily the dirtiest fossil fuel, grew at an annual rate of 3.1%. Use of cleaner natural gas grew by 5.2% and of oil by 2.9%. Fossil fuels are easier to hook up to today’s grids than renewables that depend on the sun shining and the wind blowing. Even as green fund managers threaten to pull back from oil companies, state-owned behemoths in the Middle East and Russia see Asian demand as a compelling reason to invest. The second reason is economic and political inertia. The more fossil fuels a country consumes, the harder it is to wean itself off them. Powerful lobbies, and the voters who back them, entrench coal in the energy mix. Reshaping existing ways of doing things can take years. In 2017 Britain enjoyed its first coal-free day since igniting the Industrial Revolution in the 1800s. Coal generates not merely 80% of India’s electricity, but also underpins the economies of some of its poorest states (see Briefing). Panjandrums in Delhi are not keen to countenance the end of coal, lest that cripple the banking system, which lent it too much money, and the railways, which depend on it. Last is the technical challenge of stripping carbon out of industries beyond power generation. Steel, cement, farming, transport and other forms of economic activity account for over half of global carbon emissions. They are technically harder to clean up than power generation and are protected by vested industrial interests. Successes can turn out

Entryist dads: the Lib Dems plot internal...

to be illusory. Because China’s 1m-plus electric cars draw their oomph from an electricity grid that draws two-thirds of its power from coal, they produce more carbon dioxide than some fuelefficient petrol-driven models. Meanwhile, scrubbing CO{-2} from the atmosphere, which climate models imply is needed on a vast scale to meet the Paris target, attracts even less attention. The world is not short of ideas to realise the Paris goal. Around 70 countries or regions, responsible for one-fifth of all emissions, now price carbon. Technologists beaver away on sturdier grids, zero-carbon steel, even carbonnegative cement, whose production absorbs more CO{-2} than it releases. All these efforts and more—including research into “solar geoengineering” to reflect sunlight back into space—should be redoubled. Blood, sweat and geoengineers Yet none of these fixes will come to much unless climate listlessness is tackled head on. Western countries grew wealthy on a carbon-heavy diet of industrial development. They must honour their commitment in the Paris agreement to help poorer places both adapt to a warmer Earth and also abate future emissions without sacrificing the growth needed to leave poverty behind. Averting climate change will come at a short-term financial cost—although the shift from carbon may eventually enrich the economy, as the move to carbon-burning cars, lorries and electricity did in the 20th century. Politicians have an essential role to play in making the case for reform and in ensuring that the most vulnerable do not bear the brunt of the change. Perhaps global warming will help them fire up the collective will. Sadly, the world looks poised to get a lot hotter first.

have low barriers to entry, making the party an appealing home for disaffected members of other parties. Talk of a new political movement has been constant since the Brexit vote. But why bother launching your own party, asks one senior Lib Dem, when you could simply take over one that already exists? After all, the Liberal Democrats have 100,000 members, 98 seats in the House of Lords and, crucially, a toehold in Britain’s ruthless first-past-the-post electoral system, which new parties find all but impossible to crack. Entryism presents dangers. But for the Lib Dems, scooping up disaffected Blairites from Labour and liberal Cameroons from the Tories is much less risky than it has been for Labour and the Conservatives to ally with hard-leftists and former UKIPpers. A Liberal Democrat party overrun by centrist entryists would look like, well, the Liberal Democrats. “They aren’t Militant, are they?” says one insider, referring to the Trotskyist group that infiltrated Labour in the 1970s and 80s. Potential defectors may be wary of the Lib Dems. They have baggage. There is a reason why the party’s vote fell from 6.8m in 2010 to 2.4m in 2015. After five years in coalition with the Tories, people no longer liked them. Polls suggest they still don’t: the party limps along at about 10%. Change could come from the top if MPs from other parties jumped ship. Labour ’s anti-Semitism saga flared again this week after it emerged that Jeremy Corbyn, the party’s leader, hosted an event in 2010 at which the actions of the Israeli government were likened to those of the Nazis. But despite disgust among his MPs about his handling of the row, there has been no wave of resignations. Nor has any Tory Remainer MP been persuaded to defect, even as the government’s handling of Brexit has gone from bad to worse. Instead, Lib Dems are left hoping that an era of political polyamory will replace the 19th-century system of monogamous party politics. New movements and parties should team up with the Lib Dems, believes Tim Farron, a former leader.

BUSINESS DAY

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Monday 06 August 2018 In Association With

Market power

Like America, Britain suffers from a lack of competition Finding a remedy may get harder after Brexit

N 2016 we decried falling competition in America, where profits have surged as industries have become more concentrated. This week, drawing on our own research and a study by the Resolution Foundation, a think-tank, we report that a similar—if not yet as severe—problem has taken root across the Atlantic (see article). That is bad for ordinary Britons, who pay 25% more for goods and services than they did in 2008, even as wages have grown by just 19%. Moreover, as Britain grapples with what sort of place it should be after Brexit, the whiff of oligopoly risks turning people against capitalism. If you split the British economy into 250-odd industry sectors, you will find that in nearly 60% of them the four biggest firms claim a larger share of revenues than they did a decade ago. Since the early 2000s the top 100 firms, excluding finance and oil, have seen their share of economy-wide takings creep up, from 18.5% to 23%. Profit margins have risen by nearly four-fifths since 1980, and are above the European average.

So far, profits as a whole have not gobbled up a larger share of GDP, perhaps because small firms are doing worse and because the largest companies, such as Apple and Amazon, book profits offshore. But the long-run trend in profit margins is worrying.

Nobody can be sure why the economy is becoming more concentrated. It may be that globalisation and technological advances have enabled world-beating “superstar” firms to see off their lumbering domestic competitors. This could bring some benefits. Shake-

outs, in which leading firms grow and laggards shrink, should boost overall productivity. And higher concentration does not always imperil competition. Just look at Britain’s big supermarkets, which have been fighting a decade-long price war and eking out only

meagre profits. Consumers may benefit from the efficiencies large firms can bring. But the British trend does not seem benign. There is greater concentration even in non-tradable industries such as housebuilding—in which nobody thinks the quality of output is high. Since the financial crisis, Britain’s increase in productivity has been dismal, keeping wage-growth low, too. There is evidence that leading firms, and not laggards, are behind the slowdown. In some industries they may feel they do not need to invest to keep ahead. The tech giants do innovate, but their ideas do not seem to spread through the economy. Stand back Regulators should ask themselves whether they have overlooked a growing problem. As in America, Britain’s competition tsars scrutinise mergers with a microscope. Though rigorous, their approach means that they can miss the big picture. Following a review in 2016, the government began publishing some indicators of the overall competitive health of markets. But the data are often old and patchy.

Charlemagne

Matteo Salvini, Italy’s de facto leader, is instinctively authoritarian But he is also an opportunist constrained by Italy’s rickety finances

HEN the Northern League linked up with the Five Star Movement (M5S) to form Western Europe’s first all-populist government of recent times, it was clear which was the junior partner. The League had won barely half as many votes at the general election in March. Yet in the absence of the new prime minister, Giuseppe Conte, it was the League’s leader, Matteo Salvini, who chaired the new government’s first cabinet. That was apparently because, at 45, he was older than his fellow-deputy premier, Luigi Di Maio of the M5S, then aged just 31. But it was an augury: hyperactive and omnipresent, Mr Salvini has since set the agenda for the media and the government. Pointedly, he has continued to address rallies under his electoral slogan of “Salvini premier” (“Salvini prime minister”). It still adorns his and his party’s websites, Facebook and Twitter pages. Only now, almost five months after the vote, is it starting to give way to a new refrain: Prima gli Italiani (“Italians first”), an echo, conscious or unconscious, of a Donald Trump slogan. One criticism of the League’s leader is that he acts as if he is still on the hustings. It is not one

to which he is likely to pay much heed. Since March 4th, polls suggest, he has closed the gap with the M5S. Both parties now have a following of around 30%. Mr Salvini has achieved this feat by hammering away at the issue of illegal immigration, and deploying a communications strategy that, according to Domenico Ferrara, one of his biographers, Mr Salvini sums up in an acronym: TRT. It stands for Territory, Internet (rete in Italian), Television. Unlike many politicians, Mr Salvini has not abandoned either the old media or an even older way of communicating with voters by speaking to them directly, at rallies and on the street. But his use of social

media is cannier and more intensive than that of Mr Di Maio of the supposedly technologically astute young M5S. From an iPad he carries everywhere, the League leader keeps up a barrage of tweets and posts to Facebook and Instagram. Mr Ferrara says that Mr Salvini does not use ghostwriters, relying instead on a software programme, dubbed The Beast, written for him by a university lecturer from Verona. It monitors reaction to his output, allowing him to emphasise whatever elicits the most favourable reception. Sofia Ventura, associate professor of political science at the University of Bologna, points to another characteristic of Mr Salvini’s profuse communication: he

puts himself forward on the one hand as the strong man who can solve Italy’s problems, but on the other as an affectionate chap who loves children and animals. On one recent, 11-tweet day he demanded that other countries take in the rescued migrants he had refused to let enter Italy, while finding time to comment with fatherly pride on his son’s good school report. Increasing the League’s following by half since the election is Mr Salvini’s second impressive achievement. The first was to save the party from imminent extinction. He took the helm in 2013 after a financial scandal that shattered the League’s vaunted image as the party of probity. Its poll ratings were just 3-4%. Since then, he has succeeded in giving nationwide appeal to a movement whose traditional followers regard southerners as idle, backward terroni (peasants). He dropped “Northern” from its logos and posters (though it is still part of the party’s official title). And in 2014 he founded an offshoot to fish for votes in the south. Today, amazingly enough, Mr Salvini, who used to say he could not identify with the national flag, sits in the Senate as a member for Calabria, the “toe” of Italy. But then the League has always relied on hostility to an external

foe; and what Mr Salvini has done is to switch enemies, replacing the southerner with the immigrant. Not that he is any stranger to ideological acrobatics. A member of the League from the age of 17, he made a name for himself as leader of the communist wing of what was then a very different party. As a young man, he often hung out at a community centre in Milan renowned for its associations with the radical, even violent, far left.

Monday 06 August 2018

BUSINESS

COMPANIES & MARKETS

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Google partnership with Unity to boost mobile game advertising

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

Nigerian equities fit for long term play – Greenwich boss Odinaka Anudu

he decline in the returns from the Nigerian equities market has been a source of concern to investors. However, it also presents an opportunity for bargain hunters in high-value stocks to position for long term gains. This view was shared by Oby Chiki-Ijegbulem, managing director of Greenwich Securities Limited, at the Nigerian British Chamber of Commerce (NBCC )’s Members’ Evening, themed: ‘Investment Opportunities in the Nigerian Capital Market’. According to Chiki-Ijegbulem, some shares listed on Nigerian Stock Exchange were trading below their five-year lows and thus present an opportunity for discerning investors to position for long-term growth. “This is relatively a good time to strategically invest in the equities market,” she said. “Investors, however, need to access the right information, and build the tenacity to do so. A lot of people don’t

have the necessary information; neither do they have the courage to invest,” She stated. While touching on other metrics that support investment in Nigeria’s financial market despite the downturn of equity prices, Chiki-Ijegbulem noted that in

identifying opportunities, several factors need to be considered, including the underlying fundamentals of the target stock and the risks that may impact projected performance. ‘’We understand that these dynamics may not be exactly

Hope Ashike-Moses

uaranty Trust Bank plc, is leveraging the WhatsApp business solution to offer Nigerians an additional channel to connect with the Bank for enquiries, service requests and access to other basic banking services. This is in line with the Bank’s continued efforts to enhance service delivery and offer superior banking experiences to customers. Over the years, GTBank has been at the forefront of establishing a wide range of valueadding touch-points through which customers can access banking services and interact with the bank on all accountrelated enquiries at any time of the day. The Bank was the first financial institution in Nigeria to set up a fully interactive contact center in 2006 and has, since then, led the finance sector in driving customer interaction across online and

easy for everyone to coordinate and we advise current and potential investors to contact veritable investment analysts or stockbrokers to guide them in taking decisions on investing in the equities market bearing in mind the risk involved,” she stated.

L-R: Babatunde Akindele, head, commercial banking, Stanbic IBTC; M’Fon Akpan, chief risk officer, risk management, Stanbic IBTC; Liu Jun Sheng , commercial consul, Chinese Embassy in Lagos ; Wole Adeniyi, executive director, operations, Stanbic IBTC ; and Taiwo Ala, head, internal control, Stanbic IBTC; at the Stanbic IBTC Africa China forum in Lagos. Pic by Pius Okeosisi

GTBank to launch banking services on WhatsApp social media platforms. Following the launch of the Whatsapp Business Solution, GTBank is leveraging the platform to bring financial services closer to customers, whilst offering them more channels to bank, make enquiries and have their service requests treated promptly. Once fully operational, the Bank’s WhatsApp service will enable customers chat with GTBank on their mobile phones and request for basic banking services using the advised prompts. All service requests will be treated instantly, depending on the internet connection of the user. Commenting on the Bank’s service channel on WhatsApp, Segun Agbaje, Chief Executive Officer and Managing Director of Guaranty Trust Bank plc, said; “At GTBank, we are passionate about driving constant interaction with our customers to learn more about how we can serve them better as well as to provide them with the financial solutions that can add real value

to their lives. By leveraging the WhatsApp Business Solution, we are continuing to expand our service channels as part of our commitment to making banking, cheaper, faster and readily accessible to customers wherever and whenever they choose to bank. GTBank is regarded by industry watchers as one of the best run African financial institutions across its subsidiary countries and serves as a role model within the financial service industry due to its bias for world class corporate governance standards, excellent service quality and innovation. The Bank has continued to report the best financial ratios for a Financial Institution in the industry as revealed by its return on equity (ROE) of 35.4 percent and cost to income ratio of 38.1 percent evidencing the efficient management of assets and operational efficiency. In recognition of its innovation and hard work, the Bank received over 20 international awards in 2017.

MoneyGram transfer fee lowest among competitors Oghogho Edosomwan

mongst the major money transfer players in Nigeria, MoneyGram has the lowest transfer fees. Using the estimation calculator on their websites and a base amount of $500, making a $500 transfer will attract a fee of $7 dollar which is 1.4 percent as compared to $20 or 4 percent fee charged by Western Union and $9.99 or 1.9 percent charged by World remit. World Bank’s Migration and Remittances Factbook 2016 revealed that more than 250 million people or 3.4 percent of the world population live outside their countries of birth. However, Members of the Nigerian diaspora are not absent in this trajectory as they remain closely attached to their home country, a fact revealed in the prevalent practice of remitting money to family still in Nigeria or remitting money from Nigeria to other countries around the world. The international remittance market have grown significantly in Nigeria looking at World Bank estimates that in 2017 alone Nigeria received over $22 billion in remittances, making it the largest recipient in Africa and fifth largest recipient globally. However, that transfer costs as indicated by the World Bank to sub-Saharan

Africa were among the most expensive in the world. These costs had spawned the emergence of digital transfer operators in competition with the traditional players in the field. Nigerian money transfer business was liberalized since 2002; the international money transfer market in Nigeria before 2008 was largely controlled by Western Union and MoneyGram, by the use of exclusivity agreements which gave them an almost monopolistic hold over the market. However, things are beginning to change, in the past, Western Union and MoneyGram would have been the only alternative, nowadays there are a lot of far cheaper solutions which are getting cheaper year in and year out. World Remit for example is beginning to take over. It is already in partnership with three banks, that is, GTB, First Bank and Fidelity. Its cost is way below that of western Union and may decrease in subsequent years. Reducing the costs of remittances has been a high-level goal for the World Bank, as well as these payment providers which are commercial entities. They are obviously aiming for profitability but at the same time, they have to be able to outperform their competitors by offering lower attractive rates.

Microsoft positions for cloud growth with new subsidiary Jumoke Akiyode-Lawanson

icrosoft has created a new subsidiary, the Middle East and Africa (MEA) multi country cluster (MCC) to cater for the full African continent (except South Africa and Egypt), the Indian Ocean Island, Levant and Pakistan. According to the company, this new subsidiary was created with a focus to rightly position itself for cloud growth across the region. Microsoft which enables digital transformation for the era of an intelligent cloud and an intelligent edge, a few weeks ago, appointed Ibrahim Youssry to head the MEA Multi Country Cluster as the General Manager. Akin Banuso, country manager of Microsoft Nigeria welcomed Youssry’s appointment saying that, “the establishment of MCC under

Ibrahim’s leadership, allows us to more closely align across growth markets to further deliver on our vision of digital transformation, while enabling partners. I look forward to working with Ibrahim and the MCC team, not only to drive our customer’s success but also to invest in digital skills building and youth upliftment in Nigeria”. Youssry brings over thirty years of professional experience and industry knowledge to the role. Having joined Microsoft in 2007 in the server and tools business, which he managed across most of Africa and Levant, Yousry progressed to become the General Manager of Microsoft West Central Africa in 2008. Holding his position for four years, Youssry led growth across the region, overseeing every aspect of Microsoft’s business and being awarded the Microsoft global “General Manager of the Year” award

in 2009. In 2011, Youssry moved to Microsoft France, leading an extensive government business covering ministries, social and administrative entities and large public-private accounts, and in November 2013, he moved back to the MEA region and joined Microsoft Gulf as the Public Sector lead. Microsoft acknowledges that Ibrahim Youssry has made an enormous impact in the market supporting government and education organisations to accelerate their digital transformation agendas and growing the Microsoft public-sector business significantly. Prior to joining Microsoft, Youssry spent many years working in multinational organisations across different sectors including Aramco, GUPCO and Schlumberger in the oil and gas industry, Gemalto and Orascom “Djezzy” in the Telco space.

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COMPANIES & MARKETS Google partnership with Unity to boost mobile game advertising …insight into the $137.9bn global games market Jonathan Aderoju

oogle inc, which is the world leading search engine has come into a partnership deal with Unity Technologies, who are the creators of the real-time 3D development platform. It is a strategic partnership with Google’s mobile advertising business, AdMob, that will change the way advertisers reach gamers on-the-go and help mobile game developers monetize their app. With more than 50 percent of all new mobile games made on Unity, this partnership will give Google advertisers access to Unity’s extensive network of mobile gaming titles through Universal App campaigns, helping advertisers reach consumers around the world on both Android and iOS. Unity’s scale and expertise is the go-to engine behind mobile games combined with

Google’s global brand leadership will give advertisers a seamless, integrated way to engage high-value audiences like never before. According to a research by Newzoo and Google.Mobile advertising makes up about 70 percent of all of digital advertising revenue, according to eMarketer. The mobile gaming industry alone was worth $50.4 billion in 2017. Also according to Newzoo report there are more than 2.3 billion active gamers in the world this year, of which 46 PERCENT, or 1.1 billion, spend money on games. The Newzoo report that the games market will reach $137.9 billion in 2018, with digital revenues accounting for 91 PERCENT of the market, or $125.3 billion. For the first time, mobile gaming will contribute more than half of all revenues, with smartphone and tablet gaming growing +25.5 PERCENT year on year to $70.3 billion.

Following the success of this partnership marketers who use Google’s mobile ad platform, AdMob, can advertise on games developed on Unity’s platform. Different brands can now reach an audience that spends nine billion minutes each day playing Unity-powered mobile games, while developers can earn revenue. Sissie Hsiao, the vice president of mobile advertising at Google said “At the end of the day, an advertiser cares about the performance for their advertising, and they care about brand safety, and they care about reach.” About 49 percent of mobile gamers are female; with 65 percent of U.S. women aged 10 through 65 playing mobile games. According to Newzoo report. Research shows 96 percent of the gamers don’t pay to play their mobile games, and 71 percent are good with seeing ads instead of having to fork

L-R: Victor Olannye, executive secretary, Risk Management Association of Nigeria (RIMAN); Kola Ajimoko, 1st vice president, RIMAN; Uche Olowu, president, Chartered Institute of Bankers of Nigeria (CIBN); Magnus Nnoka, president, RIMAN; Bayo Olugbemi, 1st vice president, CIBN; Grace Ademola, treasurer, RIMAN; Seye Awojobi, registrar, CIBN, and Joshua Uwedinisu, RIMAN/ ex-officio, during a Courtesy Visit by RIMAN executive council to CIBN in Lagos.

over cash. The announcement of this partnership allows Google to add iOS and Android phones

Heritage Bank achieves payment card security recertification

eritage Bank Plc, one of Nigeria’s innovative banking service providers has successfully attained recertification of the Payment Card Industry Data Security Standard (PCI DSS) version 3.2, having achieved the International Organisation for Standardisation ISO 27001:2013 recertification recently. With its legacy of innovation, the recertification reaffirms the bank’s leading position in the payment card industry in Nigeria, as first to issue a transparent Mastercard debit card in SubSaharan Africa and pioneered the mPOS in response to the CBN Cash-less initiative. A statement signed by the Divisional Head, Corporate

Communications of the bank, Fela Ibidapo explained that the PCI DSS is a proprietary information security standard for organizationsthat process, store, transmit or access cardholder information for major debit, credit, prepaid, e-purse, ATM and POS cards. The standard’s framework originated from the five global payment brand programmes (VISA, MasterCard, American Express, Discover and JCB) and was designed to increase cardholder data (CHD) controls to reduce credit card fraud. Any enterprise that falls within the scope of the standard must implement the standard and seek compliance. The PCI DSS helps enterprises dramatically reduce credit card fraud and brings significant

additional benefits, including: increased bank/consumer credibility; reduced/optimised business impact and risk; and fewer breaches/increased security awareness. Speaking on the award of the PCI DSS’ certification, MD/ CEO of the bank, Ifie Sekibo it was a strong indicator that Heritage Bank consistently has its customers’ interest at the core of its business operations, is committed to appropriately protect customers’ information as well as maintaining a safe and secure environment for customer transactions. He noted that banking is a business of risks management, from assets to data, adding that it is fundamental that whatever a customer keeps in a bank is in

safe custody. According to “We are a service company providing banking service; and we are the best in the class of security of our information systems. It means funds kept with us are safe. This award is a validation of our mission to promote high ethical standards, integrity, and good business practices,”Sekibo stated. The certification is said to be in recognition of the bank’s commitment to effective and secured financial system which has conferred internationally-recognized standard on its operations. This will also enable Heritage Bank to protect the funds of its customers and frustrate efforts by fraudsters to access their information and assets.

Eighteen more winners emerge in Star Lager National promo

tar Lager millionaire’s promo now in its sixth week, has produced eighteen more millionaires in the Kaduna and Onitsha areas as more winners were presented with their prizes this past weekend during gala ceremonies held in Kaduna and Onitsha John Paul Ocheme a thirty five year old student based in Kaduna, Zenith Abubakar, a forty four year old businesswoman

based in Sokoto and Cornelius Ocholi a forty one year old Police Officer were among the lucky Nigerians who became millionaires in the past week The new millionaires were full of joy and gratitude all through the evening, while meeting with the Nigerian Breweries brand representatives in Kaduna and Onitsha during the presentation events. At the Kaduna presentation,

John Paul Ocheme a student, expressed his delight in winning one million naira. According to him, “I never expected to win, in fact, I usually do not have faith in promos, but Star Lager has really surprised me. I am going to use the money to further my education.” Onitsha based Ezeonyebuchi Kosiso shared similar sentiments as he described his two million naira win as the “best thing that

happened to me this year.” Commenting on the regional presentations, Abayomi Abidakun, Senior Brand Manager Star Lager Beer, Nigerian Breweries Plc, said, “We are grateful for having customers all over the country who have remained loyal over the years. This promo is our way of appreciating them and we will continue to reward more Nigerians in the United We Shine Millionaires Promo.”

to its ad network, at a time when Apple is expanding its mobile advertising opportunities through search ads

in its App Store. Over half of new mobile games are built on Unity’s platform and are played on 3 billion devices.

Mahindra Company of India partners Kano farmers for commevrcial farming Adeola Ajakaiye, Kano

ahindra rise, the world number one tractor manufacturing company, says it is participating in a tripartite partnership with Kano farmers and the State Government, in the implementation of a tractor acquisition project geared at mechanizing farming activities in the state. Accordingly, the company hinted that it was participating in the partnership programme under an ‘end to end solution business concept’ it fashioned out as a way of supporting the development of Nigeria` agriculture sector across the value chain. Manoj Ramakrishnan, head of operations, Springfield Agro Limited, the company representing the tractor manufacturing entity in Nigeria, made this disclosure, at the official launching of the tractor acquisition partnership which took place at the Kano Office of All Farmers Association of Nigeria, on Wednesday. Manoj said that his company is committed to working with Nigeria in developing agriculture beyond just supplying tractors, as it has enough capacity to participate across the value –chain. He stated that the end to end solution business concept which company have in mind

for Nigeria also entails: Land Clearing, Land preparations, Supply of Improved Seeds, Fertilizers, Agro-Inputs, Post –Harvest Mechanization, and Post –Harvest Procurements. “We glad to be part of this tripartite partnership programme involving the Kano Farmers, and the State Government. Today event is a follow-up to the earlier visit which the company organised for a delegation of the Kano State Government led by the Deputy-Governor, which visited our manufacturing plant in Bombay, India. “As part of our commitment to this partnership, we have build-up a stock of over 100 Tractors in our Warehouse in Kano which we are ready to supply on demand by end users. We also want to make it known that out Mahindra has the capacity to deliver 5000 tractors in a Year”. Manoj noted that his company which has being operating for over 50 years in Kano, is ready to expand the scope of the partnership with agriculture stakeholders to areas, such as, irrigation, as a way of ensuring all year farming activities for them. In order to actively ensure the mechanization effort of the Nigerian Government, he explained that his company has operated an assembly plant in the northern Nigeria state of Kaduna.

Monday 06 August 2018

BUSINESS

DAY

COMPANIES & MARKETS Premium Pension strengthens regional offices to deepen penetration … AUM hits N570 billion MODESTUS ANESORONYE

ension fund administrator, Premium Pension Managers Limited has continued to strengthen its regional offices for efficiency and greater accessibility for its customers. The PFA, in its strategy of ensuring the above objective geared towards satisfying its numerous customers countrywide, the Board of Directors of Premium Pension Limited recently held its 59th Meeting at its ultra-modern Lagos Island regional office, located at Awolowo Road, Ikoyi. The meeting, which is first of its kind outside the corporate head office of the company based in Abuja was attended by all members of the board and executive management of the company led by the chairman, Yunusa Yakubu. The company explained that

the development is part of the Premium Pension’s commitment towards recognizing with its numerous clients residing and working on and around the Island. “We are bringing relationship closer to our clients and providing environment for them to experience our premium services” said the chief executive officer, Umar Sanda Mairami. Mairami further said that “there is no gainsaying the fact that the business of pension fund administration is delicate and tasking especially with regard to the required technical input. But our capacity and level of preparedness and alertness is not in question.” The office of the new Executive Director Business Development South & Strategy Kemi Oluwashina is also located within the precinct of the Lagos Island regional office. Premium Pension Limited was licensed in the year 2005, and currently have Assets Under Management (AUM) in excess of N570 billion.

FirstBank promotes financial inclusion in communities with agent banks HOPE MOSES-ASHIKE & AGNES IBOROMA

irstBank of Nigerian (FBN) Limited is promoting financial inclusion through the creation of agents who serve as banks in the communities. Ibukun Awosika, chairman, disclosed this in Lagos on the side line of Small and Medium Enterprises (SMEs) connect and youth entrepreneurship seminar

organised by the bank. “We are working with communities that are small to create agents who are the banks of these communities and these agents work with us. This will help to plug in more Nigerians into the economy”, Awosika said. Speaking to participants at the seminar who are entrepreneurs, she said the biggest people that will help define the country and achieve goals are the entrepreneurs. “I say to people don’t try to be an entrepreneur if you’re are

not called to be one because you can naturally succeed at what you’re naturally endowed to do with the skills and character traits that makes it a bit more conducive to build for the long term”, she said. She said anybody can build, but what is important is building in a sustainable manner that allows you not just to create value for yourself, but create value for the country and this requires knowledge. “Our investment in SME in this season is not without a course, the is-

sue of unemployment facing the country is not going to be solved by the biggest corporates”. “As entrepreneurs, you have to take the right set of decisions for your businesses to be competitive. This event for us is nation building. It is an investment in helping the next generation of players in the economy, job creators in the economy, and people being able to fulfill their dreams for us to empower and equip them in a way they can do it sustainably. Nigerians are smart and driven”.

Adeosun leads discussion as stakeholders seek growth opportunities for insurance, pension sectors

takeholders in the nation’s insurance and pension industry will on Thursday in Lagos discuss critical issues that will enable both sectors achieve their potential in the countries financial services market. Leading the discussion will be the Minister of Finance, Kemi Adeosun at the third Edition of the National Association of Insurance and Pension Correspondents (NAIPCO) Annual Conference billed to hold on Thursday

9th August 2018, at Oriental Hotels, Victoria Island, with the theme “The Role of Stakeholders in Developing Insurance and Pension Sectors”. The event to be chaired by Bala Zakariya’u, past president, Chartered Insurance Institute of Nigeria (CIIN) will have as special dignitaries the acting director general of the National Pension Commission, Aisha Dahir-Umar, and the commissioner for insurance, Mohammed Kari.

The NAIPCO event also brings together, consumers and other stakeholders of the two industries to discuss issues, challenges and the way forward for economic growth and prosperity. Sub-themes for deliberation at the conference include, ‘Making Insurance Attractive to Nigerians; Exploring the Micro Pension Concept and Creating Pension & Insurance Awareness; Increasing Insurance Contribution to GDP; as well

as the Role of the Media. A statement from NAIPCO, says the event will provide journalists veritable opportunity to get feedback from the two industries as regards the roles of the ‘fourth estate of the realm’ in developing the sectors. The theme and the sub-themes have been carefully selected to reflect the current industry trends, with erudite speakers from both sectors and the academia also carefully selected, NAIPCO said in a statement issued weekend.

BUSINESS DAY

Monday 06 August 2018

BUSINESS DAY

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Monday 06 August 2018

COMPANIES & MARKETS NIBSS platform drives micro payments in MFBs, PMBs HOPE MOSES-ASHIKE

he mCash, a product of the Nigeria InterBank Settlement System (NIBSS) is helping microfinance banks (MFBs), Finance Companies (FCs), Primary Mortgage Banks (PMBs) and Development Finance Institutions (DFIs) to deploy micro payment soclutions. mCash is a micro-payment platform or an innovative solution designed by NIBSS in collaboration with Deposit Money Bank (DMBs) and the Telcos to facilitate low-value retail payments in the country. Launched two years ago, mCash is designed to drive payments by providing accessible electronic channels to a wider range of users and to further grow financial inclusion. “We already have some microfinance banks coming on the mCash platform and for that kind of organisation that do not have plenty of money; can’t go to Nigerian Communi-

cation Commission (NCC) and have a code, they do not have a big banking application at the back. The mCash platform actually makes it easy for them to register and immediately their customers can start USSD transactions without the cost of trying to do it on their own”, Ade Shonubi, managing director/ CEO, NIBSS said. Speaking in Lagos at the relaunch of the product, Shonubi, said the mCash is the first payment platform that has insurance up to N50,000. “If you use mCash and there is a fraud, up to N50,000 is fully insured and you will get your money back because Bank Verification Number (BVN) is at the back, we can always do investigation and find out where the money went unlike any other products”, he said. Shonubi said the product uses a common USSD that cut across all banks. “Someone who has many bank accounts does not have to start remembering the code for each of the banks”. “The Telcos are committed

to provide the USSD channel to give it a priority. In terms service, we believe it will give better service, less failure than you would have for some of the others”. NIBSS relaunched the product on Tuesday after some issues around the SIM swap were resolved. “When we started Mcash for example, we did not anticipate the full effect of the sim swap problems that existed. So, when it came to be, we had to slow down because sim swap was a major issue from a loss and a risk perspective”, he said. Uzoma Dozie, managing director/CEO, Diamond Bank plc, who delivered a keynote address at the event said mCASH is cheap and secured and would significantly increase the volume of mobile payments in Nigeria. Represented by Caroline Anyanwu, deputy managing director/chief risk officer, he said people need high level of education to use other platforms but all that is required with mCash is phone and merchandise code.

Business Event

L-R: Adeyemi Ademiluyi, cyber security manager, Inlaks; Bako Wakili, head, technical standards & network integrity, NCC; Asmau Galadanchi, manager, public affairs, Nigerian Communications Satellite Limited (NIGCOMSAT), and Oladimeji Talabi Koyejo, director, Value Added Services, Inlaks, when Inlaks was presented with ICT Conglomerate of the year award at the Nigerian ICT Impact CEO Forum and Africa Digital Award in Lagos recently

Hajj: Med-View airline begins airlift of 10,000 Pilgrims from Lagos Ifeoma okeke

ed-View Airline over the wekend commenced the 2018 airlift of Pilgrims from Lagos state to Mecca. No fewer than 320 pilgrims were airlifted from the hajj camp of the Murtala Muhammed International Airport (MMIA) on board Med-view Airline at about 6:30am. The pilgrims started boarding the airline’s newly acquired Boeing 777-200 as early as 5:30 and were done with formalities before 6:00am. The airline is scheduled to airlift no fewer than 2001 passengers from Lagos alone and has a total of 10,000 pilgrims of the 95,0000 pilgrims

to airlift. According to the airline management, apart from Lagos pilgrims the airline will also be airlifting pilgrims from Kaduna, Maiduguri, Ilorin as well some extras from Guinea Bissau and Niger. Speaking with Journalist shortly before departure, Isiaq Na’allah, the executive director, business development, said that Med-view will be airlifting its pilgrims on seven trips. Na’allah stated that: “We give praise to the almighty Allah for giving us the strength to start our airlift, this is the first flight we are doing this year and we are hoping to do about 10,000 pilgrims. We are airlifting our pilgrims from Lagos, Kaduna, Maiduguri and Ilorin.” “Obviously, it’s challenging if

you look at the number of passengers we use to carry in such a short period, it is challenging and so you need a very high capacity aircraft, this is why we have brought this aircraft, it’s a triple seven(777) it’s a modern aircraft. This flight carries 323 capacity right now the Lagos people that are going now we have 320 . From Lagos state we have about 2000 passengers and we are going to do about 7flights for them.” On consistency he added,”The major source of our consistency is our ability to provide the desired services for our passengers, we give them the comfort when they are going and when they are coming back and also when they are there as much as possible we make sure they enjoy their stay.”

L-R: Dayanand Sriram, general manager, RB West Africa; Aliza Leferink, Marketing Director, RB West Africa; Abiodun Bamgboye, permanent secretary, Lagos State, Ministry of Environment, and Helen Paul, Harpic, brand ambassador, during the Harpic/ Ministry of Evironment public toilets commissioning in Lagos.

Abdulrahim A. Bello (L), administrative manager, West African Ceramics Ltd, showing the new designs of tiles on display at the royal exclusive showroom to the Eze Oha Apara the IV of Apara Kingdom, Rivers State, King C.A.A. Worlu Wodu (M) and. Ohazulumeh Chamberlain (R), MD, Marchambers Int’l. Co. Ltd during the inauguration of the showroom in Port Harcourt recently.

ADB reaffirms commitment to tackling youth unemployment in Nigeria Cynthia Egboboh

he Africa Development Bank group has re affirmed its commitment to tackling youth unemployment, and strengthening productive opportunities for youths in Nigeria. Ebrima Faal, senior director, Nigeria country office, said that the group seeks to deepen coordinated joint efforts to address youth employment crisis

and assist Nigeria in strengthening productive opportunities for the youth, so as to enhance their participation in economic development of the country and inclusive wealth creation. Faal, speaking at the Inauguration of Taskforce for Organization of Public-Private Roundtable for Nigeria on said that “the gathering signifies a common durable purpose; to seek more effective solutions to deal with the overwhelming youth employment crisis of our time. The nature and the level

of investments we make in the children and youth today, will determine the development of Nigeria in the coming years”. Speaking further, she noted that in 2016, The AfDB adopted a Jobs for Youth in Africa Strategy with the goal to create 25 million jobs and equip 15 million youth in Africa with employable skills in ten years adding that from 2016 to date, the Bank has invested over USD 400 M in both public and private operations that will promote jobs for the youth in the country.

L-R: Ismaeel Ahmed, senior special assistant to the president on Social Investment; Dotun Adebayo, operations manager, National Home Grown School Feeding Programme (NHGSFP); Mariam Uwais, special adviser to the president on Social Investment, and Abimbola Adesanmi, programme manager NHGSF, during a breakfast media round-table by the National Social Investment Office (NSIO) in Abuja. Pic Tunde Adeniyi

BUSINESS DAY

Monday 06 August 2018

CityFile

Ambode approves recruitment of 2200 teachers JOSHUA BASSEY

a g o s S t a t e G overnor, Akinwunmi Ambode on Friday approved the recruitment of additional 1200 teachers for the Junior and Senior Secondary schools in the State. The governor, at the last quarterly town hall meeting at Ibeju Lekki, had promised his administration would employ more teachers into public schools to meet up with the manpower required to cover all public schools in the state. Confirming the development, Idiat Adebule, the deputy governor, said the 1,200 teachers were an addition to the 1000 approved for recruitment into pri-

mary schools in the state. Adebule, who superintends over the Ministry of Education, said guidelines for application would be released soon in accordance with the civil service rules. The development, she added, would further aid teaching and learning in the public schools which, according to her, has been attracting more enrollm e n t i n t h e l a s t t h re e years as a result of the improved infrastructure and welfare of teaching and non-teaching staff. She said the improved facilities and staff motivation was evident in the high performance rate of the students of the State in local and international competitions.

Banker charged with swindling customers of N13.6m

Federal High Court complex, Awka, Anambra under erosion threat.

29-year-old banker, Kolawole Agboola, has been arraigned before a Tinubu Chief Magistrate Court for allege dly stealing N13.6 million belonging to two customers of Access Bank Plc, Lagos Island. The accused is facing a three-count charge of conspiracy, fraud and theft. The prosecutor, Hafsat Ajibode, told the court on Friday that the accused committed the offences between October 2017 and March 2018. According to Ajibode, the accused withdrew the money from the unnamed customers’ accounts by

issuing a forged investment certificate to them to conceal his fraudulent activities. Agbola pleaded not guilty to the charges. Ta j u d e e n E l i a s, t h e chief magistrate, granted bail to the accused in the sum of N500, 000 with two sureties in like sum. Elias said one of the sureties must be a relative of the accused and the other, a civil servant, and adjourned the case until August 16 for hearing. The offences contravene sections 287 (7), 325 and 411 of the Criminal Law of Lagos State, 2015. The section 287 (7) stipulates seven years imprisonment for offenders.

Enugu: Police nab 2 suspects, recover gun

he police in Enugu have arrested two suspected armed robbers and cult members in Oji River area of the state. Ebere Amaraizu, spokesperson of the police in Enugu, said the two suspects were arrested on July 30. According to Amaraizu, one locally-made gun and two live cartridges were recovered from the suspects. He said the arrest was made by the police operatives in Oji River division through intelligence information. “One of the suspects who gave his name as Samuel Onyia, a resident of Ugwunzu in Oji River, disclosed that he is a member

of JVC confraternity. “Following his arrest and the revelation, one Chigozie Agunwichie, also a member of JVC confraternity, was nabbed. “Onyia was caught with the gun and live cartridges while a manhunt for other fleeing members of the gang is being intensified,’’ he said, adding that the duo are helping the police operatives in their investigation. He said that the command was intensifying its sensitization programme tagged: “Police Campaign Against Cultism And Other Vices (POCACOV)’’ is being sustained to ensure that the entire state is safe and secure against cult activities.

Gully erosion: Federal High Court, Awka at verge of collapse

he Federal High Court (FHC) complex, in Awka, Anambra State is at the verge of total collapse following a gully erosion which is fast eating into its foundation. A visit to the complex last weekend showed that parts of the property had already caved into the gully site. Some of the parts that have been lost to erosion include the perimeter fence, generator house, the original site for electricity and tarred road leading to Judges’ Quarters. Other are the boys quarters for house helps in the judges’ quarters, the water supply borehole and the part of the entrance to the court complex. Blessing Egbuche, a staff of the Federal High Court, said they no longer felt safe working under the prevailing circumstance. Egbuche said no part of the complex is safe now as each rainfall reduces the integrity of the buildings which already had visible cracks due to underground vibrations. She said electricity and water supplies were no longer available as they could no longer use the borehole while the

transformer had been dismantled. A c c o r d i n g t o h e r, they had cried out to the Anambra State government and the Nigeria Erosion Watershed Management Project (NEWMAP) and had not received any assistance after they had visited severally. “We no longer feel safe and happy working here, the staff, the lawyers and judges can no longer use the convenience because there is no water, so that has resulted in the messing up of the whole place. “There is no light in the complex, maybe there is electricity supply but our transformer has been disconnected because erosion was swallowing it up and we had to call EEDC to come and remove it. “The borehole has collapsed, our 20,000 capacity water tank is there but we have emptied it to prevent it from going down into the gully soon,’’ she said. Continuing, she said “now the staff members tell you that they want to ease themselves outside the gate and leave from there, you cannot monitor them again. “The building is at the risk of collapse, we are not safe here anymore, we need urgent assistance to

prevent this disaster,’’ she reiterated. Also, May Esealuka, the deputy chief registrar in the court, feared the possible loss of the multimillion naira complex to gully erosion. Esealuka said that all efforts to get the Anambra government and Federal Ministry of Environment to intervene in the problem since it started had failed. “We sent letters to Anambra government in November last year and all the people and agencies that matter in Anambra, including NEWMAP came and saw things for themselves. “What is happening here is sad, every moment my heart jumps that the worst will happen; there is no road to the judges quarters anymore. “We have not had light for the past six months, no water supply; we have moved our generators to a safer side because the generator house has collapsed. “Since this started, nothing has been done to save it, NEWMAP at a time said I should call people at the top for release of funds, but am I supposed to talk, if not the people on ground. “We have been writing letters and making calls that some of them

no longer pick my calls, we are begging whoever is in charge to save us, the media should help us to shout so that they can help us,’’ she said. The Federal High Court complex, is however, not the only structure under threat, as the gully site is also a few metres away from the Federal Secretariat still under construction. Some structures in the abandoned Three Arms Zone along Ekwueme Square have also been swallowed by the menace. Emeka Achebe, head of communications in NEWMAP, said the World Bank technical team has visited the site and appreciated the enormity of the danger. Achebe said a special intervention plan known as “Gully Rapid Action and Slope Stabilisation (GRASS), has been approved for the site. A c c o rd i n g t o h i m, this will control damage and immediate threat to houses and other critical infrastructure, adding that remedial works will begin before the end of August. “GRASS has been approved by the World Bank for Ekwueme Square and activities will commence before end of month,’’ he said.

BUSINESS DAY

Monday 06 August 2018

BUSINESS DAY

Monday 06 August 2018

This is M NEY A daily guide to your Personal Finance

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

Leading for effective sales in tough times Iyore Ogbuigwe

eadership is a powerful tool to great accomplishments for any team or organization. The sum total of skills or abilities in a team is not as important as the leadership of that team. It is based on this mindset the late Myles Munroe said, “a herd of sheep led by a lion will always defeat a herd of lions led by a sheep.” This is the same reason when a football team is performing poorly they don’t sack the players rather they sack the coach because everything rises and falls on leadership. Besides, like the famous saying, “there are no bad soldiers under a good general.” More than anything, leadership is an attitude and this attitude is reflected in the state of the team especially during tough times. If the sales team seems unmotivated to bring in sales, here is what you must do: 1. Make a decision Decide to turn things around; decide to raise a high performance and highly motivated team. The key word here is ‘decide.’ If you decide to win, nothing can stop you. Use the power of your decision. Decision is greater than destiny because without a decision no one can get to any destination. 2. Take 100 percent responsibility If you take 100 percent responsibility for the mess, then you would have rid the problem of its power then made that power yours. Hence, you will now have the power to change the situation. The good thing is, when you’ve changed things the success will be 100 percent your responsibility. However, great leaders give credit to their team for their success but take responsibility for their team’s mess.

3. See differently Inside every seed is a potential forest. Nevertheless the seed will never be aware of its huge potential to produce a forest until the forest shows up. In the same way, see your team members as seeds; they have in them the potential to be mighty and strong. They may not know but you should know and see them that way. Therefore, see them not as they are but as they can be. The ability to see potential is a leader’s greatest tool to activate the potential in people. Don’t compare your team members with others, allow them grow at their pace but keep seeing the best they can become and talk to them that way. If you talk to the king or queen in them that king or queen in them will come to the surface. 4. Raise your expectations of your people It is said that followers rise to the expectations of their leaders. Have great expectations of them, never look down on any of them. Remember, you are the lid to their potential. If you remove the lid they will soar, if you cap their potential with a lid they will atrophy. Followers always know when their

leaders believe in them and expect great things from them. Expect them to win, to give their best and when they see you have such great expectations, they won’t want to disappoint you. 5. Invest in their personal development The desire for growth is an innate human need. The moment people realize that working with you means they will grow, they will want to stay with you. Place them on a growth plan or schedule. Give them books to read, have trainings for them to increase their effectiveness, let them attend seminars, have personal coaching sessions with them. You have no right to demand from people what you did not invest in them. 6. Show them you care No one cares how much you know until they know how much you care. Genuinely love your team and let their best interest be in your heart. Beyond the job be interested in their personal goals and make them see how they can achieve their personal goals by helping you achieve yours (in a sense align their goals with your goals such that your goals become theirs). This will

Great leaders give credit to their team for their success but take responsibility for their team’s mess only be possible if you creatively come up with a schedule for spending time with your team members. Maximize birthdays, anniversaries and other important dates of your team members. It was said that Napolean Bonaparte had very loyal soldiers because he seemed to know them personally. Walking through the battalion he would literally one after the other ask each soldier personal questions about their well being based on previous discussions he had with them. 7. Cast your vision Be clear on what the vision of the team is. Know exactly what you want to achieve. Clarity is power, so write the vision, display it for all to see, discuss

it, debate it, sing it, plan with it. Be as creative as you can to cast the vision in as many ways as possible. One thing is imperative with regards to vision; Harvard Business Review asked a CEO of a start up how he was able to lead a team of about 50 people, with no salary for a 3 year period after which the business didn’t even work out. One key point he noted was, people will be willing to move with you if you can make them see how what you’re trying to achieve can make the world a better place. 8. Encourage teamwork Individuals win medals but teams win trophies. Encourage a team spirit so the strong can lift the weak and a synergy can be formed to produce better results. When two minds come together a third mind is produced. Doing this means emphasis will be placed on rewarding a team effort and not just individual efforts. A team will never thrive if the members of the team compete against each other instead of cooperating with one another. Therefore watch your reward system. Also, introduce tag team selling to your

team members. There are times you meet a prospect and you can’t seem to build rapport or the prospect doesn’t like you or you don’t seem to get along well with them or you feel the opposite sex would probably do a better job in persuading this prospect. People buy from those they like, so don’t let the sale go. Instead, encourage your team members to never hesitate to move such prospects to someone else who can close the deal. 9. Move, then they will follow Like Alexander the great, lead your army from the front, not from the back then they will do wonders. If your team see you selling, they will be inspired and compelled to sell too. Don’t be complacent with past victories. Keep aspiring for more sales and your sales team will become motivated to give their best. 10. Be willing to try again even if you fail. Never stop believing in people because you were disappointed by someone. Be true to yourself, be the leader you were born to be then not only will your sales team follow you; even the world will follow you. Together everyone of us achieves more. To get more resources to boost performance in your sales team, visit our online store. You can also book a team coaching session with us. Iyore Ogbuigwe is a highly sought after sales and persuasion expert for local, international and multinational corporations. Iyore is the CEO of Ultravantage& Founder of the IyoreOgbuigwe Sales Academy (IOSA). He holds sales seminars in Nigeria, Ghana and the USA and has written 5 books on selling. Connect with Iyore: Website: www.iyoreogbuigwe.com Email: admin@iyoreogbuigwe.com Instagram & Twitter: @ iyoreogbuigwe

Monday 06 August 2018

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BUSINESS DAY

Live @ The Exchanges Top Gainers/Losers as at Friday 03 August 2018 GAINERS

Market Statistics as at Friday 03 August 2018

LOSERS

Company

Opening

Closing

Change

BETAGLAS

N78

N85.8

7.8

SEPLAT

N704

N710

N100

N103

N5.45

N5.75

0.3

DANGCEM

N230

N229

-1

N23.65

N23.85

0.2

CADBURY

N10.7

N9.75

-0.95

REDSTAREX ZENITHBANK

Company

Opening

Closing

Change

N81

N76

-5

INTBREW

N33.4

N30.5

-2.9

N24.5

N23.4

-1.1

OKOMUOIL

ASI (Points) DEALS (Numbers) VOLUME (Numbers)

General Meeting set a timeline of circa three months for the company’s voluntary delisting from the Nigerian Stock Exchange (NSE). GNI Plc anticipates that the delisting will take effect from October 23, 2018, according to a notice issued at the Nigerian Bourse. Great Nigeria Insurance Plc has continued to struggle over the past years to meet up with NSE postlisting requirements which include not submitting its financial reports as required and inability to meet the free float requirement. Over the last five years, there is little or no trading activity on the shares of the

company held by the minority shareholders. There has also been a considerable fall in trading volumes over the last twelve 12 months with an average daily volume of circa 1,200 units during the period March 2017 to March 2018. Through the Voluntary Delisting of GNI Plc, the Directors of the Company believe they will be shielding the Company from any enforcement action or sanction that the Nigerian Stock Exchange may impose, for example by way of a mandatory Regulatory Delisting and potential reputational damage to the Company. Also, they noted that the delisting will afford the company to carry an

imminent Corporate Restructuring exercise to take advantage of emerging opportunities and may consider re-listing the company in the future if the market conditions are favourable. The decision by the board to embark in voluntary delisting relates to their feelings that the shareholders of the company are not benefiting from the continued listing “as shareholders are not getting any exit opportunity and their investments have been locked up and they find it difficult to dispose of their shareholding. Neither the company has benefitted as the company’s shares continue to trade at a significant discount to the intrinsic value.” Also, GNI’s Free Float currently stands at 16.03percent, significantly below the NSE’s minimum Free Float of 20percent. With this Free Float deficiency, the NSE could take enforcement action even though The Quotations Committee of the National Council of The Exchange (QCN) has extended the curing period to May 2020. The NSE regulatory requirements of companies listed on the main board of the Exchange is to have a minimum of 20 percent of their shares in the hand of retail minority shareholders, under a listing requirement known as free float.

Staco Insurance board appoints Fakorede as new MD

ayo Fakorede has been recommended by the Board of Staco Insurance Plc as the new Chief Executive Officer of the Company. Fakorede’s appointment is subject to the approval of the National Insurance Commission (NAICOM), the company’s primary regulator. He takes over from Sakiru Oyefeso who has been dismissed as the chief executive officer (CEO) of, according to a statement released at the Nigerian Stock Exchange (NSE) on Friday August 3, 2018 and signed by Jackson, Etti & Edu, company secre-

tary. On July 9, 2018, STACO Insurance Plc notified the Nigerian Stock Exchange of delay in filing and publica-

Fakorede

tion of its 2017 audited financial statement. The company had told the NSE that its 2017 audited accounts had been submitted to NAICOM, “and it is being reviewed for approval”. While they apologised for the inconveniences caused by the delay in the filing, they were optimistic that “the audited accounts will be submitted on or before July 31, 2018”. That was the second extension date as they couldn’t meet up with April 30 they had promised to submit the results. In the CEO’s dismissal notice at the Exchange,

266,403,743.00 4.255

MARKET CAP (N Trn

…to receive cash consideration of 50kobo per share

he shareholders of Great Nigeria Insurance Plc (GNI) at its Extra-Ordinary General Meeting (EGM) held on Wednesday July 25, 2018 approved for the company to voluntarily delist its shares from the Nigerian Stock Exchange (NSE). The company noted that minority shareholders who do not wish to be part of the unlisted company will have an opportunity to exit the company prior to its delisting from the Exchange. According to the resolution of the shareholders sent to the Nigerian Stock Exchange, minority shareholders may exit the Company prior to the delisting by: trading their shares on the floor of the NSE through their nominated stockbroker; or receive consideration from the company in exchange for transferring their shares, a cash consideration of 50kobo per share. Extract of the shareholders resolution shows that they also approved for the board of directors of the company to inform/notify other regulatory agencies as may be necessary in the course of the delisting process. The Board of Great Nigeria Insurance Plc (GNI) had before the Extra-Ordinary

3,242.00

VALUE (N billion)

Shareholders support Great Nigeria Insurance delisting from NSE Stories by Iheanyi Nwachukwu

36,499.67

the company notified the shareholders that the Board of Directors at its meeting held in Lagos on July 30, 2018 passed a resolution dismissing Oyefeso as the CEO of the company “on the grounds of financial misappropriation, abuse of office, and breach of corporate governance best practices.” The company’s shares listed on the Main Board of the Nigerian Bourse traded at a price of 48kobo per share last Friday. Its market capitalisation is N4.483billion and shares outstanding are 9,341,087,609 units.

13.322

FBN Holdings endorses ASHON’s renewed advocacy

he Association of Stockbroking Houses of Nigeria (ASHON) has secured endorsement of the management of FBN Holdings Plc in the former’s determined to deepen the Nigeria’s Capital Market through strategic engagement with stakeholders. Besides, FBN Holdings Plc has commended ASHON for its series of initiatives, including floating of Lagos Commodity and Futures Exchange (LCFE) as Indices that shall move the capital market to the next level. Speaking during a courtesy visit of ASHON’s executive officers to the management of FBN Holdings Plc, Patrick Ezeagu, Chairman, ASHON explained that stockbrokers were always eager to get fresh information from quoted companies to enhance their investment advisory role for the clients. According to him, stock market is information driven and quoted companies are obliged by The Nigerian Stock Exchange’s Post Listing Requirements to ensure regular dissemination of information to the market to enable stockbrokers serve as a rally point for the market, quoted companies and shareholders. Ezeagu who led the ASHON’s team to the management of FBN Holdings said: “It is important that we have regular information concerning what is happening within the companies that are quoted on the Exchange so that the brokers will appropriately appreciate the efforts of the people who are running those companies, and know exactly what they are planning to do. “This will help stockbrokers to advise their clients effectively. The engagement will be a continuous one because that is the only way that we can be sure that they are operating in a very transparent manner and that we too are abreast with what is happening within the company’s space. This is because the market is actually driven by information. Prices are made based on perception of the company in question and the value they actually carry. You cannot know the value except when you get information concerning what

they have done, what they are doing at the moment, what they have done and some of the measures that the companies have put in place in order to ensure that they are able to manage their risk. “If quoted companies are able to show evidence that they are managing their risk effectively and also mitigating against unforeseen risk, they can be assured that stockbrokers shall advise their clients to buy the companies’ shares.”Ezeagu said. Responding, Urum Kalu Eke, Group Managing Director, FBN Holdings noted with delight the collaborative efforts of ASHON to move the market forward. According to him, this is a meeting that should have happened years back. Eke explained that the FBNHoldings considered it a corporate recognition for being worthy of partnership with ASHON. “We know the primary role that stockbrokers play in deepening the market and creating awareness. And so, for us, this is a partnership that should be strengthened. I was quite delighted that they have an agreement and understanding on how to move forward in terms of helping to build capacity and I was particularly delighted to learn of the plan to get into Commodity Exchange that ASHON is promoting “I think it supports the government initiative towards deepening the market. On our part, we are going to provide our platform, which is the First Bank of Nigeria Limited. The commercial bank will support the commodity exchange initiative. We will definitely partner with them. It is a great development for the market.” Speaking further, Eke charged ASHON to take its activities beyond the commercial cities and go to the hinter land and create massive awareness. He noted that the market had become a lot more exciting and the credit has to go to ASHON because its members are the major movers and they understand market sentiments. “We need to expand ASHON’s activities across the country to become a bigger body that can influence government policies and market policies”. Eke said

BUSINESS DAY

Monday 06 August 2018

BUSINESS DAY

REAL SECTOR WATCH BUSINESS DAY

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Monday 06 August 2018

Local content: Indispensable tool for Nigeria’s development

Stories by ODINAKA ANUDU

t is nearly impossible for Nigeria to achieve greatness when the majority of goods consumed and used locally are imported. The country’s recent experience with exchange rate volatility is an indication that as long as nothing definite is done to cut appetite for foreign goods, industrial and economic development will remain a mirage. More than 100 firms shut down in Nigeria in 2016 alone because they could not source dollars to import inputs or struggled to carry out transactions that year. The damage done by the situation (which was badly managed) is still with Nigerians. This makes a case for local content in all the spheres of the economy. Local content here incorporates the use of more local raw materials and domestically fabricated machines, patronage of locally produced goods, and use of domestic labour, among others. Stakeholders assembled at the August Breakfast Meeting organised by the Nigerian-American Chamber of Commerce (NACC)

L-R: Joyce Akpata, director general, Nigerian-American Chamber(NACC); Patrick Obah, director, Planning, Research and Statistics, Nigerian Content Development and Monitoring Board (NCDMB); Ehi Braimah, vice president, NACC; Ekanem John Udoh, director, Science and Technology Promotion, Federal Ministry of Science and Technology; Jide Jadesimi, executive director, Business Development, LADOL Free Zone at the Nigerian-American Chamber of Commerce (NACC) August 2018 Breakfast Meeting held in Lagos on August 1.

in Lagos last Wednesday to examine ‘Nigeria’s Local Content Policy and Its Impact on Sustainable Economic Value Creation’. Speaking at the event, Simbi Kesiye Wabote, executive secretary of the Nigerian Content Development & Monitoring Board, said local content was inevitable for Nigeria as it would engender technology transfer, productivity, use of locally made goods, employment and value chain optimisa-

tion, while reducing poverty and capital flight. Represented by Patrick Obah, director of planning, research and statistics, Wabote said the efforts of the board had led to the establishment of 420 metric tonnes per annum (mtpa) pipe mills, including two world-class mills in Abuja and Lagos. He cited other achievements to include attainment of 36 percent of marine vessels (locally), six million

training man-hours (5,769 trainees), and local processing of barites. He disclosed that the Nigerian content level was currently 28 percent and the board’s plan was to raise it to 70 percent in 2027. Oluwatoyin Akomolafe, president of the NigerianAmerican Chamber of Commerce, said several studies had shown dramatic increase in the local capacity utilisation attracting over $5 billion into the local econ-

omy while also creating employment. “In the cement sector, for instance, the country has achieved a significant level of backward integration, with over 80 percent of the materials used for cement production in Nigeria sourced locally. Similarly, there have been several policies to promote backward integration in food processing,” Akomolafe said. Funke Opeke, chief executive of Main One Cable Company, a Lagos-based communications services company, said it was unfortunate that a lot of tech companies could be developed remotely with no value addition or physical presence in Nigeria, thereby precluding locals from gaining jobs and the required skills. “This means no employment, no taxes, no skills transfer,” Opeke noted. “All the value is added offshore, and all you get is logistics, which is done at the airports.” She stressed the need to provide adequate incentives to local firms, adding that large enterprises in the USA and China would not exist today without government incentives.

Ibilola Amao, principal consultant at Lonadek Inc, said Nigeria must begin to invest more in Science, Technology, Engineering and Mathematics (STEM) and play active roles in technology. She stressed the need to bridge educational institutions and the industry, while clearly defining the type of skills the citizens need to compete globally. Andy Isichei, president of Nigerian Chamber of Shipping, stated that part of the local content included ensuring that ship owners preferred to use Nigerian ports rather than ports of neighbouring countries. “But ask yourself, why do ship owners prefer ports outside Nigeria? It is because inefficiency is still a challenge at the Nigerian ports. This is evident in terms of experience of staff of regulators and dilapidated infrastructure. It can take a truck owner two weeks to pick a container at Apapa port. One of the vessels stayed for 19 days in Apapa and was paying $15 each day. Why do we have so many tank farms in Lagos? We need to dredge other ports across the country,” Isichei said.

Bureaucracy in ETLS registration frustrating Nigerian exporters—LCCI …insists Nigeria should sign AfCFTA ODINAKA ANUDU

igerian exporters are facing undue bureaucratic bottlenecks while registering products in the Economic Community of West African States (ECOWAS) Trade Liberation Scheme (ETLS), which is managed by the Foreign Affairs Ministry, according to the Lagos Chamber of Commerce and Industry (LCCI). The ETLS is the main ECOWAS operational tool for promoting the West Africa region as a Free Trade Area. Products moving within the region are required to do ETLS registration for easier identification. At the quarterly state of the economy press briefing held in Lagos last Wednesday, the chamber said the situation was not healthy

for Nigeria. “There is growing complaint by exporters regarding the difficulty of exporting goods from Nigeria to other West African countries due to the bureaucratic bottlenecks of registration of products under. In the past Nigeria used to have Ministry of Integration and Economic Cooperation which had responsibility for facilitating trade with other African countries, but this ministry has fused into the Ministry of Foreign Affairs,” Babatunde Paul Ruwase, president of LCCI, said. “We believe that the administration of ETLS should be moved from Ministry of Foreign Affairs to the Ministry of Industry, Trade and Investment, specifically the Nigeria Investment Promotion Commission (NIPC). This will improve

the administration of ETLS and serve exporters better,” Ruwase recommended. He reiterated the call for Nigeria to sign the African Continental Free Trade Area (AfCFTA), which is a treaty that is meant to remove trade barriers and achieve common customs union across the continent. The position of the LCCI, however, differs from that of the Manufacturers Association of Nigeria(MAN), which is urging the Federal Government not to sign until impact studies are carried out to determine the effects of the treaty on the Nigerian economy. But according to Ruwase, manufacturers should not worry as there would be subsequent protocols that need to be discussed and negotiated as they relate to specific sectors.

“It is also our understanding that adjustment could also be made as the process progresses. We should see the entire process and integration arrangement as work in progress. Trade issues are not static, they are dynamic. It is important to be part of the process in order to influence the direction of the agreement and protect our interest. If we can be part of the ECOWAS, we believe that we can also be part of AfCFTA. The safeguard measures in ECOWAS can be replicated in the AfCFTA. The reality is that no economy can exist in isolation of other economies,” he said, adding that if smaller countries in Africa were not afraid of the AfCFTA, Nigeria with almost 200 million people should not be seen as a coward.

He explained that there is a strong nexus between political stability and economic progress, adding that as elections draw closer, an unstable political environment naturally will escalate the risk of investment, create anxiety and undermine the confidence of investors. “Recent turn of events in the polity gives cause for concern. We urge all political actors to demonstrate restraint and refrain from activities that could undermine the stability of the polity and create avoidable social tension. This has become very important as political and electioneering activities gather momentum. No meaningful investment can take place where there is no regard for rule of law. We should not create a situation where citizens and investors (domestic and foreign) lose

confidence in the state institutions. Public institutions are very important factors in regulating behaviour of citizens and stabilizing the society. A loss of confidence in state institution is a recipe for anarchy. “We therefore need to ensure the credibility and integrity of our institutions. In this respect, we wish to reiterate the critical importance of respect for rule of law and independence and neutrality of the institutions of the state. In particular, we would like to underscore the imperative of non-partisan security agencies and judiciary. Independence of these two institutions is very critical at this time. The loss of citizens’ confidence in these institutions could lead to complete breakdown of law and order,” he added.

Monday 06 August 2018

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BUSINESS DAY

REAL SECTOR WATCH Raising local input sourcing in Nigeria’s dairy industry

sourcing and continuing in importation. One official of a dairy producing firm told BusinessDay that they were watching FrieslandCampina’s progress, saying that his firm could only risk its investments in local sourcing only when success was guaranteed. According to Langat, companies shy away from investing in local input sourcing because it is costly and takes time to make money from it. This means that a favourable investment climate should be provided for the industry in terms of security, funding and infrastructure, experts say. One big advantage of this model is that it ensures skills and technology transfer. For instance, Dutch dairy farmers were twice invited to Ni-

geria by FrieslandCampina. The Dutch farmers were able to school local Fulani farmers on cross-breeding, healthy farm practices as well as pasture and genetic management. Nigeria has 131 million cattle, goats and sheep, according to the Federal Ministry of Agriculture (2011 figures). Apart from private initiatives, Nigerian government has a role to play. First is in the area of adopting a strategy to reduce farmersherders’ clashes. Whether it is ranching or anything else, the key point is that cows should no longer be allowed to roam about. Doing this reduces clashes and deaths and improves health of cows, which in turn leads to high milk productivity. Second is the area of investments. Between 2016 and 2017, the government of Australia invested $25.8 million in research and development (R&D) of dairy. The country also pumped $900,000 as a business support for dairy farmers as well as $579 million as a support package to assist farmers affected by the decisions of dairy firms such as Murray Goulburn, Fonterra and National Dairy Products to retrospectively reduce farmgate milk prices in 2015–16, according to Australia’s Department of Agriculture and Water Resources. Nigeria needs to invest more in the industry, more so in improving cross breeding methods to improve yield. Some experts suggest that Nigeria may need to import high milk producing cows to replace or cross-breed with low-yielding local ones. Findings show that Jordan once had low-yielding cows but now have stronger Holstein Friesian cows after importing high-yielding species. The effect of this is a significant rise in milk production. Analysts believe this can be repeated.

bund Ajaokuta Steel Company, despite an earlier business case in the last administration showing that the complex could only work if properly privatised. Inability to hand over this behemoth to the private sector to manage and run is seen as a failure on the part of Muhammadu Buhari administration. They wonder if Ajaokuta is meant for siphoning public funds and are surprised that people get salaries at the complex despite the company not fulfilling the purpose for which it was built. BusinessDay checks show that Ajaokuta Complex has the capacity to produce one million metric tonnes of steel,

one million metric tonnes of coal , manganese and limestone, among others. Due to lack of operations at Ajaokuta Steel, Nigeria today imports steel valued at $3.3 billion every year. An average of steel products such as standard plates, hot-rolled coil, cold-rolled coil and rebar is estimated at $464.7 using Chinese prices, which means that Nigeria imports roughly 7.1 million metric tonnes of steel annually. The number could have been one to five million metric tonnes lower had Ajaokuta been producing and expanding operations since 1979, experts say.

ODINAKA ANUDU

igeria is undoubtedly blessed with favourable demography. With 198 million people, and a growth rate of 2.6 percent per annum, companies have the opportunity to tap the country’s demographic advantage to stay afloat. The local dairy industry is boosted by the rising growth of a young population and an upwardly mobile workforce that spends much time outside their homes. Like other sub-sectors, the local dairy industry is also benefitting from this demographic edge. Cheese posted value sales growth of seven percent in 2017, which was a significant improvement on the decline of 49 percent recorded the previous year, according to a research done by Euromonitor International. Yoghurt, drinking milk, sour milk and others also followed in the positive trajectory. Statistics published by Dairy Chain in 2014 put the annual demand of milk in Nigeria at 1.1 billion litres, with estimated annual production around 400 million litres. This, therefore, puts demand-supply gap at 700 million litres. Official data from Nigeria’s Ministry of Agriculture show that the country imports dairy worth $1.3 billion annually. The dairy products come from different parts of the world, especially from the Netherlands, the UK, China, France and other countries. Worse still, the industry utilises just about 10 percent of the local milk. The majority of raw materials are imported. Key complaints of dairy firms include: low quality of milk produced by Fulani farmers, poor quality of grass for cows, unsanitary handling of cow milk, and constant farmers-herders clashes,

L-R: Oby Chiki-Ijegbulem, managing director, Greenwich Securities Ltd; Tubosun Falowo, group executive director, Greenwich Trust Ltd; Akinola Olawore, president, Nigeria-British Chamber of Commerce (NBCC); Michael Olawale-Cole, past president, NBCC and Ije Jidenma of Leading Edge Consulting at the Nigerian-British Dinner Lecture held in Lagos on July 26

among others. As much as these reasons are genuine, facts prove that local dairy makers have the capacity to turn the tables. Some local dairy firms have, at one point or the other, sourced milk locally. But this is not consistent and cannot significantly raise local input content. In Nigeria today, only FrieslandCampina WAMCO has come up with a consistent and sustainable model that will see a significant rise in the local input sourcing in the shortest possible time. The firm started a programme called the Dairy Development Programme (DDP) in 2011, with a target to source more milk from Fulani farmers. The company brought Fulani herders together in five communities

in Oyo State, supporting them with training, water, innovation and infrastructure to boost milk production from cows. The company also provides a ready market for the Fulani farmers, buying as much milk that can be produced. One of the biggest advantages of this is that it prevents cows from roaming the farms, thereby curbing farmers-herders clashes and ensuring copious production of healthier milk. A cow that does not roam about produces much more milk than the other which moves from place to place, experts say. This programme is already going on in Fasola, Maya, Saki, Iseyin and Akele, with a bulking centre ( a place the company pools all the milk into a truck and moves it to the factory).

So far, the DDP has supported over 3,500 local dairy farmers (including women) to expand their investment opportunities as the milk collected from the dairy farmers is used in the local manufacturing of Peak evaporated milk, according to Ben Langat, managing director of FrieslandCampina WAMCO. “You can’t do anything with cows without a good supply of clean water. So far, we have sunk 45 solarpowered boreholes, which provide water not only for the cows but also for all the five communities where we are already succeeding with the DDP,” Langat told BusinessDay in an interview. Many dairy makers in the country are weighing their options between investing hugely in local input

Why Ajaokuta Steel should be in private hands

he present state of Ajaokuta Steel Complex mirrors what is wrong with previous and present enterprises operated by the federal or state governments. The steel complex was established in 1971 to develop Nigeria’s steel sector and stimulate the exploration of God-given natural resources, especially iron ore. Luckily for the country, large iron ore deposits were found in Itakpe, Ajabanoko and Oshokoshoko all in Kogi State two years after. This was supposed to be good news for Ajaokuta as the ore was meant to serve as a raw material for

the complex. The Ajaokuta Steel Complex and Delta Steel Company were subsequently incorporated in 1979 as limited liability companies. Between 1980 and 1983, the then federal government stated that it had achieved 84 percent completion of Ajaokuta Steel plant, having completed the light mill section and the wire rod mill. It was also widely reported that erection work on equipment reached 98 percent completion around 1994. Ever since then, Nigerians have been made to believe that Ajaokuta is 98 percent completed.

But here lies the biggest puzzle: Why is a company that is 98 percent completed still failing to produce a sheet of steel over 35 years after its establishment? Kayode Fayemi, the immediate past minister of mines and steel development, laughed off claims that Ajaokuta was 98 percent completed recently while addressing journalists. “Some people will say Ajaokuta is 98 per cent completed, or that it is 90 per cent completed, but if you probe further, you will discover that you would not get any response from the campaigners,’’ Fayemi said at an interactive session with

newsmen in Abuja on March 8 this year. Despite being unproductive, government after government has continued to pump billions into the complex. Government records show that successive administrations have pumped $8bn so far into the complex since 1979. The current government of Muhammadu Buhari has joined the party of spenders on a government facility that needs to be in private hands. In a move that shocked economists and finance experts, the federal government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the mori-

BUSINESS DAY

Monday 06 August 2018

INSIGHT

Mohammed A. Abubakar as architect of modern Bauchi Bashir Ibrahim Hassan

reatness is the product of both our choices and the opportunities open to us. The choices we make are the key to realizing our potential and capacity for greatness. Ultimately, capacity is expressed in the present, and its outcomes are immediate and palpable. We can assess capacity for greatness when we focus on the present; on what is happening now, in terms of ground breaking policies and programmes ambitiously initiated and meticulously implemented across the length and breadth of a defined landscape that point to a brighter future for the citizenry. A careful look at the present happenings in Bauchi State today will glaringly show the state is on the path of attaining its potential for greatness. This is down to the capacity of its current governor, Mohammed Abubakar. He has displayed a rare capacity to engender the accelerated development of the state through carefully chosen policies and programmes leveraging on the opportunities open to him at present. The ascension of Governor Abubakar to seat of executive governor of the state came as a surprise to his political opponents, who had held sway in the state for many years. However, they had to embrace the inevitable reality of his emergence. Opposition elements were quick to employ mercenary tactics to scuttle the smooth take off of the nascent regime — such as employing rented crowds to boo the Governor at public gatherings. But no sooner had the Governor’s mature thinking and fine judgment in charting the path the state should take to leapfrog into prosperity begun to take shape than the wise people of the state see through the ruse of the tactics of the opposition. The Governor displayed a huge dose of mettle in defying the antics of his oppoenets. He was able to overcome oppositions’ the machinations and, today, his proud legacy is the peace that is reigning in the state. Evidence of this was the daring visit of the US Ambassador in Nigeria to the State without prior notice to the Governor. Then there was the fact that the state was conducive enough to shoot an Arated film by a Nollywood crew. Governor Abubakar began his reform at the right place -- the civil service, the engine room of the state executive arm, but also the hotbed of mismanagement. He attacked, frontally, the over-bloated civil service by trimming the number of ministries from 26 to just 16 and the permanent secretaries

Governor Mohammed A. Abubakar

from 60 to 28, thus drastically reducing the cost of governance in the state. He borrowed the idea of the Federal Government’s policy of tenure system for the permanent secretaries and directors and encouraged those with little time left in the service to take early exits, thereby stemming any potential negative uproar. A slimmer government has led to firmer operations, leaving no rooms for duplication or redundancy. The Governor and his team of carefully selected Commissioners were ready to start the journey of taking the state to greater heights in areas that it has comparative advantages. Two sectors come to mind when talking about comparative advantages of Bauchi—agriculture and mining. And those two areas have seen the bests of the Governor’s mature thinking and sound judgments. Bauchi occupies 1/5th of the total land mass of Nigeria and between 80-85% of her people practice one form of agriculture or the other. As for mining, Bauchi is home to several solid minerals idly waiting underground to be extracted, including such money spinners as hydrocarbons and gold. Pegging his development on these two areas of comparative advantages has portrayed the Governor as in tune with the people. It has enabled his government to take advantage of the opportunities available to him to achieve greatness -- after all, what is greatness other than a passion and commitment to evolutionary change? Evidently, passion and commitment are the hallmark of Governor Abubakar.

The Governor is well aware of the problems associated with mining communities in times of boon. More often than not, mining is associated with migration, exploitation, and misery (in forms of poverty and scourge of STDs among the mining communities if adequate care is not taken). In other instances, it fuels war like in Sierra Leone, Liberia and Angola. The root of all these is exploitation and injustice perpetrated against the mining communities. He has taken steps to address these challenges ab initio, by taking steps to organize the artisan miners along professional lines, to ensure maximum benefits to them, as he elaborated in a recent press interview. Hear him: “I am in the process of engaging another reputable company called NOREAN... that will do studies over some minerals and it will also help us to develop what is called buying centres. Buying centres are beneficiation plans – they are like factories. When you go, you dig for a precious stone as an individual miner and you bring it out, you bring it to this buying centre which will test it for you to determine the purity, it will lean it up for you and then it will display it for you and international buyers will come. This time around, they will pay you the correct price of those things, rather than what operates now where [local miners are duped]. That is what we are trying to change and in the process, we also want to organize artisanal miners because artisanal miners are phenomenon that you cannot wish away.” The Governor is bound to succeed if he adheres to this path and uses best practices that now exist

in countries like Botswana with experiences of extensive mining. Botswana is the best example of diamond mining benefiting an entire nation. Botswana gained independence from Britain in 1966, and the diamonds were discovered in 1967. Diamond mining has dominated the economy ever since – making up one-third of the GDP and 70-80 percent of export earnings. The success story of Botswana came down to sound management, fiscal discipline and the lowest level of corruption that helped Botswana evolved from being one of the world’s poorest nations to a middle-income country with a per capita GDP of $7523.22 and GDP per capita PPP of $15,807.37 in 2017. Botswana’s Diamond Development Initiative (DDI), on which Governor Abubakar is modeling Bauchi’s approach, was established in 2005 with goal of addressing the poor living and working conditions of the people at the core of the diamond industry –estimated at over 1 million diamond diggers. With DDI, wealth from diamonds have been re-channeled away from a means of war—as in other African countries—into a catalyst for economic development. The other comparative advantage Bauchi state has is in agriculture. And here the Governor is matching ahead and revolutionizing the sector through mechanization. In one fell swoop the Governor ordered 500 tractors. The scale of the procurement is unprecedented in the entire history of the state. These tractors are being sold to small-scale farmers who can afford them, big time

farmers and agriculture companies operating within Bauchi State at subsidized rates. Apparently the Governor has both manifest and latent goals for this project. The manifest goal is mechanization of agriculture in the state for greater yields; while the latent one is to attract the teaming youth in the state back to agriculture, by removing the back-breaking drudgery associated with traditional farming. Even as Governor is attracting big-time investors in agriculture, he is also planning big for the small-holder peasant farmers. He has also procured power tillers, because many soils in the northern part of our state do not require heavy-duty tractors. The state has successfully implemented the Federal Government-initiated Anchor-Borrower Scheme. The determination to revolutionize the agric sector has seen the state going outside the shore of Nigeria to establish collaboration. Success after success recorded in the state in the fast three years have put the Governor in good stead to go about his business of steering the ship of the state unperturbed by efforts to frustrate his programmes by powerful forces in the state to whose selfish tune he has refused to dance. What narrative about Bauchi state can be complete without mentioning Yankari Game Reserve—the bastion of the State tourism trump card? Despite misfortune of being part of the North east sub-region that has suffered from Boko Haram insurgency, the Governor is working in earnest to improve the Game reserve. The Game reserve now has an air strip in place. Also, an 18-hole golf course is on-going. All the potential to make Bauchi a great state is in evidence, and efforts to this into productivity are coalescing. The state internally generated revenue (IGR) is on the rise, to guarantee funding for laudable programmes. Also, the people of Bauchi are hoping that more windows of opportunity for the state’s economic development will open with the Nigeria National Petroleum Corporation (NNPC) back to prospect for petroleum oil in the state. Meanwhile the governor is busy talking to experts across the broad spectrum of the extractive industry to give him bankable reports on the gold deposits discovered in the state so that he can attract internal and external investors. All is thus set to catapult the state into modernity. And the architect of this statecraft is Governor Abubakar who is bringing his law and administrative acumen to bear on the administration of the state. • Hassan is a financial analyst

Monday 06 August 2018

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BUSINESSINTELLIGENCE

BUSINESS DAY

In association with

Correlating director influence with board performance

Tade Owodunni

he concept of ‘Influence’ and its impact on an organization’s performance is a subject that has held interest for quite some time. A two-edged sword that is often subject to more than one meaning, Influence may be positive or negative, the latter typically characterized by qualifying adjectives such as ‘negative’ or the more sublime ‘undue’ or ‘overwhelming’. The term has also often been used interchangeably (in certain contexts) with ‘power’ or ‘control’, thereby presuming a similarity in meaning with these words. Broadly speaking, an individual’s influence is determined primarily by what role he or she plays (or does not play) concerning an issue. Influence is therefore in the doing. According to a foremost American Poet and Preacher of the 18th Century, William Ellery Channing, ‘Influence is to be measured, not by the extent of surface it covers, but by its kind.’ Viewed through the lenses of governance, this definition is quite important as it elucidates how a Director may choose to exercise his/her influence for the benefit or to the detriment of the Company in which Board he/she sits. In specifying the attributes

of an independent director, Section 5.5.(ii) of the Securities and Exchange Commission Code of Corporate Governance for Public Companies provides that such Director must be one who ‘is not a representative of a shareholder that has an ability to control or influence Management.’ A Director’s ability or capacity to exert influence (of any kind) over Management in its administration of the affairs of the Company is therefore perceived as a factor that may erode his/her independence of thought and blur objectivity in exercising his/her decision-making responsibilities for and on behalf of the Company. The exposure draft of the much-anticipated Nigerian Code of Corporate Governance 2018, in its Section 24.1.22, describes a Director as wielding ‘significant influence’ where such Director has the power to participate in the financial and operating policy decisions of a company; but not to control them. The Code therefore posits that an influential board member will exercise his rights of participation in financial and operational policy decisions affecting the company whilst not necessarily having any control over the outcome of any of these. The description therefore suggests that all Directors are influential, leaving one to ponder on what kind of influence they should exert whilst exercising their participatory rights as aforementioned. There is further congruence on this subject with an alignment of both legal and governance doctrine in acknowledging the damaging effect that a strong nega-

tive influence can have on board synergy, objectivity in decision making and ultimately on the Board’s ability to perform its role of steering the Company towards the preferred strategic direction. To this effect, the Companies and Allied Matters Act, Cap C20, LFN 2004 in its Section 326(1) vests upon the Corporate Affairs Commission, the authority to appoint one or more competent inspectors to investigate and report on the membership of any company and otherwise with respect to the company for the purpose of determining the true persons who are or have been financially interested in the success or failure (real or apparent) of the company or able to control or materially to influence the policy of the company, where it appears to the Commission, that there is good reason to do so. Whilst the benefits of a positively influential Board on the fortunes of the Company cannot be underscored, in like manner, a looming, self-serving figure whose sole concern is the pursuit of individual or narrow interests has, over the course of history, been the euphemistic equivalent of a poisoned arrow that has led to the demise of many corporate

entities across the world. The situation is worsened when such influence is embodied in the personality of the CEO, who has direct stewardship of the affairs of the Company, hence the wellreferenced Agency theory. To checkmate the adverse effects of allowing an individual negatively influence the Board in its performance of its oversight responsibilities, Governance practitioners advocate having in place a strong, diverse Board comprised of objective, competent and confident individuals, knowledgeable, sound of mind and independent of thought. Indeed, a Board with a higher number of truly independent directors is more likely to resist the potentially opportunistic behavior of Executive Management (Frankfurter et al., 2000; Kosnik, 1987). Significantly, and also from an agency perspective, independent board members are reckoned as being far less likely to collude with management for personal benefit (Fama and Jensen, 1983). Bringing it all together, Directors must always bear in mind that an important part of the Board’s oversight role is its responsibility to act as the con-

science of the Company and thereby establish an effective framework for monitoring both executive and non-executive behaviour and reining in the potential for opportunistic behaviour on the part of Management by providing executives with the requisite incentives to pursue appropriate stockholder goals. Beyond the propriety of avoiding a domineering figure on the Board to discourage the pursuit of self-serving or parochial interests, Directors must always be mindful to their ultimate fiduciary responsibility to act Uberrimmae Fidae (in utmost good faith, serving the best interests of ) the Company (their principal), an ethical tenet, the violation of which has far-reaching corporate, legal and reputational consequences for the Company, its stakeholders and for such errant Directors themselves.

Tade Owodunni is the Head, Governance Services Unit at DCSL Corporate Services Limited. Kindly forward comments and reactions to towodunni@ dcsl.com.ng. For more information about our services, please visit www. dcsl.com.ng

BUSINESS DAY

Monday 06 August 2018

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Why we would not be buyers of Notore right now PATRICK ATUANYA & BALA AUGIE

ewly Nigerian Stock E xchange (NSE) listed company, Notore Chemical Industries Plc had a facts behind the Listing Presentation last Thursday. BusinessDay analysed historical financials of Notore over a five year period (2013 – 2017) and our conclusion is that we would not be buyers of the equity for now as the industrial goods firm is grappling with rising interest expense and deteriorating working capital while operating in a soon to be highly competitive sector (with the looming entrance of Dangote Industries Fertilizer plant into the market this year and established player Indorama). Dangote’s $2.5 billion fertilizer plant, located in Lagos, should produce its first batches of urea by the end of this year. It has a capacity of 3 million metric tons a year, which is set to be one of the biggest globally. Indorama Eleme Fertilizer & Chemicals Limited (IEFCL) is a group company of Indorama Corporation, a global manufacturing conglomerate operating in over 25 countries across Asia, Europe, Africa and North & South America. IEFCL is one amongst the ambitious green field projects of Indorama in Nigeria and is the world’s largest single train Urea – Fertilizer plant, commissioned in June 2016. The Fertilizer Plant includes 2,300 Metric Tons Per day (MTPD) ammonia plant, 4,000 MTPD Urea granulation plant and associated off-

P.E

SHORT TAKES 56.8 The Purchasing Managers Index (PMI) of the manufacturing sector slowly expanded to 56.8 index points in the month of July with 13 out of 14 sub-sectors reporting growth. A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally contracting.

site and utilities. This is equivalent to 839,500 mt capacity of ammonia and 1.46 million mt capacity of Urea. By comparison Notore produced 203,233 mt of Ammonia and 315,298 mt of Urea in 2017. A cursory look at the income statement shows Notore has recorded losses for each of the financial year from 2014 to 2016, and it is expected that shareholders will bear the burden in form of negative retained earnings. The firm posted a loss after tax of (N11.653 billion) in 2014, (N12.71 billion) in 2015 and (N12.42 billion) in 2016. The company also recorded a pre-tax loss of N2.14 billion for the financial year ending December 2017, but a tax credit of N10.80 billion was responsible for a profit after tax of N8.65 billion. Notore has been struggling to meet its short term obligations in the last four years as evidenced by a recurring negative working capital. Its current assets of N7.34 billion as at December 2017 cannot cover current liabilities of N59.12 billion, result-

ing in a negative working capital of N51.78 billion. Notore’s revenue fell by 53 percent between 2012 and 2014 from N35.88 billion to N16.57 billion, due to problems with production and output of Ammonia and Urea has not recovered to 2012 levels even by 2017, although revenues earned in 2017 are at par with 2012. This has brought about increased short term borrowings (from N27 million in 2012, to N59 billion in 2017) causing illiquidity in the company. Notore’s operating income is not enough to cover interest expenses as evidenced in times interest coverage ratio of 0.76 times operating profit (EBIT), in 2017. The lower a company’s interest coverage ratio is, the more its debt expenses burden. When a company’s interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. Notore has secured approval for $37 million funding which will be utilized for a turnaround maintenance (TAM) of its brownfield plant, purchase of critical spares, and ac-

quisition/installation of back-up power, which will ensure production reliability. The above means future finance cost may edge up hence eroding profitability. Notore listed its 1.61 billion shares at N62.5 per share for a market capitalisation of N100bn, equivalent to about 3x sales and 12x earnings for 2017. Plugging in 2016 numbers would give 4x sales and indeterminate Earnings multiple as profits were negative in 2016. This compares to Middle East/ Africa (MEA) listed Israel Chemicals which trades at a Price to Sales ratio of 1.19x and P/E ratio of 5.2x. A lower valuation of 1.19x sales and 5.2x earnings if applied would give a valuation ranging from N42.7 bn – N44.99 bn equivalent to N26.5 per share – N27.9 per share. The poor financial performance of Notore Chemicals in the last five years can be traced to macro, industrial and company specific challenges. The agricultural industry as a whole has been declining as a per-

centage of GDP in the past decade, thus putting pressure on companies operating in this sector. In 2007, agriculture contributed more than 30 percent to GDP but this year contribution of agriculture to GDP was only 20 percent. Fertilizer prices have been declining since last year as the prices of Urea, NPK 15 15 15 and NPK 20 10 10 are all down in excess of 10 percent. Although fertilizer prices are declining, Notore reported that fertilizer consumption in the country is also on the decline. Fertilizer production in Notore is also down in the last five years. Ammonia produced fell from 260,001mt in 2012 to 203,223mt in 2017. Urea produced fell from 369,838mt in 2012 to 315,298mt in 2017. Lower production level translated to lower sales volume. Production level dropped as a result of non-availability of gas for 98 days in 2013 and 137 days in 2014 which temporarily shut down operations in the fertilizer plant. As a result, company earnings were volatile between 2012 and 2013.

0.50 Overnight inter-bank rate rose by 0.50 percent to 4.25 percent on Thursday, from 3.75 percent after the Central Bank of Nigeria (CBN) auctioned the Nigerian Treasury Bills worth N215.5 billion on Wednesday August 1. The CBN auctioned OMO on Thursday last week where it sold an additional N348.6 billion leaving liquidity level at negative N 75.9 billion as at close of market on Friday.

N5bn A rights issue and public offer for N5bn is FMDQs current plan to boost its operations and the shareholders who were at Annual General Meeting approved the plan alongside a new name. The approved name change simply involves removing the OverThe-Counter (OTC) tag which may have constrained its reach as Nigeria’s foremost debt capital, currencies and derivatives securities exchange.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: David Ogar )

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

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Markets Intelligence Economy

Nestle, Unilever, Dangote Sugar, Flour Mills record strongest gross margins expansion BALA AUGIE

mid the precipitous drop in revenue among consumer goods firms, Nestle Nigeria Plc, Dangote Sugar Plc, Unilever Nigeria Plc, and Dangote Flour Mills Plc have continued see strongest gross margin growth among peers. This means these firms are more efficient than peers as they continue to surmount the headwinds. For the first six months through June 2018, Dangote Sugar’s gross profit margin increased to 27.80 percent from 22.70 percent the previous year, the strongest gross margin growth among 10 firms under our coverage. Flour Mills gross margins increased to 13.0 percent in the period under review from N11.60 percent the previous year amid a drop in revenue as the firm was unable to hike price of key product this year. Nestle’s gross profit margin increased to 41.07 percent in the period under review from 39.69 percent as at June 2017; the fastest margin expansion. The company’s net profit margins increased to 15.85 percent from 13.57 percent the previous year, the fast margin expansion among 10 firms under our coverage (See Table). Consistent growth in revenue from Food & Beverages segments despite various challenges gave impetus to Nestle’s margins.

Analysts are of the view that the successful implementation of creative price increases and strong brand identities of some of its products like Maggi, Golden Morn and Milo are the key factors that will continue to support revenue growth at Nestle. Unilever’s gross profit margin increased slightly to 31.80 percent in

June 2018m from 31.10 percent as at June 2017. Investors have confidence in the growth story of some of these firms as they continue to swoop on their stocks since the start of the year. Unilever shares have gained 27.80 percent since the start of the year, outperforming the Nigerian Stock

Exchange Consumer Goods Index (NGSEFB10) -13 percent and the NSE 30 Index -5.87 percent. Nestle’s shares have year to date (YTD) of 0.26 percent, outperforming the Nigerian Stock Exchange Consumer Goods Index (NGSEFB10) -13 percent and the NSE 30 Index -5.87 percent.

Stocks prices now moving in opposite direction with return on equity Emeka Ucheaga & Oluwatosin Dokunmu

his year, conventional economics has given way to unconventional investor behaviour as stock prices have continued to decline despite a surge in industry return on equity. Nigerian Stock Exchange All Share Index has declined by 4.06 percent year to date despite industry return on equity increasing from 13.64 percent at year beginning to 14.74 percent as at August 1st. As market fundamentals has continued to improved off the back of positive expansion of economic activities in the country, market sentiments have still remained largely negative since the stock market peaked in mid-January. Return on equity for NSE 30 companies jumped from 10.78 percent in Q1 2017 to 17.03 percent in Q2 2018 as industry profits

recovered after the major hit of the economic recession. NSE 30 companies are the 30 most capitalized and profitable firms on the Nigerian Stock Exchange. The profit recovery seems to be unbalanced among the publicly traded companies as lower profit expansion in companies outside

the NSE 30 pulled the NSE market ROE down 229 basis points to 14.74 percent despite NSE 30 companies being 95 percent overweight on the NSE market index. Although both the NSE30 ROE of 17.03 p ercent an d N SE A SI ROE of 14.74 percent give investors a risk premium above the one year treasur y yield which

i s c u r re nt l y s i t t i ng a rou n d 1 3 percent, investors have favoured risk free security this year over equities. The growing demand for money market and fixed income securities this year has pushed down yields in the money market and the asset rotation has caused equity prices to trend southwards.

BUSINESS DAY

Monday 06 August 2018

Start-Up Digest

In association with

How Jibola built his fashion business with N50, 000 JOSEPHINE OKOJIE AND BUNMI BAILEY

ccess to capital is arguably the biggest challenge facing Nigerian start-ups. Entrepreneurs in the country believe that near absence of cheap funds makes the business environment tough and challenging. Every year, thousands of people with entrepreneurial minds give up on their business ideas and dreams just because they cannot find the needed capital to kick start. But Jibola Jegede, founder of Stylewithjibs, a fashion business that operates in Lagos and its environment, proves that one can always start little without having to wait till the entire capital required is available. Jibola had the dream of becoming one of Africa’s finest in the world of fashion and designs. The entrepreneur only had N50, 000, obtained from his personal savings. Jibola was not discouraged with the little amount he had, as he still went ahead to establish the fashion business. “I started my business with about N50, 000. I needed more than that to start my business, but I realised that waiting to get the amount needed might lead to the death of my zeal and passion. So I started with what I had,” Jibola says. The initial start-up capital was used to create a website for the company, a logo and a media campaign, as well as for registration. Jibola was inspired to establish Stylewithjibs in 2017 owing to the constant accolades he got from friends and colleagues for his good fashion sense. Also, his passion and zeal to look good and make people around him look attractive

Jibola Jegede

also inspired him. “People often complimented the way I dressed. Some of my course mates and friends had to nick name me then ‘Gbogbo Fashionista’ because of my stylish nature. “I was not that guy with so many clothes back then on campus, but I could do wonders with the little I had. I had an insight and creative mind to combine wears together; I knew the shirt that would go well with jeans and the best shoes to rock on it. Oftentimes it usually came out great,” he recalls. Back then, Jibola used his spare time to acquire more skills on

fashion and designs. He took up courses on designs on the Internet and studied more about Africa’s fashion sector while also following some of the continent’s finest designers on Twitter and other social media platforms. “Since starting, Stylewithjibs has been growing consistently. Considering where we started from, the business has grown reasonably well and it is still growing. I am amazed at the journey so far, but there is still a lot of work to be done,” he notes. The economist-turned-entrepreneur says that lack of awareness of the need for a personal stylist has

continued to limit the business. “Not everyone is fully aware of the need for a personal stylist or a personal shopper. To look really good needs a form of extra attention and creativity. So the challenge is sensitising people for the need of our service. We do not want to segregate because Stylewithjibs is accessible to everyone out there,” he explains. He believes that lack of adequate funding has limited the business from growing at the rate it ought to. “Funding is another major challenge. We are not running at full capacity because we are yet to put some things in place due to

inadequate funds.” Jibola urges the Federal Government to provide the enabling environment that will aid businesses to thrive. Similarly, he calls for the formulation of effective policies for the country’s entrepreneurial ecosystem, while stressing the need for the involvement of governments at all levels. “The formulation of effective policies for entrepreneurial ecosystems requires the active involvement of governments at all levels working with senior public servants who act as ‘institutional entrepreneurs’ to shape and empower policies and programs,” he states. He also calls for inclusiveness of all sectors of the economy in government’s quest for diversification. Jibola says that most start-up businesses fail after five years because they are not adequately prepared enough to run as businesses. “So many people want to start up businesses because it is their dream, but many do not have the experience. For example, you want to open a restaurant because you are a great chef, but that is just one of many skills required to run the restaurant business successfully. It should not end there,” Jibola explains. The entrepreneur also identifies impatience among most start-ups as one of the causes of the high failure rates. “Start-ups must be able to have the fortitude to endure the hard times and push through with their businesses, but most of them are not patient,” he adds. Answering questions on what he would tell his younger self, he says, “Never to be afraid of taking risks because without it you cannot grow your business.”

LCCI expresses commitment to survival of SMEs in Nigeria CHINWE AGBEZE

he Lagos Chamber of Commerce and Industry (LCCI) says it is committed to engaging with government in creating a favourable business environment that would guarantee the survival of start-ups and small and medium enterprises (SMEs) in Nigeria. Babatunde Ruwase, president of LCCI, said this during the matching event of the 2018 LCCI Entrepreneurship Mentoring Programme held on August 2 in Lagos. ‘‘To us at the Lagos Chamber of Commerce and Industry, focussing on this developmental initiative on the youth is a means of investing in their future and guaranteeing better tomorrow for our country,’’ said Ruwase. Represented by Michael Olawale-Cole, vice president and chairman of the BEST board, the LCCI president enjoined the mentees to make the best of the mentoring programme.

‘‘You are implored to be good ambassadors of this program so that other youths out there can also be encouraged to explore the programme,’’ Ruwase advised.

Babatunde Ruwase

He also called on corporate bodies, the public sector, donor agencies and individuals to support the initiative. ‘‘An empowered private sector

is better positioned to create the needed jobs for the nation’s teeming youths,’’ he said. While matching the mentees with their mentors, Olawale-Cole advised the former to learn from their latter. In his counsel and closing remarks, Toki Mabogunje, deputy president, LCCI, who was represented by Suboma Ajumogobia, advised the mentors and mentees to give the programme the seriousness it deserves. ‘‘I enjoin the mentors and mentees to take this programme extremely seriously and I believe you will get enormous benefits from it,’’ Mabogunje said. The mentees who were pleased to be part of the entrepreneurship mentoring programme applauded LCCI for the opportunity. ‘‘This is a great programme. LCCI invested a lot in this programme because most of the facilitators were well-grounded in what they are doing and this made the programme worth the while,’’ said Tunbosun Afolayan, a mentee and a beautician.

Adejoke Solabi, another mentee, who is into event planning, said: ‘‘The amount we paid is far more than what we have learnt. The offer was more than what we have paid for and I’m really grateful to LCCI. Before now, I was used to doing my business anyhow, not putting account details of my stock, but I now know how to do it better.’’

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Angel James Joel Samson Graphics

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Start-Up Digest

We set up Vanpeux to solve energy problems in Nigeria — Co-founders ODINAKA ANUDU

voke Ekrebe and Peter Ejimudo, cofounders of Vanpeux Global Synergy, were once bank workers. In 2011, they came together to set up the renewable energy firm to solve energy crisis hitting businesses, offices and homes across the country. Ever since then, the partners have powered more than 1,500 homes and 45 businesses through solar energy. It was not always easy for them as the business once faced its own crisis, which nearly killed and buried it. But God being on their side, the business survived the vagaries of the Nigerian economy and is standing today with both legs. The partners see themselves as having died and resurrected. This is understandable as many entrepreneurs in Nigeria often develop high blood pressure when they lose the amount of money Vanpeux cofounders lost. But Ovoke and Peter did not waver in the face of the challenge. “We lost all we had and started afresh,” Ovoke Ekrebe, co-founder of Vanpeux, tells Start-Up Digest. Four to five years later, this firm has risen to become one of the most sought-after in Nigeria. Apart from serving numerous customers, Vanpeux has become one of the 45 renewable energy firms certified to

Peter Ejimudo

do solar business in Nigeria by the United States Agency for International Development (USAID) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), American and German development agencies respectively. The partners tell Start-Up Digest that what has kept them going is their grit and belief that hard times are only for a brief moment. The company provides solarto-water generation solutions. This means that a farmer does not need to wait till the next rainy reason to plant, which is one practice threatening Nigeria’s food security. The company provides solar water heaters, which can be used

ACUF trains youths on CV writing, interview skills ANTHONIA OBOKOH

s part of its efforts to tackle some of the challenges facing youths in Nigeria and empower them to succeed through working, learning, thriving, connecting and leading in order to further reduce the number of unemployed youths in the country, Amaka Chiwuike-Uba Foundation (ACUF), a non- profit organisation, has trained more than one hundred youths in Enugu metropolis on how to create a good curriculum vitae (CV) and cover letter, for possible employment. Chiwuike Uba , founder of (ACUF), explained that the training exercise was an opportunity to educate job-seekers on some of the factors inhibiting their ability to get appointments for job interviews and also succeed there because failures were largely attributed to poor CV and interview skills. “There is need in this country to show concern about the number of graduates roaming the streets in search of jobs, but were denied possible opportunities for employment because of their CVs,” said Uba. He noted that a job seeker’s CV was the first contact with a prospec-

tive employer and would have to be put in a proper perspective, as it would make or mar the applicant’s chances of getting a job. “There are a ‘million and one’ graduates being churned out by universities across the country but with few organisations willing to absorb them. First is due to a very high disconnect between the universities and the industries, leading to university curriculum that does not address the industry’s need and the poor written CVs,” said Uba. The event held in Enugu in June under the Foundation’s Youth Development and Leadership Workshop Series (YouDaL), with the theme: ‘Visioning and Goal Setting’. Uba alluded to competition in the labour market, stating that only a well-written CV would see a job seeker stand out in a multitude. “There is no need having a killer CV that gets you to every interview, when you lack the skills to navigate questions that are asked you during interviews,” he said. Uba said that YouDaL envisioned youths that became empowered leaders with skills and confidence to actively develop and empower self, family as well as transform the community towards positive change.

Ovoke Ekrebe

at homes, hospitals and factories. It also provides solar PVs for electricity generation. “Sometimes, people compare the price of diesel or fuel with the total cost of renewable energy,” Ovoke says. “If you compare renewable energy that can last up to 15 to 20 years with buying a diesel, it is a mismatch. It is like comparing the cost of building a house with the cost of paying rent. Won’t you rather build a house, even if it means borrowing some money and pay over time?” he asks. He says that with N500, 000, a farmer can set up an irrigation solution, explaining that renewable energy is replenishable by nature

and does not get exhausted. He explains that some solar water systems can go as high as N2.5 million, but adds that solar water heaters with a capacity to produce 50 to 300 litres per day may go as low as N150,000 to N350,000. He says that Vanpeux’s services are affordable and competitive as it allows customers to do spread payment. Ovoke further explains that he and his partner were motivated to set up the firm due to an obvious gap they saw in Nigeria. “We saw in advance that power was an issue. It was clear that power was an issue and the easiest way of getting power to the underserved

was through renewable energy,” Ovoke says. “There is a huge need for power. So many places are off the grid, on the grid but under-electrified (they have high tension wires and low voltage wires but are not powered) and off the grid,” he explains, urging communities to embrace this technology. He says that Nigeria has an advantage of exploiting opportunities in renewable energy being in the Equator. He notes that renewable energy power storage does not get exhausted during rainy season as many people think. “During rainy season, what we have is reduction in power generation, but this does not mean absence of power. Even in rainy days, what we have is less power generation, which is always a few days. “It is not a challenge. If Germany that has winter and other parts of the world with terrible conditions use renewable energy; if Islands of the Pacific can set up solar farms, why not Nigeria which is in the Equator?” he asks. However, one big challenge facing this firm is funding. The firm plans to power hundreds of thousands of homes, offices, factories and hospitals, but it is hampered by funding. The firm needs over N150 million or much more to fund several projects across the country, they say, adding that investors are always invited.

Inside Owolabi Babalola’s Yozooph Nigeria SEYI JOHN SALAU

ozooph Nigeria Limited is a fast- growing Nigerian firm, leading the country’s march to global economy. Yozooph is the vision of Yusuf Owolabi Babalola, a man with humble beginnings who has not only built a strong brand name but has impressively transformed his many companies into major players in some of Nigeria’s key economic sectors. Yusuf is among Nigerian entrepreneurs creating employment opportunities for young citizens, thereby contributing meaningfully to the economy. Yozooph Nigeria Limited, a brand reputed in the property as well as oil and gas sector is the parent company of thriving businesses such as Coolmine Nig Ltd, Builders Nigeria Ltd, Eleven07 Nigeria Ltd and Mobivation Nigeria Ltd., which are subsidiaries. Leading the Yozooph Nigeria brand’s impressive business march to prominence is the Builders Nigeria Ltd, which can best be described as a 21st century construction company of international repute. The highly-rated company is mainly into automated construction and services, a company which is synonymous with finesse and

perfection, ultimately earning its iconic reputation by the quality of professionalism and innovations facilitated by its entry into the Nigerian construction sector. At Builders Nigeria Limited, the emphasis is on automated construction and cutting edge innovations. These are now game changers. Builders Nigeria is one of the few shinning lights providing modern construction innovation in Nigeria. This unique edge has helped the company to win many high-profile jobs that competitors in the industry are striving to grab. This arm creates a brand that boasts of world-class construction equipment and large-scale produc-

Owolabi Babalola

tion construction materials. Eleven07 Nigeria Limited, which is the flagship of the Yozooph Nigeria Ltd. brand, is the hospitality arm of the Yozooph Group, which includes luxury hotels, restaurants, pool lounges and upscale high tech farming. The Eleven07 brand is another story of excellence in the service industry and hospitality havens. Aside its premium collection of world-class facilities, the winning strategy of the Eleven07 brand is the quality of services offered, which are second to none. Eleven07 restaurant is adding another range of services that provide a digital restaurant service attendant where customers order via a device inside its restaurant and also pay directly without any human assistance. Still in the business of creating value and ensuring local food sufficiency, Eleven07 also has investment in international standard Green House Farming and Animal Husbandry. The company is an active player in the agricultural sector with massive investments in commercial farming. Then, there is the Mobivation Nigeria Ltd., which is another proud member of the Yozooph Nigeria brand. Mobivation is basically an online business and service company.

BUSINESS DAY

Monday 06 August 2018

Start-Up Digest Vanessa Nwuka: Pushing made-in-Nigeria brands globally JOSEPHINE OKOJIE

anessa Nwuka is the founder and chief executive officer o f Ve e s t o r e , an online retail store that sells and distributes African brands globally. The online retail store acts as an intermediary between its clients and producers of different African brands. Through her Veestore, Vanessa delivers products globally, getting commission on each delivery. She was inspired to establish Veestore in 2015 to promote made-in-Nigeria products and tap into growing opportunities. “In 2015 and 2016 Nigerian economy was bad and there was so much talk about buying Nigeria’s products to grow the economy and strengthen the naira,” Vanessa says. “I told myself, what if I make African items easily available to people. So I decided to start Veestore, which deals with the on-

line retail of strictly African brands and we deliver worldwide,” she explains. Vanessa says that her initial start-up capital was N300, 000, which she got from her savings. The money was only used in stocking a particular brand in 2015. The young entrepreneur says her business has grown tremendously since starting, from having to stock a single brand and using emails and Instagram media platforms to now owning a website and stocking several brands. “I started this business with N300, 000 from my personal savings. I was only stocking one brand named ‘Cookieskin’. Since then, we have grown to having our website and now stocking several brands online,” she discloses. “We have also included a personal shopping service in May 2017 and with this service, we are able to source for items or brands we don’t sell online for our customers,” she further says. The young entrepreneur tells Start-Up Digest that

Vanessa Nwuka

high preference for foreign goods and lack of trust in African products and Nigeria in particular are major challenges confronting her business. She states that despite that things are fast chang-

Indigenous platform berths to foster Africa’s design industry IFEOMA OKEKE

n a bid to promote innovation, encourage home grown solutions and improve the quality of life for the common man through meaningful collaborative relationships across communities, Mbari Uno, a platform that educates, promotes engagement, develop sustainable solutions and establish a Sub- Saharan African design industry has launched in Lagos. Mbari Uno, was borne out of the need to create a platform that would engender collaborations among designers, design enthusiasts, sponsors, manufacturers, industries and the general public. Building on the pillars of design research, education and development, Mbari Uno will teach and showcase design, profile designers and chronicle design firms. The platform will also create great design work, establish and promote the design industry as well as document the design discipline in Nigeria and sub-Saharan Africa. In the absence of a holistic directory for the design industry in Nigeria with little local reference or examples to benchmark its design practice, the visionaries— Chuma Anagbado and Obinali Okoli—birthed Mbari Uno which literally translates to a ‘House

of Collaboration’ to share ideas and develop indigenous solutions among design aficionados, government and stakeholders. Speaking at the launch, Chuma Anagbado, co-founder, Mbari Uno, said “Mbari Uno is set to attract design patrons, consultants and investors to help emerging designers gain access to innovative spaces, trainings, professional assistance, and any other service that will fast track them to success.” He noted that the idea is to continually chronicle and publish the profiles of both formally and informally trained design professionals, firms, publications, events, schools, designs clusters and routinely publish insights, views, opinions, solutions, to position among others on design-based issues using the media. “We want to conceive, design and develop frameworks that will promote the culture of probing, innovation, collaboration and sustainable engagements that seek to improve the quality of life of the common man.” Mbari Uno is poised to become a ‘go-to hub’ for all things design, a platform that will drive visible human capital development and position Nigeria as a leading design nation in Africa as well as build an increase in the number of successful design start-ups originating from sub-Saharan Africa, he said.

“The vision of Mbari Uno is to establish a framework for the creation of design hubs across various cities in Sub-Saharan Africa, where host communities will engage in prototyping ideas and designing solutions that will benefit them. “Mbari Uno is a community-focused centre for design research, education & solutions development. We collaborate directly with communities and get them involved in designing solutions to their peculiar problems. We’re here to network the design industry, explore design opportunities and promote the ‘Design practice’ in SubSaharan Africa,” he explained. He said the platform is set up to help emerging and established designers gain access to information, professional networks, innovative spaces, educational trainings and a support structure that would enable success. “It promises to curate and publish information about design professionals, design firms, design publications, design events, design schools and designs activity hubs,” he stated. “Mbari Uno is a collaborative platform for the development of frameworks that will promote the culture of probing and innovation aimed at creating sustainable solutions, developing human capacity, improving the quality of life and driving economic growth,” he added.

ing in terms of quality and standards in Nigerian products, people still believe that anything produced in the country is of low quality. This, according to Vanessa, has raised her cost, adding that she advertises

the products vigorously to get the people to buy them. She urges the government to establish a specialised institution that will pay particular attention to promoting made-in-Nigeria products, stressing that campaigns on Nigerianmade goods should be done internationally as well. The young entrepreneur says that she is in partnership with a delivery organisation that has assisted in getting the goods to their customers in any part of the world. Vanessa points out that Veestore has been able to survive the highly competitive retail space because it has been able to carve a niche for itself. “The business has been able to carve a niche for itself, which is stocking strictly African brands, and we make sure we are affordable and, most especially, we have a great customer service. We do not take anyone that contacts us for granted. Since starting this business, I have come across amazing products made by Africans

and I must say we are doing very well,” she says. She stresses that Nigerians are gradually embracing e-commerce, stating that many citizens only carry out transactions using cash transfer options on delivery. According to her, the business is planning to increase its number of stocks of African products on its platform and also establish pick-up hubs across the country. Vanessa was a nominee of the SME 100 Nigeria Under- 25 CEO Awards. When asked the advice she would give other younger entrepreneurs, she says, “Always remember why you started and keep pushing. Invest in yourself. You have to keep on learning because things are changing and you have to be up to date.” “Ensure you have mentors and people to advise you rightly. You cannot do it all by yourself. Lastly, challenges will come but I have realised that in that challenge there is a solution that will help you grow,” she admonishes.

My aspiration is to help Nigerian youths fulfil their destinies— Olalere AKINREMI FEYISIPO, Ibadan

abeeb Olalere, a member of the Nigerian Institute of Management (Chartered), says his major goal in life is to help Nigerian youths and adolescents fulfil their destinies and realise their dreams by attaining the peak of their chosen careers. Olalere made this disclosure in an interview with journalists shortly after the launch of his book titled, ‘Achieving Greatness: A Practical Guide to Fulfilling Destiny’ held at the Polytechnic Ibadan. O l a l e re, w h o i s t h e founder of Fly-High International Consult, a lifechanging non-governmental organisation with a vision to help youths and adolescents, while speaking on the nine-chapter book added that the sole aim of the organisation was to help the youths and adolescents fulfil their destines despite the various challenges they might be facing. “I founded Fly-High International Consult, a life-changing organisation

with a vision to help youths and adolescents fulfil their destiny and attain the peak of their aspirations. “Just like I said in chapter one of the book, take for instance, the phone we are using, the maker has a purpose. So also, our Creator has a purpose for everyone. When God wanted to create Adam, he told the angels that I am about to create a representative on earth. Everyone in life has a purpose. But, quite unfortunately, only few of us pursue the purpose. Some people are supposed to be in the sciences but they are pursuing their purpose in arts,” Olalere said. “So the purpose of establishing this Fly-High International is to inspire, is to educate, is to engage and empower the youths and adolescents to know their goals and pursue it. “Take for instance, some of the undergraduates have the mind-set of looking for jobs after graduation, but of course, there are many things to pursue beyond academic certificates. This is the purpose for which Fly-High International was created. I want to educated them, empower them to

think beyond looking for jobs. The jobs our government promised are not forthcoming, but most people are still having the mind-set of seeking jobs after graduation, which is not supposed to be so.” “As a graduate of Proc u re m e n t a n d S u p p l y Chain Management at The Polytechnic Ibadan, I am supposed to be in the store or a procure officer. I can be that, but when that has not come yet, there should be something I should be doing. Because I believe that I have a purpose beyond academic certificates,” he stated. At the event were various speakers including Kazeem Olayiwola, deputy director, Continuous Education Centre, The Polytechnic Ibadan; F.F. Oyebamiji, Kazeem Bolarinwa, Imam Abdulrasheed and Ahmad Olalere. Oyebamiji in her remarks said that youths should endeavour to do things at the right time. She said, “God time is the best. I believe our own time will not elude us. There is time for everything. Use your time at the right place”.

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Monday 06 August 2018

In association with

How to cure your dread of public speaking Art Markman

n addition to presenting in my classes, I typically give a talk per week in front of groups. People ask me if public speaking makes me nervous. It does not. And I give a lot of credit to my fascination with standup comedy. While I’m not a comedian myself, I’ve been a fan of comedians and their process for a long time, and I think there are three lessons that anyone can learn from them about public speaking. IT’S OK TO DIE Death is a frequent metaphor for comedians. When they have a great set, they killed. When they have a terrible set, they

died on stage. Every comedian I have ever met or read about has died. Of-

ten. And they have lived to tell the tale. Once you realize that the downside

of speaking is really not so bad, it gets easier to give talks.

WORK IT OUT ON THE ROAD Once you start giving public talks, you’re likely to speak on the same topic several times. In this way, you’re like a comedian working out a new bit. Comedians will come up with something and practice it, and then try it in front of an audience. You can do the same. Watch the audience closely. You can tell when they are paying attention and when they are mentally somewhere else. REMEMBER THE ROLE OF THREE First, it’s easy to remember three elements. Second, the comparison of the first element with the second sets up a schema that creates a set of expectations.When preparing your talks, figure

Want less-biased decisions? Use algorithms Alex P. Miller

quiet revolution is taking place. It is characterized by a steady increase in the automation of traditionally humanbased decision processes throughout organizations all over the country. Is this revolution a good thing? At the heart of this question is the concern that algorithms are often opaque, biased and unaccountable tools being wielded in the interests of institutional power. Rather than simply asking whether algorithms are flawed, we should be asking how these flaws compare with those of humans. WHAT DOES THE RESEARCH SAY? There is a large body of

research on algorithmic decision making that dates back several decades. All reach a remarkably similar conclusion: Algorithms are

less biased and more accurate than the humans they are replacing. So what’s going on here? How is it that in so many

different areas — credit applications, job screenings, criminal justice, public resource allocations and corporate governance — al-

gorithms can be reducing bias, when we have been told by many commentators that algorithms should be doing the opposite? HUMANS ARE REMARKABLY BAD DECISION MAKERS Unfortunately, psychological research in judgment and decision making has demonstrated time and time again that humans are remarkably bad judges of quality in a wide range of contexts. We have known since at least the 1950s that very simple mathematical models outperform supposed experts at predicting important outcomes in clinical settings. While many critics like to imply that modern organizations pursue operational efficiency and greater productivity at the expense

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out the three things you want people to remember, and focus on them. Find ways to make comparisons among the elements you are presenting to help your audience generate expectations. Resist the temptation to add more content. Less is more. One bonus lesson here. Comedians often use callbacks to generate humor. In a callback, they refer to a joke they told previously in the set. By calling back throughout the talk to a point you made earlier, you are giving your audience cues about the information they should remember later.

(Art Markman is a professor of psychology and marketing at the University of Texas at Austin.)

of equity and fairness, all available evidence in these contexts suggests that there is no such trade-off. IMPROVING ON THE STATUS QUO Even if technology can’t fully solve the social ills of institutional bias and prejudicial discrimination, the evidence suggests that, in practice, it can play a small but measurable part in improving the status quo. A commitment to following the evidence cuts both ways, and we should to be willing to accept that, in some instances, algorithms will be part of the solution for reducing institutional biases.

(Alex P. Miller is a doctoral candidate at the University of Pennsylvania’s Wharton School.)

Politics & Policy Monday 06 August 2018

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BUSINESS DAY

A/Ibom: Unsettling political atmosphere as Akpabio moves to join APC ANIEFIOK UDONQUAK, Uyo

t a time, many senators and members of the House of Representatives from the All Progressives Congress (APC) have defected to the People’s Democratic Party (PDP), Godswill Akpabio, senate minority leader is almost certain to join APC if the reports making the rounds are anything to go by. The defection by Senators and House of Representatives has been seen as a major political tsunami that is bound to change the balance of power in the National Assembly as next year’s general elections draw closer. Akpabio, a high profile politician from Akwa Ibom State whose name needs little introduction, had dropped the hint of his changing political alliance during a grand rally by the PDP for him and Governor Udom Emmanuel a fortnight ago in Ikot Ekpene. The former two-term governor of Akwa Ibom State who was elected on the platform of the PDP stunned the audience when he said that though he had been endorsed for a second term, that he would not mind seeking re-election on any political platform apart from PDP. As if that was not enough, Akpabio was absent from the National

Godswill Akpabio

Executive Committee (NEC) of the PDP last week and it was not long before it was confirmed that the Vice President and other top leaders of APC are to receive Akpabio in Ikot Ekpene within the week at his formal defection. Soon after that was confirmed, PDP in Akwa Ibom State held its stakeholders meeting at the banquet hall of the Governor’s Office and Akpabio was conspicuously absent. Akpabio’s photograph with President Muhammadu Buhari

2019: Why I want to lead Nigeria - Dankwambo INNOCENT ODOH, Abuja

overnor of Gombe State, Ibrahim Hassan Dankwambo, has said that he decided to join the presidential race for the 2019 general elections to help salvage Nigeria from the cesspit of incompetent and corrupt leadership of the ruling All Progressives Congress (APC) led by President Muhammadu Buhari. This was disclosed to BusinessDay on Sunday by an aide to the governor, who does not want his name on print, adding that the governor’s formal declaration on Saturday to run for the presidency under the People’s Democratic Party (PDP), signifies hope for the nation especially people of the north east, who he said should not lobby to ascend to the highest political office in the country. Dankwambo formally declared his intention in a tweet on Saturday even as pleaded for support from delegates of the party from the north east and others ahead of the presidential primary election. The former Accountant General of the Federation, who addressed a delegate meeting at the new Banquet Hall of the State House, Gombe, said that consultation “is ongoing on the need for the party

to pick its candidate from the zone.” Dankwambo’s entry into the presidential race will pitch him against other formidable contestants, who have earlier declared for the presidency under the PDP platform. He will slug it out with former Vice President, Atiku Abubakar, former Kaduna State Governor, Ahmed Makarfi, former Jigawa State Governor, Sule Lamido, former Sokoto State Governor, Attahiru Bafarawa and former Jigawa State Governor, Tanimu Turaki. Dankwambo will also battle for the PDP presidential ticket with other party bigwigs such as former Kano state governor, Rabiu Kwankwaso, President of the Senate, Bukola Saraki and Sokoto State Governor, Alhaji Aminu Tambuwal who may soon declare for the presidency. Despite these formidable opponents, the Governor of Gombe state is waxing strong that he stands a chance in the PDP Presidential primary following his widespread consultations. “We have been making consultations and that consultations are ongoing. We felt this time around, our zone should be giving opportunity to conduct and preside over the affairs of the country. “We have sent delegations to various zones so that they can have the taste of the North-east this time,” he said.

during a meeting in London on Saturday has also surfaced online, confirming that plans have been concluded for his defection. Indeed, this is a season of defection but why should the Senate minority leader decide to move against the tide? This is what is quite baffling and unsettling. According to observers, his decision to defect might not be unconnected with his encounter with the Economic and Financial Crimes Commission (EFCC) which had

invited him twice for questioning but the Commission did not lay any charge against him. Analysts have however, noticed that the Senate minority leader has since lost his voice in the upper chamber of the National Assembly. As the leader of the opposition, Akpabio’s voice and contributions on key national issues could hardly be heard and this has been a cause for concern to both the people of Niger Delta and the entire PDP in the country, according to observers. While he was the governor between 2007 and 2015, most members of the APC from Akwa Ibom State left PDP as a result of Akpabio’s overbearing influence, a development which allowed him to nominate all the local government chairmen, members of the state House of Assembly, House of Representatives and the Senate from the state, analysts point out. It was Akpabio who nominated Nelson Effiong, former speaker of the state assembly who was later elected as senator representing Akwa Ibom south senatorial district. Effiong was the first senator from Akwa Ibom to defect to the APC. For instance, the former secretary to the state government, Umana Okon Umana had his office locked and was forced out of office during Akpabio’s administration while the current managing direc-

tor of Niger Delta Development Commission (NDDC) Nsima Ekere was also forced to resign when he got wind of plans of his impeachment. Similarly, the main opposition figure in the state then, John James Udoedehe was arrested and put on trial for alleged murder and had his campaign team attacked when he went to solicit for votes in Ikot Ekpene. Udoedehe had since been discharged and acquitted by the court. He is now the director of research for President Buhari’s re-election bid. It was Akpabo who often stated that PDP is like a religion in Akwa Ibom State, adding that there was no room for opposition in the state. During his tenure when five members of PDP joined another party, their seats were declared vacant till the end of the legislative year. And the question now is “in whose interest is Akpabio’s defection likely to serve?” Based on the new political arrangement that Akpabio introduced as governor, the governorship position was to rotate among the three senatorial districts and the incumbent Udom Emmanuel was to serve for eight years like his predecessors in office, but with the defection, it is not yet clear how things would work out. It seems his defection has altered the landscape politically in the state.

Makarfi cautions on excessive comfort fo PDP returnees

he People’s Democratic Party (PDP) has been urged not to destroy the zeal and determination of its members that have remained loyal and dedicated to the ideals of the party by ceding every availlable goodies to new returnees. Senator Ahmed Mohammed Makarfi , the former caretaker chairman of People’s Democratic Party (PDP), gave this warning while speaking in Lokoja on a visit to the party secretariat in continuation of his nationwide tour to solicit support for his presidential ambition and also cautioned the party against destruction of the virtue of party loyalty and dedication by members. Makarfi equally warned against making unrealiseable promises to the returnees at the expense of loyal party members, as he recalled the recent bitter experience when Ali Modu Sherrif joined the party only to work for its disintegration, cautioning that the party should be careful about who they accept back into the party among the defectors. “We would never forget the mistake we made when Modu Sheriff was brought, sheriff came from another party with well starched and long cap, they say he has millions, he has three jets, he will revive the party, but what did he do? “He was taking the party down, he was selling the party, I that was

considered to be a bush boy without money, I was told to rescue the party and I rescued it. Why because people trusted me and they believed in my capacity.” He emphasized that the party emerged victorious and that people followed him based on trust. “So, when I said let us go this way they followed me and we came out victorious. History may repeat itself if we are not careful, you will start seeing new players with all kinds of narratives, either money, either this or that, if we gamble with that, it will be the end of PDP I am serious. The same narratives that were used at that time, God so kind we had time and we were able to overcome but in this case we dont have that time. If we make that mistake that is the end of it,” he said. He disclosed that the time between now and election is so short that the party should be cautious. If it should make that mistake it would be a disaster not just for PDP but disaster for Nigeria. “For some politicians at the slightest provocation they will just jump to another party. Any little issue they will run away and a little while when they are not comfortable they will come back. But we must be careful so that we dont create the impression that it does not pay

to be loyal or committed because it would discourage people from doing so and that will destroy the party,” he said. He cautioned that the party must be careful how it accommodate and integrate the people that are coming into its fold. “Everything must be balanced in such a way that we take care of the loyal and dedicated party men. We must not create a situation where you have a home and a visitor comes and you give him guest room to stay and the next day he wants the master bedroom and the next day he wants you to leave your home for him, does that happen in any society? No, PDP must never allow that kind of thing to happen,” Makarfi warned. He called for institutional restructuring where institutions would be strong enough to make every public office holder to be accoutable for his actions or inactions while in office. “The most important restructuring which if we dont do, no matter the financial or political restructuring it would not work and that is institutional restructuring. What do I mean by institutional restructuring? INEC should be answerable to Nigerians, the police should be answerable to Nigerians, the agencies like EFCC, ICPC should be answerable to Nigerians not just the powers that be.

BUSINESS DAY

Monday 06 August 2018

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Monday 06 August 2018

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BUSINESS DAY

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Monday 06 August 2018

NEWS FG to flag off zero stunting campaign FG approves establishment of to stem babies’ malnutrition Education Trust Fund across states OYIN AMINU, Abuja

ederal Government has announced her readiness to flagged off “Zero Stunting” campaign to stem babies malnutrition. Minister of Health Isaac Adewole disclosed this in his keynote address to commemorate the world breast feeding week themed” breastfeeding is life” in Abuja on Thursday, and further advises men to allow women breastfeed babies and not compete with the babies. “Nigeria will flag off “Zero Stunting” campaign in order to make malnutrition a thing of the past.” He noted that the world breast-feeding week was essentially designed to continue human journey of breast-feeding, and pledged that the ministry’s of health and in collaboration with the Ministry of Labour and productivity would increase maternity leave from 4-6 months. “Now we have four months of maternity leave, we are working with the Ministry of Labour to increase it to six so that there will be no excuse. We need to move beyond 23%, 23% is a failure and even the 50 is unacceptable. “We need to target 100% exclusive breastfeeding in the first sic months and extend to two years even with some addition

to the two Years and then we can reduce the number of children who are wasted, who are stunted and as we key into the zero stunting campaign, we will make sure that no child in this country is wasted, is stunted and has problem. Everyone should be encouraged, nourished to attain the growth that is possible. “We need to promote and do everything to sustain exclusive breastfeeding. For the nation it is a win, for the mother it is a win, for the man it is a win because you don’t have to be providing money to buy breast milk substitutes, for the mother it is protection of health and for the child it is super protection. It is a production line that does not stop. “With this the future generation of our children will do well. Within the context of our budget, we are providing resources to handle some of this, we are moving far and wide and we want to make sure that things like malnutrition are unheard of but there is also the flip side, when you breastfeed your baby, your baby will not be obese which has complications for diabetes in adulthood. “With support from the world bank, Nigeria will flag off a zero stunting campaign and we are working on this, we want to make malnutrition a thing of the past in

this country.’ Deputy country director, United Nations Children Fund (UNICEF), Pernille Ironside, emphasised that breastfeeding must be done for the vitality and future of the country to really harness the prosperity of everybody. “We cannot continue to hover around 17%, 20% and 24%. It is not good enough, children deserves much more and we can saw the difference it makes for the children in terms of their health, stimulation and development. “This year’s theme, breastfeeding as the foundation is life, can’t be more relevant. It is good health for babies, but also health of mother’s. “The foundation of life starts when you give women the support they need to breastfeed and to be able to take the time necessary during the day and after work in order to be able to peacefully breastfeed our babies. “We need that support because breast milk is the babies first immunisation, the first protection against illness, against at disease and critical for saving new born lives. UNICEF will continue to advocate for the benefits of breastfeeding and for women to get the needed information, the advice and support that they need to breastfeed their children,” she said.

GODSGIFT ONYEDINEFU, Abuja

inister of education, Adamu Adamu, has approved the establishment of Education Trust Fund by all states of the federation. The fund, with special emphasis on funding Teacher Development and Secondary Education and the re-establishment of State Education Development Fund (SEDFund) and other funds would create additional but sustainable funding source to improve education service delivery. This was made known after deliberations by stakeholders at the Ministerial session of the 63rd National Council on Education (NCE) which ended in Abuja. Adamu had at the opening ceremony of the NCE meeting lamented that the sector had continued to suffer inadequate funding from the Federal Government, which is below the UNESCO benchmark. He called for an urgent need for stakeholders at the meeting, which is the highest policy making body in the sector to explore alternate means to increase funding. Minister of state for education, Gozie Anwukah, while

speaking at the closing ceremony, noted that the establishment of additional sources of funding would aid the achievement of 2030 Agenda and end the endless cries of poor funding in the sector. The council reached several resolutions as contained in its adopted communiqué. It approved the establishment of Bank and Students Loan Boards by states at concessionary interest rate, to enable students access education fund. Other resolutions also taken at the session include the establishment of a Special Intervention Fund for persons with Special Needs. The communiqué also stated that all investments in education should be tax deductible and that contracts and other financial transactions should be taxed to fund education. It further said that revenue generated from parastatals in the Federal Ministry of Education should be ploughed back to the education sector for effective realisation of service delivery. A collective agreement was initially made by delegates for a compulsory development levy of N500 and N1,000 to be paid annually by primary and secondary school students, respectively, which will be paid into a dedicated development

levy account. Permanent Secretary, ministry of education, Sonny Echono, had said that parents and pupils should take responsibility and sacrifice by contributing to funding education. However, minister of state, said the recommendation of delegates on payment of development fees by students should go through policy stages as the council deliberated on strategies to increase funding. On the issue of security, which has disrupted academic activities in the country, the council urged States, the FCT, LGAs and owners of schools to, as a matter of urgency augment the services of uniformed security officers with registered Vigilante groups and Community Neighbourhood Watch. On the issue of religious curriculum, the called for implementation of the separated Christian Religious Studies (CRS) Curriculum, Islamic Studies (IS) Curriculum and National Values in Primary and Junior Secondary Schools nationwide. It approved the teaching, learning and assessment of Christian Religious Studies (CRS), Islamic Studies (IS) and National Values as stand-alone subjects at the basic education level.

Monday 06 August 2018

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BUSINESS DAY

NEWS CBN flags off anchor borrowers’ input distribution in Cross River HOPE MOSES-ASHIKE

urtherance to its resolve to make agriculture regain an enviable position as a business venture rather than mere subsistence endeavour, the Central Bank of Nigeria (CBN) in collaboration with Cross River State government has flagged off the input distribution for 2018 wet season farming in the state and environs. CBN governor, Godwin Emefiele, while performing the ceremony assured of continuous support with a view to repositioning agriculture both as business venture for employment generation, wealth creation and self sufficiency in food production, saying over 12,000 farmers already enrolled under the auspices of Rice Farmers Association of Nigeria (RIFAN). Emefiele, who was represented by the apex bank’s spokesman, Isaac Okorafor, commended the Cross River government for its untiring efforts that have started yielding results in terms of awareness among the farmers, provision of quality seedlings and mechanisation of agriculture. He noted that over 4,000 farmers had been supported under ABP to cultivate 12 crops like rice, soya, maize, palm produce, cotton, and cassava, among others. He advised genuine farmers to key into the technology driven input distribution system with a view to benefiting from the low interest rate of 9 percent facility. According to the CBN, the biometric capturing that identifies farmers to specific farmland through mapping has eliminated the issue of ‘absentee’ or non-practising farmers from benefiting from the inputs and

other facilities. On the part of the beneficiaries of the inputs and other facilities under the bank’s intervention programmes, he urged them to take repayment terms seriously as that would go a long way in ensuring sustainability of the programmes. In a remark at the ceremony, the state chairman of RIFAN, John Ettah, said provision of agricultural inputs had greatly encouraged farmers in the state. He stated that it was now possible to cultivate their farmlands all year round with ‘two wet’ and ‘one dry’ season farming. He further said that rice farmers in the state had cultivated 20,000 hectares of farmland with an expected average yield of five metric tons per hectare. Etta also assured farmers of favourable market conditions for their produce as off-takers were on standby to collect the produce at an agreed and reasonable price. Cross River State governor, Ben Ayade, who was represented by the state commissioner for agriculture, Egrinya Eneji, reiterated that agriculture remained the channel for sustainable development for Nigeria, hence the state government was pragmatic in leveraging the value chain opportunities offered by the sector. According to the governor, various initiatives of the CBN have not only made agricultural practise simple, but very profitable. The Nigeria Agricultural Insurance Corporation (NAIC), represented by Eno Ekpo, assured farmers of total support and therefore urged them not to hesitate in approaching the insurance corporation for professional advice against losses.

How airlines, passengers will benefit from visibility aids at 14 Nigerian airports IFEOMA OKEKE

assengers and airport users will benefit from the provision of Category 11 and 111 instrument landing systems, which will enable airlines land and take-off during low visibility. Before now, airlines were not able to take off and land during low visibility at most of the country’s airports. However, the Nigerian Airspace Management Agency (NAMA) recently equipped 14 airports with ILS Cat II Approach and Landing Minima. The airports now having CAT 11 include Abuja, Lagos, Kano, Port Harcourt, Kaduna, Ilorin, Gombe, Owerri, Sokoto, Uyo, Yola, Dutse, Calabar, and Enugu. Also, NAMA says it is presently installing category III Instruments of Landing Systems ILS in Abuja and Lagos as pilot projects.

Passengers have complained of not being able to access some of these airports during harmattan season or bad weather therefore forcing them to use the roads as alternate means of transport, which poses security threats. Nevertheless, airline operators and passengers can now heave a sigh of relief from this development. This development is coming at a time when airlines had to cancel and delay over 50 percent of their flights as a result of the harmattan haze, which made it difficult for pilots to operate. With the installation of the new equipment, flights can also take off and land during harmattan periods, which happen to be peak periods for the airlines. Sam Adurogboye, general manager, public relations, Nigeria Civil Aviation Authority (NCAA), said the implementation of these revised aerodrome operating minima (both takeoff

and landing) was based on compliance with applicable Standard Operating Procedures for Low Visibility Operations at the affected airports. This is executed by Flight Crew, Air Traffic Controllers (ATC), Aerodrome Operators and the Meteorological Agency. According to Adurogboye, to ensure the seamless operation of these revised minima, the Nigerian Meteorological Agency (NiMET) shall continue to ensure prompt and regular provision of required meteorological information. These will include flight visibility and Runway Visual Range (RVR) values to all ATC units in the airports. Thus, NiMET and NAMA shall ensure constant updating of the Automatic Terminal Information Service (ATIS) with the available RVR values as appropriate. “All airlines, Aerodrome Operators and Air Navigation Service Providers are required to ensure adequate training of their personnel and flight crew

that would be involved in low visibility operations. “The Air Navigation service provider is expected to ensure regular flight calibration of all available navigational aids. This is to ensure safe and efficient flight operations, especially during low visibility operations. “The NCAA will continue to provide a proactive regulatory oversight that will ensure safety and security of all flight operations,” he said. Before now, domestic carriers could only operate for an average of only five hours into some of these airports Dung Rwang Pam, Nigeria’s Aviation Safety Initiative (NASI) coordinator, told BusinessDay that some of the landing aids were absent at most of the country’s airports include landing lights, the taxi way light to show airlines where the centre line and the edge of the runway was, and the apron, where airlines could taxi their aircraft.

Nigerian Army arrests wanted Boko Haram commander, kills 2 insurgents, ‘unspecified’ number of bandits STELLA ENENCHE Abuja

igerian Army said it had arrested one of the wanted Boko Haram suspects, years after he and over a hundred others were so declared. The suspect, Maje Lawan, who occupied the 96th position on the list of wanted insurgents, was arrested at Banki village, Borno State. This was as the Army said fighting troops on ambush operation in the state killed two suspected terrorist elements. Director of Army public relations, Texas Chukwu, a brigadier general, who made the disclosed yesterday in a statement, said the suspect was undergoing interrogation and would be handed over to appropriate authorities afterwards. “Troops of operation Lafiya Dole on August 4, 2018, have arrested a wanted Boko Haram suspect, Maje Lawan at Banki in Borno State,” Chukwu said. “The suspect believed to be number 96 on the wanted list earlier published by the Army was apprehended after he infiltrated into the Internally Displaced Persons camp in the area. “The suspect is currently undergoing preliminary investigation and will be handed over to the appropriate authority for further action.”

According to Chukwu, “The Army arrest wanted Boko Haram commander, kill two insurgents, ‘unspecified’ number of bandits action.” On the killing of suspected militias and terrorists, he noted: “Troops of 222 Battalion deployed in operation Lafiya Dole on 2 August 2018 while on ambush operation around Malari village Borno State neutralized two Boko Haram terrorists while others flee into the bush. “Troops deployed in operation Whirl Stroke on 4 August 2018 while on clearance operation along Gbajimba - Akor axis in Guma Local Government Area of Benue State encountered armed militia men with large herds of cattle. “The troops dislodged the armed militia men from their camp following a superior fire power. “Unspecified number of the armed militia men have been suspected to be killed by the troops while others escaped into nearby bushes with gun shot wounds. “Efforts are on to get other fleeing members of the armed militia men by the troops.” The following items were received during the separate operations, according to the Army: 10 bicycles, 1 AK 47 rifle, 2 AK 47 rifle magazines, 60 rounds of 7.62mm special ammunition, as well as 5 motorcycles.

Akinwunmi Ambode, governor, Lagos State (m); Adebowale Akinsanya, commissioner for works and infrastructure (3rd r); Remi Ogungbemi, chairman, Association of Maritime Truck Owners (AMATO) (2nd r); Felix Chukwu, managing director, ABAT Truck Terminal (r); Ladi Lawanson, commissioner for transportation (3rd l), and Taiwo Salaam, permanent secretary, Ministry of Transportation (l), during the flag off of the expansion of ABAT Truck Terminal at Orile-Iganmu, yesterday.

Apapa gridlock: Expert suggests deployment of helicopter in event of fire occurrence

… as tanker drivers convert gutters to toilets DANIEL OBI

ith the perennial gridlock in Apapa, Lagos, a safety expert has raised concern about safety of buildings, factories, tank farms and workers in the area in case of major fire incident as it will really be difficult for any rescue operations to access Apapa. Raising this concern in a talk with BusinessDay, Jumade Adejola, CEO of Surveillant Fire Limited, regretted that the gridlock was heavy, which would not allow any fire safety truck to move in to the area. “The only way to fight fire in such area is through aerial operation and this can only be possible through helicopter. “Aerial fire fighting is inevitable because fighting fire where

there is gridlock is difficult. The damage would have been done if there is not space to get there,” he said, and suggested that big companies in Apapa should enter into agreement with helicopter operators to fight fire or for evacuation of workers in case of heavy fire occurrence. There has not been permanent solution to Apapa gridlock in the last seven years, especially in the face of increased activity at the ports. Nigeria has other seaports in other regions, but Apapa seaports are more functional controlling about 90 percent of import and export activity. In the recent time, many businesses have relocated from Apapa and according to a clearing agent, who identified himself as Ekene more businesses are likely to leave the area because of inaccessibility of their offices by

their workers, which is impacting negatively on their business. Meanwhile gutters and waste dumps in the Apapa area of Lagos have been converted into toilets by tanker drivers who are trapped in the gridlock. Passers-by say this portents health hazards for residents and workers within the area. The truck and tanker drivers are on a simple mission. Their business is to go to Nigeria’s busiest seaport in Apapa to haul containers, petrol, diesel or gas and deliver to other parts of the country, but they are not finding this assignment easy. Over 85 percent of ships carrying different goods, including fuel from foreign countries berth in Lagos. With this large business at Apapa seaport, trucks and tankers in different shapes and sizes sleep on Lagos roads,

attempting to lift goods to the hinterland. Others are also returning containers back to the Wharf. With the bad and narrow roads associated with Apapa, these trucks and tankers cause gridlock and chaos within the area. Some of these drivers who want to avoid paying for parking space have turned all the roads, highways and bridges leading to the port into parking lots. What is more amazing is that these roads which include M2 through Coconut to Apapa, Orile-Apapa, Western Avenue, right from Ojuelegba to Apapa and Carter Bridge have not only become parking lots for the tankers and the trucks but bedrooms, toilets and bathrooms for the drivers and the other occupants in the vehicles.

46 BUSINESS DAY NEWS

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World Bank urges FG to spur private... Continued from page 1

remain sustainable. By end of 2018, Nigeria would have borrowed some N5.839.27 trillion just in three years to fund the budget deficits with Debt-to-

GDP Ratio currently sitting at about 20 percent, even though it is lower than standard peer group threshold of 56 percent. The caution also comes amid concerns that about 40 percent of low income countries in Sub-Saharan Africa region are already in debt distress or in high risk of debt crisis. In an exclusive with BusinessDay, Hafez Ghanem, World Bank new Vice President for Africa acknowledged that Nigeria needed much resources to fund development needs, but strongly advised against the present excessive borrowing by government. “We believe that in maximizing finance for development, we should do our best to finance these investments without incurring debt, and it is by getting the private people to finance investments,” Ghanem stated, responding to BusinessDay concerns on rising debt. As contained in the appropriation bill signed by President Buhari in June, the federal government will borrow N1.643 trillion to partly finance the N1.950 trillion budget deficit in 2018. Out of this sum, Government intends to borrow N793 billion from domestic sources and N849 billion from foreign sources. Ghanem explained that while most governments around the

world today are facing very tight budget constraints, at the same time, there are financial markets that are quite liquid that could be resorted to for private capital. “So, let us attract private sector to finance those investments without governments having to borrow. So instead of me borrowing to build an airport, I can get an investor to build the airport and run it, so I get the service without running into debt. “This is the one basic way that we are looking at funding development,” he explained. The World Bank also projects that the Nigerian economy would grow by around 2 percent in 2018 and expand to about 5 percent in the next three years, however, a major headwind to the growth prospects is Nigeria’s over reliance on oil as well as the struggling power sector. “The oil market continues to be a major risk for Nigeria and it is not only Nigeria, many countries in Africa are very dependent in commodity exports whether it is oil, cocoa, so that is really the challenge for the continent and for Nigeria obviously, the challenge is how can we remove ourselves from this dependence on commodities and how can come into the digital economy,” Ghanem said. The World Bank chief is of the view that to encourage faster growth, government must invest in three things, including the infrastructure, human capital as well as a regulatory framework that encourages entrepreneurship and young people.

Ghanem who resumed last month as the new World Bank Vice President visited Nigeria which he calls a very strategic country in Africa, to discuss with government officials and other stakeholders on how the bank might be of additional help to boosting economic growth not just in the country but on the continent. “I started my new position as the vice president for the Africa region of the World Bank about a month ago and of course I wanted to come as earliest as possible to Nigeria because Nigeria is a big and important country in Africa. At the World Bank, our mission is to fight poverty, to support economic growth and development and that is what we are trying to achieve in Africa,” he told BusinessDay. “And obviously given the size and importance of Nigeria, if you want to fight poverty in Africa, drive economic growth in the continent, we need growth and development in Nigeria. And so I wanted to come here to listen to our Nigerian counterparts about their views, about how the World Bank can serve them best, how the bank can contribute to growth and development and poverty reduction.” Speaking further to BusinessDay, the World Bank Vice President also harped on the need for the government to intensify domestic resource mobilization rather than increase debt. “The other aspect that when we look at with regards to the whole financial sustainability and the capacity of countries is domestic resource mobilisation, how can you Continues on wwwbusinessday online.com L-R: Usman Jibril, minister of environment; Juan Elegido, vice chancellor, Pan Atlantic University; Vice President Yemi Osinbajo, and Peter Bankole, director, Enterprise Development Centre (EDC), at the launch the Nigeria Climate Innovation Centre (NCIC) themed: Exploring the Opportunity for Solar in Nigeria, held at Lagos Business School (LBS) in Lagos, at the weekend.

Nigeria’s political chess game gets... Continued from page 1 lights of the PDP in the South South and nationally. Ahead of his planned defection, Akpabio on Sunday met with President Muhammadu Buhari in London with the picture of a bowing Akpabio shared all over tweeter as he met the President. The visit came a day after the Presidency confirmed that Akpabio, a PDP lawmaker who represents Akwa Ibom North West in the National Assembly, would pitch his tent with the APC on Wednesday or Thursday this week. Senior special assistant to President Buhari on Prosecution, Okoi Obono-Obla, had on Saturday announced that the senator would be formally received into APC on Thursday, August 9. The presidential aide posted on

Facebook a picture of Akpabio and the national leader of the APC, Bola Tinubu, noting that there would be an APC rally in the state on Thursday to receive Akpabio to the APC. But a different post on tweeter by senator Ita Enang, Presidential Liaison Officer-Senate on Sunday disclosed that that the APC would be receiving Akpabio into the APC family on Wednesday, August 8, at an elaborate ceremony in Akwa Ibom. Akpabio move from the PDP will be the second most significant defection in the Senate in the last one-week after the defection of the Senate President Bukola Saraki to the PDP. Until this planned defection, Akpabio was considered as one of the leading lights in the PDP in the South South and his defection will come as a surprise to many in the region. It reflects the fast shifting alignments taking place in the Nigerian political landscape ahead

of the 2019 elections. The ruling APC has been hit with gale of defections to the main opposition party in recent weeks. Some APC chieftains that have defected to PDP recently include: Senate President Bukola Saraki; former Speaker of the House of Representatives and Sokoto State governor, Aminu Tambuwal; Governors Abdulfatah Ahmed (Kwara) and Samuel Ortom (Benue). Others are: former Kano State Governor and senator representing Kano Central Senatorial District Rabiu Kwankwaso; former PDP National Chairman and serving senator, Barnabas Gemade. Others are: Ahmed Ibeto, Nigeria’s Ambassador to South Africa, who recently resigned his appointment and pitched his tent with the PDP; Dino Melaye, chairman Senate Committee on FCT and over 50 federal lawmakers. Continues on wwwbusinessday online.com

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Sulphur cap regulation to squeeze Nigerian ... Continued from page 1

tical to ensure compliance. On October 28, 2016, the IMO, a specialized agency of the United Nations, responsible for the global standard-setting authority for the safety, security and environmental performance of international shipping, formally decided to impose a global limit for sulphur in fuel oil used on board ships of 0.50% m/m (mass by mass) from 1 January 2020. It says this will significantly reduce the amount of sulphur oxide emanating from ships and should have major health and environmental benefits for the world, particularly for populations living close to ports and coasts. However, current ship bunkers are not designed to run on low sulphur fuel. Fuel oil, high in sulphur content, has traditionally been used by the shipping industry as bunker fuel. Nigerians own about 1,227 vessels according to the Shipowners Association of Nigeria (SOAN), hence the fastest way to comply would be replacing the entire fleet for new ones which cost between $40m $100m to acquire a single cargo ship. Another option for shippers is to switch to alternative fuels like Liquefied Natural Gas (LNG). This would require investments in building infrastructure to deliver natural gas as a bunker fuel at scale, something the industry is not particularly keen about. So far only French company CMA CGM has ordered nine new LNG fuelled container ships. SP Global Platts analysts say to beat the deadline, any large commercial ship that is not under construction 18 months before the IMO’s deadline is not going to leave the shipyard by 2020. So far, no ship

owner or operator in Nigeria has a contract to build new LNG fuelled container ship and the industry still grapples with the most basic challenges of handling cargo, port charges and poor infrastructure. However, experts say installation of scrubbers (exhaust gas abatement systems) which could cost anywhere between $3million to $5million, according to analysts at SP Platt’s may be the most pragmatic means to comply with the directive. The technology works by purifying dirty, heavy sulphur fuel of impurities before powering the vessel. “Retrofitting a ship with a scrubber can take as little as 2-3 weeks in theory,” says Andrew Bonnington, director, Strategic Market Engagement for Europe & Africa at Platt’s at the company’s Lagos Oil and Energy forum. Bonnington further said, “In practise, any ship-owner expecting to use one from the start of 2020 should order it several months before the deadline as the order books of scrubber manufacturers are likely to fill up quickly in 2019 and dry dock space may also be harder to find.” IMO ratified the new rules after series of false starts to cut ship air pollution which is linked to approximately 400,000 premature deaths from lung cancer and cardiovascular disease alone and around 14 million childhood asthma cases annually, according to a UN research. This rule has rattled ship owners globally and in Europe there is now a drive towards refining distillates as a cheaper option to comply with the 0.5 percent sulphur cap. Many ships are expected to experiment with blended fuel oils and new Continues on wwwbusinessday online.com

Nigerian pilots, engineers lose jobs as industry... Continued from page 1

has established they cannot decompose for hundreds of years. Experts have opined that Lagos generates the highest volume

of plastic wastes in Nigeria and this volume may triple in the coming years, if efforts are not geared toward redirecting the waste to economic benefits. Most countries in the developed world have regulations, which compel manufacturers to use recycled materials in defined quantities. However, there is no such provision in Nigeria, and many corporate entities appear to be unconscious of the responsibility they owe. The Food and Beverage Recycling Alliance (FBRA) which claims to have membership of major manufacturers in Nigeria, who make products in plastic containers, was for 2 months unable to provide response to BusinessDay enquiries on how much waste its supposed partnership with recycling companies has been able to mop up, and recycle. Wale Adebiyi, managing director, WeCyclers told BusinessDay by phone, that Lagos is estimated to generate about 14 to 15 thousand tons of waste daily. Of that, roughly, 30 percent is recyclable, and 50 percent of this is plastic. In essence, about 2,250 tons of plastic waste is generated in Lagos on a daily basis, and which can be recycled, annually, this is 821,250 tons (almost 1 million tons). At USD 500 per ton, if only 500,000 tons of plastic can be recycled an-

nually, it will potentially be a USD 250 million industry. This figure will increase significantly when other parts of Nigeria are factored in. However far less that 10 percent of plastic waste is actually being recycled in Nigeria; the bulk of which ends up constituting nuisance for the environment when it could have been recycled to make money. “We recycle 50 to 60 tons of plastic waste every month,” said Adebiyi, whose company is one of the industry’s leaders, “there is a lot out there that is not being collected.” A new crop of individuals who pick plastic wastes for a living can be seen on the streets of Lagos regularly, joining the old hands – scavengers- who pick any form of thrash they consider of value. BusinessDay learnt some of these collectors of recyclable waste, are engaged for a fee, by recycling companies to pick materials they can potentially recycle and sell. A major challenge as findings showed is that, there aren’t readily available off takers to buy the plastic from these recycling companies. As industry sources told BusinessDay, only one company, Alkem Nigeria Limited is known to have the capacity to fully process recycled plastic in an industrial process that makes it into raw materials for end users. However, it was gathered that the company does not process plastic into new bottles, rather, it converts into fibre for making cloths.

Olusola Soyanwo, managing Continues on wwwbusinessday online.com

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NIRSAL to release further funds to farmers this week … as CBN ABP creates 250,000 direct jobs, 1.25m indirect jobs through NIRSAL

ONYINYE NWACHUKWU, Abuja

igeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) announced on Sunday that it would release further funds to farmers following approvals by the Central Bank of Nigeria (CBN). The assurance was given by Anne Ihugba, NIRSAL’s new head, corporate communications, who stressed that NIRSAL was committed to disbursement of farmers’ funds approved by the CBN within five days of receipt of loan term sheets from the apex bank. Providing clarification to media enquiries regarding alleged delays in the disbursement of loans to some applicants, she also assured that, as always, farmers under the NIRSAL Participating Financial Institution (PFI) window of the CBN Anchor Borrowers’ Programme (ABP), who comply with the conditions precedent to drawdown can have access to their credited account’s after meeting such conditions. “This is in line with NIRSAL’s policy stance to always expedite the funds access process of all applicants who have met conditions precedent to draw down,” Ihugba stated in a statement. “NIRSAL observes the highest ethical and professional standards and restated that all funds from the CBN are disbursed directly into farmers’ accounts and farmers can access such funds once drawdown conditions have

been met.” According to Ihugba, CBN, through the NIRSAL window of the Anchor Borrowers’ Programme is creating over 250,000 direct jobs for farmers and up to 1.25 million indirect jobs. She stated that as a registered PFI for the ABP, NIRSAL takes its responsibility to ensure timely disbursement to farmers very seriously, as this helps to ensure timely repayment of loans, which is also a critical component of its mandate. She emphasised that as an Agricultural Finance risk management organisation, NIRSAL is mindful of the various risks associated with yield and repayment capacity of the farmers. She said NIRSAL has launched the Area Yield Index Insurance – an insurance product tailor-made for farmers and established the Project Monitoring and Remediation Offices (PMROs) nationwide to work closely with farmers throughout the farming cycle to ensure success of its projects, as well as protecting the interest of all verified and bonafide farmers. “These additional services are provided to farmers at NIRSAL’s own cost,” she further explained. She added that no off-taker will be allowed to hold farmers to ransom as existing clauses of signed tripartite agreements with various off-takers will ensure that farmers will get value for their produce in addition to sanctions for non-performance by off-takers.

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Nigerians in Diaspora get FBNQUEST Asset Management investment opportunities HOPE MOSES-ASHIKE

BNQuest Asset Management, a part of the FBN Holdings plc Group, has called on Nigerians in Diaspora to take advantage of the numerous investment opportunities available in Nigeria. This call was made at the just concluded Nigerians in Diaspora (NIDOA) global development conference in London. The conference presented a rare opportunity for Nigerians in the Diaspora to engage in constructive and interactive sessions with key decision makers across different industries in Nigeria, encouraging stakeholders to partner and collaborate on investment schemes. A major highlight of the event was the pre-launch of the $20 million Diaspora Housing Investment Fund - a closed-end investment

fund to be privately placed and constituted under a Trust Deed with a suitable Commercial Trustees to be selected. The fund will be established through the issuance of the similitude of a real estate investment trust scheme, which will provide opportunities for individual and institutional investors to participate in the Nigerian real estate sector. The conference yielded fruitful discourse and exchange of ideas that examined the intersections between investment in human capital, natural resources, entrepreneurs h i p, i n n o v a t i o n a n d technology in Nigeria. As one of the major sponsors of the confere n c e, F BN Qu e s t A s s e t Management called on Nig e r i a n s i n D i a s p o ra to offer strategic expertise in their various endeavours to impact the country with knowledge and financial capacity, especially by way of in-

vestment. Speaking during the conference, Ike Onyia, managing director, FBNQuest Asset Management, said, “We want to partner with the Diaspora community through NIDO and its members. As a member of one of the leading financial services groups in Africa, we are well-positioned to serve the Diaspora community professionally and to ensure their aspirations in the area of maximising investment returns are fulfilled.” Speaking further, Onyia said, “FBNQuest Asset Management is open to partnerships that will unlock the potential of the Nigerian diaspora community as a source of economic development. We provide bespoke solutions to organizations and individual investors looking to set up structures that can help them achieve their investment goals. “As a trusted advisor

a n d c re d i b l e p a r t n e r with sound local knowledge and a rich pedigree, we will help them navigate through opportunities in the homeland.” FBNQuest Asset Management is a leading asset manager in Nigeria for individual and institutional investors, guiding clients through Africa’s dynamic markets, while identifying the best opportunities to shape portfolios in line with specific investment goals. The firm was recognised as the ‘Best Asset Manager in Nigeria’ in t h e p re st ig i ou s Eu romoney Private Banking and Wealth Management Sur vey 2017, which is the industr y’s leading barometer of the world’s best service and product providers. The sur vey covers 15 different product and client categories and has ranking results in 70 countries, in which FBNQuest Asset Management emerged number one in Nigeria.

MTN, NIBSS, partner others to re-launch mCASH to boost cashless economy SEYI JOHN SALAU

igeria cashless initiative and financial inclusion may begin to gain traction like others of its peers across Africa as MTN Nigeria, Nigeria Inter-Bank Settlement System (NIBSS), alongside 16 partner banks and mobile telecommunication operators (telcos) recently came together for the re-launch of mCASH in Lagos. mCASH is a mobile payment system for making lowvalue retail payments designed to extend e-payment options to low-income buyers and sellers who deal in cash. The cashless initiative was first launched in 2016. Ferdi Moolman, CEO, MTN Nigeria, represented by Usoro Usoro, the general manager, Mobile Financial Services, MTN, said when organisations work together for a common goal to serve, initiative like this achieve better outcomes. “It is incredible how much the world has changed and continues to evolve with new ideas and technologies. Today, Africa is increasingly embracing new ways of payment for retail consumption and transactions. For those of us in the telecoms

industry, this presented us with the question; how do we fully utilise all available options to provide standardised and efficient mobile cashless services for micro-payment and collections; the answer is mCASH,” Moolman said. Adebisi Shonubi, managing director and CEO of NIBSS, said mCASH initiative was borne out of the need to enhance financial inclusion in Nigeria. mCASH is to extend e-payment benefits to payers and merchants who operate at the local levels especially the small and medium scale business owners. “To ensure the paradigm shift, we had to promote an ecosystem partnership consisting of banks and telecommunication companies thereby birthing what has become a novel collaboration anywhere in the world; a service not driven by one bank or telco but which is ecosystem driven,” Shonubi said. This USSD-based service delivers funds to merchants’ accounts based on USSD technology. mCASH can be access from any mobile network operator by dialling *402*Seller’s code*Amount# on a mobile phone to pay accepting merchants.

L-R: Osaretin Demuren, chairman, GTBank/chairman of the occasion; Toun Adedipe, chief consultant, B Adedipe Associates Limited, and her husband, Biodun Adedipe, parents of late Ifedolapo Damilola Adedipe, during the official launch of the IDAF with the theme’ Empowering the Girl-Child’ in Lagos. Pic by Pius Okeosisi

NNPC dissociates self from National Assemblyofpoliticking transparency leading to HARRISON EDEH, Abuja

anagement of the Nigerian National Petroleum Corporation (NNPC) has distanced the oil company and its group managing director, Maikanti Baru, from the ongoing political tango in the National Assembly. The corporation also distanced self from the trending reports in some section of the media insinuating that its helmsman had doled

out funds to effect the impeachment of Senate president, Bukola Saraki. The corporation in a statement issued by its group general manager, group public affairs division, Ndu Ughamadu, described the report as the handiwork of mischief makers seeking to drag the NNPC and its GMD into a purely political affair totally different from its mandate,

saying “Count Us Out of Ongoing Politicking in National Assembly - NNPC says Baru not Funding alleged Impeachment Plot Against Senate President.” The NNPC emphasised that the report was not only false but also an affront on the verifiable reforms in the operations of the corporation under Baru, which has witnessed irreversible strides in the area

the sustained publication of NNPC monthly operations and financial records. The corporation called on all well-meaning members of the public and oil and gas industry stakeholders to discountenance the said story, noting that the management of the NNPC remained committed to its statutory role and responsibility to the entire federation.

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Gridlock: Lagos flags off reconstruction of Iganmu trailer park … to build another park in Ijanikin for 5,000 trucks JOSHUA BASSEY

here seems to be a chain of efforts by the Federal and Lagos State government toward the resolution of the intractable traffic congestion in Apapa and other parts of the state metropolis, as Governor Akinwunmi Ambode, on Sunday, flagged off the reconstruction of the OrileIganmu trailer park. The Iganmu trailer park being constructed by Planet Projects Limited, on completion, will hold at least 1,000 trucks while another facility that will accommodate 5,000 trucks is being contemplated at Ijanikin, Ojo, where the state government is acquiring a land. This comes less than one week the Federal Executive Council approved N72.9 billion contract for the rehabilitation of collapsed sections of Mile 2 - Tin Can - Apapa Expressway. The expressway is a major artery into Apapa, host community of the nation’s most utilised seaports Apapa and Tin Can ports, but had been left in a state of disrepair for over one

decade. The Apapa and Tin Can ports account for 75 to 80 percent of shipping activities in Nigeria. Rotimi Amaechi, minister of transportation, was also in Lagos last week, during which he announced the extension of the ongoing rehabilitation of LagosIbadan narrow gauge rail line to Apapa, to aid evacuation of goods from the ports, in order to reduce pressure on roads in and out of Apapa. Ambode, who led a few of his cabinet members to the trailer park site, said the flag off was a follow-up to his earlier promise to partner the federal authorities and other stakeholders in finding a lasting solution to the gridlock within and around Apapa. “One of the resolutions is that we should have authorised truck terminal park, and so my visit to this place today (Sunday) is to flag off the reconstruction of this terminal so that we can accommodate 1,000 trucks. “We would do this in collaboration with the Nigeria Ports Authority so that the call-up system can work efficiently. The expansion

we are adding to this particular terminal in which we have decided to acquire the adjoining land, we would use that primarily for nonpetroleum trucks so that we can sectionalise these trucks and allow the call-up system to work. “This is just part of the efforts that the state government is making to make sure this Apapa gridlock and the truck menace become a thing of the past permanently,” the governor said. Speaking further, he said, “I have just been briefed that we have an additional land space in Ijanikin that can accommodate 5,000 trucks. We will explore that possibility immediately; all that we are doing is to make sure that there is a permanent solution to this whole idea of trucks destroying our bridges and roads.” He also inspected progress of work on the ongoing modern bus terminals in Yaba and Oyingbo, as well as a failed section of Sari Iganmu Road, which had been abandoned for over two years, where he assured the residents that contractors would move in to fix it within the next two weeks.

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Monday 06 August 2018 A8 BUSINESS DAY NEWS Keystone Bank wins Africa’s Best Nigerian pilots, engineers lose Customer Service Provider 2018 jobs as industry fleet size slumps C002D5556

eystone Bank Limited shone brightly at the International Banker Awards 2018, as the lender emerged winner in two categories beating other nominees and carting away the prize for “Africa’s Best Customer Service Provider” and “Nigeria’s Most Innovative Retail Bank of the year, 2018.” The International Banker Awards is an annual event organised by the renowned International Banker financial magazine, one of the world’s leading sources of authoritative analysis on finance, international banking, and world affairs. The awards were established to recognize top-ranking individuals and organisations setting new benchmarks for performance and pushing the boundaries within the financial industry. The magazine’s readership and a jury comprising financial journalists vote for winners. They take account of not only growth, liquidity position and profitability of a company,

but also innovation, technology, corporate governance, sustainability and transparency. According to Simon Hughes of the International Banker Magazine, “We depend on nominations from our readers to locate the worthiest financial institutions around the world, the banks that are not just doing their jobs well but exceptionally well, that are in effect operating on the cutting edge of the industry and setting new levels of performance to which others in the field will aspire. “The size of the bank is not as important as the size of its impact; therefore, banks in countries from North and South America, Western and Eastern Europe, Asia and Australia, the Middle East and Africa are recognized for offering what top-of-the-line banks provide: much-needed capital for economic growth, cutting-edge innovation to improve security and efficiency, intelligent investing to maximise profits and share-

holder value. “And I am happy to announce to you that Keystone Bank has demonstrated these qualities, hence, the recognition.” Receiving the awards on behalf of the bank at the London Stock Exchange studio, recently, the group managing director/CEO, Keystone Bank, Obeahon Ohiwerei, dedicated the feat to the customers, whose loyalty, support and patronage he said has remained the fountain of the bank’s growth and competitive edge in the African continent. “This recognition speaks volumes. It validates the strong management, staff commitment to service excellence, sound business model and prudent risk management of Keystone Bank,” Ohiwerei said. Ohiwerei further stressed that the awards were a lucid indication that the initiatives being implemented by the Bank particularly as it relates to enhancing service delivery are yielding the desired result.

IFEOMA OKEKE

significant reduction in the number of available aircrafts is driving pilots and engineers out of jobs, BusinessDay has found. “If you look at it critically, Arik Air used to have 32 aircraft and now it has less than 12 aircraft flying. Aero used to have 17 aircraft with 12 Boeing 737 alone flying and now they are struggling with two aircraft. When Medview came into the business, they had over six aircraft but they are currently struggling with two aircraft. “First Nation, IRS and Chachangi are down. AirPeace is the only airline that has increased its fleet significantly. The fleet increment in AirPeace cannot compensate for the reduction in the fleet of Aero, Arik and other airlines,” Isaac Balami, former president of the National Association of Aircraft Pilots and Engineers (NAAPE) told BusinessDay. Balami explained that while this development has made young pilots unemployed, other pilots with years of experience are currently flying in other countries including in Europe, Middle East and

United States of America. Documents obtained from the Nigeria Civil Aviation Authority, (NCAA), put the total number of licenced pilots in Nigeria at 2,226 in 2016. Although this number has increased to 2,356 in 2017, the number of licenced active Nigeria pilots has reduced from over 1,700 three years ago to below 1, 300 today. In the same vein, the number of aircraft maintenance engineers has reduced to 1,484 in 2017 from 1,532 in 2016. Gbenga Olowo, President of Aviation Round Table (ART), said there has been continuous depletion of the fleet of Nigerian airlines. Olowo recalled that in 2010, Nigerian airlines had 54 commercial operating aircraft but by 2013 the fleet had reduced to 39, noting that with declining fleet size, route expansion would be limited and this will affect the number of pilots and engineers that can be employed airlines. BusinessDay’s checks show that as a result of the difficult economic environment, over the past two years, Aero Contractors has sacked over 100 staff, United Airlines and Iberia Airlines dismissed not

less than 30 Nigeria staff when the airline closed shop last year, and Virgin Atlantic also sacked 20 Nigerian staff. Experts say despite the loss of jobs, aviation schools across Nigeria are still churning out as many 750 personnel yearly. The five Civil Aviation Training institutions in Nigeria include the Nigerian College of Aviation Technology (NCAT) Zaria, the International Aviation College, (IAC), Ilorin, International Helicopter Flying School, Enugu, Landover Aviation Training School, Ikeja and Aeroconsult Training School, Ikeja. BusinessDay’s findings show that NCAT, which is the biggest aviation school in Nigeria, graduates an average of 500 trained personnel each year, followed by IAC Ilorin, which produces between 60 and 80 pilots per annum. Other schools produce between 150 and 200 trained personnel yearly. Chris Iwarah, Corporate Communications Manager, Air Peace Limited told BusinessDay that pilots seek employment from Air Peace every day and some apply through the company’s communication channels.

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FINANCIAL TIMES Berkshire Hathaway posts surge in profits

Colombia denies role in drone attack on Venezuelan president

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Caesars’ Mark Frissora: rebuilding after bankruptcy The casino chief bet on moneyspinning projects and motivating staff Andrew EdgecliffeJohnson & Sujeet Indap

he house always wins,” Mark Frissora says, repeating the maxim to remind his guests of the statistical predictability underpinning craps games, blackjack tables and slot machines from Atlantic City to the Las Vegas Strip. Except in January 2015, one house lost: the operating company behind Caesars Palace and the Harrah’s casino chain filed for Chapter 11 bankruptcy protection, sunk by more than $18bn of debt stemming from the buyout its private equity owners, Apollo Global Management and TPG Capital, struck in 2008, just before the financial crisis ended Wall Street’s winning streak. Two days after its owners announced the filing for Caesars Entertainment Operating Company, they named Mr Frissora as its chief executive. His task was to make the house a winner again. Mr Frissora was reassured about his chances by his son Chris, who works in restructuring and had been studying Caesars. He was struck by his son’s explanation of how casinos generate cash — from hospitality and entertainment as well as gaming — and by his appraisal: “What a cool gig.” Glad-handing high rollers and cutting deals with resident rock stars would have to wait, however. When Mr Frissora walked into the ancient Rome-themed resort in Las Vegas, which was founded by Jay Sarno in 1966, his immediate challenges were staff unsettled by rumours that the company would be broken up, and ugly headlines about creditors fighting Caesars’ private equity owners. Mr Frissora was not the obvious choice. He started his career at General Electric and his previous chief executive roles had been at Tenneco, the auto-parts maker, and Hertz, the car-leasing company. His tenure at Hertz attracted scrutiny from activist investors, including Carl Icahn, and ended in 2014 after the company disclosed accounting errors. Apollo and TPG, which had majority control of Caesars at the time of

Mr Frissora’s appointment, wanted him to concentrate on operations, he says, but that still posed the challenge of keeping customers happy and employees focused on the business rather than the bankruptcy. “If you take your eye off the cash, customers or employees, you’re dead,” the 63-year-old says. The bankruptcy examiner’s report into whether directors and former executives breached their duties was “pretty tough on everyone that had been on the board,” Mr Frissora notes, but he did not clear out the management team he inherited. “I’ve always tried to be very careful about not getting rid of people that run operations [and] have the knowledge of the business, because that ends up being the golden goose, oftentimes,” he explains. The people running Caesars knew what ailed it, he adds: “You just go out and interview them.” In the first three months, he toured 27 Caesars properties, asking staff: “If you were CEO for a day, what would you do?” There were 60 ideas, but he forced his team to “filter, filter, filter; prioritise, prioritise, prioritise”. Those priorities including revitalising Total Rewards, the loyalty programme that analysts estimate helps Caesars generate 10 per cent more revenue at a given property than its rivals; and investing in hospitality, recognising that Caesars makes higher margins in its bars than on its gaming floors. Mr Frissora boiled the feedback down into wallet-sized cards he gave to staff, setting out a “strategic architecture” with the cornerstones of its business plan and four “accelerators” he saw as most likely to create value, such as sports betting and mobile gaming. His team needed to be “stabilised” and convinced about the right way forward. “I did a lot of hand-holding,” he recalls, “and always stayed positive.” He focused on increasing cash flow by investing in projects that could pay back in two to three years. That led him to sign off on a programme to renovate hotel rooms that had been starved of investment while Caesars’ cash was being diverted to interest payments.

Trump claims US is winning trade war with China Says fall in Chinese stock market this year is evidence trade tariffs are working Yuan Yang

resident Donald Trump has claimed the US is winning the worsening trade war with China, firing back a day after Beijing announced retaliatory tariffs on $60bn of imports from the US. “Tariffs are working far better than anyone ever anticipated,”

Mr Trump wrote on Twitter on Saturday, adding that China was “doing poorly against us” and tariffs “are really hurting their economy”. “We are Winning, but must be strong!” Mr Trump said in a series of Saturday afternoon tweets comparing the fall in China’s stock market to the US economy’s Continues on page A14

EU migrant deal needs work, Brussels commissioner says

Critics see bloc’s unilateral announcement as high-handed towards African states Michael Peel

n EU push to send migrants rescued at sea to African countries is far from a done deal on either side of the Mediterranean, the bloc’s commissioner for international co-operation and development has warned. European countries had neither agreed among themselves nor won approval from African counterparts about how the proposed approach would work, Neven Mimica said in an interview. His comments highlight doubts around plans signed off by EU leaders at a summit in June to try to avert a political crisis on migration. While there is support around the bloc for curbing arrivals via Mediterranean people-smuggling routes, critics point to practical obstacles to the mooted system, which includes plans to send migrants landing in the EU to as yet unspecified “controlled

centres” in the bloc. “I do not see that there is widespread acceptance or widespread recognition in the European Union among the member states that this should be the best way,” Mr Mimica said of the migration package. “[And] I don’t think that we discussed or brought it as a clear, defined proposal to any of our partners in Africa.” European leaders approved the idea of “disembarkation platforms” outside the bloc to try to diffuse tension between Italy’s demands to redistribute migrants in the EU and central European states’ refusal to take them. EU member states will follow up by “all doing their part with countries they have links with” in Africa, though none has been asked to talk to specific countries, one bloc diplomat said. Critics see the EU’s unilateral announcement about its plan as highhanded towards African countries, many of which were formerly oc-

cupied by European powers. Asked if the EU had been disrespectful, Mr Mimica said: “We are still at a stage where some of the member states or some of the circles in Europe launched this idea, but without tackling all other considerations.” Mr Mimica was speaking to the Financial Times before the European Commission last week said it would pay €6,000 a migrant to any government that helped take people rescued from boats in the Mediterranean. Italy said it did not need “charity” and rejected the plan. Andrej Babis, the Czech prime minister, is among those to raise concerns that the EU’s latest migration plans are unworkable, particularly the idea about sending migrants to centres in Europe. He said this month that the best approach was to “make a deal” with north African states and then help migrants “in their respective countries, like in Syria, Nigeria or others”.

Turkey hits back against US sanctions over jailed pastor Erdogan freezes ministers’ assets after Pompeo warns him ‘clock has run out’ Ayla Jean Yackley

urkey has imposed financial sanctions on two US cabinet officials in an escalating row over the detention of an American pastor on espionage and terrorism charges. “We will freeze the American justice and interior ministers’ assets in Turkey, if there are any,” Recep Tayyip Erdogan said. The president added that his patience had run out after the US imposed financial sanctions on two Turkish ministers over the affair. Although it is not clear who the sanctions will affect — the US secretary of the interior oversees the national park system and public lands, while the Department of Homeland Security is in

charge of public security — Mr Erdogan’s threat is a rebuff to US secretary of state Mike Pompeo, who was quoted as telling reporters on Friday that “the clock had run out” for Turkey to free Andrew Brunson, an Evangelical preacher arrested by Turkish authorities in October 2016. Mr Brunson spent close to two years behind bars before a court ordered him to be transferred to house arrest on health grounds in July. He is accused of participating in a conspiracy to topple Mr Erdogan in an abortive military coup in 2016, charges he denies. The US Treasury this week froze assets belonging to Abdulhamit Gul, Turkey’s justice minister, and Suleyman Soylu, the interior minister, for their alleged roles in the detention of Mr Brunson.

The relationship between the two Nato members has plunged to its lowest point in decades in the wake of the violent attempted coup in 2016. Donald Trump last month threatened Turkey with “large sanctions” over the affair, Investors have dumped Turkish assets, with the lira tumbling more than 3 per cent since the US administration announced sanctions, fearful that more punitive measures are in the pipeline if Turkey digs in its heels. Mr Erdogan has sought to draw a line between the dispute and his relationship with Mr Trump, with whom he was photographed smiling and holding hands at a Nato summit just weeks ago. He called on Mr Trump on Saturday to intervene and end the stand-off.

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FT Trump claims US is winning trade war...

Portugal battles fires as temperatures hit record

Continued from page A13 recent strong performance. He also claimed that trade tariffs imposed by his administration had led to steel plants reopening across the US. On Friday, the Chinese stock market lost its place as the world’s second-biggest after it was overtaken by Japan for the first time in almost four years. Chinese stocks have lost $2.29tn in value since their high in January, falling 27 per cent over eight months. The fall reflects investor anxiety over the trade dispute with the US, as well as worries about China’s expanding debt pile and slowing economic growth. On Saturday, Mr Trump incorrectly claimed the 27 per cent fall had happened in the last four months. Concerns over short-term growth have led China’s leadership to signal its intention to stimulate the economy through looser monetary policy. The Chinese economy expanded at its weakest pace since 2016 in the second quarter, and most economists expect further deceleration. On Friday, Beijing threatened to impose new tariffs on $60bn worth of imports from the US, saying Washington had created an “emergency situation” for China through its proposal to raise the rate of threatened tariffs on $200bn of Chinese exports to 25 per cent, up from 10 per cent. The US tariffs could take effect next month. China’s commerce ministry said Friday “the implementation and date of [Chinese] tariffs will be decided by US actions.” With no sign that either side is willing to back down, the chances of an all-out trade war between the world’s two largest economies looks increasingly likely. The International Monetary Fund and others have warned this could derail global growth. China’s new tariff list threatens a 25 per cent tariff on liquefied natural gas, a potential blow to US LNG companies, for whom China is the third-largest export market. Since the outbreak of trade hostilities between the two countries China has targeted politically sensitive US exports that are made in Donald Trump’s voter heartlands. In response, Mr Trump has had to pledge $12bn in aid to support farmers hit by China’s previously announced retaliatory tariffs. Last week he was criticised by business and farm groups for announcing further tariffs. China’s new tariff list also includes duties on aircraft, agricultural goods, chemicals and medical supplements. The two sides have already imposed tariffs on $34bn worth of one another’s exports. Beijing’s Friday announcement brings the value of trade threatened by Chinese tariffs to $110bn, compared with $130bn worth of goods that China imported from the US last year. The US is targeting $250bn worth of Chinese imports, out of a total of $505bn in 2017. Because of the US’s large trade deficit with China, the US has more leeway to announce tariffs on other types of products imported from China.

Monday 06 August 2018

Country on alert and air-conditioned buildings kept open for people to escape extreme Peter Wise

T Nicolas Maduro reacts during a military parade that was interrupted by exploding drones, in this still frame taken from video © Reuters

Colombia denies role in drone attack on Venezuelan president Maduro blames his Colombian counterpart and says arrests have been made Gideon Long

olombia has “emphatically rejected” accusations from Venezuela’s President Nicolás Maduro that it was linked to an apparent attempt to assassinate him using drones packed with explosives. The government in Bogotá described as “absurd” Mr Maduro’s claim that his Colombian counterpart Juan Manuel Santos was behind the incident on Saturday. Mr Maduro had been attending a military parade in central Caracas. “It is common that the Venezuelan leader constantly blames Colombia for any type of situation,” the foreign ministry said in a statement. Analysts also said the incident could prompt a further crackdown by Mr Maduro’s government on its domestic opponents. The incident unfolded as Mr Maduro addressed a parade to mark the 81st anniversary of the creation of the National Guard. Television footage showed Mr

Maduro and his wife flinching and looking upwards after what appeared to be an explosion. Hundreds of uniformed officers broke ranks and scattered before the TV signal was cut. Speaking later from the presidential palace, Mr Maduro said a drone blew up in mid-air in front of him. “It was a big explosion,” he said, adding that a second drone exploded to his right. The government said seven National Guard members were injured. Mr Maduro said some suspects had been arrested and blamed the assault on “the Venezuelan far-right in alliance with the Colombian far-right”. “The name of Juan Manuel Santos is behind this attack,” he said. “The first elements of our investigation point to Bogotá.” A Colombia government source said Mr Santos had spent the day at his granddaughter’s baptism and was concentrating on that, “not on bringing down foreign governments”. Venezuela’s relations with neighbouring Colombia have deteriorated in recent years as Mr

Santos has become more critical of the government in Caracas, and as 1m Venezuelan refugees have poured over the border to escape economic collapse. Mr Santos has frequently suggested that “regime change” is imminent in Venezuela. Mr Maduro has warned the Colombians to keep out of Venezuelan affairs. Mr Maduro’s speech was more than usually peppered with anti-Colombian sentiment, including several references to “the oligarchs in Bogotá”. Saturday’s incident came three days before Mr Santos is due to step down and hand power to rightwinger Iván Duque, who is likely to take an even tougher stance against the Maduro regime. Mr Maduro claimed the drone attack was masterminded and financed from Miami, although he gave no evidence. Speaking to Fox News on Sunday John Bolton, US national security adviser, said: “Unequivocally there is no US government involvement in this at all.”

Brexit pessimism eases among UK’s biggest companies But FTSE 350 companies remain gloomy about the country’s economic prospects Sarah Gordon

he UK’s biggest companies have become more optimistic about the impact of Brexit on the UK economy, although they remain gloomy about the country’s economic prospects more broadly. The most recent Boardroom Bellwether survey, conducted twice a year by ICSA, the governance body, in conjunction with the Financial Times, found that more than half — 55 per cent — of FTSE 350 company secretaries expected Brexit to have a negative effect on the economy, but this was sharply down on the proportion a year ago, when over twothirds — 69 per cent — thought this would be the case. In addition, a majority of company secretaries — 58 per cent — said Brexit would have no impact on their business. Two-thirds said

that Brexit was a risk but was not judged to be a “principal” one, in part because many FTSE 350 companies have often significant operations outside the UK. However, confidence about prospects for the economy remained low, despite last week’s interest rates rise by the Bank of England to their highest in almost a decade, on the back of full employment and a pick-up in activity supported by household spending. Only 6 per cent of respondents anticipated an improvement in the next year, down from 8 per cent six months ago, and 13 per cent a year ago. More than half — 55 per cent — predicted a decline, more than double two years ago, but the same as six months ago. “It is hard to see any other reason for continuing pessimism over the economy other than the ongo-

ing government infighting over Brexit and the lack of a clear plan if there is no deal at the end of the negotiations,” said Peter Swabey, ICSA policy and research director. James Bilefield, who chairs recruitment company SThree, a FTSE 250 company, said activity in the UK had been subdued because of Brexit, and uncertainty around the outcome of negotiations was having an impact on all sectors. “We need to see clarity on the future relationship [between the UK and EU],” he said. However, Mr Bilefield said “animal spirits” in the corporate world remained strong, and that SThree was seeing plenty of opportunities outside the UK, in the EU, US and Japan. The bellwether results also suggested FTSE 350 companies remained optimistic about prospects outside the UK, despite rising fears of trade wars.

emperatures soared to record highs across Portugal and Spain this weekend as a punishing European heatwave moved west, stoking forest fires and raising fears of a sharp increase in heat-related deaths. The temperature in Portugal reached 46.8C in the central town of Santarém on Saturday, one of 16 locations where record highs above 45C were recorded, the country’s meteorological office, IPMA, said. In Lisbon, the temperature climbed to 44C, the highest since records began in 1943, IPMA said. Readings at 73 of Portugal’s 96 official weather stations rose above 40C. More than 1,600 firefighters and army engineers fought 30 forest blazes across the country on Saturday, the worst in the Serra de Monchique, a dense eucalyptus forest a few miles north of the Algarve holiday coast. Nine people have been injured in the Monchique fire, which has destroyed more than 1,000 hectares of forest, and 100 removed from their homes for safety, fire services said. Another six people were injured, two of them seriously, in a forest fire near Estremoz in southern Portugal. In Spain, which has also been hit by forest fires, heatstroke is reported to have claimed three lives. Temperatures in Spain reached 46.6C in El Granado, close to the frontier with Portugal, according to the Spanish weather office Aemet. The highest temperature recorded in Portugal was 47.4C in 2003 while in Spain 47.3C was recorded last year. Europe’s highest temperature on record is 48C in Greece in 1977. Portuguese hospitals reported an increase in people, particularly the elderly, seeking emergency treatment for dehydration and other heat-related problems. A previous heatwave in Portugal in 2003 is estimated to have increased the mortality rate by more than 1,600, according to an official report. Portugal has been placed on red alert for forest fires under new civil protection measures designed to prevent more deaths after catastrophic wildfires claimed 114 lives in June and October last year. More than 7m people were alerted by mobile phone text messages to the “extreme risk” of forest fires this weekend, the civil protection authority said. Some Portuguese municipalities made arrangements for airconditioned shopping centres, churches and other buildings to remain open 24 hours a day, should large numbers need to escape the extreme heat. Portugal, like other southern European countries, sees itself as being in the front line of the potential impact of global warming on climate change. Higher temperatures have exacerbated drought, desertification and forest fires. Over the long term, extreme summer heat could lead to severe water shortages and potentially damage Portugal’s booming tourism industry, which has doubled in size over the past five years.

Monday 06 August 2018

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FINANCIAL TIMES

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COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Berkshire Hathaway posts surge in profits New accounting rules force conglomerate to recognise portfolio gains Eric Platt

ar ren Buffett ’s Berkshire Hathaway reported a surge in profits as its insurance business rebounded and a change in accounting rules forced the sprawling conglomerate to recognise gains on its multibillion-dollar stock portfolio. The company said net earnings attributable to its shareholders nearly tripled from a year earlier to $12bn, or $7,301 per class A share, for the three months to the end of June. That compares with $2,592 a share a year ago. The gains include roughly $5bn from its investment portfolio, which benefited handily from a rise in the share price of Berkshire’s largest equity investment, Apple. The market value of the iPhone maker eclipsed $1tn earlier this week, the first time a US-publicly traded company has done so in history. Berkshire continued to purchase shares in the technology behemoth in the second quarter, which now accounts for $47.2bn of its $179.7bn stock portfolio, a filing with US securities regulators on Saturday showed. Mr Buffett has expressed his fondness for Apple, earlier this year saying he would like to own the entire company if he could. Berkshire first invested in the company in 2016 and has steadily increased its stake to about 5 per cent of the Tim Cook-helmed group. Berkshire disclosed that its four other largest holdings remained American Express, Bank of America, Coca-Cola and Wells Fargo, and that it had trimmed its fixed income holdings — including its ownership of US and foreign

government bonds, municipal debt and corporate and mortgagebacked securities — by more than $1.2bn in the quarter. The sheer size of the investment can have large sways over the company’s quarterly results, with Berkshire suffering a loss in the first quarter after it reported a $6.4bn hit from swings in its investments and derivative positions. “The amount of investment gains [and] losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be misleading to investors who have little or no knowledge of accounting rules,” the company said in a statement. Core businesses of the conglomerate like Geico insurance, the BNSF railroad and the industrials unit that includes Precision Castparts performed solidly in the quarter, each reporting earnings and revenue gains from a year before. Overall, operating earnings from those and other divisions rose 67 per cent from a year earlier to $6.9bn, or about $4,190 per share. That exceeded expectations from Wall Street analysts surveyed by Thomson Reuters. “Operating earnings were solid, pretty much across the board,” said Jim Shanahan, an analyst with Edward Jones. “The results are all about improvement in insurance results . . . and strength in Berkshire’s portfolio of energy, transportation, service, retailing and manufacturing businesses that reflect broad US economic strength.” Alongside the strength of its industrials business, which includes Precision and Lubrizol, Berkshire reported higher pre-tax earnings from its divisions that focus on homebuilding and consumers — the latter includes the Duracell battery business.

Banker warns of Herculean task to escape Libor’s tentacles

Deutsche Bank treasurer says shaking free of the benchmark will be a bigger challenge than Brexit Joe Rennison & Robin Wigglesworth

oving global finance away from its reliance on Libor is a Herculean task that could be “bigger than Brexit”, according to bankers and analysts. Dixit Joshi, group treasurer at Deutsche Bank, said the “tentacles” of the disgraced interest rate benchmark stretched from big banks and asset managers all the way to consumers, making the task of moving away from its use more complicated than the UK’s exit from the EU. “I think it is a mammoth exercise with a lot of risk,” he said. “It is not insurmountable but it is complicated. In many ways this is potentially bigger than Brexit.” Mr Joshi sits on the board of the International Swaps and Derivatives Association, one of the industry groups leading the transition from the so-called London interbank offered

rate, or Libor, which was discredited after revelations that traders colluded to rig the benchmark for their benefit. This resulted in hefty settlements between banks and global regulators, and the finance industry is now trying to move from Libor to more tamper-proof alternatives. But Libor remains at the heart of the global financial system, underpinning payments made on at least $420tn worth of derivatives, corporate loans and mortgages. The financial industry is already making plans to transfer loan and derivatives documents across to new interest rates, but Mr Joshi said that work remained to educate everyone whowouldbeaffectedbythetransition. Many mortgages were tied to Libor, he said, which would require educating borrowers on how their mortgage repayments could be affected, changing retail banking systems to accommodate new interest rates and training salespeople to understand the impact on consumers.

Liam Fox warns UK odds-on to crash out of EU without trade deal Trade secretary says European intransigence makes failure more likely David Bond& Rochelle Toplensky

K trade secretary Liam Fox has ramped up the pressure on EU leaders to agree to Theresa May’s Chequers Brexit plan after claiming that Britain was now odds-on to crash out of the bloc without a deal. In an interview, Dr Fox said the European Commission’s “intransigence” made it “60-40 per cent” likely that the UK would have to leave without an agreement next March. “We have set out the basis in which a deal can happen but if the EU decides that the theological obsession of the unelected is to take priority over the economic wellbeing of the people of Europe then it’s a bureaucrats’ Brexit — not a people’s Brexit — then there is only going to be one outcome,” he told the Sunday Times. “It’s up to the EU27 to determine whether they want the EU Commission’s ideological purity to be maintained at the expense of their real economies.” Dr Fox is one of a handful of pro-Leave ministers left in Mrs May’s cabinet following the resignations of the former

foreign secretary Boris Johnson and Brexit minister David Davis last month. While he has issued similar warnings of a no-deal outcome in the past, his latest remarks will raise the stakes for the EU as Mrs May tries to persuade other European leaders to soften their position on Brexit. Last week, the prime minister cut short her summer holiday to meet French president Emmanuel Macron. Meanwhile, other ministers including foreign secretary Jeremy Hunt and Brexit secretary Dominic Raab have embarked on European charm offensives to try to secure support for Mrs May’s Chequers plan. The plan would establish a common rule book for goods with the EU, in effect tying the UK to terms set by Brussels. Another round of negotiations between the UK and commission is scheduled for August 16 and 17. A Number 10 official declined to comment on whether Mrs May supported Dr Fox’s assessment of the talks. The official added that while the government was making preparations for a no-deal outcome, it was still working towards securing

an agreement with the EU. “We remain confident of getting a good deal,” they said. In an article published in a number of European newspapers on August 2, the commission’s chief negotiator Michel Barnier indicated that the EU’s 27 member countries could not agree to a deal which would see the EU lose control of its borders and laws. “The UK wants to keep free movement of goods between us, but not of people and services,” Mr Barnier wrote. “And it proposes to apply EU customs rules without being part of the EU’s legal order.” Following Dr Fox’s interview, a commission spokesperson said it was working “day and night to reach a deal with the United Kingdom”. Some people familiar with the negotiations displayed frustration with his remarks. One said he was “a bit surprised by these comments and numbers by Fox. Barnier has explained the EU position rather clearly a couple days ago.” Much was going well but “[on] essential things [there is] still disagreement.” Mr Fox “simply can’t have it both ways,” he added.

US pension fund suffers big losses on forestry land Red ink at Calpers could run into hundreds of millions of dollars Ben Foldy & Robin Wigglesworth

alpers, the biggest US pension fund, has lost hundreds of millions of dollars from mistimed investments in US forestry land during the months before the 2008 financial crisis, a Financial Times analysis shows. The 1.9m member California Public Employees’ Retirement System headed a group, called Lincoln Timber, that bought 1.4m acres in forestry land in the southern US for $2.38bn in 2007. Last month, it sold nearly all of its remaining holdings — 1.1m acres in east

Texas — for $1.39bn to a group led by CatchMark Timber Trust and including Highland Capital and BTG Pactual’s Timberland Investment Group. Combined with previous disposals, it appears that total sales of the forestry land netted $1.85bn, leaving Calpers and its partners with a $534m loss before taking into account lumber revenues, inflation, management fees and debt servicing costs Many pension funds and endowments were lured into woodland in the past decade by the alternative asset class’s high returns and lack of correlation with other markets. But the Calpers consor-

tium wound up buying land in the southern US just in time for a construction slump that has depressed log prices in the region to this day. “It was just badly structured from day one,” said JJ Jelincic, a former Calpers board member who left the board in January. Another person familiar with the asset said: “Anything that could have gone wrong, did go wrong.” Calpers told the FT it currently held 67 per cent of equity in Lincoln Timber. Calpers declined to comment on its losses or whether its stake had fluctuated over time, but a 67 per cent stake would translate into an estimated $355m loss on the portfolio.

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ANALYSIS Why stubbornness is the secret to Britishness A refusal to take orders explains much about Brexit Britain to an American abroad

eneralising about the British is hazardous. Once, over lunch, I asked two friends — one from Manchester, the other from Yorkshire — how many distinct accents the British Isles contained. In the space of five minutes they came up with 13. None of them were dying dialects spoken by a few ancients in the Hebrides: Geordie, Scouse, Mancunian, Glaswegian, Brummie, West Country, RP, Aberdeen, Cockney — these and others thrive. One thinks of Charles de Gaulle, despairing of governing a country with 246 types of cheese. What unifying threads can bind the culture of a place that has crammed 13 ways of talking — at least 13 — into a place a third the size of Texas? That said, indulge me. I would like to offer a sweeping hypothesis. Having arrived in the UK almost five years ago, and now being about to move back to the US next week, I posit that the British are a pain in the ass. Arse, if you prefer. This is not an insult — on the contrary — nor a throwaway line.

colleagues, especially those of working-class or northern backgrounds, are capable of spectacular bluntness. I remember entering a meeting wearing what must have been a bold outfit, provoking one colleague whom I knew only slightly to ask, seemingly out of real curiosity, whether I had got dressed in the dark. The Brits can call it as they see it. The unruliness is not merely verbal. I have supervised other journalists since I arrived, and my bosses seem pleased enough with my efforts. “Your team seems very happy,” they say. Well, bosses, here is my secret for managing Brits: don’t. You can’t tell these people anything. Does it constitute politeness when your boss — or nominal boss, which is what I have felt like during most of my tenure in the UK — tells you directly to do something, and you nod and say “fine” and then go on exactly as before? On the receiving end it feels more like bullheadedness. Faced with this treatment from the natives, I have come up with a smarter approach. I get the best people I can on to my team and then hide under my desk.

It is an observation and, if not a scientific one, it is at least based on my own experience. The residents of these islands do not like being told what to do. They are stubborn, intractable and uppity. The British political classes, along with their opposite numbers in Brussels, have been re-learning this simple point, from Leavers and Remainers alike, since the June 2016 referendum. Once I grasped it, not just Brexit but the whole heaving complexity of British culture, from its ways of talking to its manners to its humour and politics, became just a little bit clearer. Start with manners. I came to London expecting to be faced with colleagues who were polite and deferential to the point of opacity. The expectation was ingrained in me by watching BBC productions on US public television as a child. Masterpiece Theatre bias has left many Americans of my generation with Alistair Cooke as their template of English people. Mixed with this is a view — widely held in US finance, where I spent a slice of my career — that Englishmen are not quite straight-shooters. An American friend of mine spent a few years working in London for a big Wall Street bank and reported that he did not much care for the place. “I prefer getting stabbed in the front,” he said, pointing to his chest. A vivid image, but not quite what I have found. Many of my

The British, in sum, are not intrinsically polite. They behave politely, and frequently resort to euphemism, because in a country where people take their autonomy seriously, a little formality and deference is only prudent. The phrase “this is quite good” must sometimes stand in for “this is pretty bad” in a place where differences of opinion tend to escalate. This same side of the national character goes some way to explain British humour, which is not defined (as is widely supposed) by irony, but by subversiveness, a desire to deflate pretences of authority or control. One of the contrasts with America that has delighted my wife and me (to say nothing of our children) was that you can make a fart joke in almost any social context in Britain. In America there are certain classes and contexts where bathroom humour is out of place. Work is often one of them. Not so Britain, where you can let it rip (so to speak) wherever you like. Very little is holy here. It is perfectly true that the British are attached to ceremony, to Royal Ascot, the New Year’s Honours list, Elgar and whatever else. But spend time with the British and you realise that this appetite for pomp is the twin of a gut recognition that fine façades are held up with wobbly planks and upholstery tacks.

Robert Armstrong

Bruce Ratner, left, prepares to break ground at Barclays Center, New York, eight years ago, along with other dignitaries including Michael Bloomberg, second left, Bob Diamond, right, and Jay-Z, second right © Getty

Bruce Ratner deal signals decline of New York real estate families Big names giving way to groups backed by institutional investors looking for yield Eric Platt & James Fontanella-Khan

ruce Ratner stood, shovel in hand, near the corner of Flatbush and Atlantic avenues in Brooklyn in March 2010. Flanked by mayor Michael Bloomberg, Barclays’ chief executive Bob Diamond and hiphop artist Jay-Z, he was ready to break ground on the new home for the National Basketball Association’s Brooklyn Nets: Barclays Center. Mr Ratner was by then a familiar figure on the New York scene, scion of a family real estate company, Forest City, which was aiming to make its name as well known as such traditional local property powers as the Dursts, the Speyers and the Rudins. Last week, Forest City was sold for $11.4bn to Canada’s Brookfield Asset Management, and even the buyer could grasp the poignance of the moment. Many of the renowned families of New York real estate were giving ground to companies such as Brookfield, Blackstone and The Related Companies, backed by pensions, endowments and sovereign wealth funds looking for higher yields than could be found in the bond markets. Only a few days after buying out the Ratners, Brookfield struck a deal to take control of Manhattan’s 666 Fifth Avenue, the lossmaking tower purchased at the top of the market for $1.8bn by the Kushner family of New Jersey, now represented in the White House by President Donald Trump’s son-in-law, Jared Kushner. “Thirty years ago, it was an industry largely dominated by families,” said Brian Kingston, chief executive of Brookfield’s property group. Now, the influx of new investors to real estate had “necessitated groups like ours” — which manages about $160bn of property — to oversee the action. “That has brought more discipline to the sector. You don’t see situations of a massive oversup-

ply then a crash. The boom-bust cycle seems to be shallower.” Even before the sale to Brookfield, the Ratners had already seen their voting control in Forest City diluted. Once shareholders approve the sale, their ownership will end. Forest City declined to put Mr Ratner and David LaRue, its chief executive, up for interviews, citing US securities regulations ahead of a shareholder vote. Mr Ratner, who was seen by New Yorkers as the face of a company with roots in Cleveland, had stepped down from Forest City’s subsidiary in New York in 2013 and retired from the board in 2016. Before then, Mr Ratner was instrumental in altering the New York skyline, developing the New York Times tower in midtown Manhattan as well as retail assets in Times Square. But his efforts were more centred on Brooklyn. He spent the 1980s and 1990s developing and building the downtown MetroTech office complex where more than 20,000 people work. He would go on to hammer out a plan for an arena — what is now the Barclays Center — and a sprawling group of towers in 2003 known as Atlantic Yards. The project, the largest in the borough’s history, was hampered by the financial crisis as well as strong opposition from the local community. Only a handful of the residential buildings have been completed. For being one of the most powerful real estate magnates in New York’s cut-throat market, Mr Ratner managed to preserve a reputation for being “one of the good guys”, said Diane Coffey, a managing director at boutique investment bank PJ Solomon, who has known him for four decades. “He was tough, you have to be tough to survive New York’s real estate world, but he had an ability to bring people together and get things done,” said Ms Coffey, who worked together with Mr Ratner in the late 1970s and 1980s in the administration of New York mayor Ed Koch.

The rise of Mr Ratner in the city’s real estate industry partly stems from the lasting connections he made during his years at City Hall, where he served as Mr Koch’s commissioner of the department of public affairs. “He was really getting his feet wet in public service at the time and that helped him to get to know everyone,” said Ms Coffey, who worked as Mr Koch’s chiefof-staff. “Working in City Hall taught him how to bridge the world of politics and business as well as getting to bring people together on big projects.” Mr Ratner remained a close friend of Mr Koch well after leaving the mayor’s office, including working closely with the former mayor in 2011 while he was setting up a statewide redistricting reform supported then by Mr Bloomberg. A former official in the Bloomberg administration who dealt directly with Mr Ratner on a number of big projects, including the development of Atlantic Yards, said the real estate tycoon had some of the deepest political connections in New York. It was no easy feat for someone who was originally from Cleveland. “He was the ultimate socialite, he knew everybody,” said the former Bloomberg administration official. “That’s not usual for real estate people but he was particularly good at the people game. Plus his experience in public office helped him to do deals that faced complex social, political and labour issues, situations that made it difficult executing big development projects.” Ms Coffey said the fights wore on Mr Ratner, who was known for getting into shouting matches. One particular fight with an opponent of Atlantic Yards ultimately led the real estate developer to reconsider his legacy, several of the people who knew him said. While his cousins from Cleveland were developing projects across the US, his daughters did not show an interest in following in his footsteps.

BUSINESS DAY

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NEWS YOU CAN TRUST I MONDAY 06 AUGUST 2018

fivethings

Opinion

for your new week

Weber’s puzzle: Why is Nigeria so religious, yet so poor? GLOBAL PERSPECTIVES

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

few months ago, the popular American preacher TD Jakes came to the church I attend in London. Preaching on leadership and wealth, he said prayer is not leadership and won’t make anyone rich. “If prayers were enough”, he said, “Nigeria would be one of the richest countries in the world”. Most people in the congregation clapped in agreement. Several weeks later, The Times of London wrote an editorial on the relationship between religion and wealth, in which it said: “A period of increasing religiosity in Nigeria heralded a period of falling wealth”. So, Nigeria has become a global case study of how a nation can be deeply religious and yet not prosperous. But where does the idea that religiosity leads to prosperity come from? And why has the causal relationship held in reverse for Nigeria? The major secular source of the idea is Max Weber, the German philosopher and political economist. In his book, The Protestant Ethic and the Spirit of Capitalism, Weber argues that only the “spirit of capitalism” can engender prosperity and that the “spirit” is strongly correlated with religion, particularly Protestantism. But what’s the explanation for Nigeria’s religiosity without prosperity? Well, to explain this puzzle, we must first understand what the “spirit of capitalism “and the “Protestant ethic” mean and, then, examine whether Nigeria’s religiosity induces the spirit of capitalism; in other words, is there a correlation between the religiousness of Nigerians and the ethos that drives a capitalistic or market economy and, thus, prosperity? First, what is the “spirit of capitalism”? Weber drew on the work of Benjamin Franklin, one of America’s founding fathers, who set out key principles, such as “Time is money” and “Credit is money “as well as the virtues of industry, frugality and honesty. Thus, the spirit of capitalism combines two elements (1) the impulse to accumulate wealth and (2) a frugal life-style. The former requires a disciplined labour force and a regularised investment of capital; the latter requires thrift and “this-worldly asceticism”. The idea is that wealth should be accumulated not

for conspicuous or spontaneous consumption but for the betterment of society. But the spirit of capitalism is also ethically driven. Capitalism may be about the greed to accumulate wealth, but it’s greed with a moral underpinning, as evident from reading Adam Smith’s The Wealth of Nations with his The Theory of Moral Sentiments. According to Weber, “the capitalistic economy forces the individual to conform to capitalistic rules of action”, and “the manufacturer who acts counter to these norms will be eliminated from the economic scene just as the worker who cannot adapt himself to them will be thrown into the streets without a job”. In other words, the capitalistic economy is a competitive, no-nonsense one, and only those who play by the rules, that is, who demonstrate the spirit of capitalism–thrift, industry and enterprise – will, in the long run, survive. Weber then goes on to argue that the spirit of capitalism is embodied in the religious values that derive from Calvinism. These values, found in the Bible, include diligence, hard work, self-control, thrift and honesty. The overarching ideas of “duty” and “calling” are common to both capitalism and Christianity. For instance, Ecclesiastes 9:10 says “Whatever your hand finds to do, do it with your might”, and 2 Thessalonians

book, Civilisation: The West and the Rest, the economic historian Niall Ferguson lists what he calls “the Six Killer Apps” that gave the West a competitive edge over others. The “killer apps” are competition; science (the Scientific Revolution preceded the Industrial Revolution); property rights, including the rule of law; medicine (after all, “health is wealth”); consumerism (industrialisation depends on a consumer society) and work ethic. The idea is that the spirit of capitalism and the moral energy of religion, in conjunction with these social, political and economic institutions, drive the capitalistic economy or “commercial society”, as Adam Smith put it, that delivers wealth and prosperity. All of which brings us back to Nigeria. First, we can all agree, I assume, that Nigeria does not have the social, political and economic institutions to support a viable market economy. Nigeria doesn’t have the tradition of rule of law, the property rights, the disciplined and efficient bureaucracy, the social institutions (health, schools, social security etc), the right politico-governance structure, the scientific or technological base, the physical infrastructure base, the market system, the competitive environment etc that can bring about a viable capitalistic economy or a commercial society.

Nigeria doesn’t have the tradition of rule of law, the property rights, the disciplined and efficient bureaucracy, the social institutions (health, schools, social security etc), the right politico-governance structure, the scientific or technological base, the physical infrastructure base, the market system, the competitive environment etc that can bring about a viable capitalistic economy or a commercial society 3:10 puts it more bluntly: “If any would not work, neither should he eat”. The Bible abhors laziness and idleness, as well as profligacy and waste. It sets out the injunctions to save, invest and act with honesty, prudence and discretion in business. Of course, the spirit of capitalism can exist independently of religion, and can be found in other religions apart from Christianity. However, Weber believes that the spirit is particularly associated with the “this-worldly asceticism” found in Calvinism. But the spirit of capitalism and the religious ethic work in conjunction with institutions. Weber lists efficient market system, rule of law and developed bureaucracy among the“preconditions for the development of rational capitalism in Europe”. In his

But these institutions do not emerge by accident. They are products of a cognitive or ideational process and of deliberate policy choices that a country makes. Since Nigeria has not made these choices, we can say that it lacks the spirit of capitalism necessary to do so. Finally, we can also say that, since, according to Weber, there is a strong link between religious values and the spirit of capitalism, Nigeria’s religiosity lacks the moral fervour and drive to engender a viable capitalistic economy and thus prosperity. Now, let’s briefly illustrate all this with a few examples. Take the two elements of the spirit of capitalism: the accumulation of wealth and thrift. Nigeria is an oil-dependent mono-economy that has failed woefully to diversify.

Once it discovered oil in the 1970s, it abandoned all other economic sectors, including agriculture. A capitalistic economy doesn’t behave like that; it fires on all economic cylinders, not just one, in a bid to accumulate wealth. What about thrift? Well, Nigeria is a profligate country; it hardly saves or invests but rather borrows and spends. All the successful Asian countries, including China, financed investment out of savings. Nigeria could easily have built the infrastructure for a strong economywith all the money it made from oil. But, alas, it didn’t, but squandered the money. That’s not how a capitalistic economy behaves. At the individual level, Nigerians indulge in conspicuous consumption. A few years ago, there was an event in Kenya. All the prominent Nigerians that attended went in their private jets to the amazement and amusement of Kenyan journalists. Weber would argue that such behaviour is inconsistent with the spirit of capitalism and the Protestant values. And what about work ethic? No country has ever developed without an efficient bureaucracy. The economic success of Singapore and China is partly associated with the quality of their civil service. But Nigeria has a dysfunctional bureaucracy. The following are words used by the Office of the Head of Service of the Federation, in various press releases, to describe federal civil servants: “habitual late coming”, “truancy”, “lukewarm and shoddy attitude to the discharge of duties” and “corrupt practices”. Yet Nigeria is a deeply religious country, where everyone wears their religion on their face. But the work ethic of most of the people is not consistent with the “duty in calling” associated with religion and the spirit of capitalism. Truth is, religion has failed to impact positively on governance in Nigeria. The Bible says, “Righteousness exalts a nation”, and that “When the righteous are in authority, the people rejoice”. But these Biblical blessings continue to elude Nigeria. Why? Well, because there is so much unrighteousness, injustice, oppression and abuse of power in the country. A deeply religious country that produces the 100th richest person in the world and yet, at the same time, has the largest number of extremely poor people in the world, according to the Brookings Institution, certainly has a problem that should scar its conscience. Nigeria may be a deeply religious country, but its religiosity is shallow; it doesn’t inspire the spirit of capitalism needed to generate wealth and prosperity and tackle poverty. Sadly, Nigeria’s religiosity erodes, rather than help, prosperity!

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