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Akinwunmi Ambode, governor, Lagos State, presenting the 2019 Budget to the State House of Assembly, at the Assembly Complex, Alausa, Ikeja, Lagos, yesterday.

NGUS JAN 29 2020 364.65

Niger Delta oil reserves half-way through their lifespan …analysts stress need to increase deepwater exploration to replace reserves

Rising unemployment, poverty, insecurity A worry voters 10 days to elections W

ISAAC ANYAOGU

s at December 2017, a total of 187 blocks had been opened in the Niger Delta comprising 46 Oil Prospecting Continues on page 38

Inside

MICHEAL ANI

ith the 2019 presidential election barely 10 days away, reports from local and international research firms

tracked by BusinessDay indicate that rising unemployment, poverty and insecurity in Nigeria are a major concern for voters. Buhari, Nigeria’s incumbent president and candidate of the ruling All Progressives Congress (APC), is seeking re-election for

another term of four years in the presidential elections slated for February 16. His main challenger is the opposition candidate Atiku Abubakar of the People’s Democratic Party (PDP). Nigeria’s unemployment rate has soared since Buhari took

over in 2015, rising from 8.2 percent to 23.1 percent in the third quarter of 2018, according to the most recent data. Another 20 percent of the working-age population is un-

Continues on page 38

Buhari’s election vulnerability exposed as P. 2 disquiet over joblessness grows Apapa-Ijora Bridge to be open to traffic tomorrow P. 39 - Contractor

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The fiscal challenge and the 2019 window of opportunity BusinessDay at the Social Media Week L-R: Jay Alabraba, co-founder and director, business development, Paga Tech; Olayinka David-West, academic director and DFS lead, Lagos Business School; Babajide Sanwo-Olu, All Progressives Congress, (APC) gubernatorial candidate in Lagos State; Lehle Balde, anchor, financial inclusion today, BusinessDay Media; Nurudeen Abubakar Zauro, technical advisor, digital financial inclusion, financial inclusion secretariat, development finance department, Central Bank of Nigeria (CBN), and Nkem Okocha, founder, Mamamoni, at the Social Media Week themed ‘Inclusion for All: Making Financial Inclusion a Reality for Nigeria’ in Lagos, yesterday. Pic by David Apara

Lagos airport road, Oshodi transport inter-change for completion

…as Ambode finally presents N852.3bn budget for 2019

JOSHUA BASSEY

ngoing Lagos international airport road expansion and the Oshodi transport inter-change are listed among major projects to be funded to completion as Governor Akinwunmi Ambode finally presented the Lagos State’s 2019 budget estimate of N852.316 billion to the House of Assembly yesterday. The two projects which are in their advanced stages of construction, upon completion, would impact positively on Nigeria’s international image and add to the quality of lives of the citizens with respect to public transport system in Nigeria’s economic capital. The Oshodi transport inter-change project would consolidate about 13 intracity and inter-state bus parks into three multi-storey terminals, providing standard facilities including shopping mall, waiting area, loading bays, ticketing stands, drivers’ lounge, parking areas, rest-

rooms, accessible walkways and pedestrian sky-walks linking all the terminals. The budget presentation, Tuesday, came after nearly two months of back and forth arguments between the executive and legislative arms of the state government, leading to a threat last week by the lawmakers to impeach Ambode. The rift was eventually resolved on Sunday following the intervention of the leadership of the All Progressives Congress (APC) and the Governor’s Advisory Council (GAC) led by Bola Tinubu, a former governor of the state (1999-2007). The budget consists of N462.757 billion capital expenditure and N389.560 billion recurrent expenditure components, representing 54/46 capital/recurrent ratio. The projected total revenue in the budget, according to Ambode, is N775.231 billion, of which N606.291 billion is expected to be generated internally. Also, N168.940 billion is expected from federal transfers while a total of N77.086

billion would be sourced through deficit financing with the state’s medium term expenditure framework. Giving details of what informed the budget size, Ambode said the performance of the 2018 budget of N1.046trn as at November 2018 stood at 60 percent owing to reduction in revenue projections, while the total revenue stood at N530.192 billion. “In the outgoing year, however, we experienced a reduction in our revenue projections, which affected our projected performance and our desired implementation of the 2018 budget,” Ambode said. “The overall budget performance as at November 2018 stood at 60 percent/ N574,206 billion with actual cumulative total revenue of N530,192 billion/64 percent; capital expenditure closed at N311,930 billion/49 percent and recurrent expenditure performed at N262,276 billion/82 percent,” he said.

•Continues online at www.businessday.ng

Buhari’s election vulnerability exposed as disquiet over joblessness grows NEIL MUNSHI, FT

au Umar said he had barely managed to earn $3 on a recent weekday at his openair barbershop, which operates under a sheet of tin hanging off a half-built building in Kano. A few years ago, he lamented, he had made five or more times that amount in a day. Thebarberpinnedtheblame for the plunge in his income on PresidentMuhammaduBuhari, who he said was guilty of mismanagement that had sapped people’s earnings and turned even a haircut into a luxury. “Buhari promised us, but he couldn’t do it — that’s why we can’t vote for him,”

said Mr Umar, 26. Buhari is seeking re-election on February 16 in Africa’s most populous nation and his record on jobs is one of his greatest vulnerabilities. Running against him is former vice-president Atiku Abubakar, a wealthy businessman whose pointed campaign slogan is “Let’s Get Nigeria Working Again”. Umar said he knew few people with steady employment in Kano, a city of 4m that is the commercial centre of the north — and a microcosm of a national problem. Since Buhari took office in 2015 the unemployment rate in Africa’s largest economy has soared, rising from 8.2

per cent to 23.1 per cent in the third quarter of 2018, according to the most recent data. Another fifth of the working-age population are underemployed. For young people aged 15 to 35, who make up more than half of registered voters, the figures are even worse: 55.4 per cent are unemployed or underemployed. Abdulmalik Kabir, a 32-year-old market trader who had just finished a shave in the barber shop, said: “I voted for Buhari in 2015 and we were expecting him to do the right thing for Nigerians, but now we know . . . he is ruining Nigeria.” At a business forum in

Continues on page 38

NONSO OBIKILI Obikili is the chief economist at BusinessDay. His research primarily focuses on African economic history and political economy. He earned his PhD in economics from Binghamton University and is a director at the Turgot Centre for Economics and Policy Research (TCEPR). He writes from Abuja.

s the president read the budget speech a few days before the end of 2018, one thought ran through my mind: “This budget seems unimplementable. The revenue projections are unlikely to be met.” As a recap, the budget assumes overall revenue of N6.97trn in 2019, with N3.73trn expected to come from oil revenues, N1.39trn from non-oil revenues, and N1.225trn from other sources. Oil revenues projections are unlikely to be met as the production target of 2.3m barrels per day has not been achieved in a long time and looks unlikely even if you include condensate and the new Egina platform. The oil price benchmark is also problematic. The actual oil price had already fallen below the $60 per barrel budget benchmark while the president was reading the speech. It may go back up, but it may not. As for non-oil revenue, the projections continue with the trend of an over-optimist. If you throw in the near record deficit of the already over-optimistic budget and the fraction of actual revenues spent servicing already existing debt in the last budget cycle, then the phrase “fiscal distress” does not seem too far-fetched. It is easy to get lost analyzing the details of this budget but a look at the trend in budget revenue and spending makes clear what the fiscal challenge is. First, a bit of history. In 1957 Nigeria started producing crude oil mostly for exports and revenue to the government from crude

oil quickly outpaced every other revenue stream. By 1974 crude oil accounted for 93 percent of all exports and 32 percent of the economy. By 1980 crude oil revenue accounted for an estimated 97 percent of all inflows into the federation account. By the end of our first oil boom in 1980, Nigeria had officially become an oil economy and the fiscal structure had shifted to how to effectively distribute and utilize these revenues. A key point is that by the end of the 1970s and through the 1980s, Nigeria was producing roughly 2 million barrels of crude oil per day. Fast-forward through time and the crude oil industry has remained relatively constant. In the 1990s we produced roughly 2 million barrels per day on average. Same 2 million barrels per day in the 2000s. The average over the last five years? Just a little bit below our regular 2 million barrels per day. The country and the rest of the economy have, however, changed rapidly over the same period. The population has grown from about 58 million in 1970 to over 190 million in 2019. Officially anyway. The economy has also ballooned in real terms from $12bn to $375bn between 1970 and 2018, mostly driven by the nonoil economy. If you think about it systematically, the fiscal challenge is clear: the government has survived based on its ability to collect and distribute oil revenue, but the oil industry has remained relatively stagnant while the population and rest of the economy have grown. The government is therefore squeezed. The trend is towards a day when oil revenue will no longer be enough to perform even the most basic government functions. We tend to focus on the challenges of the booms and busts with regards to the oil price but the real fiscal challenge is very clear. The government needs to transform from one that is structured based on collecting and distributing crude oil revenues to one that is structured on collecting and spending broader tax revenue. Simply put, the government needs to learn how to collect taxes from the economy in general. To get there, the government needs more fundamental

tax reform redefining the structure away from sharing oil rents and redefining the rules determining which level of government collects what and keeps what. Unfortunately, but also fortunately, we are in a democracy and such reforms will demand a constitutional process requiring all parties to participate. Such reform is also likely to create a lot of losers, in terms of governments that will get less money in the short term. For example, consider a case where a 15 percent derivation is paid to host states from corporate income tax collections to incentivize state governments to enforce compliance. In the short term, states with relatively more economic activity will gain but states with relatively lower economic activity will lose. If you crunch the numbers, the losers outnumber the winners. Why would losers then vote for tax reform that leaves them worse off? Indeed, any tax reform that tries to shift the tax structure from an oil sharing structure to a tax sharing structure is likely to result in these kinds of winner-loser dynamics, which in English can be translated as a political minefield. A minefield that will require the most adept political calculations. Still, 2019 offers the opportunity for a serious government, either the current one or a new one if there is a change after elections, to start the inevitable discussion about tax reform. The challenge for that government is how to deliver tax reform in a political environment that is likely to create many losers from the reform. This is a challenge that we as a country must face regardless of who wins. We have a current strategy of ignoring the challenge and kicking the can down the road with debt. That window is unlikely to be open for much longer.

Next: Dr. Abimbola Agboluaje writes on Friday. Agboluaje, managing director at WNT Capitas, a strategic communications and investment risk consultancy, completed a PhD dissertation on development aid conditionality and structural adjustment in Africa at the University of Cambridge in 2005.

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External reserves to fall 7.9% in 2019 HOPE MOSES-ASHIKE GBEMI FAMINU

igeria’s external reserves are projected to decline to $39.75 billion with expected decline in crude oil prices to $54 per barrel in 2019. Foreign reserves stood at $43.17 billion as of February 1, 2019, according to data on the Central Bank of Nigeria (CBN) website. The price of crude oil (Brent) traded at $62.49 per barrel Tuesday. “The fate of the Nigerian economy still hangs on hydrocarbons – volume produced and exported vis-à-vis the international oil market price,” said Biodun Adedipe, founder/chief consultant of B. Adedipe Associates, on the sidelines of fifth annual Economic Outlook, by the Chartered Institute of Bankers of Nigeria (CIBN). In his 2019 macroeconomic expectations, Adedipe said the economy was likely to grow at between 2.65 percent and 2.75 percent in 2019. World Bank GDP growth projection is 2.2 percent for 2019, and 2.4 percent for 2020/21, while International Monetary Fund (IMF), a Washington-based financial institution, expects Nigeria to grow by 2.0 percent in the year.

It projects inflation rate to rise to 13.05 percent in 2019, interest rate to be in double digit and the naira dollar exchange rate to trade around N306/$ at the official rate and N363/$ at the Nigerian Autonomous Foreign Exchange (NAFEX) window. “The resilience and staying power of the average Nigerian provides growth opportunities for those that look and move in the right direction. Nigeria is the right place for any forward thinking entrepreneur and investor to be,” Adedipe said. The major drivers of Nigeria’s GDP are Agriculture, Trade, ICT, Mining and Quarrying, Manufacturing, and Real Estate. These together accounted for 80.5 percent of Q3’18 GDP. There were estimated 198.56 million Nigerians as of Thursday, January 10, 2019, growing at 2.6 percent annually, 51.9 percent living in urban areas, and 17.9 years median age. Nigeria ranked seventh most populated country, 2.6 percent of world population and fertility rate of 5.67. There is need for massive investment in infrastructure still, he said, adding that more aggressive revenue drive, including restructuring of Joint Venture Oil Assets to reduce government’s stake to maxi-

mum of 40 percent. Nigeria needs to maintain stricter fiscal discipline – Treasury Single Account (TSA), Government Integrated Financial Management Information System (GIFMIS) and Integrated Payroll and Personnel Information System (IPPIS). On monetary side, key issues remain continued ban on 41 ineligible items for official foreign exchange, which could be increased to 50, to drive shift in imports composition. Capital goods accounted for 29.91 percent of imports during first to third quarters of 2018, processed fuel and lubricants 27.86 percent, capital goods, food imports 11.07 percent and consumer goods 4.48 percent. “The country needs to rethink its strategy of handling some of its economic activities,” Uche Olowu, president/ chairman of Council, Chartered Institute of Bankers of Nigeria, said on Tuesday. He was concerned that delays in budget approval and signing had become predominant that it was not available for implementation in most cases in the first quarter and rare cases a better part of the second quarter over the past 15 years. Incidentally, this year is not being an exception.

90% non-sensitive materials now in our possession - Oyo REC AKINREMI FEYISIPO, Ibadan

ndependent National Electoral Commission (INEC), Oyo State, said Tuesday, that it had received about 90 percent of non-sensitive materials needed for the conduct of the 2019 general elections. Resident Electoral Commissioner in the state, Mutiu Agboke, disclosed this at a press conference in Ibadan, saying, “About 90 percent non-sensitive materials have been received at the state level. We have received voting cubicles, generating sets and other materials and these are already being deployed to local government INEC offices. “Ballot for the presidential/ governorship elec-

tion will be in red, senatorial/house of Assembly has black, while House of Representatives is to be green ballot boxes, respectively. “It is expected that, sensitive materials will be coming in as from next week and party agents together with journalists will also be invited to witness the distribution of these materials.” The elections are billed to take place on Saturday, February 16, and Saturday, March 2, in the country. He also disclosed that collation centre building for the coming elections is presently being constructed at the state office and should be ready for use before the commencement of the general election. He however lamented

that 846,417 uncollected permanent voter’s cards (PVCs) were still in the custody of INEC. “We have been able to receive a total number of 2,962,646 PVCs from 2015 till date. Out of this figure, 2,116,229 PVCs have so far been collected. “However, we still have a total number of 846,417 PVCs left uncollected. In Oyo State, we have a total number of 2,934,107 registered voters. Since the use of PVCs and smart card readers (SCRs) remain the game changer in the coming election, the commission has a total figure of 7,336 SCRs available out of which 6,390 SCRs will be required to take care of 6,390 polling units in Oyo State.

Half of world’s population now using Internet MIKE OCHONMA

ore than half the world’s population is using the Internet for the first time, marking an important milestone for connecting people to the digital economy. The International Telecommunications Union (ITU) estimates that, by the end of 2018, 51.2% of the global population, or 3.9-billion people, were using the Internet. “The ITU’s global and regional estimates for 2018 are a pointer to the great strides the world is making towards

building a more inclusive global information society,” says ITU secretary-general Houlin Zhao. “We have surpassed the 50:50 milestone for Internet use. This represents an important step. However, far too many people around the world are still waiting to reap the benefits of the digital economy.” Slow and steady growth in developed countries contributed to the increase in the percentage of the world’s population now using the Internet, growing from 51.3% in 2005 to 80.9% in 2018.

Internet use in developing countries surged from 7.7% in 2005 to 45.3% by the end of 2018, the latest global and regional ITU estimates show. The strongest growth was reported in Africa, where the percentage of people using the Internet increased from 2.1% in 2005 to 24.4% in 2018. Despite this, penetration on the continent remains the lowest worldwide at 24%, compared with Europe’s 80%. However, Europe, along with the Americas, with 69.6% of the population using the Internet, registered the lowest growth rates.

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comment Ndigbo should be wary of Fani-Kayode and Obasanjo

Tochukwu Ezukanma

n his earlier writings, Femi FaniKayode venomously castigated the Igbo. He accused us of excessive greed and unbridled tribalism, and indicted us for virtually everything that ever went wrong in Nigeria. Olusegun Obasanjo, both as a military head of state and a civilian president did not demonstrate any respect for Igbo legitimate aspirations and/or ensure that we got what was equitably ours. Neither of these men is a friend of the Igbo. Ironically, lately, they are pretending to be solicitous of the Igbo. FaniKayode took to ingratiating Nnamdi Kanu and pandering to the forces of neo-Biafranism. And in a recent BBC interview, Olusegun Obasanjo justified Igbo anger against Nigeria by reeling out a litany of reasons why the Igbo should be enraged at Nigeria. This is most insidious because Igbo anger against Nigeria is not, in any way, helping the Igbo. It traps us in a political limbo, where we refuse to enthusiastically accept Nigeria, and instead, cling to an imaginary country, Biafra. Therefore, stoking Igbo rage against Nigerian is extremely dangerous to the Igbo. This is exactly what these two men are doing; the Igbo must be extremely wary of them Most Igbo are very bitter at Nigeria because they have refused to view the Nigerian reality objectively. For our own good, we need to objectively analysis the Nigerian reality, and put our

anger in perspective. No one can, at the same time, be a victor and a loser. After every war, the winner luxuriates in the thrill of victory and the loser suffers the misery of defeat. History has demonstrated that, irrespective of the magnanimity and benevolence of the victor, the loser must bear the brunt of defeat. We find examples of this in the American South, after the American civil war; Germany, after the two World Wars; and South Vietnam, after the triumph of the North Vietnamese. Quite naturally, the Igbo paid the price of not only defeat but unconditional surrender: the seizure of Igbo property as abandoned property, a banking policy that further impoverished us, etc However, buoyed by the glimmer of hope inherent in the emergent order dictated by Gowon’s no victor, no vanquished policy, we, uncomplainingly, mourned the dead, bind up our wounds, and wiped off the smears of blood and streaks of tears. And with solace found in our faith in God and consolation found in our hard-edged work ethics, bubbling entrepreneurial spirit, irrepressible optimism and love for life; we set out once more to reestablish ourselves. Despite discriminatory practices that blighted the no victor, no vanquished policy, there was still a phoenix-like regeneration of the Igbo in the years following the end of the war. And by 1979, we had also re-established ourselves politically. However, since after the 2nd Republic, there has been a steady erosion of Igbo political accomplishments. It is now evident that the more time we have, since the end of the civil war, to re-establish ourselves, the more troubled our politics becomes; more politically irrelevant we become; more angry we are at Nigeria; and the more we blame every other Nigerian for hating us and victimizing us and every Nigerian government for marginalizing us. This is because there was an attitudinal shift among the Igbo,

especially the Igbo power elite. After the civil war, the Igbo political elite were dominated by those whose concept of Nigeria and the place of the Igbo in Nigeria were formed before Biafra. Thus, their attitude towards Nigeria was not shaped by the falsehood of the Biafran propaganda. So, although we were at a nadir of powerlessness and helplessness, they approached politics with a positive attitude: confidence, trust and optimism in the Nigerian system. They believed that it works for all Nigerians within the limits of human weaknesses. With that hopeful attitude, they engendered an Igbo re-emergence from the ashes of war. And then, the Igbo were less angry, felt less victimized and hauled less blames at other Nigerians and Nigerian governments. The present Igbo political elite’s concept of Nigeria and the place of the Igbo in Nigeria were informed and shaped by the falsehood of the Biafran propaganda. The Biafran propaganda taught us that we are a harmlessness and blameless people encircled by a band of evil ethnic groups that not only refused to appreciate our enormous contribution to Nigeria but, in their fervid hatred for us, routinely betrayed us and massacred us, and finally, drove us out of Nigeria. And, as we left and found our own country, Biafra, still driven by their implacable animosity for us, they pursued us to our country to fight us and exterminate us. Therefore, the war was a war of survival that the Igbo must win or face extermination by a Hausa/ Fulani led posse of blood-thirsty ethnic groups of Nigerians. The enduring hold of the Biafran propaganda on Igbo minds makes the Igbo suspicion of other Nigerians. It makes us wallow in self-pity and feel like victims. It is this attitude of suspicion, self-pity and victimhood – and its intrinsic persecution complex - that explains the present problems of the Igbo in Nigerian politics. We feel surrounded by enemies united in a conspiracy to undermine our every

‘

For our own good, we need to objectively analysis the Nigerian reality, and put our anger in perspective

progress in every facet of the Nigerian social life. We feel that we are forced by the loss of the civil war to continue to co-exist in one country with groups hell-bent on our destruction. No wonder, we feel persecuted and victimized by other Nigerians and every Nigerian government and its policies. So, what in the past we saw as challenges to success, we now see as confirmations for the universal hatred against us. Where in the past we saw the need for self-assertion, and even, brinkmanship, or negotiations and horse-trading, we now see the rationale for secession. In Nigerian unity, where we once saw opportunities and benefits, we now see gloom and doom. With such a mindset, why would the Igbo not be extremely angry at Nigeria? This blazing anger against Nigeria is most detriment to us: it subverts our progress, especially, in politics. We need to discipline our emotions, and objectively, deal with our problems in Nigeria. As, we do not, and cannot, have another country, we should wholeheartedly accept Nigeria, wholly assert ourselves and stake claim to all that is legitimately ours; and direct our activism, not towards a daydream country, Biafra, but in demand for all our entitlements in Nigeria. Fani-Kayode and Obasanjo, by justifying Igbo bitterness against Nigeria are doing the Igbo a monumental disservice. They are reinforcing the Igbo political limbo – a ridiculous, retrogressive indeterminate state - where we reject a real country and grasp for an imaginary one. Our lack of total commitment to Nigeria retards our political strides in politics. And the quest for Biafra will yield us nothing but destruction and death. Therefore, the likes of Obasanjo and Fani-Kayode, in fanning Igbo anger against Nigeria, are nudging the Igbo towards a political suicidal. Ezukanma wrote from Lagos, Nigeria maciln18@yahoo.com 0803 529 2908

Lagos, taxation and economic development

RASAK MUSBAU

everal years ago, 4th President of the United States of America, James Madison said that the power of taxing people and their property is essential to the very existence of government. Similarly, Franklin D. Roosevelt, the only US President to serve 3 terms also underscored the importance of tax when he asserted that: “Taxes, after all, are dues that we pay for the privileges of membership in an organized society.” Roosevelt relied on taxes, particularly from rich taxpayers, to fund programs designed to pull the country out of the Great Depression. The various New Deal revenue acts in the mid-1930s substantially boosted the tax burden on the wealthy, raising the effective income tax rate on the top 1% from 6.8% in 1932 to 15.7% in 1937. Scholars of development economics have shed a sea of ink on the issue of taxation and its import to economic development. Amidst the penumbrae of arguments, the central tendency is that taxation is the price people pay for government services. Most often, because of the inherent

tendency of people to resist payment of tax for essential services, taxes are compulsory payments individuals make to government. The element of coercion is justifiable in that legitimate government activities can hardly be carried out without fiscal resources. These activities include defense, protection of life, property and individual liberty - which are fundamental rights enshrined in the Nigerian constitution. Irrespective of the school of thought one belongs, one is doubtless bound to contribute a certain portion of his income to government for the provision of essential social services. Similarly, it is the duty of government to apply such monies in the most efficient way to improve the living standards of the people. Since the return of democratic dispensation in 1999, successive administrations in Lagos State have had to contend with the knotty issue of attempting to boost the State Internally Generated Revenue (IGR) through the implementation of a viable and sustainable tax system. With about N600 million in 1999, when Asiwaju Bola Tinubu took over, the IGR rose to between N10 billion and N11 billion by 2007 when he left office. With continuing reforms in the internal revenue system, aggressive tax drive, capacity building and professionalism of the Lagos Internal Revenue Service (LIRS), the IGR of the state had by 2015 when Mr. Babatunde Fashola (SAN) left office, risen to about N23 billion monthly. What has been the secret of Lagos’s economic growth under the current administration is a revenue enhancement reform which has achieved higher IGR and providing a sustainable financial base for bridging the huge infrastructure deficit

estimated at over US$50bn. Implementation of financial policy such as widening of the State tax net, expansion of tax base, updating/upgrading of databases, improvement of administrative processes and operational efficiencies, among others has so far achieved an average monthly Internally Generated Revenue (IGR) of N34billion in 2018 compared to monthly averages of the last three years. In could be recalled that in just two and half years, the Lagos Government constructed Abule-Egba and Ajah Bridges among several other capital projects. There is vast empirical evidence that taxation correlates highly with economic growth in addition to some spill-over effect on effective service delivery. Lagos is a good example for research work in this direction. At the global level, no economy in history has ever achieved high per capital growth without a sustainable tax system. In fact the advanced capitalist economies depend heavily on taxation in running their economies. In Europe, U.S.A and Latin America, tax evasion is a punishable offence without the option of fine. The global economic power of Japan is Personal Income Tax. Taxes available to state governments to collect from the citizens across the country include: Personal Income Tax in form of Pay-As-YouEarn(PAYE) or Direct Taxation(Self-Assessment), withholding Tax (Individuals Only), Capital Gains Tax (Individuals Only), Stamp Duties on instrument executed by individuals, Poola Betting, Lotteries Gaming and Casino Taxes, Road Taxes, Business premises registration fee in respect of urban and rural areas which includes registration fees and per annum for the renewals as fixed by

each state, Development Levy (individuals only) not more than 100 per annum on all taxable individuals and Naming of street registration fees in the State Capital. Other classification of taxes are: Right of Occupancy fees on lands owned by the State Government in urban areas of the State, Market Taxes and Levies where State finance is involved, Land use Charge, where applicable, Entertainment Tax, where applicable, Environmental (Ecological) fee or levy, Hotel, Restaurant or Event Centre Consumption Tax, where applicable, Signage and Mobile Advertisement, jointly collected by the State and Local Government among others. It is, thus, surprising that today many States and Local Governments still give the impression that their entire operations depend on the statutory Federal allocation. It is an aberration that even the Federal Government still depends heavily on oil. In Lagos, the impacts of enhanced revenue base in development strides in the state are quite visible to all. For instance, in 2016 alone, the state government commissioned 114 roads across the state while another 181 roads were built in 2017. In the health sector, 14 additional LASAMBUS operational points were created while 26 new ambulances for General Hospitals and LASUTH as well as 20 new Mobile Intensive Care Units were inaugurated. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Musbau is of Features Unit, Lagos State Ministry of Information and Strategy, Alausa, Ikeja

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Mission drift and microfinance in Nigeria Small Business handbook

Emeka Osuji

do hope my audience, particularly those interested in microfinancing, will find time in this most unpredictable election season, to read this stuff. Elections have sadly become a dangerous ritual in Nigeria, spinning out sadness and pain to many as they listen to promises that die on election day. Elections have become one of the “poverty generators” in Nigeria that need to be curbed. Everything stops so that we can spend billions to hold elections that bring no real benefits to the needy people of our country. If we do execute this one successfully, then it would be time to seek alternative ways of managing our country for the benefit of all. Those at privileged positions, who are using the commonweal to terrorize the rest of us, should look around and see how erstwhile powerful men, who ran things in Nigeria, are now begging for help and none seems to come. What goes around comes around! Now to the issue of the day – the apparent loss of focus, technically called mission drift, in the microfinance industry. The microfinance industry in Nigeria has, no doubt, arrived at the inevitable stage of consolidation – one of the four stages all microfinance industries must pass through. Others are the pioneer stage of the industry, which is characterised by a few early not-for-profit and commercial lenders who book microloans for the poorer members of society, especially women. At this stage, most of these lenders often operate illegally, charging interest rates that are higher than those permitted by the existing laws.

There is also the Expansion or Breakout stage, which is essentially the growth stage. Here, players come in to take advantage of the opportunities perceived to exist in the sector. The number of players increases very rapidly at this stage. This stage is usually followed by the consolidation stage when a number of forces limit the expansion of the industry and impose a process of consolidation. The final stage is the maturity stage. The Nigerian industry has not reached maturity. A number of factors have coalesced to drive the development of the microfinance industry in Nigeria. The first is the fact that growth cannot continue indefinitely in a market with finite number of clients. The number of creditworthy borrowers is not infinite. This puts a break on the rapid growth that characterises the breakout stage. The reason for the slowdown is that competition, which heightens with the influx of operators, thins out margins and cost control becomes a major focus while service delivery suffers. At this point also, consolidation may proceed naturally but quite often, it is compelled by government to restore sanity in the industry. This probably explains the recent directive of the Central Bank of Nigeria on the recapitalization of microfinance bank. A mild threat to consolidate. We have experienced consolidation in other industries in Nigeria. The banking industry was forcefully consolidated by the Central Bank under Governor Soludo. Our experience was that consolidation is not a tea party. Most Nigerians want to do their own thing and so there will be lethargy to consolidate. Besides, the microfinance industry is populated by very weak institutions that can hardly attract any consolidation partner. So we expect some level of voluntary liquidation and attrition of some sort. I had indicated in an early contribution in this column that the Nigerian microfinance industry suffered a somewhat stunted growth during its growth stage. It didn’t grow as fast as it ought to grow. There has really never been more than 1,000 active microfinance banks in Nigeria at any time, despite the names and

numbers reported. The CBN and NDIC will tell you that they often relicense an operator only to get there and discover that the operator had closed shop long before the CBN hammer. Yet their name was in the books till the policy action. The number has hovered around this 1,000 but often actually below it. Compared to the South African microfinance sector, which at its breakout stage, had over 3,500 operators in the scene. By the time they consolidated in 2000, only 1,330 microlenders were registered and in operation. With about 1,000 largely weak operators currently in the Nigerian space, it is doubtful that Nigeria will boast of much more than one hundred operators at the end of the current consolidation process. Given our population size and the large numbers of poor people that have made us the poverty headquarters of mankind and the laughing stock of even poor nations, we should have had so many more microlenders before consolidation begins. It does appear that the Nigerian microfinance sector has suffered from the destructive illness called Mission Drift, an ailment that has prevented many Nigerian institutions from fulfilling their mandates. Every organization, private or public, for-profit or not-for-profit, has a mission. This is the reason for their existence. It is often, but not necessarily always, captured in a Mission Statement – the clear and concise statement that says what the organization does or intends to do, for whom it intends to do it and, in many cases, where. Even whole industries or economic sectors and agents, have or ought to have clear missions, whether stated in writing or not. The mission is that guiding light that helps an organization to keep its feet within the box. Mission drift occurs when an organization finds that it has moved unconsciously away from its stated mission or that it has, by its own design, ventured away from its mission into new areas that were not originally in its plan. Although some studies have found evidence to suggest that sustainable microfinance banks in the country tend to be more focused

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Evidently, poverty has worsened over the past few years irrespective of the efforts of the microfinance industry

on poor clients, which implies increase in the depth of outreach, they were unable to conclude that the microfinance industry in Nigeria does experience mission drift. This finding by some scholars may appear contrary to observed reality. By mere observation, there is evidence to show that many operators, especially the unit microfinance banks, have long since moved away from the original mission of financing the very poor, especially women. They have tended to focus on the commercial rather than the social aspects of their mission. Commercial microfinance actually has a limited interest in the social aspects of microfinance. Thus, its impact on poverty may be limited, just as its focus on the poor is diluted. The impact of the evident mission drift among operators may have been doused by the influence of the big operators, which actually do real microfinancing. They control the larger market share and may have impacted the studies that found no mission drift in our microfinance sector. This drift has made their impact not to be felt as it ought to be. Evidently, poverty has worsened over the past few years irrespective of the efforts of the microfinance industry. Indeed, there seems to have been no dent on poverty in the country since the introduction of microfinance. Although we must note that there are so many reasons why poverty has multiplied in Nigeria, including the misfortune of successive, anti-people governments and policies. During the past several years, many small operators have simply become micro commercial banks, mimicking the failed strategies adopted by commercial banks to fund the poor. I must add that it is not completely their fault. The economy stopped expanding long ago and so the pool of economically viable active poor dried up. Commercial microfinance is not charity. I believe this why the CBN is going back to the Peoples Bank idea – to provide the social dimension to microfinancing. Dr Emeka Osuji, School of Management and Social Sciences, Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

2019 – The year of automation Dermot O’Connell

e are surrounded by data, which is being constantly generated by billions of connected devices. Analyst firm, Gartner, estimates there will be 20.4 billion connected objects by 2020, all containing sensors generating data from the environment around them and the interactions they monitor and measure. This on going data generation, gathering and analysis is the fuel behind digital transformation, but if data is the fuel, and digital transformation is the vehicle, then automation is the engine. In 2019, Forrester predict that automation “will become the tip of the digital transformation spear, impacting everything from infrastructure to customers to business models. “The analyst house goes further to say that more than 40 percent of enterprises will create state-of-the-art digital workers by 2019, by combining AI with technologies such as robotic process automation (RPA). It also concludes that by 2019,automation will eliminate 20percent of all service desk interactions thanks to a successful combination of cognitive systems, RPA, and chatbot technologies. So, what does this tell us? It tells us that next year automation will provide the key for businesses to accelerate their digital transformation journey, and that very

soon we will begin to engage with machines not only with more regularity and in a more sophisticated fashion, but also be increasingly reliant on the real-time, unassisted decisions they make. You only need to look at the automotive industry to see just how close we are to being dependent on automation in our everyday lives. Autonomous driving is now not the stuff of science fiction, and self-driving cars that are in-built with automated steering and cruise control; that rely on data generated from proximity sensors and geospatial mapping systems to safely guide us to our destinations are already on our public roads. Indeed, the race for which company and country cracks autonomous driving first is picking up pace, with some states in the U.S., as well as the U.K., Germany, South Korea and Singapore already enacting legislation to allow autonomous vehicles to be tested. Another industry leading the way in automation is the industrial sector. Where industrial automation leads, other sectors eventually follow. Think of the widespread adoption of emerging trends that first surfaced in the industrial automation market, such as augmented reality, 3D printing, robotics, artificial intelligence, cloudbased supervisory control and data acquisition (SCADA) systems and programmable automation controllers (PACs). From edge to core to cloud Whether it be factories, mines, oil-rigs, laboratories, sports stadiums, hospitals, parking lots or our supermarkets, eventually, automation will dominate. Critical to this vision is having

standard hardware devices right at the edge, as well as software interoperability in the field. IDC only recently predicted that by 2022 over 40 percent of organisations’ cloud deployments will include edge computing, but I would argue that this percentage could actually be a lot higher given the momentum we are seeing in this space. Edge computing is so vital to automation because if a massive amount of data needs to be relayed across a long network link to a central processing system for analysis and then sent back with an actionable decision, it takes a lot longer than if the data is processed close to its source. By positioning compute and storage systems at the edge, processing latency and bandwidth constraints are reduced, which enables operational and safety decisions to be made and executed quickly, close to the action. For industries such as healthcare and defence, that require split-second decisions to save lives, this is mission critical. Intelligent shipping One industry starting to make noise with its automation efforts is the marine industry. Compared to manufacturing and the enterprise business sector, the marine industry has been slower to embrace the journey to fully-integrated automation. Shipping companies are only now beginning to realise the potential increases in efficiency and performance, in addition to the easier and more comprehensive approach to fleet maintenance, management, and crew safety. There are some exciting early examples, including the port of Rotterdam (Europe’s largest port by cargo tonnage), which is on a multi-year

digital transformation journey to become the smartest port in the world. Its goal is to be capable of hosting autonomous shipping by 2030, and it’s transforming its operational environment with thousands of field sensors and devices across its 42-kilometre site, on quay walls, mooring posts and roads. Shipping companies and the port are estimated to be able to save up to one hour in berthing time per ship which can amount to about €70,000 in savings. In fact, one experiment has already resulted in a 20 percent reduction in waiting time for vessels in the port. Data and partnerships with state-of-the-art technology providers will further help reduce wait times, determine optimal times for docking, loading and unloading, and enable more ships into the available space. Let’s also not forget the world’s first fully autonomous ferry that was launched a few weeks ago. In December, Rolls-Royce and Finferries launched its ground-breaking Falco ferry, which utilises Rolls-Royce Ship Intelligence technologies to navigate without any human intervention. Breakthroughs like this prove we are now living in the era of autonomous vessels and will soon bear witness to entirely automated fleets, which will be managed and maintained from a central base of operations. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng O’Connell is VP and GM OEM and IOT Solutions, EMEA.

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Dapo Akande

ermit me to be frank; what we need is not just more churches or more denominations but more godliness. And godliness is not bestowed upon you by your pastor saying “God bless you” or by the name you bear. It is by being godly in heart and subsequently in behaviour. God willing, I will continue to do what little I can possibly do to rejuvenate our society and to turn our hearts back to more civil behaviour. I look forward to that time when we can confess once again that good is indeed good and bad is bad; contrary to our often current profession that right is actually wrong and a criminal is in fact a saint. I have to say here that it’s not even enough for our children to know right from wrong or good from evil. They need to be committed to doing good. This therefore makes it essential they be ingrained through education with the right values, so that they will at all times be fortified by conviction to do the right thing. We need to put a stop to living in self delusion by miraculously expecting God to “bless” our evil machinations. He just

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Time to tweak our mindset Character Matters with Daps

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doesn’t work that way, no matter how we try to spin it. No, “blessing” your family and a handful of people around you while denying millions of their birthright doesn’t suddenly remove the garb of criminality off your back. Not to lie though, it’s quite difficult to blame the beneficiaries of such largesse entirely because we live in a society where all seems to be skewed against those who try to make a decent, legitimate income but is overwhelming in favour of those who don’t. Still though, this doesn’t in any way make it right and that is one odious anomaly and misconception that we urgently need to correct before we lose yet another generation. Let’s face it, ours is already gone and several coming behind us are on their way out too. And the adolescents? Yes, they still have a fighting chance but it certainly isn’t automatic. Only if we do right by them by showing them the correct way go. I’ve often felt there are certain fairly simple ways one can positively tweak the mindset of people. One, by itself may not be the panacea but together they could bring us closer to our promised land. Here’s one: Lagos state government did well to introduce zebra crossings across the state some years ago but I feel they could have been done better. First of all, because they are so few, it appears to be little more than cosmetics. And we know “make up” no matter how beautiful, will eventually wash off. Secondly, some are so poorly located, only a suicidal motorist would even attempt to apply his brakes for pedestrians to cross at that point. There’s one of such on Mobolaji Bank Anthony Way which everyone knows is essentially a highway. Anytime I attempt to stop for pedestrians crossing there

I would look intensely at my rear view mirror to gauge the speed of the vehicles coming up behind me. If I stop, will they be able to stop on time? Am I putting myself in the firing line to be severely bashed? Could it ultimately result in a pile up? To improve on this campaign, such crossings should be everywhere but more sensibly located. There should be a very clear signboard that can be seen from afar and which no reasonable and vigilant motorist can claim he didn’t see. The Zebra Crossing itself should be repainted on a regular basis so it’s clearly marked out. Last but not least they could be manned by an official, at least to start with. With time, they may no longer be necessary. We have many young and able bodied people out there who currently have nothing to do. Last but not least, a robust media campaign using television, radio and bill boards educating both the motorist of the need to abide by them and the pedestrian on how to use them. Many pedestrians erroneously believe that as long as they cross the road within some meters of the Zebra Crossing it’s okay. Not at all. If the law here is modelled on that of the West, a motorist would only be held liable if he hits a pedestrian who’s actually on the Zebra Crossing, not near it. It should equally be brought to the attention of the motorist, just how grave an offence he would be committing if he was to hit a pedestrian on it. The incalculable value derivable from implementing this Zebra Crossing campaign is that it would incrementally result in us putting others before ourselves. Subconsciously, we become aware that our immediate, individual interest is not the only one that matters, as this realization steadily drips into our minds over

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My proposed solutions to some of our societal issues are, I admit, embarrassingly simple

time, until it becomes fully ingrained. The thought process that takes place when you decide to put your interest on hold, even if just momentarily, should not be trivialized. With time, it would become part of you and this should spill over into other areas of your life. Your perspective simply changes when you no longer think the whole world revolves around you. Civility, better manners, recognition of the dignity of man and a keener sense of humanity begin to seep in. I hear some out there shouting, ‘How many motorists do we even have?’ Yes, you’re right, but we must start somewhere. To paraphrase the often used quote, what you cannot do shouldn’t stop you from doing what you can do; so just do your part and leave the rest. My proposed solutions to some of our societal issues are, I admit, embarrassingly simple but to be totally honest, I’m really not smart enough to conjure up grandiose ones. Quite frankly though, why do I need to, when simple ones might just do. Oyibo, who we often hold as a standard to emulate, rightly or wrongly, has over the years mastered the art of masking cooperative selfishness as selflessness. My people, don’t be deceived; he doesn’t for a second take his eyes off his interest but he has quite cleverly come to realise that the best and surest way to secure his interest is to pursue the interest of all; the common good. Enlightened self interest. It’s looking like we may still be at the crude selfishness stage but please feel free to correct me if my deduction is wrong. Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

The Nigeria auto industry part III: The suggested way forward

BAMBO A. ADEBOWALE

he various auto and auto related policies have and are being touted as the lifelines required to resuscitate the auto industry. It however seems that the lines have caught the industry round the neck and are slowly, but surely, strangling it. Gaps in the auto industry development Development of the auto industry needs to be addressed across the whole value chain - the new, the used, the fake, the unregulated and everything in between. The Hon. Minister of Trade and Investment, Dr Okey Enelamah, has acknowledged that implementation of the auto policy has been poor and called on the private sector to join in the implementation. I however believe that a review of the policy is required before implementation. This is not a time issue, so we shouldn’t mark success to how soon it can be signed into law. It is just as important that the document represents the interests of the whole industry. The duty rates in the policy have not been realistically set and are not transparently implemented. Used car dealers are being charged 35%, whilst new car dealers facing a 35% duty + 35% levy charge. I understand the rationale – that the assemblers need to be protected from those who are merely trading. However, in the process, it is killing even the assemblers, since their production is stagnated and the used cars

are being imported anyway. Lowering of the current duty rates in a controlled manner could actually be a good thing - high duty with poor border control (and Benin Republic next door) is double wahala for the government – imports and duty fall while smuggling increases. The used car dilemma The current implementation committee of the auto policy needs to include the used car dealers that comprise 80% of the industry. It also needs to include the auto mechanics, the spare parts manufacturers and the transport owners. Admittedly, we cannot continue the used car trend, especially if vehicle assembly is to thrive and when combustion engines are being phased out. There are environmental issues and technological reasons too, as more countries turn out hybrid vehicles. The policy must therefore accommodate the 21,000 used car dealers and support their evolution into new car dealers that can support the 400,000+ vehicles that will be assembled. There needs to be a structured phase out – maybe a change in regulation and fiscal enforcement. We need to effect a deliberate reduction in the age of imported used cars from the present 15yrs to say, 5yrs over the next 3 or 4 years to give dealers time to evolve to newer cars and such dealers should be supported with a program of supervised training, financial access, IT upgrade, forecourt development and proper. This could be backed by a mileage restriction or premium duty for older vehicles. All vehicle dealers, especially the used vehicle dealers, need to be identified and registered. If the industry is to grow, it needs to be regulated. Private imports might need to be stopped (or such vehicle held for 1 year before resale, in order to curtail further unregulated transactions), or all imports go throughregistered dealers. These registered dealers should then benefit from a range of development initiativesto position themselves to become dealers for the 54 licenced assemblers and 400,000+

vehicles in addition to the current inventory of used vehicles. We must consider schemes for individuals to exchange old cars for new ones (scrappage if necessary), like UK did for emissions reduction. Government will acquire and scrap vehicles of a particular age or make for environmental or mechanical reasons. The owner (with proof of ownership), will receive a voucher that can be used in part payment with one of the registered dealers for a Nigerian assembled vehicle – supported with finance from the Auto bank. This will remove defective vehicles from the roads and encourage replacement of old vehicles – which in turn will act as a catalyst as the assemblers scale up production. We will also need to scale down and eventually ban the importation of used vehicle parts - possibly over the same period to scale down the age of imported used vehicles. we should then support the development of SMEs as component manufacturers and subsequently ban car parts once the quality and standard meet those of the OEMs. Time for an auto bank? In the same vein as a bank of Agriculture, SME Development etc. we should now consider an Auto Bank. We have the market and we have the need – look at the winners of the “best customer” for the auto industry awards, and you will find the Vehicle and Asset Finance Departments of banks, who acquire the vehicles from the dealers and sell on HP to the user, retaining ownership until final payment. The bank will seek and deploy funds that will support the auto industry across the value chain to acquire and replace up to 5millionvehicles (I commented on this in Part 1 of this write-up). The Auto bank can take seed capital from the National Automotive Fund domiciled in the BOI and source funds from the Sovereign wealth fund and the capital market. Additional support should be sought from OEMs and IDAs (World Bank, AfDBetc.). An Auto Bank financ-

ing will target single digit interest, repayment terms up to 4 years, deposits as low as 10% of value and a platform for part exchange of old vehicles through dealers.Acquisition/disposal of 200,000 new and used vehicles (including the multiplier effect of lending) and additional income from a voucher scrappage scheme of up to 200,000 vehicles annually will definitely be a catalyst for the industry. Other issues The policy needs to protect the auto dealers from the exuberance of the Nigerian Customs Department in the areas of valuation. Customs need to focus on duty calculation and collection, seeking more viable ways to ensure that the valuation presented by the dealers are accurate and legitimate. In addition, NCS needs a change in mind-set that their duty.is collecting duty, not generating revenue. The data repository recently introduced by NADDC is a good attempt at combating smuggling and this will work in collaboration from land border import restrictions. Now the government should consider stopping defective vehicles at point of origin – maybe certification of road worthiness should be from origin. Eventually, we should have an industry where a vehicle is assembled in Nigeria (or a less than 5yr vehicle imported into Nigeria by a registered dealer). The acquisition is financed at a single digit loan from the Auto Bank. The imported vehicle is certified road worthy from country of origin. You service your car with parts manufactured in Nigeria, good enough for the OEMsand installed by an accredited auto technician and at end of life, you should be able to trade-in your vehicle as part payment for a newer vehicle and whether new or used, the value chain would have contributed to the development of the economy through duty, taxes or commerce. Adebowale is chair of the automobile section of the Lagos Chamber of Commerce and Industry

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Nigeria’s declining FDI

o one really doubts that every country which seeks to develop these days seek to attract foreign direct investment (FDI) to complement the level of domestic investment. FDIs not only enables investments in critical sectors of the economy, it also helps in “securing economicwide efficiency gains through the transfer of appropriate technology, management knowledge, and business culture, access to foreign markets, increasing employment opportunities and improving living standards.” Even the Nigerian government is gradually coming round to this realisation as it finds it does not have the huge funds needed for even the physical infrastructure needed to support Nigeria’s burgeoning population. Indeed, the government’s Economic Recovery Growth Plan (ERGP) captured the problem well: “The value of Nigeria’s total infrastructure stock (road, rail, power, airports, water, telecoms, and seaports) represents only 35 per cent of GDP. This is far below the level of peer emerging market countries, where the average is

70 per cent” This, perhaps, explains the country’s low ranking in the Africa Competitiveness Report by the World Economic Forum, which ranks Nigeria’s infrastructure 134th out of 144 countries. The ERGP plan stated clearly that Nigeria needs to invest $3 trillion in infrastructure over the next 30 years if it wishes to remain competitive. Of course, the government doesn’t have all those money. It must partner the private sector and leverage private capital to build these critical national infrastructure needed to kick-start development. Like other progressive governments, the Nigerian government is beginning to design policies to ensure a robust public-private partnership where the private sector can invest massively in infrastructure. But just as this is been done, Nigeria is waking up to the realisation that FDI into Nigeria have been on the decline in recent years. Figures from UNCTAD shows that FDI inflow into Nigeria has declined from a high of $8.9 billion in 2011 to a paltry $2.2 billion in 2018. This is hardly surprising. This is a country where the president came out to say matters-

of-factly that he does not trust individuals in the private sector. In his words: “We are averse to an economic team with private sector members” because such persons “frequently steer government policy to suit their narrow interests rather than the overall national interest”. What is more, public private partnerships (PPPs) have not been successful in Nigeria basically because the government has shown over the years that it does not regard validly executed contracts as sacred. In many cases, the government has resorted to self help in a bid to do away with contracts that it considers not favourable to its interest. The result is a lack of trust in government and therefore reluctance by the private sector to participate in PPPs. With low interest in PPPs, the government is forced to fund infrastructure from its low revenues budget that could easily be funded through PPPs and from borrowing, sometimes, at exorbitant interest rates. Then there is the greater problem of disregard for the rule of law and unpredictability in government policies, regulation and the undermining of the judiciary as

an impartial arbiter in disputes. The president has gone about personalising power, violating the constitution and destroying critical state institutions that are essential building blocs of well ordered and sustainable society. These reckless behaviours have consequences, which will deeply hurt the country and its corporate image among the comity of nations. First, no self-respecting country will do business with a country that doesn’t respect its laws. Second, no foreign investor will invest in a country that has no regard for its laws and where the courts are not independent or cannot be trusted to arbitrate on contract and trade disputes impartially and efficiently. There is just no running away from the reality that the government must partner the private sector to provide modern and world class infrastructure. The government must begin to rebuild trust by returning to the path of democracy and rule of law. It is only then it can hope to get the private sector onboard efforts to invest in Nigeria’s infrastructure. Private capital has alternative uses and many countries are competing for them. The sooner we develop an attractive PPP model the better for us.

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Tough operating environment pushes Academy Press to 13-year low OLUWASEGUN OLAKOYENIKAN

cademy Press Plc, a leading pr inting and publishing firm in Nigeria, Monday in the form of capital depreciation got its share of the tough operating environment, which triggered increased costs of production for most companies in the country, as its share price fell to its lowest level in more than 13 years. The stock dropped 8.89 percent to close at 41 kobo on the floor of the Nigerian Stock Exchange (NSE), the cheapest since November 1, 2006, after the Lagosbased company released its financials for the nine months ending December which saw it enmeshed in losses amounting to N178.7 million as against N121.88 million losses recorded in

the corresponding period of 2017. The losses recorded by Academy Press were largely driven by low returns coupled with soaring cost of sales as witnessed by some of its peers in the printing and publishing business. This is despite the company cutting its administrative expenses, which include payment of workers’ salaries, by over 8 percent to N348.85 million, and finance expenses on banks loans and equipment lease by 32 percent N124.67 million. Revenue recorded in some of the company’s products like Calendar, Diaries, Books and Labels was not enough as declined turnover from AR/ Brochure and Security combined to weigh heavily on its total returns in the review period. Gross Profit of Academy Press plunged by 27.16

percent as sales dipped 6 percent to N1.49 billion from N1.58 billion in the same period a year earlier, while the total costs used to create its goods sold surged

by 2.48 percent to N1.16 billion from N1.13 billion. This caused its gross margin to wane to 22 percent from 29 percent. Academy Press prints

labels, calendars, company annual reports, books, magazines and other materials. The company further provides printing related services like visuals, lay-

out designs, typesetting, artwork, photography and colour separation. It was incorporated on July 28, 1964, and listed on the NSE on June 15, 1995.

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ValuAlliance posts N169.2mn losses in Q2 2018 over fair value deficit

SON develops five new standards for pap, Millet, ‘Acha flour’, others

ISRAEL ODUBOLA

aluAlliance Asset Management Limited, manager of “Value Fund”, reported N169.2 million losses for six months ended December 31, 2018, indicating a 127.9 percent year-on-year contraction compared to N607.4 post-tax profit posted twelve months, triggered by N324.5 million fair value losses on equity instruments. The fair value losses plunged 183 percent to N324.5 million compared with a gain of N391 million reported a year earlier. The fund manager lost on fair value on 13 equities including Access Bank, Okomu Oil Palm and Seplat among others, out of 16 stocks, and this saw operating losses pile to N165.7 million against an operating income of N611.5 million posted in the similar period of 2017. Fair value gains were recorded in stocks of Diamond Bank, Continental Reinsurance & Custodian & Allied Plc. Revenue for the period stood at N136 million deficit, representing a whopping decline of 120.84 percent over

N652.7 million obtained in the corresponding period a year earlier. Earnings per share fell more than 128 percent to a loss of N5.27 in the period under review as against pershare profit of N18.93 a year earlier. A total of N29.7 million were expended in the period under focus, an improvement over N41.2 million for six months ended December 2017, largely driven by N9.17 million reduction in other operating expenses. The mutual fund holder reported N4.94 billion in total assets, which is 10.63 percent lower relative to N5.52 billion recorded in 2017 full year, driven by a drop in the financial assets at fair value. Total liability, consisting payables and accruals settled at N21.6 million for the period, which is N2.9 million lesser than the figure for 2017 full year. Similarly, total equity dip by 10.62 percent to N4.92 billion against N5.5 billion recorded for 2017 full year. Net asset value/unit, representing the value of a mutual fund scheme’s assets minus the value of its liabilities per unit, slumped by 10.63 percent to N153, 110 as against N171, 320 recorded

in twelve months ended June 2018. This actually reflects an increase in the number of units held. Furthermore, market price per unit stood flat at N103, 200. Total return, which represents all the income earned including interests, dividends, and capital gains, contracted by 8.16 basis percent points year-on-year to -3.04 percent as against 5.12 percent in the same period in 2017. Total expense ratio, one of the parameters investors take into consideration before investing in the mutual fund scheme, grew to 1.54 percent in the reviewed period, and is 34 basis percent points higher than the figure for December 2017, thus signalling fewer profits on funds. Annualized growth and holding period return rate stood at 11.28 and 116.97 percent respectively. ValuAlliance Value Fund, (“The Value Fund”) is a closed-end unit Trust Scheme under the management of ValuAlliance Asset Management Limited with Leadway Capital and Trust Limited as Trustees. It began operations in July 2011 and the units of the Fund are listed on the Exchange.

HARRISON EDEH, Abuja

n a determined move to maintain standards in edible agricultural products and sustain agricultural diversification, the Standard Organisation of Nigeria, SON, has coordinated the drafting of five new standards on indigenous foods. The indigenous food standards drafted by SON consist of packaged Millet flour for pap; standard for corn pap powder; standard for packaged sorghum powder for pap; and standard for fonio flour (Acha flour). The ongoing development of the standards also promotes the application of research and technology to boost the production of foods for local consumption and export, SON said. Disclosing this view at the first technical committee (TC) meeting on food technology standards in 2019 held in Lagos, SON Director General, Osita Aboloma stated that the development is to further the nation’s quest to be at the forefront of promoting indigenous production of food. According to him, the technical committee meeting is to reiterate Nigerian stakeholders’ and regulatory agencies’ relevance in food standardization. Represented by Omolara Okunlola, SON Group Head, Food Technology, he advised the TC members to bring their expertise and rich experience to bear on the drafting of the

standards in order to make them practical and easily implementable by stakeholders after approval and publishing. These, according to him, will provide the necessary guide to manufacturers, promote fair trade practices and assist statutory regulatory activities. Aboloma enjoined the committee to consider critical issues bothering on food safety, food quality and fair trade practices so as not only to strengthen the economy, but also to enhance the productivity of the food sector. The TC Chairman, Charles Ariahu, a Professor in the Department of Food Science and Technology, University of Agriculture, Markurdi, promised that the committee would carry out its responsibilities diligently. He enjoined members of the TC to ensure strict compliance with the standards development guidelines and

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

endeavour to contribute their opinions and positions freely. According to him, some of the products to be considered are indigenous, have been in existence over the years and are already being traded across borders thus necessitate approved specifications to serve as benchmarks. Institutions represented at the TC meeting include Promasidor, Federal Produce Department, Consumer Protection Council (CPC), Federal Institute of Industrial Research, Osodi (FIIRO), NASCO Foods and the National Agency for Food Drug Administration and Control (NAFDAC). Others were the Federal Ministry of Agriculture and Rural Development, OLAM Foods, Institute of Public Analyst of Nigeria (IPAN), Nestle Foods and the Federal University of Agriculture, Abeokuta (FUNAAB), while the SON provided the secretariat.

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COMPANIES & MARKETS TELECOMS

MTN expects 20% surge in earnings after settling dispute with CBN OLUWASEGUN OLAKOYENIKAN

frican telecoms giant, MTN Group, expects an upsurge in earnings for the last financial year across its 21 markets after resolving US$8.1-billion dispute w ith the Central Bank of Nigeria (CBN), even as it faces another court hearing over a separate $2 billion tax dispute later this week. The largest wireless carrier by subscribers in Africa said in a statement Monday that its earnings per share rose by at least 20 percent in 2018 more than the 182 cents in the prior financial year, indicating improved profitability for the company. For the 12-month period to December 2018, headline earnings p e r s ha re ( H E P S ) a re expected to increase by 36.4 cents, while at-

tributable earnings per share (EPS) are projected to inch up by 49.2 cents from 246 cents, according to MTN. The results would be published on March 7, MTN said. Despite the announcement, shares of the South African company reversed prev i o u s g a i n s re c o rd e d o n t h e Jo h a n n e s b u r g St o ck E xc ha ng e ( J S E ) by shedding 2.54 percent to 85.86 rand at the close of business at the bourse. The mobile-phone company has since August last year been battling with the Nigerian authorities where it has its biggest market to pay a total claim of $ 1 0 . 1 b i l l i o n ov e r a l leged illegal repatriat i o n o f s h a re h o l d e r s’ funds from the country and tax default, causing the company to lose 20 p e rc e nt o f i t s ma rk e t

value. CBN reached an ag re e m e nt w i t h M T N last December after the

telecom company paid $53 million on the basis of new information received that showed no

wrongdoing by the firm regarding most of the repatriations. However, MTN is yet to resolve its

$2 billion tax dispute as another court case has b e e n f i xe d f o r Feb r uary 7.

PRIVATE EQUITY

BRANDS

Partech declares final closing of Africa fund

Life Lager celebrates 40th anniversary of Lagos electronics hub

JONATHAN ADEROJU

Global investment firm, Partech, has disclosed that its African fund peaked at €125 million ($143 million) after the final closing of the Partech Africa fund. This is a staggering increase compared to the company’s result a year ago. The announcement showed the company made double of its first closing a year ago, which saw Partech record €57 million ($70 million). The €125 million is above Partech’s hard cap. The company also disclosed it has made inroads into East Africa, with Ceasar Nyagah joining the team as Investment Officer based in Nairobi, Kenya. Partech had launched its Partech Africa fund in January 2018, which secured above €57

million (US$70 million) commitments toward its target size of €100 million ($120 million), making it the first technology fund of such size from a top tier international VC to be exclusively dedicated to the fast-growing tech ecosystem in Africa. Partech has been able to get the support of several investors, including highvalue corporations to back the Partech Africa fund. According to Partech, these investors include: the European Investment Bank (EIB), IFC, member of the World Bank Group and Averroès Finance III (fund of funds managed by Bpifrance and co-sponsored with Proparco), KfW, the German Development Bank (on behalf of BMZ, the German Ministry of Economic Cooperation and Development), FMO, the Dutch Development Bank and the African Develop-

ment Bank Group. The statement also said that Partech Africa is leveraging the experience of more than 25 successful entrepreneurs produce a new generation of game changers. With the success it has recorded from its closed fund, Partech believes it is the go-to platform for financing tech startups in Africa as the company boast of a strong capability to leverage much more capital thanks to its partners. Partech Africa financing is categorised into two rounds: series A and B financing. The fund is disbursed to startups changing the way technology is used in education, mobility, finance, delivery, energy, etc. In 2018, two investments were made, with Nigeria’s TradeDepot and South Africa’s Yoco benefiting from the fund. Partech intends to close more deals in 2019.

n a strategic move seen at increasing the market share of Life Continental Lager in Lagos with intent to spread its reach beyond the shores of the southeast, Life beer recently celebrated the 40th anniversary of Alaba international market. The beer brand in celebrating the traders at Alaba market, took the “Bridge of progress” party aimed at celebrating the beautiful tradition and the remarkable progress of the Igbo people. The Lagos edition is particularly unique, as it marks the first “Bridge of Progress” party being hosted outside the South East. Life beer has been firmly rooted in culture and a vast majority of

its distribution zones, and by extension, its consumer engagement activities have typically been in eastern Nigeria. Uche Unigwe, the sales director Nigerian Breweries Plc, said the brand felt it was important to celebrate its progress as well as that of its consumers. “We had a really good 2018, and we have our loyal consumers to thank for that. We had some interesting parties in Awka and Asaba and we decided to bring it down to the West, so our people here in Lagos can also get a taste of the celebration. “We also have the chance to celebrate the remarkable progress of some of our core demographic here in Lagos with the 40th anniversary of the Alaba market. We are thrilled to

share this day with our loyal consumers and we are excited for what the future holds for Life Lager as we continue to explore new territories,” said Unigwe. The market which is renowned for being the electronics hub of Lagos has often been regarded as a home away from home for many Igbo merchants who make the journey from the southeast to become successful traders in Lagos. As part of the celebration, Life beer brought on brand ambassador and high life crooner, Flavour to thrill the audience on Saturday at the Motor Garage Electronic Section in Alaba, and on Sunday at the Barbados, 322 Road, E Close, FHA Shopping complex in Festac.

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Company release

Cowrywise commits to building sustainable entrepreneurship

n the early penetration days of global brands, like Unilever, to emerging markets, they learnt something fast and quick. Summar izing the lesson, they learnt that emerging markets such as the African market would require them to provide affordable products that will still drive profits. To achieve this feat, which seemed close to stupid, they towed the path of retail packs for vendors of products and retail services for service providers. This singular choice is the background of many brands successfully operating in Africa today, from Celtel (now known as Zain), Microensure to Unilever, and now Cowrywise. Before the advent of Cowrywise into the Nigerian asset management space, accessing high-end investment

products seemed like a dream that was never going to come through. Thankfully, Cowrywise Co-founders, Razaq Ahmed, CFA, and Edward Popoola, committed their resources to understand how best to provide affordable investment options for the masses without raising the eyebrows of regulatory authorities and arrived with a brilliant solution. Their solution allows Nigerians to not just automate their savings, from N100, but also helps them invest these savings in high-yielding bonds. To solidify their value offering, they entered into a Trust Partnership with Meristem Trustees to help secure 100 percent of invested funds. Looking back, Razaq Ahmed said they went through a lot of hurdles to get the job done; hurdles that would not exist in other climes. This unique experience has

motivated the firm to help as many Nigerian entrepreneurs as possible to make sustainable choices. In his words, “it takes more than just a brilliant idea to survive in the Nigerian market, it takes a brilliant idea that is fit for the market.” To help simplify the process of creating sustainable ideas, the firm launched an event series with its first edition focused on small business owners. The series tagged Simplified by Cowrywise, hosted small business owners to a knowledge packed session with one of Africa’s leading strategists, Subomi Plumptre, Head, Corporate Practice, Alder Consulting. It is a series of events that will help untangle the complexities associated with various money concepts, particularly the ones that concern sustainable business growth.

L- R: Christophe Begat, MD, Schneider Electric West Africa; Nabil Djouhri, GM, Schneider Electric West Africa; Ibilola Amao, principal consultant, Lonadek Inc, Abdul-Malik Halilu, GM, strategy (PRS) Nigerian Content Development and Monitoring Board (NDMB), Federal Republic of Nigeria; Banigbe Ibitayo Bankole, lead solutions architect, Schneider Electric West Africa, during the WAIPEC Conference and Exhibition in Lagos.

L-R: Funke Amobi, group head, human capital, Stanbic IBTC; Demola Sogunle, chief executive, Stanbic IBTC Bank PLC; Tom Isibor, head, Association of Chartered Certified Accountants (ACCA) Nigeria; Bridget OyefesoOdusami, head, marketing and communications, Stanbic IBTC; Adekunle Adedeji, group chief financial officer, Stanbic IBTC Holdings PLC, during the official inauguration of the revamped Stanbic IBTC (Blue Academy) Learning & Development Centre and Accreditation by ACCA as an Approved Employer for Trainee and Professional Development in Lagos, Pic by Pius Okeosisi

CONSUMER GOODS

Goldberg Lager hosts unlimited faaji in Ondo

oldberg Lager Beer, Nigeria’s golden premium quality Lager, thrilled the city of Akure, showing fans and brand loyalists that despite the end of the yuletide season the celebration continues. The Unlimited Faaji event, which was a spectacle of culture, arts and music held recently at Democracy Park, Akure. Along with consumers and music lovers, the brand provided an unforgettable experience, filled with energy, excitement and entertainment. The event was anchored by Nollywood actor and Goldberg ambassador

Odunlade Adekola featured artists such as Leye Williams, Tope Ajani and Remi Aluko who were on ground to thrill the audience. Excited music fans and brand loyalists turned up enmasse to enjoy a cool night of music, arts and culture. Speaking on the event, the BrandManager,Goldberg,Olufunmilayo Ogunbodede, said “Goldberg Lager in the month of December had various activities centered on aiding consumers and brand loyalists celebrate the yuletide season. We at Nigerian Breweries are quite relentless with our efforts and as such we

have put together this Unlimited Faaji event for residents of Akure. Delivering highly engaging and memorable moments to our consumers, is something we take immense pride in, and i know the audience all round have had a good time.” Goldberg Lager in 2018 hosted audiences in Ota and BeninonDecember24th&31st respectively to premium gatherings, filled with music lovers and brand loyalists during the season of yuletide. Goldberg is a premium quality lager beer that is brewed to golden standards by the Master Brewers; Nigerian Breweries Plc.

L-R: Tokunbo Awolowo- Dosunmu; Aderemi Adio-Moses; Remi Omotosho; Anuoluwapo Adio-Moses; Seni Adio, and Ariyo Olusanya, royal father, during the St Paul’s Day Award Ceremony where a posthumous award was given to Pa Josiah Soyemi Ogunlesi and Tanimowo Ogunlesi for a lifetime of service and dedication in Shagamu, Ogun State.

L-R: Olushina Adegoke, regional director, Airtel Nigeria; Sunday Ogunkeyi, baale, Ilaje Community; Olufunmi Rafiu Olatunji , chairman, Eti- Osa East, LCDA and Emeka Oparah, director, corporate communications and CSR, Airtel Nigeria at the Airtel Touching Lives season 4 prize presentation of borehole with water treatment plant to Ajah- Ilaje Community in Lagos.

L-R: Femi Ogunwusi, education secretary, local government education authority, Lagos State; Scott Mitchell, president /CEO, Sumitomo Chemical America; Adekanla Adegoke, head, Oando Foundation, and Angela Lee, Sumitomo Chemical America Incorporation, during a school/inspection visit of projects in the school, Lagos.

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Wednesday 06 February 2019

CITYFile Labour disrupts banking activities at Fidelity Bank JOSHUA BASSEY

Members of Free Nigeria Movement with Coalition of Civil Society Groups (CSO) protesting against an alleged prosecution, illegal arrests and continuous detention of Deji Adeyanju, a human right activist, at the Embassies Road in Abuja on Monday. NAN

Building collapse: Stakeholders insist on demolition of distressed buildings ... blames prevalence partly on failure of LASG JOSHUA BASSEY & agency report

ome players in the building industry have advised Lagos State government to embark on demolition all distressed buildings in the state to avert further collapse and loss of lives and properties. The experts gave the advice in Lagos while also stressing the need for relevant agencies of the government to monitor buildings and be more proactive. Recall that two persons were confirmed dead when an abandoned three-storey building collapsed in Ijora Badia area of the state on February 2, 2019. The abandoned building, located at No. 9, Amosun Street, Ijora, Badia, was occupied by three persons, suspected to be illegal occupants, as the original residents were said to have vacated the building long ago. Two of the occupants were brought out dead, while one was rescued with injuries. As at mid-2018, over 250 buildings were identified by the Lagos State ministry of Physical Planning and Urban Development to be distressed and standing precariously in different parts of the state metropolis, especially around the Lagos Island. Although some of the buildings were said to have been demolished, there is, however, the criticism against the state government

over the imposition of the cost demolition a distressed building on the owner. Stakeholders believe that the government should not always wait for owners of distressed buildings to pay the cost before demolishing any identified distressed. Kunle Awobodu, national president, Building Collapse Prevention Guild, said that building collapse resulted from negligence of the monitoring agency. Awobodu said that the legal occupants of the building vacated the building about eight years ago due to signs of defect. According to him, an agency of the government charged with building monitoring should have sealed or demolished the building, thereby prevent it from hiding miscreants and illegal occupants. “For the original occupants to have abandoned the building for over eight years, means it is structurally defective. “This is a period long enough for the monitoring agency to either demolish the building or persuade the owners to renovate it. “Once a building is abandoned, it begins to show signs of defection, which will eventually lead to collapse,” Awobodu said. Makinde Ogunleye, a former chairman, Nigerian Institute of Town Planners (NITP), advised the government to formulate a policy stipulating that buildings abandoned for long would be confiscated by the govern-

ment. Ogunleye regretted increased rate of building abandonment across Nigeria, saying that the policy would curb the trend. According to him, once a building is abandoned for about six years, it should be confiscated by government and converted to a meaningful project in public interest. He advised Lagos residents to report construction of abandoned and substandard buildings to regulatory or monitoring agencies. Ogunleye said that such a report could be made to the Lagos State Building Control Agency (LASBCA) for appropriate actions to avert building collapse. “Residents have vital roles to play in curbing building collapse; they are in a better position to detect illegal, abandoned and substandard constructions early. “LASBCA and other building regulatory authorities alone cannot properly monitor to detect when buildings are defective or when illegal constructions are going on, without the support of residents,” he said. According to the former NITP chief, the residents are in a better position to detect abandoned and substandard buildings within their areas. “It requires collective efforts to end building collapse, and residents need to contribute their quotas,” Ogunleye said.

NDLEA dislodges 35 drug joints in Kano ... arrests 17 suspected illegal drug leaders

o fewer 35 drug joints have been dislodged by the National Drugs Law Enforcement Agency (NDLEA) in Kano in continuation of efforts to rid the state of uncontrolled consumption and sales of illegal drugs. The state commander of the agency, Ibrahim Abdul, disclosed this on Monday while briefing newsmen on the activities of the com-

mand in the last one month. According to Abdul, officers of the command discovered and dislodged the joints during special operations aimed at keeping the state free from drug use as ahead of the 2019 general elections. “During the period under review, 35 joints and hotspots were dislodged at the following areas: Plaza, Sanya Olu, Kabuga, Rimin Kebe

and Danzaki village. Others are Sauna, Wurare, Aisami, Sabon Titi, Dorayi, Hauren Gadagi, Kwanar Dan-marke motor park, Chalawa, Madobi, Ring road, Farawa village, Mariri motor park and Kofar Ruwa, among others,” he said. Abdul explained that the operation would be sustained to ensure that those drug users did not continue to patronise the joints and the hotspots.

ormal banking activities were disrupted at the Fidelity Bank head office in Victoria Island, Lagos, as workers under the aegis of National Union or Banks, Insurance and Financial Institutions Employees (NUBIFIE) picket the premises. The workers led by the union leaders stormed the bank at about 7:30 am on Thursday and blocked the entrance and exit gate thereby denying customers and visitors to the bank normal access into the premises. The union is accusing the bank management of termination of over 300 workers without recourse industry bargaining agreement. Abakpa Anthony, president of NUBIFIE alleged that over 300 workers have been sacked in the last six months without respect for workers right. According to Anthony, the union gave the bank a seven-day ultimatum and later 14 days within which to dialogue on the issue but did not get any response. He said that the union would not accept a situation where only few of the workers are paid their entitlement while others are not settled. He alleged that over the years, the company had been setting aside money which grew to about N9.4 billion to pay workers entitlement anytime they exit. ‘’Suddenly the bank discontinued the saving. And in the last six months, the bank has sacked about 300 workers without paying their entitlement. ‘’The union has written to the bank for discussion but no response. The union is expecting a letter from the bank for a meeting on Feb. 8 to resolve the matter,’’ he said. Anthony said that the union would ensure that the right of workers are respected and that they get their terminal benefits. Sheikh Muhammad, general secretary of the union also said that the union wanted the bank to revert to the policy where workers are paid entitlement from the pool of funds. Muhammad said it was unfair to sack workers who had served the company for 10 to 20 years under various excuses. Innocent Emuwa, one of the aggrieved workers said that he worked for 12 years but was sacked without any entitlement. Another aggrieved worker who did disclose his name said that he drove bullion van for the bank for 18 years without being involved in any accident or robbery attack. ‘’Today, my reward is termination without payment of entitlement. It is sad,’’ the aggrieved said.

Police nab notorious kidnapper in Katsina

he police in Katsina say they have apprehended a suspected kidnapper, Ibrahim Muwange, allegedly terrorising communities in four local government areas of the state. Spokesperson of the police in Katsina, Gambo Isa, said that the suspect, who was on police wanted list for long, was arrested on Saturday at Dayi in Malumfashi local government area, following a tip-off. “The suspect has been on the wanted list of the command in connection with various cases of cattle rustling, kidnapping, culpable homicide and armed robbery. “He is among criminals terrorising people in Danmusa, Malumfashi, Safana and Batsari local government areas of the state,” he said. He further said that during police investigations, one AK 47 rifle was recovered from the suspect, who is to be charged to court.

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Position of NAMB on CBN’s plan to establish national MFB Stories by Hope Moses-Ashike

ollowing the proposed plan to establish a National Microfinance Bank using NIPOST outlets by the Central Bank of Nigeria (CBN) and the Bankers Committee, the National Association of Microfinance Banks has reviewed the decision and come up with its position. In the National MFB establishment plan, the CBN and the Bankers Committee will utilise the sum of N5 billion as equity from N60 Billion Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS) Fund, while NIPOST will contribute its offices in the 774 local governments. The association is of the view that the decision runs counterproductive to the salient objectives of the National Microfinance Policy, Regulatory and Supervisory Framework for Nigeria as well as the objectives of the National Financial Inclusion Strategy. In statement made available to BusinessDay, the leadership of NAMB led by Rogers Nwoke, president, said the CBN and the Bankers Committee should utilize existing touch points and offices of existing microfinance banks which meet approved criteria to disburse its intervention funds including but not limited to the ACGSMEIS, Micro

Rogers Nwoke, NAMB, president

Small and Medium Enterprises Development Fund (MSMEDF). NAMB said equity Funds for the planned National Microfinance Bank should be channelled to support the NAMB initiative for a private sector led Microfinance Development Company Ltd to manage a Microfinance Development Fund as provided for in the National Microfinance Policy. This would be a sector-based source of wholesale funding and refinancing for the microfinance subsector. According to the statement, the CBN and the Bankers Committee should consider a super agent banking license to NIPOST. NAMB is willing to partner with NIPOST as a super-agent for delivery of financial services across the 774 local government areas. There is need for an ur-

gent engagement and dialogue between NAMB and the Bankers Committee to consider modalities and options for optimal utilization of the various intervention funds, particularly, the ACGSMEIS Fund by microfinance banks and effective linkage between the commercial banks on the one hand, and microfinance banks on the other for the purpose of on-lending. “We believe that the Bankers Committee is driven by a strong commitment to improve financial inclusion across the country; so equally does NAMB and its constituent microfinance banks. A strong collaboration is truly needed to sustain financial inclusion growth in Nigeria”, the statement reads. Section 6.9 of the Revised National Microfinance Policy (2011) recognizes the importance of wholesale funds to microfinance

institutions to enable them expand outreach. Pursuant to this, the Policy provides that the CBN shall work out modalities for fostering linkages between Deposit Money Banks (DMBs), Development Finance Institutions (DFIs), specialized finance Institutions, donor agencies and Microfinance Institutions (MFIs) in general and Microfinance Banks in particular, to enable the Microfinance Banks and MFIs source for wholesale Funds and refinancing facilities for on-lending to their clients. This policy has not been implemented to support Microfinance Banks with needed wholesale funds. The delay to fulfill this role of creating appropriate linkages with DMBs and other wholesale financial institutions is most probably responsible for the non-disbursement of the intervention funds created for this purpose. “We strongly advise that linkages that facilitate the flow of capital to the MSME sector should be put in place while all intervention funds meant for the development of the MSME sector be channelled through Microfinance Banks which meet well defined criteria. The Bankers Committee will achieve their objectives better and faster than going through the process of setting up a microfinance bank from the rubbles of dilapidated and rundown post offices nationwide”, NAMB leadership added.

Fidelity Bank presents cash, gifts to customers

idelity Bank plc has opened this year’s activities with presentation of cash and gift prizes to customers who participated in its savings promo scheme in January 2019. The customers received their winnings across all the six geo-political zones in the country. But the presentation for Lagos zone was made at the bank’s branch at Trinity in Olodi Apapa. Some of the customers who won in the third monthly draw fall in the category of N2 million and N1 million. Those who won in the N2 million include Umaru Gagi, Abdulrahman Olanrewaju, and Chioma Patience. Those who emerged winners in the N1 million category are Steven Oriase, Kareem Amodu, Evangelina Moughalu, Raphael Omoijate, Ogechukwu Mike, Musa Abubakar, Onwuharaonge Kingsley, Blessing Uwadiegwu, Ukamaka Joy, and Nwankwo Onyeka. “This is our eighth promo in 11 years since we started this journey and in that time we have made significant contribution to the lives of our customers”, Chijioke Ugochukwu, executive director, shared service, said. She said promo is very special to the bank because it has dedicated it exclusively to the improvement of the living standard of its customers by availing winnings in the form of cash which it knows solves a lot of problems and the cash

in questions runs into millions. “There is no cash award in this promo that runs below on million. There are two categories of draws and this is the monthly category and this is the third monthly draw that has produced 13 cash winners and 18 consolation prize winners”, Ugochukwu said. In excitement, after receiving an alert of N1 million, Oluwakareem Amodu, Bale of Dankaka, Ajeromi Ifelodun Local Government Area of Lagos State, said he activated the account with N1,000. He told all his community members to open account with the bank. Richard Madiebo, bank’s divisional head, retail bank-

We have come a long way since 1989 when the business was started in Lagos to having a strong presence in the 36 states and Abuja and becoming part of a multinational concern and one of the top seven most capitalised companies on the Nigerian Stock Exchange,” Yinka Sanni, Chief Executive, Stanbic IBTC Hold-

ings PLC, said. “We are indeed very excited about our future prospects, the economic and environmental challenges notwithstanding, as we continue to work with our clients to provide relevant and top quality financial solutions aimed at enabling real growth for individuals and businesses,” Sanni added.

ing, who spoke at the event said that the bank had made banking easy through the promotion, while calling on the people in the area to take advantage of the initiative to open account with the Bank, assuring them that they had the chance of winning N1 million, N2 million and more.

Stanbic IBTC assures of quality service in 30th anniversary

tanbic IBTC, member of the Standard Bank Group which has been in operation for over 155 years, is celebrating 30 years of providing quality financial services to its clients. The company has grown from its early days as a merchant bank to become the leading end-to-end fi-

nancial services provider in the country, with a balance sheet size close to N2 trillion and a market capitalisation valued at approximately N500 billion in December 2018. In 30 years, Stanbic IBTC has built a culture of excellence in providing its clients with innovative financial

products and services as well as contributing to the attainment of the developmental aspirations of the country. Today, many of its subsidiaries are market leaders in their segments; these include Stanbic IBTC Bank PLC, Stanbic IBTC Pension Managers Limited, Stanbic IBTC Stockbrokers Limited, Stanbic IBTC

Asset Management Limited, Stanbic IBTC Capital, and Stanbic IBTC Nominees. “It gives me immense pride celebrating this milestone with the Stanbic IBTC family, our clients, who have believed in us and entrusted us with their financial needs all these years, our partners, shareholders, and Nigerians.

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Why Nigeria must promote local cocoa consumption Stories by Josephine Okojie

ne major challenge facing Nigeria’s cocoa industry is poor local consumption. Ni g e r i a h a s n o chocolate manufacturers at the moment, despite that the industry is worth about $120 billion globally. Cocoa is the major input for the production of chocolates. Some beverage companies in Nigeria have their plants in Ghana and get their cocoa from that country. “We should produce, process and consume the final products of cocoa like cocoa drinks and chocolates. This would help the country hedge against price volatility at the international market,” Robo Adhuze, chief operating officer, Centre for Cocoa Development Initiative, said. “We currently consume less than five percent of what we produce. Nigerians are yet to understand the health benefits of consuming cocoa. We need to increase our cocoa consumption, not just exporting all we produce,” Adhuze said. All the chocolates consumed in Nigeria are majorly imported from Europe and the United States. “We need to start promoting consumption of cocoa so that we do not rely on the international market to determine price” Dokun Thompson, the Olooni of Eti-Oni and

an international cocoa trader, said. Thompson stated that the country would generate more revenue and create jobs as well as other spin offs when cocoa is processed into intermediate products such as butter and cakes and also into finished products like chocolates. Currently, Nigeria consumes only 5 percent of its total cocoa beans produced as beverage.

Multi-Trex Integrated Foods PLC, Nigeria’s largest cocoa processing factory, with a production capacity of 65,000MT per annum, that was supposed to commence chocolate production in the country to grow local consumption has since been shut down by the Asset Management Corporation Organisation of Nigeria (AMCON). Multritrex was shut down in June 2015 over a contested sum of N8.5

EZ-Farming emerges finalist in Georgetown University’s start-up pitch competition

Experts urge youths to leverage opportunities in agric value chains

n a bid to tackle the high unemployment rate in the country, experts have urged youths to leverage opportunities in the various agricultural value chains to create jobs for themselves and others. The experts, who spoke during the Agro Money Conference, organised by Cash Your Passion Africa, expressed optimism that the country can create jobs through the sector if value chain opportunities are tapped. “Nigeria’s agriculture is evolving and lots of opportunities across the value chain are being created that need to be leveraged,” Babatope Dare, executive director, Inlaks said.

“In the area of technology, youths can provide services that meet the needs of players in the sector,” Dare said. He stated that the sector has huge potential and that the future remains the main force in social and economic transformation of the economy. Ly n d a O m e re k p e f o u n d e r and CEO of Cash Passion, Africa and convener of the Agro Money Conference, said that the initiative is to foster empowerment for young people through agriculture. She stated that the initiative is helping youths identify the oppor tunities across var ious value chains and training them in

Lynda Omerekpe, founder and CEO, Cash Your Passion Africa presenting the cheque to KRIXTOBAX, the winner of the pitch competition during the Agro Money Conference in Lagos recently.

billion Eligible Bank Asset (EBA) bought from Skye Bank. Since the shutdown of Multri-trex Integrated 65,000 MT-capacity factory, Nigeria has seen its cocoa processing reduce by over 26 percent, according to BusinessDay’s calculations. “If we start consuming much of the cocoa we are producing, we would be creating lots of jobs for our people,” said Sayina Rima, national president,

Cocoa Association of Nigeria (CAN). Rima also noted that daily consumption of cocoa drinks is good for the body, adding that cocoa drinks are medicinal and help in prevention of certain illnesses. In the 1960s and 1970s, Nigeria was a major cocoa producer and supplied most of the world’s demand. Cocoa was a major revenue and foreign exchange earner for the country and provided millions of jobs for the people, especially those in the southwest region. Several years down the line, after the discovery of oil in commercial quantity, the once major cocoa producer now lags behind Ivory Coast, Ghana, Indonesia, Ecuador and Cameroon in cocoa production, according to latest data from the International Cocoa Organisation (ICCO) 2016/2017 season. The reasons for this are not farfetched. BusinessDay investigations in Ondo, Cross River, Edo and Ogun states found that lack of improved seedlings, high numbers of unrehabilitated trees, aging farmers, low level of investments in the industry and bad weather, among others, are major reasons for Nigeria’s loss of ‘cocoa power’ in the global market. With adequate consumption by its 190 million people, experts say, the country will boost production and the industry will create employment, earn more foreign exchange and other spin offs.

agriculture, as well as mentoring them. According to her, the goal of the conference and agric start-up pitched competition was to support the next generation of agribusiness professionals to create jobs, thereby addressing the unemployment challenges in the country. The pitched competition had three agropreneurs who were finanlists pitch their businesses for grant price to scale up. The pitched competition was won by Krixto Bax Limited, a start-up in the aquaculture industry. Also speaking during the event, Onyeka Akuma, founder and chief executive officer, Framcrowdy said that with collaboration, farmers will be empowered to boost their productivity. Akuma urged youths to take advantage of the opportunities across the value chains by addressing challenges limiting players in the sector. “We need to start creating solutions to the problems other people complain about,” Akuma said. Bridget Okonofua, president, Unique Women In Agriculture Cluster Initiative (UWIACI) said that since agriculture is becoming more vibrant, technology and innovation are inevitable.

Z-Farming, a start-up in Nigeria’s agricultural sector has emerged as finalists in the annual New Venture Competition, a bu si n e ss pitch co mp etitio n hosted by Georgetown University’s McDonough School of Business in conjunction with the Walsh School of Foreign Services’ African Studies Programme. The agritech start-up is the only Nigerian business listed as one of the six finalists for the pitch contest. Adewale Oparinde, founder, EZ-Farming said in a statement made available to BusinessDay that the development is another validation for the impressive work EZ-Farming is doing to revolutionalise farming in Africa, noting that the start-up offers one of the highest Return on Investment (ROI) in the agritech investment space in Nigeria. “We are very excited by the fact that we have made it this far in the competition. We know that our mission to connect people to farmers, invest in commercial farming in Africa and empower youths to create wealth is never missed and we are fully committed to making this happen. This would be the basis of our pitch at Georgetown University,” Oparinde said.

Organisers of the event, the Young African Professions DC ( YAP DC) a network of over 10,000 African professionals in the district of Columbia in Washington, United States, in a statement, said the competition is in its third consecutive year and that the 2019 Georgetown Africa Business Conference is themed ‘Transforming Africa: A New Business Revolution.’ A c c o r d i n g t o YA P D C , t h e pu r p o s e o f t h e e ve nt i s to showcase the growth and impact of the private sector across the African continent and facilitate a discussion on the opportunities to continue the success recorded. “After careful review of each application, six ventures from Ghana, Zambia, Nigeria, Uganda, and Southern Africa have been selected to pitch on February 2nd,” the group said in a statement. “These ventures focus on tackling critical issues in agriculture, healthcare, education, environmental sustainability, and human capital. Click on the logos below to learn more about each venture,” the group added. Other startups shortlisted for the pitch competition are Health First; Talents in Africa; Joon Africa; Wena Hardware and Recycle Up.

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Showcase success stories of agripreneurs to attract youths, experts tell FG Stories by Josephine Okojie

xperts in the agricultural sector have urged the Federal and St at e G ov e r n m e nt s t o project successful stories of agripreneurs to encourage other youths into agriculture and agribusiness in the country. The experts, who spoke with BusinessDay, said that government at all levels are in the best position to stimulate agricultural revival in the country and make the sector attractive to the younger generation. Despite the country’s population growing rapidly, food production is not growing at same pace, as youths are unwilling to take up careers in agriculture. The population of farmers in the country has been on the downward trend due to old age and death, making it imperative for the sector attract youths.

“We need to project t h e su c c e ss st o r ie s o f agripreneurs to attract youths into the sector, while providing the v i t a l i n f ra st r u c tu re to a i d p ro d u c t i o n ,” s a i d AfricanFarmer Mogaji, chief executive officer, X-Ray

Consulting. “Agriculture is a serious business and it needs to be treated as such. The government needs to make certain commitments in the area of infrastructure, Mogaji said. He stated that the

C:AVA organises training for cassava processors on food safety

n a bid to promote food safety, quality and operation management, the Federal University of Agriculture, Abeokuta (FUNNAB) and Increasing Performance of the Cassava Industry in West and Central Africa Region (IPCI) under the Cassava: Adding Value for Africa 2 Project have organised training for cassava processors. Ac c o rd i ng t o L ou i s e Abayomi, postharvest specialist at the Natural Resources Institute (NRI), University of Greenwich, United Kingdom, the training is expected to increase efficiency, reduce variability in product quality and optimise potential profits. Abayomi also noted that the training would put the FUNAAB Integrated Cassava Processing Centre in the right position to be a regional cassava training centre for processors. “It is hoped that other countr ies that are less developed in terms of cassava processing can come here

and learn,” she said. “There is a number of equipment that has been put here from a number of fabricators in Nigeria and some of the equipment here are actually the best in the market at the moment,” she added. Enumerating the purpose the training centre is supposed to serve, Abayomi pointed out that it is expected to serve as a business, training and a research centre. As a business centre, she said, “it is supposed to be sustainable and supposed to churn out cassava products, such as Fufu, Garri and so on”. Speaking further of the training centre, Abayomi said “people, even students within food science industry should be able to come here and train, which enhances their skills before they go out there in the workplace. “Students can come here to process their samples for research. So what I am doing here today is basically trying to implement those best practices that will serve

as a Centre of Excellence, so there is a roadmap towards implementation,” she said. A l s o, L at e e f Sa n n i , a professor and country m a n a g e r, C : AVA 2 a n d deputy vice-chancellord e v e l o p m e n t , F U NA A B described the training as a step in the right direction as it would enhance the implementation of quality management and ensure t h e p ro d u c t i o n o f s a f e and wholesome cassava products such as garri, fufu, plantain flour or poundo yam flour. Sanni revealed that participants would among other modules, be trained o n h a z a rd s a s s o c i a t e d w i t h f o o d a n d c o n t ro l measures, identification of Critical Process Parameters (CCPs) and critical limits, monitoring systems and cor rective actions, verification and validation, as well as documentation, maintenance and review of Hazard Analysis Critical Control Point (HACCP) plans.

provision of critical i n f ra s t r u c t u re s w o u l d help the youths shift focus from white-collar jobs into agriculture, agribusiness as well as address the issues of rural-urban migration. Also speaking to BusinessDay in a telephone

interview, Abiodun Olorundenro, manager, Aquashoot, said that apart ffrom telling the success stories of agripreneurs, youth would find agriculture attractive when the sector becomes mechanised. “Apart from various agripreneurs success stories, youth will also find agriculture attractive when there is innovation. “Currently, our agriculture is still involved in a lot of drudgery and this would make it become unattractive to the youths. The average Nigerian youths wants to be involved in a profession were they see others there making it financially and that involves innovation,” Olorundenro said. He urged the government to provide tractors for far mers and other infrastructures that would help reduce production cost, thereby making agriculture profitable to impact farmers’ livelihoods. Sani Dangote, vice

president, Dangote Industries and president Nigeria Agribusiness Group (NABG), said that youth would only find agriculture attractive when it becomes a business that is profitable and when the country is able to move away from subsistence to commercial agriculture. “A lot of farmers are still entangled in poverty as a result of low productivity despite the volume of time they spend on their farmlands. How can the youth go into agriculture when its entrenched in poverty? And this is why NABG is advocating for a revolutionised agric sector by changing the practice,” Dangote said in an exclusive interview with BusinessDay. “A larger scale of youth will only find agric attractive w h e n t h e g ove r n m e nt develops mechanisation and gives youths access to land. With this, agric becomes attractive for youths as a profession,” the NABG president added.

What it takes to own a poultry farm

oultry production is the aspect of livestock farming that presents one of the finest opportunities for potential entrepreneurs and investors to make good money within the shortest period of time possible, if well setup and managed. Currently, Nigeria, Africa biggest economy needs more than a million metric tonnes of poultry products annually to meet local demand. Official figure shows that local farmers are only able to produce about 300,000 metric tonnes, leaving a wide gap of more than 1.2 million metric tonnes. This has made smuggling of poultry products; especially chicken and turkey a big business for importers of these products. As a result of this, the government placed ban on the importation of poultry products. But most of the bans placed on poultry products have not been effective and have made no real impact on actual foreign imports. Imported poultry products, e s p e c i a l l y c h i cke n a n d turkey, have been identified as causative agent in NonCommunicable Diseases (NCDs) and antibiotics resistance. Some of these

health conditions include hypertension, kidney disease, and cancer. This has made the demand for fresh chicken products on the increase especially from Nigeria’s middle growing class which constitute about 60 percent of the total population. According to industry estimates, Nigerian poultry industry is estimated at over N80 billion ($600 million) and is comprised of approximately 165 million birds. Apart from chicken production, investors and agro entrepreneurs can go into egg production as well. With the Nigerian population of over 180 million people, the market for poultry eggs is rather un-imaginable. Neighbouring West, East and Northern African Countries also depend on poultry eggs from Nigeria for consumption. This implies that the market is very huge with good return on investment. Also, with the increasing awareness of Nigerians improve their nutrition with at least one egg daily and the recent Federal Government School feeding initiative, the market for poultry table eggs is widening on a daily basis. The cost of setting up

a poultry farm depends on the size of the farm and the number of birds intended to start production with. For a poultry investment between 200 and 500 birds, the potential investor requires between two and five million. The investor has to first identify the aspect of production desired to start with, either egg production or meat production. The next step is to obtain day old chicks from reputable hatcheries. The small chicks can be either naturally or artificially brooded. If artificially brooded, small chicks must be placed in a separate house from laying chickens and it is necessary to protect the chicks from predators, diseases and cold. This stage of brooding lasts for eight weeks. In the first four weeks of life, small chicks need to be housed in a brooding box first before transferred to the main pen house. Birds domestication involves feeding with very good feed, supply of clean water and keeping the farm clean always by way of regular disposal of their wastes, disinfecting the pens and restriction of foreign bodies from entering into the pens.

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We scrutinise GMOs properly before granting permits, says NBMA

ufus Ebegba, director general and chief executive officer of the National Biosafety Management Agency (NBMA) has said that the agency duty is ensuring safety of genetically modified foods (GMO) and products to humans and the environment. Ebegba in a statement to clarify the process of granting approvals for Genetically Modified Foods and Products said before any organisation is granted approval status by the agency, two specific committees made up of professionals and experts from the academia, line government agencies, civil society groups and other stakeholders are constituted to painstakingly

analyse the application and review the risk management and risk assessment plans before a decision is made. He said when an application either for importation of a GM seed or grain, or for the confined field trial and commercial release of a crop, is made to the agency, it is acknowledged and treated based on the NBMA Act 2015. Public participation in the process of permit granting starts with a publication of the application as public notice in three national dailies and the NBMA website to allow members of the public to contribute to the discussion which can either be in support or against the application for a period of 21 days. The agency finally makes

its decision after going through the recommendation of the ad-hoc committees, advising the agency to either grant or deny a permit, giving full consideration to safety issues to the environment, human health and socioeconomic

How to establish an oil palm plantation Olumakinde Oni

il Palm is native t o We s t A f r i ca. Nigeria used to be the Worldâ&#x20AC;&#x2122;s largest producer of oil Palm before the oil boom era. Malaysia has now taken the leading position. Oil Palm Plantation and allied industries is now the main stay of Malaysian economy. According to experts, Malaysia came to Nigeria in the seventies to obtain oil palm seedlings and seeds. Apart from household consumption, oil palm serves as by-product to numerous industries such as the food and beverage, cosmetics and the pharmaceutical industry. The palm can be used in various ways: the leaves are used in making brooms and as roofing materials (in the rural areas). The bark of the fond can be peeled and woven into baskets. The main trunk can be splitted like dawn timbers and used as part of building materials. Palm wine can be obtained from oil Palm, red Palm Oil are readily obtainable from the fresh fruit bunches. When the fruit is processed the residue obtained can be used as fuel (for cooking and fertilizer to improve soil nutrient). Red Palm Oil is used in Cooking, making soap, candle and margarine. Palm Kernel oil can be extracted from the nut. The residue obtainable in the process of palm kernel oil extraction otherwise called palm kernel cake is used to as livestock feed. Palm Kernel Oil is used in vegetable oil and soap making. Palm Kernel shells are also useful as energy source and industrial raw materials such as mosquito coils when binded. The uses to which oil palm can be made seem non exhaustive. This clearly

indicates that investment made in the establishment of oil palm plantation is nothing but a wise one. The market is guaranteed for all the products of oil palm plantation in this era of global food crisis. Technical Information To establish oil palm plantation, it involves getting a good site where rich, well drained acidic soils are abundant. The soil should have adequate quantities of potassium, magnesium and nitrogen. Soil tests should therefore be carried out to determine the nutrient status of the land. It is usually better to use the early maturing variety called tenera which bears fruits as from the fourth year. Other requirements include seedlings procurement, this can be obtained from reputable nurseries. Prospective investors must engage the services of Agricultural experts in the course of establishing this project. Other cultural practices are planting, regular weeding, pruning and fertilizer application. Serious minded investors will be guided accordingly in the implementation of this project Financial Aspect We are recommending a 20 hectare plantation for a start. 20 hectare oil palm plantation can conveniently service a palm oil mill that will be established by the owner when the plantation starts to fruit. To establish a 20 hectare plantation a sum of N19, 300,000 will be required broken down as follows: Pre-Investments: N300, 000 Land Acquisition : N10, 000,000 Land Clearing/Preparation : N3, 000,000 Seedlings procurement

400/hectare (8000 @ N500) : N4, 000,000 Other Cultural practices @ N100,000/hectare. : N2,000,000 TOTAL N14,000,000 ========= Note: The project scope can be higher or lower depending on the financial strength of the prospective investors. Var ious governments (Federal, States and Local) can also set up this project and lease it out to individuals and corporate bodies on maturity. It is a way of diversifying the economy and also to create jobs and income opportunities for Nigerians. It is also one of the strategies for food security in the country and also in line with the transformation agenda of the present Federal Government of Nigeria. Income Analysis A matured plantation will start to give investor 12.5 tonnes per hectare of red palm oil annually from the fourth year per hectare. 250 metric tonnes of oil can be obtained annually from 20 hectares plantation. A tonne of red palm oil is a minimum of N150,000. Gross revenue of N37.5 million is obtained from red palm oil. We can also get 7.5 metric tonnes of palm kernel per hectare. This gives us 375 tonnes from 20 hectares. This translates to annual income of N26.25 million. Total income realizable is about N63.75 million while the annual operating expenses is put at N15 million. This leaves us with net income N48.75 million annually for the investor for the rest of his/her live. There are still other sources of income such as palm fronds and palm kernel shells. Serious minded investors can be assisted in the realization of this worthwhile investment.

impact. Ebegba said looking at the process it is clear that the Agency does not just process permits but looks critically at the application ensuring that the product does not or will not cause harm before granting approvals. The permit for the commercial release of the GM cotton was granted in

2016 after due diligence and this product was released under the watchful eyes of the Agency and what seemed like a very unpopular decision, was applauded by the Ministers of Agriculture and Rural Development, and Science and Technology in a joint press conference two years later. The recent approval for the commercial release of GM cowpea went through the same safety procedures, taking into consideration safety to the environment which includes ensuring the conservation and sustainable use of biological diversity. In the area of safety to human health, the Agency ensures that GMOs are not toxic to humans and that they do not cause and allergies. He averred that the Agency will continue to ensure that only safe GMOs w ill be allowed either for planting,

January 23 - January 30, 2019

consumption or processing in Nigeria as the Agency has full structural and human capacity to ensure the safety of genetically modified organisms in Nigeria. He also touched on the process of development of GMOs through modern biotechnology and assured that the application of modern biotechnology will be thoroughly scrutinized to ensure that the NBMA Act is followed through. He also stated the Agency will not hesitate to prosecute any violators of the NBMA Act and advised all those who intend to deal in GMOs must ensure they apply for a biosafety permit first. He once more advised super stores that import GM foods without permit to desist from such as the Agency will not hesitate to shut down such super store.

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NIMASA sees high demand for maritime infrastructure, cargo tonnage in 2019 Stories by Uzoamaka Anagor-Ewuzie

hough Nigeria’s economy is still in a somewhat fragile state after exiting recession in the second quarter of 2017, with 1.8 percent growth in third quarter of 2018, there are indications that demand for the use of maritime infrastructure will be on the increase in 2019, an industry forecast by the Nigerian Maritime Administration and Safety Agency (NIMASA), has predicted. This, according the forecast, is on the basis of the expectations that the industry will see 10 percent more tonnage coming through Nigeria’s ports, which means that more ships will be required to bring in the projected increase in cargo volume. It also predicted that there will be an increase in opportunities for tanker vessels, container vessels, offshore support vessels and Cabotage operations, especially on possible signing into law of the much awaited Anti-Piracy Bill and Petroleum Industry Governance Bill (PIGB). Presenting the 2019 forecast in Lagos on Tuesday, Doyin Salami of Kainosedge Consulting Ltd said that all the industry players need

to up their game, not just in terms of acquiring and building maritime infrastructure, but also in rendering service to meet the demand, which businesses expect to see in 2019. According to the report, the nation’s maritime industry has not recovered to its pre-recession levels of competitiveness and activity, but is expected to in tandem with projected growth in the economy. “We expect growth in the sector to kick-off, based on assumptions from the Federal Government’s Economic Recovery and Growth Plan (ERGP),” Salami said. Salami stated that the general election and its aftermath was a major factor that would affect the economy this year. The other, according to him, will be on things that will be happening in the global economy, especially the United States/ China trade war. Also, total fleets including oil tankers and non-oil tankers are improving but are still well below the 2014 figures. This trend is also the same for total cargo throughput at the ports (excluding crude oil terminals) in 2018 at 30million is still at a far decline from the over 80million recorded before the global crash in oil prices in 2014. According to the forecast, the outlook for the econo-

L-R: Emmanuel Duja Effedua, rector, Maritime Academy of Nigeria, (MAN) Oron; Martins Fakrongha from Headquarters Western Naval Command; Bashir Yusuf Jamoh, executive director Finance & Administration, Nigerian Maritime Administration and Safety Agency (NIMASA); Margaret Orakwusi, chairman, Ship-owners Forum, and Dakuku Peterside, DG NIMASA, during the public presentation of Nigeria’s Maritime Industry Forecast for 2019-2020 held in Lagos recently.

my in 2019 reflects on the global side, concerns about slowdown in growth, likely higher US interest rates, a stronger dollar and volatile oil prices, possibly averaging below US$60 per barrel, and domestically, the impact of sentiments surrounding the 2019 general elections as well as post-electoral transition. The growth of the total fleet size in 2019 over 2018 is predicted to be 10.33 percent, and will ease to 8.75 percent for 2020. Oil tanker fleet size is projected to decrease by 11.2percent for both 2019 and recover to

a positive growth of 0.11 percent by 2020. Non-oil tanker fleet size is estimated to increase by 14.3 percent in 2019 and 10.2 percent in 2020, while oil rig count is projected to increase by 6.98 percent and 6.5 percent for 2019 and 2020, respectively. In reaction, Dakuku Peterside, director-general of NIMASA, who said that the forecast dealt on two key issues including the review of the past trend in the maritime industry and the opportunities available for prospective investors as regards acquisition of assets, also identified asset build-

ing/acquisition and human capacity development, as two factors that would enable Nigerians play a major role in the maritime and shipping sector. He further predicted that: “If elections end in favour of the ruling All Progressive Congress (APC), it will mean continuity on the existing policies but if it ends in favour of the opposition People’s Democratic Party (PDP), there will be a shift in policies. On the other hand, elections might end in a deadlock and this will pose a serious challenge to the local economy including

the maritime sector. Emphasising that growth in the global economy is going to be very slow in 2019 and 2020, with a slight effect on Nigeria’s economy, Peterside said that this development will affect the oil and gas industry, and maritime by extension. “Demand for finished products will continue to increase, meaning that there will be a lot of import into the country, and there will also be an increase in export of gas cargo, especially at the completion of LNG train 7. There will also be an increase in the export of nonoil cargo,” Peterside further predicted. “After 2014, the demand for shipping services nosedived but it started rising again in 2018. However, it has become a thing of necessity that if Nigeria fails to address issues around piracy and other criminalities on its waters, the nation will find it difficult to achieve its maritime potential,” he added. Recall that in 2018, the Nigerian maritime industry was projected to grow by 2.5 – 5 percent with a projected increase in demand for maritime services during the period. However, Nigeria failed to achieve the 5 percent as predicted but according to NIMASA, maritime industry was closer to achieving the 5 percent target.

Amy Jadesimi, LADOL’s MD emerges FIN leading woman 2019

Group to unveil book on Buhari’s achievements in maritime sector

my Jadesimi, managing director of Lagos Deep Offshore Logistic Base (LADOL) was awarded the Oil and Gas Leading Women Award at the Foreign Investment Network (FIN) and Federal Ministry of Petroleum Resources Honorary Patrons Dinner and Awards Night, held at the just concluded Nigeria International Petroleum Summit 2019, in Abuja. The recognition was in acknowledgement of Jadesimi’s significant contribution to the oil and gas servicing industry and maritime sector development in Africa, including leading LADOL – as it ensured that the first successful partial fabrication and integration of the world’s largest FPSO successfully took place in Nigeria.

he Shipping Correspondents Association of Nigeria (SCAN) is set to unveil a new book detailing the achievements of the President Muhammadu Buhariled administration in the maritime industry. A statement jointly signed by Yusuf Babalola, President of SCAN, and Shulammite ‘Foyeku, chairman, Book Presentation Committee, said that the book titled, “Footprints of President Muhammadu Buhari in the Maritime Sector,” will be presented to the public on February 8, 2019 at Eko Hotel & Suites, Lagos. The statement said that the book highlights some of the measures taken by the present administration to address the numerous challenges and infrastructural deficit facing the sector. “To make the port and the maritime domain a hub of

Sh e w a s a l s o re c o g nis e d as the managing director/CEO of the first Sustainable Industrial Special Economic Zone in Africa, and a member of the Price’s Trust International Global Advisory Board; a founding comm i s s i o n e r o f t h e Bu s i ness and Sustainable Development Commission; and vice-chairman of the Board of Directors of the Global Maritime Forum. Speaking at the award ceremony, Michael Dragoyevich, chief executive officer of FIN said the award was in recognition of business leaders like Amy Jadesimi, trailblazers, policy makers and investors in the oil and gas sector in Africa for contributions. Commenting, Jadesimi said: “This award is a great honour and it represents

the success L ADOL has achieved thanks only to the 18 years of hard work and dedication of our founders and our staff. LADOL is all about team work and I’m very proud to lead the men and women who work at LADOL. Our team work shone through not only in the success of the Egina project but also in achieving our ISO 9001, 14001 and 45001 last year. Jadesimi appreciated LADOL’s clients - Total and Shell, for believing in LADOL and supporting genuine local content in Nigeria. “Going forward we hope to work and collaborate with a growing number of indigenous companies spread across the country and the region, so that together we can help make Africa the growth engine for the world,” she added.

maritime activities, the Federal Government has introduced the policy of Ease of Doing Business in the Port. The government has also embarked on the rehabilitation of Wharf Road, among others, which had been a nightmare to port users over the years; and procured speed patrol boats for the Nigerian Navy to combat oil thefts and other maritime crimes. The statement further said the administration also acquired tug boats for the Nigerian Ports Authority (NPA), and is currently constructing a rail line from Lagos to Ibadan for evacuation of cargoes from the ports. “Other efforts at repositioning the maritime industry include the dredging of the Escravos channel in the NigerDelta, restructuring of the Maritime Academy of Nigeria (MAN), Oron, and ban on importation of rice to promote food sufficiency.

“It is in the light of the above that we are determined to bring to the front burner the giant strides the present administration has recorded in the nation’s maritime industry, which will be unveiled at the launch of the book,” the statement said. The book presentation is expected to be attended by Hassan Bello, executive secretary, Nigerian Shippers’ Council; Dakuku Peterside, director general, Nigerian Maritime Administration and Safety Agency (NIMASA); Col. Hameed Ali (rtd), comptroller general of Customs; Vice Admiral Ibok Ete Ibas, Chief of Naval Staff, and Olorunimbe Mamora, managing director, National Inland Waterways Authority (NIWA). The Minister of Transportation, Chibuike Rotimi Amaechi, is the Chief Host, while the Managing Director, Nigerian Port Authority (NPA), Hadiza Bala Usman, will lead the discussion.

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Nigeria ratifies 40 conventions, domesticates 19 international laws Stories by Uzoamaka Anagor-Ewuzie

akuku Peterside, the director general of the Nigerian Maritime Administration and Safety Agency (NIMASA), has announced that Nigeria has ratified 40 conventions on maritime safety, labour and marine environment as passed by the International Maritime Organisation (IMO) and International Labour Organisation (ILO). Also, 19 of the conventions have been domesticated by way of regulation, adoption or incorporation under the Merchant Shipping Act of 2007. Peterside, who spoke in Lagos during the 8th Strategic Admiralty Law Seminar for Judges organised by NIMASA in conjunction with the Nigerian Institute of Advanced Legal Studies (NIALS), also said that non-implementation and enforcement of international conventions on shipping has been affecting investments in the country. “It has been a herculean task trying to sell Nigeria to the international community

M.L. Garba, Justice of the Court of Appeal; Dakuku Peterside, director-general, Nigerian Maritime Administration and Safety Agency (NIMASA); Emmanuel Okon, director of studies, Nigerian Institute of Advanced Legal Studies, (NIALS), Associate and Mosunmola Arinola, Chief Judge of Ogun State, at the 8th Strategic Admiralty Law Seminar for Judges organised by NIMASA in conjunction with NIALS in Lagos.

for investments because in some cases the investors had raised the issue of uncertainty in dispensation of litigation and implementations of laws. It is on the premise that the seminar titled ‘Strengthening Nigeria’s Admiralty Regime through Effective Implementation of International Maritime

and Labour Instruments’ became imperative” Peterside said. According to him, NIMASA is working closely with the Federal Ministry of Transportation under the auspices of an Inter-Ministerial Committee to ratify additional six IMO conventions before the end of 2019

and to ensure that Nigeria as an IMO member state fulfills its treaty obligation. “The conventions include the Hong Kong International Convention for Safe and Environmentally Sound Recycling of Ships 2009; Protocol Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties (Inter-

vention Protocol) 1973; 1996 Protocol on Limitation of Liability for Maritime Claims (LLMC). Others are 2002 Protocol Relating to the Carriage of Passengers and their Luggage by Sea (PAL) 1976; International Convention on Standards of Training, Certification and Watch Keeping for Fishing Vessel Personnel (STCW-F) 1995, and the Protocol of 2005 to the Convention for the Suppression of Unlawful Act against the Safety of Maritime Navigation. He added that NIMASA as a responsible Agency is working with relevant stakeholders under the auspices of the IMO Mandatory States Audit Scheme (IMSAS) Corrective Action Plan Committee to ensure that all queries raised in the 2016 IMO Audit report on Nigeria’s maritime sector were addressed before the end of first quarter of 2019 in order to boost Nigeria’s reelection bid into Category ‘C’ of the IMO general council. Peterside, who reiterated the fact that the maritime sector in Nigeria has a lot of opportunities to become an economic driver, said that this can be fully actualised when the various arms of

government work together collaboratively. He urged the Nigerian judicial system to ensure efficiency and timeliness in the dispensation of justice in maritime related cases, as it will boost stakeholders and investor confidence in the system. “Timeliness in justice dispensation is critical to realising the potentials in the maritime sector to enable investors trust our judicial process. The more time taken on a case, the more investment opportunities are lost. Therefore, I wish to use this opportunity to appeal to our judges to facilitate timely resolution of dispute for maritime cases as we all have one role or the other to play in catalysing the Nigerian economy,” Peterside said. On maritime security, Peterside said that the draft suppression of piracy and other maritime offenses bill facilitated by the Agency, aimed at criminalising piracy and other maritime offenses has been forwarded to the National Assembly, adding that the bill has passed first reading in both chambers of the National Assembly. He also expressed optimism that it will be passed into law before the end of the 8th Assembly.

NPA commences oil spill clean-up exercise along Onne Port channel

APM Terminals increases rail connectivity for its terminals as Nigeria drags

he Nigerian Ports Authority (NPA) has commenced cleaning up of oil spill at the Federal Oceans Terminal (FOT) in Onne Port. The clean-up is being executed by the personnel of NPA’s environment department from both the corporate headquarters and the FOT. Speaking during the kick-off of the exercise, Barbara Nchey-Achukwu, acting port manager, who represented Alhassan Abubakar, port manager, commended the wisdom of Hadiza Bala Usman, managing director of NPA, for granting approval for the commencement of the cleanup. Nchey-Achukwu, who disclosed that prior to the clean-up , vessel owners whose vessels call at Onne Port, had been complaining of oil stains on their vessels hauls, expressed optimism that after the exercise, such complaints

P M Te r m i n a l s Pipavav, one of India’s leading multipurpose ports, launched a rail connection to its Kanpur Inland Container (ICD) at the end of 2018, giving customers the opportunity to connect more efficiently to the gateway port. This is happening at a time Nigeria is still struggling to revive its rail system an as alternative means of moving cargo, after the failed attempt to concession the rail line to General Electric. The new connection was aptly named the ‘Polymer Express’ as the first train on the route was carrying 90 TEUs of polymer for Gail, the natural gas transmission

will be a thing of the past. “I know that after this exercise, terminal operators and shipping companies will no longer complain to Onne Port management of stains on their anchored vessels,” Nchey-Achukwu said. I.S Abdulbaki, general manager HSE, said he and his team have come to Onne Port to clean up the water channels. According to him, it has become difficult to ascertain the actual cause of the oil spills at the Port, but there was suspicion that it was due to the activities of oil bunkers and waste from communities that are empted into the water. “Apart of the cleanup, we are also removing debris from the waters and using chemicals to clean the water. We will also embark on awareness campaign to raise the consciousness of the people on the need for clean waters, and its role in sustaining aquatic life and

vessel navigation,” he said. Also speaking, Khadijat Sheidu-Shabi, assistant general manager, Environment said that NPA has decided to carry out this oil- spill clean up to improve the quality of the water channels. “As an Authority, we are proud to show commitment to improving the navigational channels within Onne Port”, Sheidu-Shabi stated. Uchenna Chukwuemeka, principal manager/ and the Commander of Onne Port channel cleanup operations, listed materials to be deployed for the exercise to include bio-degradable materials, mediation products and pressure washers for removal of oil stains on the quay walls and fenders. He said that the team will also be using scooping nets within the Onne water channels to remove floating debris, cans and cellophane bags within the Onne water channels.

company. The terminal is one of India’s leading gateway ports for containers and liquid and dry bulk cargoes, serving customers in the state of Gujarat with road and rail networks to India’s hinterland and northwest. “It will help exporters and importers to move their cargo faster and more safely using an environmentally friendly mode of transport,” said Keld Pedersen, managing director of APM Terminals Pipavav. This follows another recent connection in Italy, where new routes to the north from the port of Vado Ligure, have been resumed. Vado Ligure is a large

Mediterranean port that specialises in handling fresh fruit and vegetables, so rapid transit is essential. The new trains from the terminal travel to Rivalta Scrivia where the Rail Hub Europe SpA is based. These recent additions build on further expansions made last year in Mexico and Sweden. Meanwhile in the Americas, a new block-train service from APM Terminals Lazaro Cardenas, Mexico, is helping avoid congestion and delays commonly associated with other west-coast ports, to reach hinterland destinations in the US and Mexico. Not only is the service faster, but it’s also proven to be much more secure than transport by truck. Industry close watchers in Nigeria believed that the government needs to pay more attention to reviving the nation’s railway in order to ensure round-the-clock cargo movement using the latest technology to avoid congestion along Apapa corridor.

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Sovereign Trust N4.2bn claims payout in 2018 underscores strong capacity

Ahead of elections, Nigerian’s reminded of position of insurance on ‘riot risks’ Stories by Modestus Anaesoronye

head of February 16th general elections in Nigeria, experts have called for caution and increased vigilance to avoid g risks exposures that could affect life and properties. The experts noted that in transition to democracy there is usually election related violence, sometimes affecting those that are not targeted. So, understanding the potential for violence and adjusting plans, procedures and resources during an election period will help mitigate risks and lay the groundwork for responding to emergencies if they arise Insurance experts note that life and property in-

surance ordinarily does not cover riot or violence, stating that this accounts for why many are not able to make claims when properties are destroyed as result of riot. Kola Ahmed, an insurance broker and former director general of the Chartered Insurance Institute of Nigeria(CIIN) said what brokers who manage clients have done over time is to request for an extension of the property and fire policy to include cover for riot and violence. “And what this means is that the insured would have to pay extra premium to get cover extension”. Ahmed noted that in advanced economies like the UK, it is usually the responsibility of government to pay compensation for damage as result of riot. “In the UK, we have what is called Riot Dam-

age (Compensation) Act, which makes provision for insurers to recover their loss if they pay claims to insured on damages due to riot.” According to Ahmed, such policy is not here in Nigeria and that is why insurance companies are reluctant to give cover for riot. Chika Onwunali, managing consultant, Premium Debate said loss from riot could be huge and capable of wiping out a whole insurance company. “It is the responsibility of government to pay for premium on riot and political violence and it is taken as subsidy to insurance. Unfortunately it is not available in Nigeria, that is why most violence is not insured.” Meanwhile, the Association of Registered Insurance Agents of Nigeria

(ARIAN) had stated that, as the nation embarks on the most important election in her history over the next few weeks, it urge all stakeholders to ensure that election is free, fair and credible. “We must ensure it is violence / war free”. The group said this is because, as an insurance expert, the cover for war risks are always excluded from our policies meaning that if there is war , your car, house, properties even life if destroyed, insurance companies will not be available to pay claim, except in case of extension. “For this reason, we in the insurance industry plead with every Nigerian to do everything within their powers to see that this election is free, fair and credible. Also War will definitely introduce new hazards which cannot be accurately calculated for.

nderwriting firm, Sovereign Trust Insurance Plc N4.2 billion claims payout in 2018 attest to its commitment and capacity to meeting obligations as and when due. The company last year settled claims totalingN4.23 billion to various insured who suffered one form of loss or another during the period. Segun Bankole, head of Corporate Communications & Brand Management stated that the underwriting firm is does not pay lips service to settlement of genuine claims when they occur. He however, stated that the claims experience in 2018 was quite humungous which he attributed to the downturn in the economy. According to him, “every insured wants to claim at every given opportunity which really escalated the claims figure for the year. The summary of the claims paid in 2018 shows that Energy had the highest figure of N2.1b with Fire Insurance ranking second with total claims settled to the tune of N664m. Motor Insurance claims amounted to N567m while Marine & Aviation claims stood at N447m. The total sum of N333m was paid as claims on General Accident Policy with Engineering closing the figures with N41m bringing the total claims paid to N4.2b. Jude Modilim, the executive director, Technical Operations said “there is no compromise to genuine claims settlement in Sovereign Trust Insurance Plc because the major focus of the company is to ensure that our teeming customers get to enjoy the benefits of taking out any form of insurance policy

with us through prompt settlement of their claims when the need arises. “That to us, is the only way to prove that we are well and alive to our responsibilities as an underwriting firm in the country, we intend to uphold this obligation and we will continually strive to make good our promise.” In the same vein, Olaotan Soyinka, managing director/CEO of the company also stated that the company has put in place a friendly-claim-process with the major aim of putting smiles on the faces of its various customers across the country by ensuring that claims are settled within the shortest period possible on completion of all necessary documentation. Our commitment to uphold the tenets of our

Vision and Mission has made the company one of the country’s most relevant and responsive insurance companies in the country. Sovereign Trust Insurance is no doubt a formidable force to reckon with in the Nigerian Insurance landscape with a network of offices spread over (18) locations in the country buoyed by cutting-edge technology in delivering seamless and convenient insurance services.

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The issues, as micro pension sets to impact the informal sector

services available to them, so that in practice success remains the exception rather than the rule.” Most poor people across Nigeria in their life time combine self-employment, casual employment, low-grade and formal employment, fulltime, part-time and intermittent employment respectively. The idea of retirement is foreign to most of them, so what happens when they can no longer support themselves? For the poor and vulnerable, two types of pension could be provided. The first is public or social pension, where the state raises revenue and redistributes to citizens when they reach a stipulated age in order to guarantee them a dignified life and Micro-Pension, a personal retirement savings plan. But because of paucity in government revenue and failure of the traditional pension system, the first one is not tenable in Nigeria today. Micro Pension is a programme that seeks to give a chance to the poor and marginalised working-class people to live a comfortable life at the end of a formal work, it builds up retirement income for them. A defined contribution

Micro Pension programme has kicked off targeting about 80 million self-employed persons and informal sector workers into the CPS. The Nigerian informal sector is characterised by absence of formal structures, low and irregular incomes earned by workers except those on fixed salaries, highly mobile and flexible jobs, no permanent work address in many instances. There are also many Small and Medium Enterprises (SMEs) with less than

scheme, micro-pension is basically a long term voluntary savings plan that accumulates over a long period, in order to yield returns at a later date. Savings are managed and invested in financial or capital markets by professional fund manager at low costs, accessible to poor customers. The accumulated fund could be drawn in retirement by way of lump-sum payment, annuity or some combination of both. Target Market/Informal Sector PenCom recently said the

‘

Micro Pension is a programme that seeks to give a chance to the poor and marginalised workingclass people to live a comfortable life at the end of a formal work, it builds up retirement income for them

‘

f they have a choice, ma ny l ow i n c o m e earners, self-employed people and informal sector workers across the country would not like to depend on their children and relatives for financial support during their old age. Speaking the mind of other low income earners, a petty trader once said “I don’t want to be a burden on my children and relatives. That is why I have to force myself to save so that I can live my old age with dignity. The money I save now will be of a great help when my husband and I grow old.” The above statement captures the essence of Micro Pension, an initiative of the National Pension Commission (PenCom) meant to lead the marginalised section of the society towards a better and more financially secured future. Before now, pension used to be seen as something for the privileged class, particularly those that worked, working or hopes to work for the various tiers of government as well as those in paid employment in the formal sectors. This is notwithstanding the fact that old age poverty is not limited to workers in the organised sectors because no matter how long a selfemployed person decides to work age will eventually retire him. That is why the Pension Reform Act, 2014, by way of Micro Pension, is seeking to ensure that this class of Nigerians have something to fall back on when they grow old and retire from active service. Micro Pension Stuart Rutherford in his article ‘Micro-pensions: Old Age Security for the Poor?’ noted that “poor people well understand the purpose and value of saving. They sense that there may be a savings route to old-age security, and grab opportunities when they come their way. But they are beset by many difficulties, both in their own circumstances and in the financial

RC634453

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

three employees, household workers and many more that are eligible to participate in the Contributory Pension Scheme (CPS) under the micro-pension initiative. These will add up to the myriads of motorcycle riders, taxi, bus and truck drivers, food vendors and other hawkers as well as artisans and self-employed people. Micro Pension is very attractive to this group of workers since it is offering them a platform to live a life of comfort in retirement. The scheme targets entertainers, technicians, drivers, tailors, fashion designers, barbers and hair dressers as well as other artisans and professionals plying their trades at different levels across the country. All informal sector workers who earn more than they can consume on a daily basis are also being targeted under the micro-pension initiative. Benefits of Micro Pension Determined to ensure that its micro pension scheme succeeds, PenCom has continued to dialogue with different groups including self-employed tailors and garment workers under the umbrella of the Nigerian Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN) to drive home the relevance of

pension savings to them. According to Aisha DahirUmar, acting director-general, PenCom, the implementation of the Micro Pension Plan will improve the standard of living of the informal sector participants at retirement and reduce dependence on extended family for support at retirement. The plan, when operational, would capture selfemployed people, especially, those with irregular income, usually in the informal sector and are largely financially uninformed with limited or no access to financial services, especially, pension plan, DahirUmar stated. Section 2(3) of the Pension Reform Act, 2014 extends the coverage of the Contributory Pension Scheme (CPS) to selfemployed persons through micro pension scheme. Farouk Aminu, head, Research & Corporate Strategy, PenCom, had, at a forum in Lagos, said, the Commission is working on ensuring that the plan commenced as planned, noting that, this is a development that could enhance the growth of pension assets in the country. He stressed that the plan has the potential to generate about N3 trillion to the pension assets, while it intends to mobilise about 12 million contributors within five years. On benefits to be derived, Aminu, noted that self-employed people and workers in the informal sector could reap by participating in the plan, saying, the initiative, in addition to providing income for people at old age and inculcating a savings culture through highly protected and regulated investment, would afford them the opportunity to connect to other programmes of government while helping to finance infrastructure across the country. An Abuja based insurance professional looking at the issues relevant to moving the CPS forward, believes Nigeria is set to embrace the micro pension pensions.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

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Shortage of actuaries digs holes in insurers’ pockets ...Consultants make huge pay …IFRS, annuity increase demand Stories by Modestus Anaesoronye

he shortage of professional actuaries in the nation’s insurance market and the need for companies to pay professional consultants for their services are creating deep holes in firms’ balance sheets. The need for these experts became more critical since the introduction of annuity as part of the pension reforms, as well as the transition to International Financial Reporting Standard (IFRS), requiring firms to regularly carry out actuarial valuation and regular returns rendition to the regulators. “More than ever before we need the services of actuaries and this accounts for why we still pay heavily to consultants from time to time”, one of the insurance CEO’s said. “You know they are very few in Nigeria, and to recruit them abroad is also very expensive”, said the CEO who was looking to hiring one before the end of first quarter.” According to industry sources, there are only about 17 professional actuaries in Nigeria, underscoring the available potential in the market. Mohammed Kari, commissioner for Insurance said the National Insurance Commission (NAICOM) was making efforts to reduce the gap in the shortage of actuaries in the Nigerian market. Kari said the industry is in need of trained actuaries because of the significant role they play in risk management.

Kari said the Commission has embarked on a project of training some actuaries abroad to enable build capacity for the market. Rotimi Okpaise, one of the top actuaries in Nigeria, told BusinessDay that there are tremendous opportunities for actuaries in the market. “In fact, I thank IFRS for that because if I was answering this question some years ago, I wouldn’t have been this positive. There is a huge demand for actuaries in the Nigerian market right now. Incidentally, in the insurance industry, every insurance company needs to have an actuary.” Asked why this sudden demand, Okpaise said IFRS requires that every entity’s balance sheet reflect true and fair representation of obligations. “It could be pension obligation from pension fund managers; a company could have pension obligation to its employees; insurance companies also have obligation to their policyholders and they have to be accounted

for on an internationally accepted standard and to a large extent it’s only actuaries that can do these. “To go a step further, because results have to be presented in an IFRS format, insurance companies are now having to price their products to reflect the new direction, and so a multitude of requirements instantly present themselves and is only actuaries that are trained for that.” According to him, beyond that IFRS has opened the eyes of the Nigerian financial market to think risk management and that is the core of our training, which is to identify risk and quantify it. Banks, insurance and pension people all need actuaries’ obligations and risk management. Actuaries are professionals who deal with the financial impact of risk and uncertainty and mathematically evaluate the probability of events and quantify the contingent outcomes in order to minimise the impacts of financial losses.

They are central to the efficient risk management of insurance business and so help firms to scientifically evaluate the liabilities owed to policyholders. Enhanced wage analysts say represents a long term measure to end scarcity of actuaries currently bedeviling the sector, than relying for so long on intervention funding for training currently going on in the market. “The long term solution will be to restructure our reward and emoluments packages such that it will drive best brain into the industry. Good remuneration package will effortlessly drive professionals into the industry, says one of the CEO’s. “It is a fact that we are facing the challenge of inadequate professional Actuaries in the Nigerian insurance industry. “A major factor for this is that professional training of actuaries has not been localised in the country, so you need substantial amount of foreign exchange to train an actuary.”

Cyber, business interruption top global risk rankings

yber incidents and business interruption (BI) are tied as the most concerning risks for global businesses in 2019 and beyond, according to the results of the latest Allianz Risk Barometer report. The annual survey by Allianz, which questioned 2,415 experts from 86 countries, found that 37 percent of respondents identified cyber as their biggest risk while 37 percent said BI. Climate change (13 percent of responses) and shortage of skilled workforce (9 percent) were the biggest climbers on Allianz’s list, while companies were also more worried about changes in legislation and regulation (27 percent). In the UK, cyber threats and Brexit were considered the top risks, each receiving 48 percentof responses. “Companies need to plan for a wide range of disruptive scenarios and triggers, as this is where their big exposure lies in today’s networked society,” said Chris Fischer Hirs, chief executive officer (CEO) of Allianz Global Corporate & Specialty (AGCS). “Disruptive risks can be physical, such as fire or storms, or virtual, such as an IT outage, which can occur through malicious and accidental means. They can stem from their own operations but also from a company’s suppliers, customers or IT service providers.” Allianz noted that both cyber and BI risks are becoming increasingly interlinked as ransomware attacks or accidental IT outages often result in disruption of operations and services, costing hundreds of millions of dollars.

BI was also ranked as the biggest cause of financial loss for businesses after a cyber incident (69 percent of respondents), while cyber incidents were considered the BI trigger most feared by businesses (50 percent), followed by fire (40 percent) and natural catastrophes (38 percent).

number of people making the contribution is large, it is possible to build a huge pool of funds from their small individual contributions. Again, it is very unlikely that all contributors to the funds would suffer loss at the same time. The few who actually suffer loss are therefore easily compensated from the pool. What are the benefits of

insurance? Insurance provides you with peace of mind. When you know that someone else is sharing your risk, you can sleep with both eyes closed. Insurance also enhances businessmen’s confidence to do business as they know that is the event of an unexpected loss, they will, at least recover part of their loss.

“Whatever the trigger, the financial loss for companies following a standstill can be enormous,” continued Fischer Hirs. “New risk management solutions, analytical tools and innovative partnerships can help to better understand and mitigate the modern myriad of BI risks and prevent losses before they occur.” “It’s no surprise to see changes in legislation and regulation as the new top risk in the UK, jointly with cyber threats,” added Tracey Hunt, Deputy CEO of AGCS, UK. “Uncertainty around Brexit along with concerns around a potential increase in the regulatory burden and global trade disputes have made confidence fragile.” “UK businesses also continue to be occupied by the threat of cyber-attacks,” she explained. “The consequences of a major data beach have never been greater since the EU’s General Data Protection Regulation (GDPR) came into force with data breaches potentially now resulting in huge fines.” Shortage of skilled workers also appeared in Allianz’s top 10 global risks rankings for the first time this year, driven by factors such as Brexit uncertainty, changing demographics and a shallow pool of talent in the digital economy.

Are you still shrouded with ignorance about insurance?

any people lack knowledge about what insurance means and its benefits in our daily lives and activities. And this explains why the level of insurance penetration is low in this part of the world. The consequence therefore is that people will continue to lose valuables when there is

no replacement or compensation when losses occur. Here, this article explains primary concepts about insurance. What is insurance? In its primitive understanding and in simple language, insurance is the (mutual/unwritten) agreement between two or more people to help each other in the time

of trouble. In other words, it is the agreement between two or more people that brings about the assurance that, no matter what happens, each party will always be taken care of in time of trouble. Insurance can also be described as a practice where people who are exposed to identical risk situation contribute money into a

common pool out of which the unfortunate few that suffer loss are compensated. Insurance is therefore a form of security against the risk of loss. How does insurance work? Insurance is based on the theory of probability and the law of large numbers. What this means is the since the

PrivateEquity & fundraising 27

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Active managers struggle to beat benchmarks FT

ewer than a quarter of active equity funds beat benchmarks in 2018, research has found. The study, which analysed 2,000 global equity funds, found the proportion that outperformed their benchmark fell year-over-year from 53 per cent in 2017 to 24 per cent last year. The Equity World segment, which included analysis of 700 funds, suffered a sharp fall in outperformance, with just 22 per cent beating the MSCI World index in 2018, compared with 56 per cent in 2017. G er man and Japan es e focussed equity funds were among the worst performers, according to the research, falling from 87 per cent to 25 per cent and 74 per cent to 15 per cent, respectively. In contrast, 37 per cent of the 59 funds in the Equity Asia Pacific excluding Japan segment beat the index. The study by Berlin-based Scope Analysis had analysed funds authorised for distribution in Germany with about half of the funds available for sale in the UK. It stated: “Global equity funds were affected by the discrepancy between European and American equities, which was extreme by historical standards. Many equity funds were overweight Europe and underweight the US in 2018, which had a negative impact on performance. “Moreover, numerous fund managers in Europe and Germany had high weights on cyclical export firms and were hit when the trade war escalated.

he 2019 annual conference by African Venture Capital Association (AVCA) will host investors across the globe who collectively manages over US$1.5trn in assets, the venture capital and private equity trade association said. The 16th annual AVCA Conference which is said to be the largest private equity gathering globally is expected to run for a 6 day period from 1st-5th April, in the city of Nairobi, East Africa’s

PE firms believe AI will disrupt their sector by 2024 MICHEAL ANI

L-R. Ijeoma Agboti-Obatoyinbo, Managing Director/CEO, FBNQuest Funds; Ify Ossi, Executive Secretary, PEVCA; Ronke Bammeke, Managing Director/CEO, PAL Pensions; Tokunboh Ishmael, Co-Founder/Managing Director, Alitheia Identity; and Joanne Yoo, Managing Director, DPI at the PEWIN (Private Equity Women Investor Network) dinner gathering of over 30 senior women in private equity hosted in Lagos recently.

“Many fund managers were similarly overweight German small- and mid-caps, which had a disproportionately strong correction relative to blue chips, especially in the second half of 2018.” Bond funds also came under pressure as the study found just 16 per cent of approximately 1,000 funds outperformed their benchmarks during 2018. The only peer group that improved on 2017 figures was the Bond Euro Corp high yield, with 29 per cent of its 76 funds beating the benchmark. The study stated: “For bond funds, the long-standing boom in emerging markets came to an end last year. Many fund managers were overweight EM, partly lured by positive spreads, and were caught on the wrong foot as a result. “Additionally, high exposure to Italian bonds contributed to under-performance as Italian

bonds came under severe pressure over the budget dispute with the EU. “Even funds that counted on a narrowing of the record-high gap between US and German government bond yields saw losses.” Scope’s evaluation was based on the outperformance ratio, which measured by peer group the share of actively managed funds that beat their respective benchmark over the period under analysis. Scope allocated a benchmark to each peer group. Adrian Lowcock, head of personal investing at Willis Owen, said: “The increased volatility in markets in 2018 will make it hard for some fund managers as, in the short term; they can easily be on the wrong side of the market. “The latter stages of a bull market are hard for active managers as areas of the market

look expensive and the active manager tends to avoid them, but stocks can remain expensive far longer than an active manager has the patience for. “In addition short term sell offs as we saw at the end of 2018 should be of little concern to most active fund managers unless they are of the view that any sell off leads to a longer term trend or change. “More likely it is to provide an opportunity to invest at a lower level if they have conviction in the stocks they hold.” Lowcock added that active management had to be analysed in context. “Ultimately the market reflects all opinions of active managers, the good, the bad and the ugly. “So any analysis focuses on everything and does not look at the top end. It would be better to look at active through the lens of AUM not number of fund managers.”

AVCA’s 16th annual conference to host investors with $1.5trn combined asset MICHEAL ANI

Wednesday 06 February 2019

most cosmopolitan city. “Given its rising regional influence, Kenya is an increasingly attractive investment destination,” AVCA said. AVCA is a trade association that promotes, develops, and stimulates private equity and venture capital in Africa. The association provides advocacy, research, and training services. A survey by AVCA for 2019 ranked Kenya as the 2nd most attractive country after Nigeria for PE investments in Africa over the next three years.

According to AVCA, members of the association is expected to pay £1,350 to attend the forum, while non-members of the association who wish to attend, will pay £2,250 Over the past 16 years, the AVCA conference has become the most important forum for promoting, developing, and stimulating private investment in Africa. The conference continues to be a rallying beacon, shedding light on the vast opportunities available to global investors, and guiding the industry with in-

formative research and thought leadership. Starting in 2003 in Cameroon, AVCA has held conferences in Botswana, Egypt, Ethiopia, Ghana, Kenya, Nigeria, Morocco, Senegal, South Africa, and Tunisia, with the goal of exposing investors to the diverse prospective investment markets across the continent. AVCA continues to showcase the fastest growing countries in the world to investors, and we are delighted to gather the industry in Kenya in April 2019.

irms in the private equity space say they are highly aware of the impact digital innovation will have on their sector, particularly in the areas of artificial intelligence (AI) and blockchain, Over 90 percent of private equity firms believe AI is likely to have the biggest transformational impact on the sector by 2024, according to new research from Intertrust. This is almost a fifth higher than the industry average of 77 percent. Of this figure, 37 percent, representing over a third of respondents to the survey said that blockchain, AI and robotics were already being adopted in the industry and will become more widespread in the near future. Some 56 percent of respondents believe digital innovation is currently having the biggest impact on the back office, by generating greater operational efficiencies. 37 percent say innovative technology is also being deployed to speed up the due diligence process when completing transactions. “The findings of our survey reflect growing levels of interest in using AI for handling large volumes of investor queries more efficiently by recognizing questions being asked and recommending responses”, said Michael Johnson, Director of Fund Services, Intertrust. This will also introduce more standardized responses, further reducing risk. Additionally, there is likely to be an emerging desire for firms to favor the use of blockchain for KYC-related activities.” “Over the next five years, there is set to be a huge demand for new Regtech solutions, which is recognized by nearly half of all respondents. New Regtech solutions bring previously unforeseen levels of automation to the regulatory compliance process, including reporting and monitoring. Often provided as a software as a service (SaaS) model, Regtech solutions are designed to boost transparency and support compliance with a regulation such as KYC.”

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

Email the PE & F team loladeakinmurele@gmail.com

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Odunayo Oyasiji

OCUS CLASSICUS

MAXIMS OF EQUITY

hat this maxim of equity means is that if you are guilty of wrongdoing then you should not approach equity for relief. Equity will not aid or help you when you are also guilty. Equity will not assist a person to profit from his wrongdoing. If you must approach equity for remedy then you must check yourself to see that you haven’t contributed to the wrongdoing

in one way or another. An example of such situation is when you approach the court for the enforcement of your right under a contract you entered into with a person, you must be sure that you haven’t broken any of the covenants or terms in the contract. Equity will not aid you if you have breached the contract and you seek to enforce your right under the same contract.

(e.g. applications for leave to serve processes by substituted means) and when time is of essence (this symbolises urgent situations where things can go wrong if an order is not granted without the other party being heard). Ex parte orders are usually meant to last for few days. The other party is expected to be put on notice before the expiration period of the order. The party seeking an ex parte order is expected to make full disclosure on the matter. Failure to do so will serve as a ground to set aside the order when the failure comes to the notice of the court. Before an ex parte order is granted, the party seeking the order must show to the court that he has a legal right which is to be protected by law, that the situation is really urgent (that is why the affidavit in some situations is usually tagged ‘affidavit of urgency’), he must show that irreparable damage will be done if the court fails to intervene by granting the order and the applicant must show that there is a prima facie case (i.e. that on the basis of what is before the court there is a good legal claim). Furthermore, the applicant must undertake to compensate or indemnify the other party for any damage suffered should the substantive suit turn out to be frivolous or vexatious. Balance of convenience must also be shown – the applicant must show to the court that he will suffer injury or damage if the application is denied. The possibility of the abuse of the process (ex parte) is high

and that is the reason why courts are often reluctant to grant ex parte orders. There have been instances of conflicting ex parte orders from the same court (but different judicial divisions). Ex parte orders had also been granted in situations where they ought not to be granted. It must be pointed out that the fact that an order was granted without hearing the other side does not take away its veracity. It is an order of court and it must be obeyed. A party that is aggrieved can approach the court for the order to be set aside provided it has genuine grounds. Therefore, disregarding an order of court on the basis that it was granted without hearing both sides will make the disobedient party to be liable for contempt of court. In conclusion, ex parte applications are meant for situations that demands real urgency –where irreparable loss or damage will be done if an order is not granted in the absence of the other party. Therefore, it is an essential part of our justice system. However, in granting ex parte orders, the court must tread with caution so as not to grant orders based on frivolous applications and thereby occasioning injustice. The integrity of the judiciary must be preserved and as such the court must be careful not to grant contradictory ex parte orders. Ex parte orders are granted with the aim of doing justice and therefore should not be turned to an instrument of confusion and injustice.

Foakes vs. Beer (1884) 9 App. Cas. 605

n this case, Dr Foakes was the judgement debtor of Mrs Beer. They agreed to the payment of the debt (minus interest) by instalments over a long period of time. When the debt had been completely paid, Mrs Beer also requested for the interest on the judgement debt. It was held in court that Dr Foakes had to pay the interest on the judgement debt regardless of the fact that Mrs Beer initially agreed to collect just the debt. This was based on the fact that there was no further consideration paid for the foregoing of the interest of the judgement debt. Abdul Yusuf vs. Nigeria Tobacco Company (1974) NCLR. 236: In this case, the defendant made a typographical error in drafting the contract of the plaintiff in transporting ome of its goods. Due to this mistake,

the price to be paid was unduly high. The defendant requested the plaintiff and other drivers to return their contracts for correction. The plaintiff refused and sought to have the contract en-

He who comes to equity must come with clean hands

forced. The court refused to grant the equitable remedy of specific performance based on the fact that it would be inequitable to do so since the plaintiff was trying to exploit the defendant’s mistake.

Exparte Applications/Order

he recent developments in the country/judiciary make it necessary to examine again what an ex parte application is all about. Of recent, an order suspending the CJN was granted on the basis of an exparte application. So many people have condemned the action of the Court in the matter. An ex parte application usually involves only one party- the party that files it. It is usually brought before the court for the said party to be heard without the presence of the party against whom an ex parte order is being sought. Niki Tobi (JSC) in his book ‘The Nigerian Judge’ defines an ex-parte application as “proceedings brought on behalf of one interested party without notice to, and in the absence of the other party. This means that the application for interim injunction brought exparte is heard by trial judges in the absence of the adverse party”. Nnaemeka –Agu (JSC) in delivering the lead judgement in the case of Kotoye V CBN [1989] 1 NWLR pt. 98 gives a detailed explanation of an ex parte application when he stated that “by their very nature injunctions granted on ex parte applications can only be properly interim in nature. They are made, without notice to the other side, to keep matters in status quo to a named date, usually not more than a few days, or until the Respondent can be put on notice. The rationale of an order made on such an application is that delay to be caused by proceeding in the ordinary way by putting the other side on notice would or might

cause such an irretrievable or serious mischief. Such injunctions are for cases of real urgency. The emphasis is on ‘real’.” Is this not against the principle of natural justice?- Audi Alteram Parterm (which means that both side must be heard) and Nemo Judex in Causua (which means that one cannot be a judge in his own case). The answer is no. Uwais (JSC) in the case of 7-Up Bottling Company Limited V Abiola & Sons Limited (1995) 3 NWLR (Pt.383) noted

stitution, without oral hearing of the application, then I see nothing wrong or unconstitutional for a trial court to deal with an ex-parte motion under its rule”. It must be noted that the court at the stage of ex parte application is not going to delve into the merit of the case. The application is usually brought to seek a temporary order of court in a situation where irreparable damage or harm will occur if the other party is put on notice. It is usually used in urgent matters. Exam-

that “there is no doubt that the right of fair hearing under the constitution is synonymous with the criminal law rule of natural justice …in both civil and criminal proceedings, there are certain steps to be taken which are incidental or preliminary to the substantive case, such steps include, motion for directions, interim or interlocutory injunction. It is in respect of such cases that the provision are made in court rules to enable the party differed to make ex-parte applications… if the Supreme Court can dispose of an applications under S. 213 (4) of the 1979. Con-

ples of such situation where ex parte order is usually granted are – where property is involved (to preserve the property), a spouse who is being physically abused can seek an order restraining the alleged abuser. The order is granted pending the time when the court will hear both parties. The Supreme Court of Nigeria in the case of Leedo Presidential Motel Ltd. v. Bank of the North, (1998) 7 SCNJ 328 at 353 stated two circumstances where an application ex parte can be made. The circumstances are – when the interest of the adverse party will not be affected

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BUSINESS DAY

Jobs at risk in UK following ‘No Deal’, says WTTC Pg 31

Appetite for Cars45 online, Kia swap deal grows …Carry out transaction on 300 vehicles in 2018 ...To add other brands under new business strategy

MIKE OCHONMA mikeochonma@gmail.com

here is growing demand for locally used vehicles in the country as Kia Motors and Cars45, one of Nigeria’s leading online marketplace to buy, sell or swap a car, has carried out over 300 transactions on Kia vehicles since the partnership was entered into in January 2018. This disclosure was made recently in Lagos where both companies announced that they were expanding the partnership to accommodate more car brands that will allow consumers to have more choices when they want to buy, sell or swap their cars through Cars45 at any KIA location across the country. At the event which served as a stock-taking platform to review its activities in the past one year, Jide Adamolekun, Chief Financial Officer, Cars45, noted that the partnership has improved car ownership in Nigeria. According to him, “We launched this partnership January last year and at the end of the year, we reassessed how far we have gone and examined the opportunities that we have created in the Nigerian market’’. H e disclosed that Cars 45 carried out over 300 transactions via this relationship last year and that the joint venture has seen the future whereby making more brands available to consumers, adding that the move will help unlock more value in the nation’s automotive space. In his words, “we are proud that we have enabled consumers on their journey irrespective of whatever side of the economic spectrum

they fall. We hope to move with Kia beyond our current operations in Lagos, Port Harcourt and Abuja to new cities and territories across the country making cars affordable to the Nigerian populace.” On the value of the partnership, Olawale Jimoh, marketing manager, of Kia Motors averred that, it has been a very wonderful and rewarding experience which has seen both parties record so many gains. ‘’We have seen the sale of used Kia cars rise as Cars45’s structured arrangement of buying and selling used cars has brought transparency and credibility, taking away the associated stress with selling locally used vehicles,” Jimoh stated. Furthermore, he said, “it is against the backdrop of the successes recorded that we are now expanding this relationship to a more robust arrangement such that regardless of the car brand that you are driving, you can experience the rich range of value offerings

provided by Cars45.” Vice President, Trading, Cars45, Mohammed Iyamu expressed his happiness that the progress made on this journey has been impressive by all standards. He narrated that about three hundred cars last year were traded in, even as they are looking to triple that volume, go to other cities and grow in leaps and bounds this year. He lamented that a missing link in Nigeria’s auto industry is financing. If you look at a market like say South Africa, 70 percent of the cars on the road are financed one way or another. Cars45’s trade-in/ swap scheme has served as a means of financing for many and hoped that, the partnership would be looking at adding more value to this partnership end to end. On next steps, Iyamu said that, “we are looking to provide new services to our customers that include repairs and workshop services, we are also looking to partner with other service providers in the auto

Toyota, Panasonic tie up towards electric car batteries

industry especially those who deal in accessories and also partner with financial institutions to provide financing for certified Cars45 car purchases.” The event also provided an opportunity for Cars45 to showcase the achievements of its sister brand, Carsbazr which provides a stress-free experience for customers to buy verified locally used cars that they can trust at the best prices. For John Egwu, head of operations, Carsbazr, “affordability is at the heart of what we do. Whatever car you are looking to buy at your individual price point, we’ve got you covered. All our cars have a standard report and there are no hidden details about any cars. Carsbazr weekly live auctions, which have become a game changer within the automobile community in Nigeria, also provide a great opportunity where people are able to go home with vehicles that they can afford in a convivial and fun environment’.

oyota has announced that, it was creating a joint venture with Panasonic to develop batteries for electric cars, as the Japanese car giant ramps up its ambitions for electric-powered vehicles. The firm will be set up by 2020 and controlled 51-49 percent by Toyota, the carmaker said in a statement. “Toyota and Panasonic are confident that the contracts will further strengthen and accelerate their actions toward achieving competitive batteries,” the statement added. Toyota boss Akio Toyoda has previously said he wants half of the firm’s global sales to come from electric-powered vehicles by 2030, up from around 15 percent now. “The key to electrifying vehicles in the future will be batteries. In order for Japan to survive this era of profound change with no natural resources, we must develop competitive batteries and establish systems for a stable supply,” Toyoda said. Panasonic is seen as a specialist in the battery sector and has already partnered up with electric vehicle innovator Tesla to operate a huge “gigafactory” in the United States.

ABC purchases new G9 passenger coaches …On expectation of improved road condition

n a bid to restore the standards of safety, comfort and timeliness in long distance travel, ABC Transport plc has procured additional brand new Asiastar Generation 9 coaches to reinvigorate its operations and provide passengers with enhanced travelling experience. Spurred by the recent initiatives and efforts by the government to rehabilitate the dilapidated road infrastructure nationwide, the acquisition of these new coaches according to management underlines ABC Transport’s unflinching commitment to improve on its entire service delivery to customers. It is widely perceived that with better road conditions, coaches for long distance travel will return to our highways. ABC Transport said that, the Generation 9 coaches from Asiastar

Wertstar long distance passenger coach range model will bring together comfort and smooth movement, beauty and sophistication as customers are bound to enjoy trav-

elling on board this world class bus. The new coaches are fully airconditioned and features state of the art safety equipments, lush and luxury interiors, reduction in

noise levels and ultimate comfort due to its unique and advanced suspension systems. It comes equipped with 3 positions LCD TV monitors for comfortable viewing and USB chargers on all seats for improved convenience and entertainment and also boasts of an improved on-board toilet system. According to the manufacturers, the concept of The Asiastar Generation 9 coach is mostly focused on the comfort and safety of passengers and is guaranteed to give them the most comfortable ride experience, while giving the driver great comfort and confidence to ensure safe driving. Consequently, customers should be rest assured that there will be more adherence to scheduled departures, prompt and

seamless transloading of passengers and cargo where necessary and early arrivals at terminals. The first batch of coaches has been deployed on the Coach West Africa which covers Lagos (Nigeria), Cotonou (Benin Republic), Lome (Togo) and Accra (Ghana). The second batch will be delivered and subsequently be introduced on the domestic routes within the first quarter and as the need arises. For over 25 years, ABC Transport has been providing services in passenger operations, cargo, to over 100 destinations daily from 31 locations including Accra, Ghana. It is quoted on the Nigerian Stock Exchange and also offers hospitality services through its City Transit Inn, an 114room budget hotel in Utako, Abuja.

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Debutant GLE marks new era in mid-sized SUV … Luxuriously elegant and powerfully progressive

While the rear stands out with the rear lights, reflectors and chrome plated underguard. The interior design is luxuriously elegant and powerfully progressive. It comes with a sporty and stylist cockpit design in the dashboard. The dashboard support flows into the door panels, and the integral trim element likewise extends around the driver and front passenger areas to meet the doors. There is a new sport steering wheel with a striking, sculptured spoke design emphasizing the impressive appearance of the SUV’s interior. Other features include good ergonomics, flowing leather surfaces, a broad area of trim and flush-fitting sunblinds. All the controls and displays are now in a new design. It has a considerably longer wheelbase than its predecessor (2995 mm, plus 80 mm). This creates significantly more space, especially for passengers in the rear. Legroom in the second seat row has increased by 69 mm to 1045 mm. Headroom in the rear with the standard, fixed rear seat unit and 40:20:40 split backrest has been increased by 33 mm to 1025 mm. As a world first in the SUV segment, a second seat row with 6 fully electric adjustments is now available. Another key highlight is the luggage capacity which

is up to 825 litres behind the rear seats and up to 2055 litres when the second seat row is folded down. The Mercedes-Benz User Experience (MBUX) is one of the key highlights in the new GLE, it makes its debut in a Mercedes-Benz SUV after its successful introduction in the A-Class last year. This latest generation multimedia system comes with even more improved functions when compared to the first edition in the A-Class. Improvements that this revolutionary system debuts include two large 12.3-inch/ 31.2 cm screens as standard, which are arranged side-by-side for an impressive wide-screen look. The information from the instrument cluster and media display is easily legible on the large, high-resolution screens. Showcasing elements in an emotively appealing manner underlines the comprehensibility of the intuitive control structure and impresses with brilliant graphics. Users can set up the MBUX with four different styles from Modern Classic, Sport, Progressive and Discreet style. Key features of the MBUX in the GLE include; the widescreen cockpit, navigation services, smartphone integration, vehicle set up app, Linguatronic voice control, LTE communications module for Mercedes me connect

services and Burmester surround sound system. The GLE 450 4Matic comes with a 6-cylinder petrol engine systematically electrified with 48-volt technology. It has an estimated output of 270 kW (367 hp) and torque of 500 Nm. Mirko Plath, managing director, Weststar Associates Limited, has described the new GLE as one of the welcome innovations in the global automobile industry. He pointed out that with features like the MBUX the world continues moving towards a more digitalized era and that Nigeria isn’t left out. With the growing demand for Mercedes-Benz cars in Nigeria, he believes the new GLE will be well received. The an iconic member of Mercedes-Benz SUVs and its newest installments have largely exceeded expectations, and with its first of its kind innovations and an even more personal interaction between the driver and car, customers can look forward to a futuristic driving experience. The driving performance has also been further enhanced with 4Maticwhich ensures great agility on the road and superior performance off the beaten track. The new GLE is expected to be at Weststar’s authorized Mercedes-Benz dealerships in Nigeria by beginning of April, 2019.

Wednesday 06 February 2019

FRSC warns political campaigners, over covering number plates

MIKE OCHONMA mikeochonma@gmail.com

ercedesBenz GLE has marked a new era for the midsized SUV segment. Years after getting a new identity with a change from the MClass nomenclature to the GLE, the best-selling Mercedes-Benz SUV continues to set the pace. Last year October, the latest installment of the GLE was presented to the public for the first time at the Paris Motor Show with a number of exciting innovations that are revolutionizing the premium SUV segment. Weststar Associates Limited, authorized general distributor of MercedesBenz models in Nigeria will be introducing the new GLE to the market by 1st quarter, 2019. The new GLE comes with a handful of novelties that have completely reconceived the SUV trendsetter. Features like the E-active body control, the latest generation of Mercedes-Benz assistance systems, 4Matic which makes the GLE more off-road capable than ever, seating comfort with corresponding interior spaciousness and MBUX have been highlighted as the most important innovations. The exterior design exudes a powerful presence. The front emphasizes this with the upright radiator grille in an octagonal SUV interpretation, the prominent chrome-plated underguard and the bonnet with two powerdomes. Its distinctive headlamp design is another key feature; this comes with Multibeam Led lights; the brightness of the main beam headlamps covers over a distance of more than 650 metres. The side view highlights the wide C-pillar typical of the GLE, large wheels in sizes from 18 to 22 inches and the pillared roof rails or the optional illuminated running boards.

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he Federal Road Safety Corps (FRSC) Zonal Commanding Officer for Zone 10 Sokoto Kayode Olagunju, Ph.D has warned motorists and other road users on political campaign movements to desist from unsafe acts that put their lives at risk. Assistant Corps Marshal (ACM) Olagunju observed that many drivers in the Zone, comprising of Sokoto, Kebbi and Zamfara states attending political rallies drive dangerously, overload their vehicles with many hanging on top of the vehicles and some seated in the booths/trunks of the vehicles and often drive above the speed limits. These acts, contrary to Section 10 of the FRSC (Establishment) Act, 2007, result in avoidable injuries and loss of lives and property. The ACM stated that, those violating traffic rules and regulations would be arrested and prosecuted accordingly. In a release signed by the Zonal Public Education Officer,

Assistant Corps Commander (ACC) Aliyu Maaji, Kayode Olagunju called on all road users to be safety conscious always and should abide by all safety regulations as only those that are alive can exercise their civic responsibility of voting during the elections. Olagunju also warned against the illegal act of covering of vehicle number plates. This illegal conduct, according to him has both safety and security implications. Sections 10 (4) (h) and 10 (4) (s) of the FRSC (Establishment) Act, 2007 make it mandatory for Vehicle Identification Mark (Number plates) to be conspicuously displayed on the vehicles. The National Road Traffic Regulations (NRTR), 2012 in Sections 36 and 39 also make it an offence not to properly display vehicle identification number plates. The Zonal Commander stated that such vehicles will be impounded and the violators arrested and prosecuted accordingly.

Ford planning to electrify its ‘iconic’ models

ord is planning to increase its investment in electrification, spending $11 billion by 2022 to create hybrid and all-electric versions of its vehicles, even as its executive, James Farley said the increased e x p e n d i tu re e ss e nt i a l l y doubles and extends Ford’s previous $4.5 billion investment in electrification until 2020. The American car giant said the increased spending will lead to 16 fully electric and 24 hybrid and plug-in hybrid models. The company currently offers just one fully electric vehicle.

“What we learned from this first cycle of electrification is people want really nice products,” Farley said. “We’re starting to telegraph where we’re going to play in the electrified business around the world,” he said. “And that is to electrify our iconic nameplates that tend to be higher transaction price vehicles.” Ford also announced that it would begin building a hybrid version of its popular F-150 pickup in Dearborn, Michigan by 2020. It hinted at a fully electric car to come in that same year, but did not provide specifics.

he’s been helped out by 1,700 people, whose offers also determine his route. On that note, he theoretically doesn’t have very far to go, given that his goal is to reach Sydney.However, the ultimate aim, according to Wakker, is to “educate, inspire and accelerate” the transition to a zero carbon future. “Electric vehicles are a significant part of the solution to the global environmental problem we all share,

sadly the uptake of electric cars is going slow mainly because there are a lot of prejudices, people believe they are not reliable or not fit to cover long distances,” Wakker says. “By driving from Holland to literally the other side of the world I hope to change people’s minds.” So far, he has obliterated the long distance world record for a non-solar electric car, which was 22,000km.

World’s longest electric car trip hits 89,000km mark

riving between towns is something that many electric car drivers fear, but Dutchman Wiebe Wakker hasn’t just conquered that so-called range anxiety, rather, he has actually tackled an 89,000km road adventure that’s taken him through 33 countries in 1,050 days. So far Wakker has taken his ‘Blue Bandit’, which is a VW Golf 5 estate retrofitted with an electric motor, through Europe, the Middle East, In-

dia, Southeast Asia and a large chunk of Australia, where he recently pulled into Adelaide after an Outback Adventure. But not only is he doing the trip in a car that can manage just 200km between recharges, he’s also doing the trip without any money. Wakker instead relies on the helpfulness of people along the way to support him with a meal, somewhere to sleep and, of course, a place to plug his beloved car in. So far

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BUSINESS DAY

MTravel odern

Qatar Airways buys into largest Chinese airline

Jobs at risk in UK following ‘No Deal’, says WTTC MIKE OCHONMA

mikeochonma@gmail.com

ver 300,000 jobs could be at risk in the tourism sector in the United Kingdom if the country leaves the European Union without a deal on March 29th, according to new analysis from the World Travel & Tourism Council. In addition, almost 400,000 further jobs could be lost in Europe. A ‘No Deal’ Brexit would have a damaging impact on one of the UK’s most important economic sectors.

According to WTTC, which represents the private sector of tourism globally, the industry contributes more than €1.5 trillion to the European Union’s gross domestic product, or 10.3 percent of total. At the same time, it supports 27.3 million jobs, or 11.7 per cent of total. In the UK, the sector contributes £214 billion to gross domestic product, and supports around four million jobs. VisitBritain argues tourism is worth £127 billion to the UK economy, suggesting the WTTC figures may be optimistic.

Gloria Guevara, president of the WTTC, said: “The UK is the fifth largest tourism economy in the world. “Given its importance to the UK economy, it is now clear that a ‘No Deal’ Brexit would have a dramatic impact on one of the UK’s most significant sectors.” The WTTC analysis models the impact on the tourism sector over the next decade, based on the 7.7 per cent forecasted fall in economic activity across the wider UK economy modelled by the International Monetary Fund. In this situation, a No Deal Brexit would result

in a loss of £18.6 billion in gross domestic product to the UK economy. Guevara added: “If the IMF prediction on the wider economy is realised, there would be a total cost across Europe of over £40 billion and over 700,000 jobs compared to our projections.” To avoid the downturn, the WTTC argues the UK should continue to have access to the Single Aviation Market, offer visa-free travel between the UK and EU and security co-operation to avoid hard border checks and lengthy delays between the UK and Ireland.

atar Airways, the stateowned flag carrier of Qatar, headquartered in Doha, announced that it has completed an on-market purchase of shares of China Southern Airlines Company Limited (China Southern Airlines), resulting in its aggregate holding of approximately 5.00 percent of the total issued share capital of China Southern Airlines. The move comes as part of Qatar Airways Group’s strategy to invest in the strongest airlines around the world and continue enhancing its operations and network connectivity. Qatar Airways’ group chief executive Akbar Al Baker added, “China Southern Airlines is one of the most prestigious airlines in the Chinese domestic market and an important market player

in the world, with massive potential for cooperation in the future. The investment is a clear demonstration of Qatar Airways’ continued commitment to connecting travellers across all corners of the world in a way that is meaningful and convenient. Qatar Airways very much looks forward to the opportunity to deepen our working relationship with this great airline and further enhance the travel opportunities across the globe.” This investment further supports Qatar Airways’ investment strategy which already includes its 20 percent investment in International Airlines Group, its 10 percent investment in LATAM Airlines Group, its 49 percent investment in Air Italy and its 9.99 percent investment in Cathay Pacific.

Europcarwelcomes new franchises globally

uropcar Mobility Group (EMG) has announced the opening of new franchises in 16 countries through its brands - Europcar, Goldcar, InterRent and Buchbinder to expand its international presence. The group now offers its car rental services to a wider clientele in new destinations. Europcar will welcome new franchises in Israel, Brazil, Russia, Colombia, Kenya, Azerbaijan, Singapore, Nepal and Sri Lanka, while Goldcar will see a new partner in Montenegro. At the same time, Buchbinder picks up new franchises in Finland, Portugal, Iceland and Czech Republic, while InterRent sees new franchises in Mauritius and Lebanon. EMG is now present in 135

countries through its brands, which allows it to benefit from substantial flows of business and leisure customers; a key development as the number of international tourist arrivals worldwide reached 1,326 million in 2017, an increase of seven per cent compared to 2016. Marcus Bernhardt, Europcar Mobility Group managing director, said: “We are proud to expand the footprint of our brands in 16 new countries. We aim to provide to all our customers, wherever they are, our quality of service, and to make their life easier when they choose to rent a car with their usual car rental company. In 2019 and onwards, we will pursue our ongoing developments in order to reach a presence in 170 countries by the end of 2020.”

Awards will host its fifth annual gala ceremony at the iconic Armani Hotel Dubai. Giorgio Armani has created an exceptional lifestyle experience in one of the world’s most exciting cities, making it the perfect setting for the pioneers and influencers of the global spa and wellness industry.” As the first hotel designed and developed by Giorgio Armani, it reflects the pure elegance, simplicity and sophisticated comfort that define the global fashion icon’s signature style. An oasis of peace and tranquillity, the 12,000 sq. ft. Armani/SPA offers tailormade sensory therapies designed to meet individual wellness needs.

In embracing the Armani lifestyle philosophy, the Armani/SPA encompasses a series of unique spaces and facilities with sequential thermal bathing, personal fitness, creative spa cuisine and calming relaxation areas. The red-carpet World Spa Awards Gala Ceremony 2019 will represent the highlight of a three-day networking programme, with attendees given the opportunity to participate in an exclusive spa and wellness itinerary. Organisations wishing to enter the World Spa Awards 2019 can submit their applications from January 14. Voting will then open on April 29 and will be concluded on August 19.

World Spa Awards reveals Armani Dubai as 2019 hosts

orld Spa Awards – the global initiative to recognise and reward excellence in the spa and wellness sector – has revealed that its Gala Ceremony 2019 will be hosted at Armani Hotel Dubai. The event will take place on October 21st. The announcement follows Armani Hotel Dubai being voted World’s Leading Hotel 2018 at World Travel Awards, and Armani/Spa named World’s Best Spa 2018 at World Spa Awards. Armani Hotel Dubai is situated in the incredible Burj Khalifa, the world’s tallest tower. The red-carpet evening will bring together the global leaders of the spa and wellness industry as they

celebrate their achievements, and exchange knowledge and innovations. L au n c h e d i n 2 0 1 5 ,

World Spa Awards aims to drive up standards in spa and wellness tourism and foster growth by rewarding the leading organisations in

their respective fields. Rebecca Cohen, mana g i n g d i re c t o r, Wo r l d Spa Awards, said: “I am honoured that World Spa

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FEATURES

How Sona Group is changing narrative of industrial waste management in Nigeria

s Nigeria’s population continues to increase, so does the number of industrial organisations who activities are aimed at meeting the numerous needs of communities around them. However, while there is a surge in industrial organisations sprouting in communities, there also comes with that a need to reduce the amount of wastes generated by these enterprises in a bid to make the environment safer and fit for living. Industrial waste has been identified as part of the contributors to Nigeria’s low life expectancy currently put at 54 for males and 55 for females, according to the World Health Organisation. Analysts believe that this can be improved upon if industries can invest in modern technologies to ensure their wastes are recycled and clean before they are discharged into the environment. One of the ways to achieve this is the use of Effluent Treatment Plant (ETP). ETP is one type of waste water treatment method which is particularly designed to purify industrial waste water for its reuse and its aim is to release safe water to the environment, free from the harmful effect caused by the effluent. The ETP works at different levels and involves various physical, chemical, biological and membrane processes to treat waste water from different industrial sectors like chemicals, drugs, pharmaceutical, refineries, dairy, ready mix plants and textile, amongst others. Industrial effluents contain various materials, depending on the industry. Some contain oils and grease, while some contain toxic materials (e.g., cyanide). Effluents from food and beverage factories contain degradable organic pollutants. Since industrial waste water contains a diversity of impurities, specific treatment technology called ETP is required. It was therefore with delight that Bolaji Oyeleye, commissioner Ogun State Ministry of Environment inaugurated the Effluent Treatment Plants of Sona Group across four of its subsidiaries last week. Sona Group of Industries, one of the biggest diversified conglomerates in Nigeria, is currently blazing the trail in this regard. Oyeleye who commended the management of Sona Group on

its giant strive in putting in place ETPs for four of their subsidiaries, said the journey with the company has been quite an eventful journey. “We started with the first plant in Euro Global, we moved on to Sona Foods, then Shongai Packaging and then Food and Agro. I am quite encouraged by the management’s will to put this in place. When we started off discussions with them, we found out that they could do better and we started engaging with them and the result is what we are witnessing today,” Oyeleye said. “I want to congratulate the management and staff of the Sona group for this and to encourage them that if there are other facilities that are yet to have the ETP, they should quickly put that in place,” Oyeleye said. He explained that the ETP is important because during the course of production, waste water is generated and that water needs to be treated before discharging it into the environment. He further explained that if the water was not treated, it might pollute the surface and in some cases the underground water and that is why it is important for ETPs to be in place in industries where water wastes are generated. The commissioner who said the ministry had been engaging with companies which do not currently have ETPs in place, stressed that companies need to be environmentally complaint by

‘

The Group’s strategy has been to acquire existing sick companies and turn them around. “After the unit is acquired, we bring in new investments, modern technology, state-ofthe art machines and modern management techniques that help to turn the business perspective

‘

Ifeoma Okeke

Arjan Mirchandani, chairman, Sona Group of Industries

putting in place these facilities. Speaking during the inauguration of the four plants at Sango Ota, Ogun State, Arjan Mirchandani, chairman of Sona Group of Industries, said that clean environment was important to the company and the people. “When people throw garbage and the rain comes, the water moves these garbage and they make dump. If this is not curtailed, there will be problem. Water used for production is also contaminated and needs to be treated before they are let out into the environment,” he said. Because of this, he said, Sona Group put up the four plants to ensure that its waste water was processed so it doesn’t contaminate the environment, thereby leading to diseases and suffering. “The environment is vital in whatever we do,” Mirchandani, said. He disclosed that it took the company some time to put up these plants in place because it required their time, a lot of planning and funds. “The environment department in the ministry carried out regular surveillance on the facilities to ensure we were on the right track. We had to meet the set criteria and we are happy to have the plants today. We have had to treat the waste water first and when the water is let out to

the environment, the plants will grow better and there won’t be contamination,” he explained. He added the company bought new machineries and that four of their plants were being commissioned. Speaking on the compliance level of organisations on the implementation of ETPs Oyeleye, said: “We have recorded some measure of success since the term of this administration. A lot of companies are compliant and it is a good one for the environment.” He said that the Ministry’s target was for all companies to comply, but noted that experiences and challenges differ from one industry to the other. The Ministry works with the companies to help them achieve the ultimate goal, which, according to him was putting in place ETPs. “My advice for companies in Sango Ota is that they should be conscious environmentally in terms of their processes and they should know that whatever they do impacts the environment.” “Oyeleye encouraged the companies to approach the Ministry or its agencies with details of their needs, promising that “we will reason out a way to achieving those targets because ultimately, the environment is key and whatever you give to the environment is what it will give back to you.” On employment opportuni-

ties provided by Sona Group, chairman Mirchandani: “Sona Group has almost 15 industries and employs over 6,000 people and we are looking forward to employing more people.” He said that the group wanted to invest more on agricultural produce and to start producing cheap but quality food to ensure that every Nigerian survived on their incomes. “This is important because everyone is equal. God has given us the power and the might and a good heart, then we should help other people and we are happy to be partners in progress.” He assured that the group would come up with more industrial establishments and with that, had set a target to raise its employees to over 10,000 in the near future. Mirchandani said that although the group produces over 100 products, the high cost of production makes it difficult for poor people to be able to afford these products. “We are here to make sure that we reduce the cost for people to afford. The only way we don’t import is to produce locally as much as possible. We need to create more local food. We need to make sure the poor man survives,” he said. He announced that the group planned to increase its capacity three times in the next two years. “Children need something to eat and good quality. We have put in a lot into our production line to ensure there are no contaminations and there is hygiene.” Sona Group is one of Nigeria’s fastest growing groups. The Group is currently in the business of manufacturing plastic and glass containers. It started business in Nigeria decades ago. The Group’s strategy has been to acquire existing sick companies and turn them around. “After the unit is acquired, we bring in new investments, modern technology, state-of-the art machines and modern management techniques that help to turn the business perspective,” the chairman said. Some of Sona Group’s subsidiaries include Avnash Industries, Coronation Power and Gas Ltd, Coronation Real Estate Development Ltd, Coronation Real Estate Ghana Ltd, Euro Global Foods and Distilleries Ltd, Food, Agro and Allied Industries Ltd, Shongai Packaging Industry Ltd, Shongai Technologies Ltd, Sona Agro Allied Foods Ltd, Sona Industrial Gases Ltd and Techblow Nigeria Ltd.

Wednesday 06 February 2019

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BUSINESS DAY

NATIONAL DISCOURSE

JOSEPH MAURICE OGU

n his book, “The way the world works”, political scientist and an adviser to a number of past USA presidents, Jude Wanniski says “emigration is a sure sign of political failure in a state.” What Wanniski said in 1978 is even truer today in the Nigerian context. The rate at which Nigerians have been fleeing the shores of the country in search of greener

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Wednesday 06 February 2019

systems to take off the shackles that limit their ability to accomplish their greater selves. Education is the key that opens the mind to knowledge, ambition and accomplishment. Our educational system is archaic. A good deal of the teachers are not well trained and motivated, resulting in poor quality education and incessant strikes. Universities are poorly funded. The number of Nigerians studying in foreign countries is unprecedented. Health is wealth, a common adage says. Getting quality health care for the poor in Nigeria is almost unthinkable. The Nigerian health system clearly marks the disparity between the rich and the poor. While the rich can afford expensive health care provided by private health institutions or even embark on medical tourism abroad, the poor die frequently while patronising the ill-equipped government health facilities. Solutions are required to these challenges facing the nation. Nigerians need to make a living to enable them have

roofs over their heads and put bread on the table. This can be done through well-thought out policies that create a business friendly environment. These include creation of business hubs, tax reliefs, encouraging credit to MSMEs, etc. If our teeming youths are consciously engaged through creating of jobs, the perilous journey across the desert and Mediterranean will reduce significantly. On the health sector, Nigerians health sector needs general overhauling to meet up what is practiced elsewhere in the world. The sum budget accrued to the health sector should clearly reflect on our hospitals and clinics. Nigeria’s nascent health insurance scheme is laudable but needs to be upgraded to the best possible practice seen elsewhere around the world. To prove Wanniski wrong in Nigeria, the incoming administration needs to provide jobs for Nigerians so that our best brains will stay in Nigeria instead of wasting them in either in deserts, ocean or foreign countries.

What Nigerian voters want pastures over the years, has always been a source of concern for every government. But for those who damn the consequences by embarking on the hazardous trek across the desert and cross oceans in ill-equipped over crowded boats is a sure sign of a desperate move by the multitude of Nigerians to get a better life elsewhere. If Wanniski’s definition is correct, perhaps Nigeria may have fallen into the category of states whch have failed their citizens, especially the youth. What do Nigerians at home seek to make a good life and what do the emigrants pursue elsewhere? Everyone seeks a functional state that offers peace and stability to everyone living in the country, citizens and visitors. That Nigeria has this in reasonable measure is doubtful. Taking security for example, the Boko Haram insurgency in the north which has existed for a decade without meaningful check, has consumed thousands of innocent lives. The killing of security personnel and kidnap-

ping of school girls is still fresh in people’s minds. Across the country, herdsmen and farmers frequently clash and cause enmity and scarcity of food in what would have been a common venture to provide food for Nigerians and add to the country’s GDP. Instead, the incessant clashes have resulted in the distortion of goods, lives and livelihoods across the country. In some parts of the country, we have ethnic militia delivering mayhem, disturbing the peace and sabotaging the economy and infrastructure in the country. The mortgage system through which people make monthly instalment payments leading to their ownership of homes in 10-15 years needs to be put in place. The monies Nigerians pay as rents could as well be spread out for years after which they become owners of homes. That is what a responsible government policy strives to accomplish. Nigerians need infrastructure such as affordable and available electricity, as well as good roads, rail and water transportation

After so much talk, Nigeria’s agric fundamentals remain the same JOSEPHINE OKOJIE

espite the potential of the agricultural sector to change the fortunes of the Nigerian economy, with attendant exponential gains by way of earnings, employment and other spin-offs, the country is yet to boost farmers’ productivity. Over the years, government has mouthed support for agriculture, saying it is serious with making the sector one of the largest employers of labour, and foreign exchange earner. But this is yet to go beyond the talking stage as the sector is still largely limited by lingering issues. In the last three and a half years, the Buhari- led government has devoted a lot of energy at deepening agriculture with initiative like the Anchor Borrowers Programme (ABP) without addressing fundamental issues of mechanisation, irrigation, seeds, extension service, insurance, research and development, among

others. As a result, yields have continued to remain low and progress made initially is now on a downward trajectory. This is evident in the country’s Gross Domestic Product (GDP) report. Data from the National Bureau of Statistics (NBS) GDP report show that growth in the sector has been on the decline since the first quarter 2017, with marginal growth recorded only in the fourth quarter of the same year. The GDP report shows that growth in the sector contracted from 3.06 percent in Q3 2017 to 1.91 percent in Q3 2018 year on year. “We have increased our crop production of various commodities but the government has still not done anything in addressing fundamental issues. We still do not have sufficient seeds and seedlings, nothing in place to increase mechanisation,” said Abiodun Oyelekan, chief executive officer, Farm Fresh Agric Ventures. “The only thing the government has done is shifting attention

AGRICULTURE to the agricultural sector. People now want to invest in the sector than before and this is why there is increase in production,” Oyelekan added. Also, lots of youths that invested in the sector through entrepreneurship are diverting into other sectors, owing to the high failure rate caused by some underlying problems in the country’s agricultural sector. Nigeria still operates the Land Use Act of 1978, which vests the ownership of land on the governor of a state or the president in the case of the Federal Capital Territory. AfricaFarmer Mogaji, chief executive officer, X-Ray Consulting Limited, said that people take the issue of land ownership very seriously and see it as the next thing after life. Mogaji noted that with appropriate legislation and synergy with stakeholders and town union leaders, it will be easy to acquire

land for agricultural purposes. “We need land and infrastructural reforms to ensure food security especially in a country like Nigeria where our population is growing very fast,” Akin Laoye, executive director, FTN Cocoa Processors PLC, told BusinessDay in an exclusive interview. “Every nation has land kept for housing, agriculture and industries in urban areas. In Nigeria, these things are there but they are never followed because we lack institutions to drive these policies,” Laoye said. He stated that portions of land in urban areas are taken over by housing estates which are not good for the sector, as most youths are into agriculture want to remain in the cities or nearby locations. Similarly, critical infrastructure to aid growth for the agricultural sector is lacking. Indubitably, one of the greatest problems confronting rural farmers and communities in Nigeria is the absence of critical infrastructure such as ‘motorable’ roads.

Farmers continue to suffer low levels of agricultural productivity due to infrastructural deficit across the country, which reduces their profit and impact their capacity to expand. “The problem with agriculture is infrastructure. It is not that we do not grow enough but the infrastructure to move, store and process what is harvested are not there,” said Abiodun Olorundenro, operations manager, Aquashoots Nigeria. “Without critical infrastructure, agriculture will continue to suffer and our diversification through the sector would only be a dream,” Olorundenro said. He recommended the development of linkages between farmers and the market, stating that youths can only find agric attractive when such linkages are provided. Stakeholders say developing agriculture requires the rehabilitation of dams and irrigation facilities to boost farmers’ productivity and also motor-able roads to aid access to the market.

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BUSINESS DAY

Violence: PDP guber urges security agents to act fast, douse tension Akinremi Feyisipo, Ibadan

ollowing pockets of political violence in last few days in Oyo State, the governorship candidate of the People’s Democratic Party (PDP) in the state, Seyi Makinde has urged the heads of the security agencies in the state to move fast and douse the tension. In the last two weeks, the state has witnessed about five political violence in Ibadan, Ojoo, Oyo, Ibarapa, and Ogbomoso geopolitical zones. Briefing newsmen in Ibadan at his campaign office in Ibadan, the state capital, Makinde condemned the spate of violence that has greeted the campaigns of the gubernatorial candidates in the state. He maintained that there is a need for the security agencies in the state to move fast to douse further tension and save lives and property at a time when electioneering campaign has reached the final lap. Makinde, who insisted that both the Commissioner of Police and the Director of State Security counter-

part must call an emergency meeting of leaders of all the political parties and commit them to an undertaking of peace, described the recent political violence in the state as

head of the forthcoming general election, a coalition of civic society groups has urged candidates of political parties in the country to end the increasing forced eviction of citizenry from their dwelling and work places. Speaking at a press conference in Lagos, leader of the coalition and Founder of Rethinking Cities, Deji Akinpelu, lamented that successive administrations in Lagos State had forcefully evicted residents and inhabitants from their land and work places in the guise of planning a mega city. Akinpelu stated that the coalition was interacting with various diverse candidates and their parties under the theme ‘Don’t Get Elected to get Evicted’. According to him, “Worried by the spate of relentless attacks on work places and communities, we, the coalition of civic society or-

has become even more urgent on my part that a formal pronouncement be made to drive home the implication of complacency in this very serious development.

Babajide Sanwo-Olu, All Progressives Congress governorship candidate in Lagos State; Obafemi Hamzat (2nd right), his running mate, and other APC members addressing party faithful during a rally by the women wing of the party in Lagos Central Senatorial District at the Campus Square, Lagos Island.

2019: Coalition urges candidates to end forced evictions Iniobong Iwok

“something that does not worth it”. According to him, “While it is a fact that I had addressed the issue of political violence and thuggery in the course of the on-going campaign, it

ganisations have decided to come together for the purpose of engaging political office holders and aspiring office holders on the need to halt the continuous forced eviction of citizens from their dwelling and work places and in working with these entities, to fashion a better alternative to the problem of urbanisation.” The coalition further berated the Lagos State Government, for its continuous attacks and demolition of communities in spite of existing court orders, adding that successive administrations’ policies in the state were anti-masses, which had also negated its effort to build an inclusive city. “As a group, we say NO to the Lagos State Government’s lack of respect for the rights of those living and working in Lagos, and its disregard for the rule of law as being displayed in the repeated attacks on Otodo Gbame community in November 2016 and March 16 which was in violation of a subsisting court order,” Akinpelu added.

“Apart from a few skirmishes here and there, the spate of political thuggery and violence is assuming a worrisome dimension that should be of grave concern to all. In the past two weeks alone, violent incidents have been witnessed across the state in places like Ogbomoso, Igbo-Ora, Ojoo, Omi Adio, Oke Ado and only yesterday in Oyo. “At a time when electioneering campaign has reached the final lap, there is a need for our security agencies to move fast to douse further tension and save lives and property. We strongly recommend that both the Commissioner of Police and his Director of State Security counterpart must call an emergency meeting of leaders of all the political parties and commit them to an undertaking of peace.” Makinde further said: “Our people are already traumatised as a result of grinding poverty and avoidable lack and it will be ungodly to saddle them with gory scenes of bloodletting just because some politicians are scared of relinquishing power that is not a birthright. Yorubas say, ‘Oosa, b’ole gbemi, fimile bose bami’.

APC sure of winning Lagos, says Salvador Iniobong Iwok

oshood Salvador, the Lagos State directorgeneral of presidential support committee, for President Muhammadu Buhari and Yemi Osinbajo’s reelection bid, has said that the ruling All Progressives Congress (APC) would sweep the state in the forthcoming general election. Salvador, a former chairman of PDP in the state who defected to the APC after falling out with leaders of the party, stated this while launching campaign vehicles and other materials at the campaign office in Maryland, Ikeja. He added that it was obvious that Lagosians had rejected the PDP, stressing that the party’s inability to campaign in the state was an indication that it had accepted defeat in the general election. Salvador, who was a former member of the House of Representatives, between 1999 and 2003, promised to secure one

million votes for the party in the state, while charging members of the party to increase campaigns across state. According to him, “No other language is better than Permanent Voters Card during these elections. There is no other party than APC in Lagos. PDP does not exist; where are the posters of the PDP anywhere? They are not campaigning; they cannot even afford to pay agents.

Salvador

“The people should go out and vote peacefully for APC and I would do everything within my power to get one million votes for APC in Lagos State.” Also speaking at the event, former Senator, Anthony Adefuye, said that the Lagosians had resolved to vote the APC in the general election, while charging members of the party to protect their votes after voting. “APC is what we would vote in Lagos in this election. Go out and vote and protect your votes even after voting. APC would be on the ballot paper, don’t make mistake. Do not fight; be peaceful; go from house to house and convince Lagosians to vote for APC,” Adefuye said. Nigeria’s general election would begin on February 16th with the Presidential and National Assembly elections. Incumbent President Muhammadu Buhari of the APC is seeking a second term in office; his main challenger is Atiku Abubakar, a former vice president of the country and candidate of the PDP.

Nwanyanwu warns Ajimobi, IGP over ZLP candidates’ safety in Oyo Akinremi Feyisipo, Ibadan

he National Chairman of the Zenith Labour Party (ZLP), Dan Nwanyanwu, yesterday warned the state Governor, Abiola Ajimobi and the Inspector General of Police, Adamu Mohammed to respect the rights of the party’s candidates to seek people’s votes without hindrance. The warning was in reaction to the shooting of members of the ZIP who were arranging and putting

finishing touches on the venue, by alleged members of the ruling party in the state. Nwanyanwu, flanked by his wife; a former Governor of the state, Rashidi Ladoja and members of the National Working Committee of the ZLP, said the development could escalate crisis and precipitate violence. The chairman also raised the alarm that since the party’s House of Representatives candidate for Ibadan South West and Ibadan

North West left APC to contest under ZLP, security agents have been on his (Ajanaku) neck following a trumped up allegation by his opponent. According to him, “If anything happens to Ajanaku, we will hold you responsible. Everybody is free to belong to a party of his or her choice; enough of harassment of our candidates.” Nwanyanwu, who presented ZLP flags to the party’s gubernatorial candidate, Sharafadeen Alli;

the three senatorial candidates and all the 14 House of Representatives’ candidates, including Ajanaku, said nothing must happen to the young man, ‘whose entry into the race, has continued to send jitters down the spines of the ruling party and its candidate in the constituency. He solicited the votes of the electorate for Alli, whom he described as “a man with character. He is the best man for the job. Check if any of other candidates has the character of Alli;

he is the finest of them all. Vote for him and he will work for you. Alli will restore lost glories in education, especially Oyo State rating in WAEC and develop LAUTECH.” Nwanyanwu said Alli, if elected governor, will implement the party’s manifestoes by industrialise the state, lift the down-trodden masses from poverty circle; change the paradigm shift in governance and make artisans and traders enjoy revolving loans to grow their businesses to make the society better.

BUSINESS DAY

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Wednesday 06 February 2019

Live @ The Exchanges Top Gainers/Losers as at Tuesday 29 January 2019 GAINERS

Market Statistics as at Tuesday 29 January 2019

LOSERS

Company

Opening

Closing

Change

Company

Opening

Closing

Change

BETAGLAS

N60

N66

DANGCEM

N190

N189.5

-0.5

STANBIC

N46

N46.9

0.9

DANGSUGAR

N13.95

N13.5

-0.45

NASCON

N17.5

N17.9

0.4

ZENITHBANK

N22.9

N22.75

-0.15

GUARANTY OANDO

N33.85

N34.1

0.25

NAHCO

N3.45

N3.32

-0.13

N4.85

0.15

NESTLE

N1420.1

N1420

-0.1

ASI (Points)

30,773.57

DEALS (Numbers)

3,183.00

VOLUME (Numbers)

190,318,395.00

VALUE (N billion)

2.925

MARKET CAP (N Trn

11.475

Stock market sustains gain by N11bn currently stands at -2.09percent. The positive feat was achieved as investors in 3,183 deals exchanged 190,318,395 units valued at N2.925billion. GTBank Plc, Zenith Bank Plc, FBN Holdings Plc, Fidelity Bank Plc, and Transcorp Plc were actively traded stocks. Top on the gainers list is Beta Glass Plc which gained N6, from N60 to N66, adding 10percent, followed by Stanbic IBTC Holdings Plc which gained 90kobo, from N46 to N46.9, adding 1.96percent. Nascon Plc gained 40kobo or 2.29percent, from N17.5 to N17.9, GTBank Plc advanced by 25kobo or 0.74per-

Stories by Iheanyi Nwachukwu

he Nigerian stock market on Tuesday February 5, 2019 gained about N11billion, helping to sustain preceding trading day’s rally. The equities market closed on a positive note, as All Share Index (ASI) advanced by 0.09percent to close at 30,773.57points as against 30,745.05 points recorded on Monday. The value of listed equities increased to N11.475trillion from N11.464 trillion the preceding day. The Yearto-Date (YtD) returns

FCMB Women in Business launches zero-interest rate product for SMEs

omen entrepreneurs in Nigeria who desire affordable and convenient funding to boost their respective businesses, can now do so. This is because Women in Business at First City Monument Bank Limited (FCMB) is set to launch a proposition that offers zero-interest rate on loans to Small and Medium Scale Enterprises (SMEs). The development is in line with the commitment of the Bank to empower women-owned SMEs (existing and startups), through financial support, advisory and value-added products, to enhance customer experience and overall contribution to the growth of the country and its econ-

omy. FCMB has established a dedicated desk for women-owned businesses, under its Business Banking Group and equipped this unit with highly professional personnel to meet the needs of this segment. In a statement, the Bank explained the zero-interest rate product which is for an initial period of three months, is designed as an all-round programme structured to prepare and equip the

Bank’s female owned SME customers to take their business to greater heights. This product comes with additional benefits, such as capacity building programmes through trainings and financial advisory services, 80 women every quarter, will have access to mentorship and training and 40 of these women will benefit from the loan. This means that by the end of the year, we would have mentored 320 women and 160 women would have enjoyed the facility. Commenting on the product, the Executive Director, Business Development of FCMB, Bukola Smith, said women have become important assets for social and economic growth, going by their

business undertakings and exploits in the establishment and management of SMEs. She said, “At FCMB, we recognise and appreciate the noble efforts of women entrepreneurs in the areas of job and wealth creation, poverty reduction, empowerment and the overall socio-economic development of Nigeria. Our zero-interest loan product is tailored to offer sustainable benefits and increase the productivity and contributions of women-owned SMEs.” “It will further unravel and unleash the true potential of women in entrepreneurship so they can take their respective businesses to greater heights and compete favourably in the global environment.

NSE lists additional 1.130bn units of Consolidated Hallmark

he Nigerian Stock Exchange (NSE) has listed additional 1.130billion ordinary shares of Consolidated Hallmark Insurance Plc. The additional shares

listed on The Exchange arose from Consolidated Hallmark’s placement of 1.130billion ordinary shares of 50 kobo each at 65 kobo per share. The listing by placement was done on Tues-

day February 5, 2019, the NSE said in a notice signed by Godstime Iwenekhai, Head, Listings Regulation Department. With this listing of the additional 1.130billion ordinary shares, the total issued

and fully paid up shares of Consolidated Hallmark has now increased from 7billion to 8.130billion ordinary shares of 50 kobo each. Dealing Members of the Exchange have also been notified of the listing.

cent, from N33.85 to N34.1; while Oando Plc garnered 15kobo, from N4.85 to N5, up by 3.09percent. On the losers table, Dangote Cement Plc led the pack after its share price declined by 50kobo or 0.26percent, from N190 to N189.5. Dangote Sugar Refinery Plc followed, from N13.95 to N13.5, down by 45kobo or 3.23percent, while Zenith Bank dipped from N22.9 to N22.75, losing 15kobo or 0.66percent. NAHCO Plc lost 13kobo, from N3.45 to N3.32, down by 3.77percent, while Nestle Nigeria Plc lost 10kobo, from N1420.1 to N1420, losing 0.01percent.

Book build commences on N10bn NSP-SPV PowerCorp Green Infrastructure Bonds

he book build for NSP-SPV PowerCorp Plc’s Series 1 up to N10billion Guaranteed Fixed Rate Senior Green Infrastructure Bonds under its N50billion Debt Issuance Programme opened on Tuesday February 5, 2019 and is expected to close on Monday February 11, 2019. The Green Infrastructure Bonds tenured 15years has Maturity Date of 2034. It will be listed on FMDQ OTC Plc. United Capital Plc is the Lead Issuing House/Book Runner; while Stanbic IBTC Capital Limited, Vetiva Capital Management Limited and Zenith Capital Limited are the Joint Issuing Houses/Book Runners. NSP is Africa-focused electricity Generation Company with a diverse and emerging portfolio focused on the electricity value chain. Its business model is designed to encompass a broad range of technologies

and power types including hydropower, wind, biomass and solar with a focus on Sub-Saharan Africa. NSP currently generates, on the average, 8percent of Nigeria’s power providing power to about 7 million people and aims to be the leading power company in Sub-Saharan Africa by safely providing affordable, reliable, and sustainable power to its customer base. The medium term objective of the Company is to contribute more than 10percent of Nigeria’s power generation output by 2020. In a bid to achieve both the medium and long term strategic objectives, the Company intends to use the proceeds from its Series 1 Guaranteed Fixed Rate Senior Green Infrastructure Bonds to refinance existing debt obligations as well as conduct a scheduled overhaul of turbine 4/system controls for its Shiroro Hydroelectric Power Plant.

Wednesday 06 February 2019

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BUSINESS DAY

38 BUSINESS DAY NEWS

C002D5556

Rising unemployment, poverty... Continued from page 1 deremployed. For young people

aged 15 to 35, who make up more than half of registered voters, the figures are even worse: 55.4 percent are unemployed or underemployed. “The economy has slowed a lot since Buhari came in 2015. We have seen our sales fall. Cars are packed for months without anybody buying and tying down our capital in the process,” Nurudeen Tijani, a 41-yearold motor vehicle dealer in the Festac area of Lagos, said. At a business forum in Lagos last month, Abubakar warned that jobless youths were “like a time bomb”. “We must create jobs — if not, we will get mobbed one day by the unemployed youths,” he said. Africa’s largest economy has similarly recorded increasing levels of poverty in the past few years, aided by an oil shock induced-recession and low growth rates that were worsened by unorthodox economic policies pursued by the incumbent president, according to some analysts. Despite more money budgeted and spent annually across all tiers of government, Nigeria last year overtook India as the nation with the highest number of extremely poor people, according to a report by Brookings Institution in June 2018. The report said Nigeria had about 87 million people in extreme poverty as at the end of May 2018, with the number of Nigerians in extreme poverty increasing by six people every minute. In March last year, the International Monetary Fund (IMF) said Nigerians were getting poorer, stressing the need for coherent and comprehensive economic reforms. Yusuf Sanni, national chairman, oppositionAdvancedDemocraticParty (ADP),saidthepovertyrateinthecoun-

tryhasbeenexacerbated in the past few years, adding, “Poverty is a state policy under this APC administration.” Bukola Saraki, Senate president and director-general of the Atiku Presidential Campaign Council, said in a recent interview on Africa Independent Television (AIT) that Buhari’s support base was weakening across the country. “If you recollect in 2015, majority of the security concerns was in the North-East, the issue of Boko Haram terrorists particularly in Borno, Adamawa and Yobe. But today, if you move across to the North-West the challenge is in Zamfara, even in Katsina, in Kaduna; in some of the states there are serious security challenges that people cannot even go out. That was not there before,” Saraki said. “In the North-Central, of course, places like Benue, Plateau, a lot of killings and we have seen that as one of the things that we’ve picked up concerns about. And, of course, the issue of the economy,” he said. Ahead of the elections, no fewer than three international research agencies predicted a close race with the issues of unemployment and slow economic growth seemingly working against the incumbent and favouring the opposition candidate Atiku Abubakar. In two separate reports, the Economist Intelligence Unit (EIU), a British business within the Economist Group, forecast a tight race between 76-yearold Buhari and 72-year-old Abubakar. “The 2019 elections will be a close contest between the ruling All Progressives Congress and the People’s Democratic Party. However, we expect the PDP to win, but for the next administration to flounder against the same problems as the incumbent,” EIU said in its September 2018 forecast ahead of the 2019 general elections.

In another tweet by its African unit last week, the London-based firm affirmed its September prediction, insisting that a defeat awaits President Buhari in the February 16 presidential election.“We retain our forecast for Abubakar to win, but the expected margin of victory is narrowing as the poll approaches,” EIU Africa said in a tweet. Lai Mohammed, Nigeria’s minister of information and culture, responded by saying the prediction was nothing but fake news. In 2015, then opposition challenger Buhari broke a long-standing record after he defeated the then President Goodluck Jonathan with over 2 million votes to emerge the first ever candidate in Nigeria to unseat an incumbent president. The EIU at that time had also predicted victory for Muhammadu Buhari over then-incumbent Goodluck Jonathan, noting that the former military head of state was “the least awful choice” that would be accepted by the people “with a heavy heart”. “Voters have ample cause to send Jonathan packing. In a country where power has often changed through the barrel of a gun, the opposition All Progressives Congress has a real chance of winning through the ballot box,” The EIU said in 2015. The Hongkong and Shanghai Banking Corporation, a British multinational banking and financial services holding company, before closing its Nigerian operations received a backlash from the Nigerian government after it tipped a win for the PDP candidate, saying that re-election of President Buhari for a second term would “stall” economic growth. About 72 political parties will be present on the ballot paper in an election that has been described by analysts, technocrats and international bodies to be the most fiercely contested since the country’s transition to democracy in 1999. The two major contenders, Bu-

hari and Abubakar, are Northern Muslims. Both are of the Fulani ethnic stock. President Buhari is promising to intensify his fight against corruption and get the fragile state of the economy to the next level, despite spending a large part of his tenure on medical trip abroad treating an undisclosed ailment. “A Buhari re-election carries tail risks,” according to a report by Eurasia Group, a Washington-based political risk consultancy firm. “A politically weak president, for health or other reasons, would open the floodgates for political infighting, increasing the chances that his ruling

Wednesday 06 February 2019

All Progressives Congress implodes.” Eurasia said Buhari would be a lame duck from day one, “with powerbrokers in his own party quickly shifting their focus to the next electoral cycle in 2023”. Abubakar, a businessman and a former vice president, promises to get the economy working again by cutting corporate taxes and, in turn, creating jobs and delivering a $900 billion economy by 2030. Though silent on who the winner will likely be, Eurasia said if he wins, Abubakar will focus on enriching himself and his cronies, avoiding the difficult and politically unpopular tasks necessary for reform.

Buhari’s election vulnerability exposed as... Continued from page 2

Lagos last month, Abubakar warned that jobless youths were “like a time bomb”. “We must create jobs — if not, we will get mobbed one day by the unemployed youths,” he said. Both he and Buhari have announced plans for tackling the problem, with a shared focus on promoting apprenticeship programmes, vocational training and entrepreneurship. But Nonso Obikili, director at the Abuja-basedTurgotCentreforEconomicsandPolicyResearch,saidthatneither candidate’s plan tackled “the systematic problems behind unemployment”. One jobs training programme touted by Buhari, named Npower, had provided training to only “a very small minority of youth”, said Obikili. Abubakar’s policies, meanwhile, regurgitate “the regular youth empowerment schemes that have not really had any impact over the years”. Andrew S Nevin, chief economist for PwC in Nigeria, said that with the working age population of Nigeria growing at roughly 3 per cent a year, the country’s economy would need to expand at 6-8 per cent annually to reduce youth unemployment.

In each of the past two years gross domestic product growth has been only about 2 per cent. “While these issues are being discussed in the election, the issue is whether the winner will take on reforming these difficult structural policies,” said Nevin. Other solutions proposed by the presidential candidates included boosting Nigeria’s credentials as an investment destination and decentralising growth beyond the dominant commercial centre of Lagos. But as is often the case in Nigeria, implementation remains key. There was no consensus at the barbershop. Sani Mukhtar, who sells mobile phone top-up cards from the open-air shop, said the presidentwas doing a good job. The economy had slowed, Mr Mukhtar said, because Buhari had slowed the flow of corrupt money that had flooded the economy during the administration of his predecessor. That, combined with a recession brought on by the oil-price crash, had ground things toa halt.Butthe painwas worth it in order to stamp out corruption. “Buhari is a gentleman — Buhari is not a thief,” Mukhtar, 44, said.

•Continues online at www.businessday.ng

Niger Delta oil reserves half-way through... Continued from page 1

Leases (OPL) and 107 Oil Min-

ing Leases (OML), the highest in Nigeria’s seven oil producing basins, indicating the vast contribution of the region to Nigeria’s economy, according to data from the Department of Petroleum Resources (DPR), the oil sector regulator. But after 60 years of continuous crude oil exploration in the Niger Delta without a strategy to remediate the environment and with little to show for development in the region, oil reserves in the basin are estimated to be half-way through their lifespan, according to a new study on the Nigerian oil and gas sector by Afrinvest, an investment banking firm. “Although there are several hydrocarbon basins in Nigeria, the Niger Deltahasremainedthefocusofexploration for over 60 years. Based on remaining proven commercial reserves, the Niger Delta is estimated to be half-way through its lifespan,” the report said. Several studies on oil exploration activities in the Niger Delta basin have found that pressure is mounting in the basin. “The Niger Delta is one of the most prolific oil provinces in the world. Exploration activities are still on-going withreportsofthepresenceofoverpressure zones which has been a source of worry to oil and gas investors,” said one study by Obi, George and Ofem of the Geology and Physics departments of the University of Calabar. Records from six wells involved in the study reveal the presence of 21 overpressured zones. One well has the largest overpressure depth range of 200m from sonic log assessed. Hydrocarbon generation, an important

activity for those exploring crude oil, contributes to this pressure. “This implies that Nigeria needs to increase deepwater exploration to replace reserves,” said analysts at Afrinvest. Since the last five years, the bulk of Nigeria’soilproductionhasbeencoming from deepwater fields as concerns about militancy and community agitation force International Oil Companies into deepwater fields. Oil production from Production Sharing Contracts (PSC) contributed about 32.27 percent of nationalproductioninAugustlastyear.PSCs produced far less than these in the past. The relative lull in militancy helped Nigeria average around 1.7 million barrels per day production in 2018, according to OPEC records. But the 125 pipeline sabotages witnessed in August last year, according to NNPC records, indicate that rather than recede, militancy may be the quickest factor that will force production away from inland basins in the Niger Delta. To ensure Nigeria’s energy security, the NNPC on February 2 said it would start drilling at Barumbu Village, Alkaleri Local Government Area of Bauchi State, precisely at Kolmani River II Well, after President Muhammadu Buhari cut the ribbon on the project. The field had been previously abandoned by Shell almost 20 years ago. The NNPC has said it is pursuing aggressive exploration of the inland basins including Anambra, Bida, Benue, Chad, Dahomey, Gongola and Sokoto. However, analysts have counselled against drilling in the north fraught with security challenges as well as scant proof of oil and gas in commercial quantity. Henry Biose, petroleum eco-

Completed repair work on Apapa-Ijora bridge to be opened to traffic tomorrow, Thursday, 7 February, 2019.

nomics, management and policy researcher at University of Port Harcourt, earlier told BusinessDay that the cost-benefit analysis shows drilling in the north is not viable. “While there is about 37 billion barrelsofprovenoilreservesandabout187 trillion standard cubic feet of gas in the south, what we want to explore in the north is an unproven reserve of about 2.3 billion barrels of oil reserves and about 14.65 trillion standard cubic feet of natural gas available for four or more countriesintheChadBasin,”saidBiose. Afrinvest analysts’ advice to focus

on deepwater is predicated on the presence of reforms in the oil and gas sector, including passage of the critical Petroleum Industry Bill. Buhari last year refused to assent to the governance aspect of the bill, worsening investor uncertainty in the sector. “Consequently, foreign capital inflow into the oil and gas industry has continued to decline as evidenced by the Nigerian Bureau of Statistics’ report, which showed an average decline of 70.0 percent Q-o-Q between Q1:2018 to Q3:2018,” the investment company said in the report.

Pic by Olawale Amoo

Nigeria’s production sharing contracts, which prescribe the terms under which drilling of deepwater fields is carried out, will expire in the next 5-10 years, but the country is not reforming its laws to prevent the billions of naira it is losing in royalty revenue due to poor fiscal terms it developed for its offshore fields over 20 years ago when it had scant knowledge about drilling in deepwater fields. “Hence, Nigeria’s upstream outlook post-2020 is poor, unless this fiscal uncertainty is addressed,” the Afrinvest report said.

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Apapa-Ijora Bridge to be open to traffic tomorrow - Contractor CHUKA UROKO

arring unforeseen circumstances that may lead to rescheduling, the Apapa-Ijora Bridge will be open to traffic tomorrow, Thursday, February 7, 2019, Julius Berger, the contractor handling the repair of the bridge, has assured. The bridge, which had been undergoing a major repair involving some broken joints, had been closed to traffic for about eight months during which residents, motorists, business owners and port workers contended with the daily woes that define commuting to the premier port city. An official of Julius Berger told BusinessDay at the project site Tuesday that the bridge would be ready for commissioning by the government today and by tomorrow it would be open for use. The Federal Ministry of Power, Works and Housing confirmed this, which said it had sent out invitation to stakeholders for the commissioning of the bridge.

The re-opening of the bridge comes as good news and a big relief to motorists, business owners, and residents for whom life has been miserable because of what unwholesome activities of truck drivers have turned an otherwise enviable destination into - a nightmare. In what is clearly a lamentation, Ayo Vaughan, chairman, Apapa GRA Residents Association, recalls: “I left Ikoyi for Apapa because as at the time we came here, Apapa was a paradise. Apapa and Ikoyi at that time were the same. And that was 30 years ago. Today, Apapa is paradise lost. “In those days, it took only 15 minutes to get to Awolowo Road from Apapa. Now, I am afraid to go out. It has happened in some cases that residents, including me, have had cause to turn back and sleep elsewhere because the road is impenetrable. During the day, the roads are better, but in the night the trailer drivers are in control; it is as bad as it can be.” Apapa-Ijora Bridge, which is one of the two major routes

to Apapa and Tin Can Island ports in Lagos, was constructed over 40 years ago and, according to Babtunde Fashola, the bridge, over this long period, has not received any major repair despite the daily wear and tear by heavy duty and articulated vehicles. About five years ago, the bridge was partially burnt at the Ijora end, yet nothing was done until some of its joints caved in, most probably because of the stationary trailers and tankers who, in spite of presidential orders and consistent warning by structural engineers, have made the bridge a loading bay. Gabriel Ojo, a civil engineer at Sanni Ojo & Partners Consulting Limited, says, “Though it is most unlikely that the bridge’s structure and integrity are adversely affected from the point of view of overload from the ‘empty’ trucks, many of those trucks are not in perfect condition. “And because many of them are not in perfect condition, they are likely to have oil such as petrol, diesel, engine oil, brake oil, etc, dripping on

the bridge; these oil are organic solvents that naturally dissolve the asphalt topping and cause the bridge’s topping and the decks to deteriorate very fast.” Femi Akintunde, a structural engineer and GMD/CEO, AMFacilities, affirms, stressing that heavy-duty trucks packed at close proximity to one another and in static condition over a long period of time have adverse impact on bridges. “What this implies is that the combined weight of the vehicles packed in this condition will be far more than what the bridge was designed to carry under normal condition. “The implication of this situation is that the higher concentration of the static load of these closely parked trucks on the bridge will subject its structures to high degrees of stress at the various joints and support joints than normal, leading to faster wear and tear at critical points which ultimately puts the structural integrity of the bridge at great risk of collapse or catastrophic failure,” he says. L-R: Bisi Adeyemi, company secretary, UTL Trust Management Services Limited; Olufunke Aiyepola, managing director/chief executive officer, UTL Trust; Olawunmi Abiodun, director, UTL, and Kalu Abosi, principal partner, Aster Law Firm, at the UTL Trustees Launches Online Will Writing Service - Willpower in Lagos.

Alleged $40m fraud allegation: Money was properly utilised – Azibaola FELIX OMOHOMHION, Abuja

ousin to former President Goodluck Jonathan, Robert Azibaola, who is standing trial over alleged fraud to the tune of $40 million, Tuesday, told a Federal High Court in Abuja that the said sum, which he received from the detained former National Security Adviser, Sambo Dasuki, was put into proper use, what it was meant for Under cross examination from the prosecution counsel, Sylvanus Tahir, Azibaola confessed to collecting the money from the office of the National Security Adviser (ONSA), but denied that the money was converted to personal use. He said the money was for special assignment meant to assuage the security risk of

the Niger Delta region of the country at that time and it was used for that. Azibaola and his wife were first charged in 2016 alongside their company, One Plus Holdings Nigeria Limited, on a nine-count criminal charge. They were alleged to have received $40 million from Dasuki without a valid contract. However, the court in 2018 struck out seven out of the nine-count criminal charge the Economic and Financial Crimes Commission (EFCC), preferred against them. The court, in a ruling that was delivered by Justice Nnamdi Dimgba, also discharged and acquitted Aziboala’s wife, Stella, of all allegations levelled against her in the charge marked FHC/ ABJ/CR/113/2016.

Justice Dimgba said he was satisfied that going by the proof of evidence the anti-graft agency adduced before the court, the 1st defendant, Aziboala and his firm, One Plus Holdings Nigeria Limited, had no case to answer with respect to the seven-count charge that was struck out. However, the court, ordered Azibaola and his firm to open their defence to counts two and three of the charge which borders on allegation that they received $40m contract from Dasuki, The EFCC had in the two charges that were sustained by the court, alleged that Aziboala had while being the Managing Director/Chief Executive Officer (MD/CEO) and a signatory to the Zenith Bank account of One Plus Holdings Nig Ltd, on or about Septem-

ber 8, 2014, took possession and converted the $39, 999, 958 out of the $40m, and transferred same to the domiciliary account of One Plus Holdings Nig Ltd with Zenith Bank Plc Account No. 5070365750. Under cross-examination yesterday, Azibaola rebuffed EFCC allegations that the money was siphoned using One-Plus as a conduct pipe. Though, he confessed that money was paid into the company’s account without a formal contact, Azibaola said the money was for a “discreet security assignment” at the Niger Delta which would not had gone through normal bidding process. “Yes, there was no formal contract with the Office of the National Security Adviser. It was for assignment,” he said on why the purpose the money was paid.

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39 NEWS

BUSINESS DAY

BDCs transform forex market with CBN approved technology HOPE MOSES-ASHIKE

ureau De Change (BDC) operators on Tuesday keyed into the Central Bank of Nigeria’s (CBN) approved time-tested technology to transform the forex market and to deliver effective services to foreign exchange end-users. The Live-Run Operation Portal, which automates BDC operations to reduce manual labour, was built in collaboration with Centrifuge Consulting. According to Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), the objective for making this Live Run operation portal is to enhance BDCs compliance with set regulations and promote market integrity. The portal will sustain transparent transactions in the BDC corridor, boost the morale of operators and ensure continuous operations in ABCON. ABCON has fully upgraded its Information Communication and Technology (ICT) platforms, to achieve full digitisation of BDCs operations in line with its goal of sustaining transparent operation and prompt rendition of weekly returns to regulatory agencies. Speaking at the official launch of the Live Run Automation Project in Lagos, Gwadabe said the BDCs had helped the government in creating over 30,000 jobs for Nigerians, thereby reducing the unemployment rate in the country.

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He linked the stability of the exchange rate to measures instituted by the CBN and the ABCON to ensure that foreign exchange demand at the retail end of the market was met. Such measures initiated by the CBN include the sustenance of dollar supply to over 4,100 BDC operators across the country through the International Money Transfer Operations (IMTOs) forex window, has helped the status of the local currency. “The naira remains stable despite political party’s campaigns and spending across the nation. The strategic partnership, actions and pre-actions of the CBN and ABCON have stopped distortions to the exchange rate due to ongoing politicking and campaign spendings in the country,” Gwadabe said. However, he was worried that the BDC sector was confronted with many challenges that had continued to defile solutions. Some of these challenges include multiple exchange rate, abnormal bank charges, Value Added Tax (VAT) and Commission on Turnover (COT), parallel market operators and illegal IMTOs, porous international boarders, complex documentation requirements and poor capacity/ skills of operators. He gave an instance of the increasing difficulties arising from over regulation and complex documentation requirements that licensed BDCs were facing in carrying out their daily legitimate operation, saying this was disturbing.

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Shaping people into a team

The Big Idea: Time for Happiness Ashley Whillans

preponderance of evidence shows that the feeling of having enough time — “time affluence” — is now at a record low in the United States. When my team and I analyzed a survey of 2.5 million Americans by the Gallup Organization, we found that 80% of respondents did not have the time to do all they wanted to each day. This situation is so severe it could even be described as a “famine” — a collective cultural failure to effectively manage our most precious resource, time. Time poverty exists across all economic strata, and its effects are profound. Research shows that those who feel time-poor experience lower levels of happiness and higher levels of anxiety, depression and stress. They experience less joy. They laugh less. They exercise less and are less healthy. Their productivity at work is diminished. They are more likely to get divorced. And in our analysis of the Gallup survey data, my team and I even found that time stress had a stronger negative effect on happiness than being unemployed did. On a broader level, time poverty directly accounts for billions of dollars in productivity costs to companies each year, and secondary costs multiply that number many times over. Public health officials rank it as one of the top contributors to rising obesity. Researchers put the health care costs of time stress at $48 billion a year. The irony is, despite the perception that people today work longer hours, the data reveals that most of us have more discretionary time than ever before. How can we feel so starved for time? The answer seems to be money. Most of us fall into a trap of spending time to get money, because we believe money will make us happier in the long run. Our thinking is backward. In fact, research consistently shows that the happiest people use their money to buy time. My colleagues and I have

conducted correlational, longitudinal and experimental research with nearly 100,000 working adults from all over the world. We consistently find that people who are willing to give up money to gain more free time — by, say, working fewer hours or paying to outsource disliked tasks — experience more fulfilling social relationships, more satisfying careers and more joy, and overall, live happier lives. WHY WE VALUE MONEY OVER TIME In studies of middle- and upperincome people across diverse cultural contexts in Europe, Asia and North America, individuals who earn more money report feeling more pressed for time. In a survey of over 30,000 respondents from Australia, for example, higher levels of time stress were correlated with higher incomes, and the longer work hours correlated with greater pay could not explain this effect. Considering that wealthier people can afford to, say, hire housecleaners and take cabs instead of public transportation, their greater time poverty may seem counterintuitive. But it makes more sense if you understand commodity theory, which holds that when any resource is perceived as valuable, it is also per-

ceived as scarce. So, the more we get paid for our time, the more we value it, and the more intensely we feel the loss of any moment. Feelings of financial insecurity (regardless of actual wealth) may also prompt people to experience more intense time poverty. That’s because individuals who feel unsure that they’ll have the same job or earn the same level of pay in the future are more likely to prioritize having more money at the expense of having more time. Despite the inverse relationship between wealth and time affluence, most of us keep striving to make more money. In my team’s research, only 48% of respondents reported that they would rather have more time than more money. Even the majority of people in the group that was the most time-impoverished — parents who had full-time jobs and young children — shared this preference. The very wealthy didn’t always prioritize time over money, either. Nearly half of the 818 millionaires we surveyed said that they didn’t spend anything to delegate disliked tasks to others. It’s not that people can’t think of ways to save time: In one study, 99% of respondents could name a chore they wanted to pay to offload. But across several additional studies, just

17% of respondents spent money to do so. And it’s not that people can’t think of anything better to do, either: Most could name several activities, such as pursuing a hobby, that they’d like to have time for, even as very few bought the time to do them. The core challenge to reducing time poverty and unhappiness is not financial but psychological: the erroneous belief that wealth will make our lives better. Even individuals with a net worth of $10 million think they need to increase their wealth dramatically to be happier. Research shows, for instance, that employees frequently overestimate the value of cash rewards and salary when considering what jobs to accept. They believe that pay, insurance and other financial benefits like retirement plans will determine job satisfaction. And they underestimate the value of flexibility regarding their work schedules. Research shows that once people make more than enough to meet their basic needs, additional money does not reliably promote greater happiness. Yet over and over, our choices do not reflect this reality. It’s important to note that some people — particularly those who are struggling to make ends meet or who feel uncertain about their financial future — often do feel happier when they choose money over time. But it’s still clear that those of us who are more fortunate may need to rethink our priorities. WHY IT’S HARD If the solution to time poverty is so simple — just make choices that give you more time — then why are we all still stressed? There are any number of reasons for our misguided pursuit of wealth, but they fall into two categories: — BEHAVIORAL FACTORS: Several cognitive biases make money seem like a more appealing choice than time. Americans, for example, think being busy signals higher status. The desire to feel important is a powerful motivator that may undermine our best interests.

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My research suggests that people also feel guiltier about spending money to have more time than they do about spending money on material goods. Paying someone to complete tasks we ourselves don’t like can make us feel lazy, so we opt out to avoid that feeling. And because we overestimate the amount of time needed to enjoy an experience, we end up wasting small pockets of free time that we could use more effectively. Five minutes spent socializing with a colleague or 20 minutes on an elliptical machine often have more powerful mood benefits than we expect. Last, we suffer from something called future time slack — the belief that we’ll have more time in the future than we do in the present. So, we decide to make some sacrifices now with the promise of enjoying more time later. Of course, when the future comes, we don’t have more time. We just repeat the same mistake. ORGANIZATIONAL FACTORS: Human resources departments may think that how employees choose between time and money has little to do with them, but a large body of research shows that organizational factors shape the way employees perceive their time and can increase their feelings of stress and undermine social connections and happiness. We know from decades of research, for example, that financial incentives increase people’s efforts to perform better. But we now also know that they make workers obsessed with money. While our overarching focus on financial gain has created economic growth, it has had a cost. All of us — employees and managers alike — should consider giving up money to have more and better time. Time is a precious resource. Rethinking how we value it will help us answer the more fundamental question of how to maximize individual and societal well-being — and help all of us escape the stress traps of everyday life.

Ashley Whillans is an assistant professor at Harvard Business School.

Wednesday 06 February 2019

BUSINESS DAY

42 BUSINESS DAY Financial Inclusion www.businessday.ng

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Innovectives targets 5 million accounts through Kesh Express Oluwasegun Olakoyenikan

nnovectives, a third generation and last mile FinTech Company, has disclosed of its 2019 target to spur financial inclusion through minimum account opening of over five million for its bank partners while it will also recruit over 50,000 new merchants. Last year, the Lagosbased integrated Fintech company, which is a Payment Facilitator, licensed Agent Banking Services Provider, inter-bank Payment Aggregator, as well as a certified mobile Point of Sale solution provider recorded over 1.2 million transactions worth over N8 billion on its agency banking platform. The company’s Chief Executive, Emmanuel Agha, speaking on Innovectives target said “our target for 2019 is to record ten million transactions worth N10 billion.” The Fintech company which aims to take financial services and payments to the under banked and unbanked areas or the segment referred to as the last mile, where banks really do

not have presence, is a super agent licensed by the Central Bank of Nigeria (CBN). As part of measures towards achieving the set 80 percent financial inclusion target by 2020, CBN licensed some companies as super agents. Meanwhile, Chief Execu-

tive Agha while speaking on the company’s 2018 performance said “last year we travelled far and wide to many of the rural and semirural communities in our country where more than half of our population still reside,” this was in order to better understand the dis-

tinct peculiarities affecting consumption of organized financial services. He cited that on these trips they came face to face with the gaping needs and how they have crippled the micro economy. “We identified the lack of fit-for-purpose and sustain-

able initiatives to stimulate the demand side of digital financial services. The disproportionately higher number of financially excluded, economically active adults and non-existent access to credit to the productive segment of our society was indicators that we had to raise our game,” Agha told BusinessDay in a mailed response. “These gaps are not new but the scale and impact on the micro economy calls for intentional and systematic interventions,” he mentioned. The mail from the Fintech Company read that in 2018, it was able to increase the number of FIs and NFIs connected to Kesh Express, its agency banking platform, from four to seventeen. “Today, Kesh Express is connected to Zenith, GTBank, Access Bank, Stanbic IBTC, UBA, Ecobank and Cowries Microfinance Bank. Wema, Sterling and Jaiz Banks will be live in two weeks. We also connected to NIPOST IFS, Angaza, Masterpass, mVisa, Quickteller, NIBSS and Remita platforms,” as compiled from the company’s response. Its target for 2019 is

therefore to achieve 100 percent connection to all retail-focused deposit money banks, major micro-finance banks and international remittance platforms. “2018 was the year we were able to affirm the agility of our integrated and aggregative strategy for agency banking business through our participation in the Shared Agent Network Expansion Facility (SANEF), a project powered by the Central Bank of Nigeria (CBN), the Bankers Committee and NIBSS,” Agha said. According to the Tech driven financial institution, the company has been able to recruit over 25,000 agents across the 36 states, out of which over 10,000 agents are connected and actively carrying out financial transactions for customers on its platform. It plans to speed up agents onboarding process and therefore increase the number of activated agents from 10,000 to 50,000. “Amongst several other services, our agents have been able to open over 750,000 bank accounts for various banks connected to our aggregated, integrated and shared Kesh Express agent platform.”

Banks, Airtel, TraderMoni collaborate to spur financial inclusion in IDP Camps segun adams

anks, Airtel partner TraderMoni to give Internally Displaced Persons (IDP) access to financial services considering they occupy the bottom of the economic ladder and remain part of extremely poor Nigerians. Displaced from their homes, disconnected from their daily jobs, many IDPs, estimated at about 80 million find it difficult to have access to financial services. This is resulting from but not limited to the Boko Haram crisis in the North Eastern part of Nigeria which has affected Nigerians living in those parts of the country, as they are forced to live temporarily at camps across the country. Camp residents remain unbanked for several reasons; chief among them being loss of identification

documents during unexpected crisis that ravaged their communities. Through a partnership with the Bankers Committee, a group that represents all Nigerian commercial banks, Airtel Nigeria and the federal government with the aim to reach the displaced persons, TraderMoni team in January 2019,visited Bocolis, Teacher’s Village, Custom’s House, Learning Centre, and all IDP camps in Maiduguri, Borno state. At the camps, TraderMoni enumerators met with thousands of IDPs, educated them about the TraderMoni scheme and enumerated them by taking their details especially their phone number. Camp residents without mobile phones were given TraderMoni branded mobile phones and free sim cards through which they were able to access their mobile wallets.

Through a technologydriven process, largely tied to a phone number which also doubles as a mobile wallet, database that contains the names and contact details of every beneficiary, Tradermoni is able to give them access to ten thousand Naira TraderMoni loans. “As the country continues its race to financial in-

clusion, Nigerians at the IDP camps is not left behind,” the Government Enterprise and Empowerment Programme (GEEP) said in a statement. In 2016, the GEEP was initiated by the Federal Government with the knowledge that millions of Nigerians at the base of the economic pyramid lack access

to credit facilities. Many of these Nigerians are at IDP camps, displaced from their daily sources of income and uncertain about their future. “These initiatives are aimed at expanding financial inclusion because we have over 23 million Nigerians who are financially excluded, as this ad-

ministration aims to reach them so that they can grow their businesses,” GEEP explained. So far N12 billion has been disbursed in loans to a total of 1.2 million people; the target is to disburse a total of N20 billion to 2 million people across Nigeria. Meanwhile, the Central Bank of Nigeria (CBN) has a set target to include 80 precent of its adult population into the financial cycle by the year 2020. Less than 2 years to the deadline of the apex bank’s goal, Enhancing Financial Innovation & Access (EFInA) 2018 figures revealed that that Africa’s largest economy has 63.6 percent of its adult population included in the financial cycle. This leaves 36.6 percent financially excluded, representing a 16.6 percentage points gap from the set 20 percent exclusion target it is to achieve in less than a year and 10 months from now.

Wednesday 06 February 2019

BUSINESS DAY

44 BUSINESS DAY NEWS NNPC makes $5bn in one year with increased gas supply to power www.businessday.ng

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OLUSOLA BELLO & HARRISON EDEH

... records monthly trading surplus of N2.06bn

igerian National Petroleum Corporation (NNPC) exported crude and gas worth $5.97 billion within one year spanning a period between November 2017 and November 2018. This was contained in the corporation’s latest monthly report covering November 2018 and in which it was also revealed that the corporation increased gas supply to the power sector to the tune of 735 Million Standard Cubic Feet of gas per day (mmscfd) delivered to gas fired-power plants during the month under review. The total gas supply from November 2017 to November 2018 stood at 3,071.13bcf, out of which 466.44bcf and 1,317.77bcf were commercialised for the domestic and export market, respectively. A further breakdown of the report indicates that gas

– injected, fuel gas and gas flared - stood at 1,286.92bcf. Details of the report contained in the NNPC Monthly Financial and Operations Report for the month of November 2018 released Tuesday, show that out of the 212.93bcf of gas supplied during the period, a total of 123.29bcf of gas was commercialised, consisting of 36.14bcf and 87.15bcf for the domestic and export market, respectively. The release notes this translated to a total supply of 1,204.76mmscfd of gas to the domestic market and 2,905.06mmscfd of gas supplied to the export market for the month, implying that 57.91 percent of the average daily gas produced was commercialised while the balance of 42.09 percent was re-injected, used as upstream fuel gas or flared. The November report, the 40th edition in the series, announced a trading

surplus of N2.06 billion, which represented a laudable improvement of 116 percent over the previous month’s deficit of N12.66 billion. This increase in performance month-on-month was primarily attributable to improved efficiency of the Nigerian Petroleum Development Company’s (NPDC) operations. NNPC also posted a total crude oil and gas sale of $668.57 in November 2018, which is 26.13 percent higher than the previous month. Crude oil export sales contributed $574.95 million (86%) of the dollar transactions compared with $425 million contribution in the previous month. Export gas sales amounted to $93.62 million in the month. In the downstream sector, the NNPC has continued to assiduously monitor the daily stock of Premium Motor Spirit (PMS) to achieve smooth distribution

of petroleum products and zero fuel queues across the nation. To this end, a total of 1.62 billon litres of PMS, translating to 54.0 million litres/ day, were supplied for the month. In November 2018, a total of 197 pipeline points were vandalised; out of which six pipeline points failed to be welded and two pipeline points were ruptured. The situation improved from the 219 vandalised points recorded in October 2018, with Mosimi-Ibadan, Ibadan-Ilorin and AbaEnugu accounting for 58, 35 and 34 points, respectively, or approximately 29%, 18% and 17% of the vandalised points, respectively. While Atlas Cove-Mosimi accounted for 13%, WarriKaduna and PHC-Aba accounted for 8% each, and other locations accounted for the remaining 7% of the pipeline breaks.

Maikanti Baru, group managing director, NNPC (2nd r); Mohammed Adamu, acting Inspector-General of Police (2nd l); Seidu Mohammed, chief operating officer, Gas and Power of NNPC (l), and Chief Finance Officer, Isiaka Abdulrazaq, during Adamu’s courtesy visit to NNPC Towers in Abuja, yesterday. NAN

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Wednesday 06 February 2019

Damage control: NDDC pledges to reduce anger, to pay contractors promptly IGNATIUS CHUKWU

ewly installed management of the Niger Delta Development Commission (NDDC) has moved to reduce tension, pains and hatred for the Federal Government by at least paying contractors promptly. The Nelson Briambaifaled management has been meeting with various aggrieved groups to assuage their bruised feelings in the past three years. Contractors are one of the groups being pacified. The new management assured its contractors and consultants that henceforth their payments would be paid promptly without unnecessary bureaucratic bottlenecks. The NDDC acting executive director, finance and administration, Chris Amadi, gave the assurance when he paid a courtesy visit to the palace of monarch of Apara Rebisi of Port Harcourt, Victor Woluchem XII, the key landlords of the federal secretariat. Amadi affirmed that the NDDC director of finance had been charged to ensure that a more efficient process was applied in paying for projects and meeting contractor obligations. The delay in payments affected many groups including critical service groups whose frustrations are said to have injured the popularity and credibility of the Commission. Petty debts were said to have piled up. He said: “In a couple of days, we are going to start payment to contractors owed between N20million and below. There will be no need for contractors and consultants to come to the NDDC before they can get their payments. They can simply stay in their homes or offices and give us the necessary information.”

The executive director said that the new management had resolved to fully discharge the NDDC mandate and intervene in specific projects that would impact on the lives of the majority of the people. “We want to right some wrongs and ensure that never again will our people suffer in the midst of plenty,” he said. According to Amadi, “Ikwere people are a dominant ethnic group in Rivers State. From available statistics, Ikwere has over 55 percent of the voting population of the state.” He regretted that the ethnic group, with high political sensitivities, never had an opportunity to be in the board or executive level of the NDDC, even from the days of the Oil Mineral Producing Areas Development Commission (OMPADEC). He stated further: “My appointment means a lot to the Ikwere people. They are very happy and I am also happy and humbled. We are very grateful to our leader, Rt. Hon Rotimi Chibuike Amaechi, for finding me worthy of recommendation to President Muhammadu Buhari for this appointment.” Woluchem received the NDDC executive director, finance and administration in the company of Nyenwali Isiokpo, Eze Blessing Nwagor and Nyenweli Akpor, Eze Aniele Orlu-Iriebe. The Port Harcourt monarch congratulated Amadi on his appointment, describing it as breaking the glass ceiling for Ikwere people. He noted: “As the landlord of the NDDC headquarters, I have been pained in the past because Ikwerre is the dominant ethnic group in Rivers state and we have several oil wells. I don’t know why it took so long to have an Ikwerre son in the executive management of NDDC.”

Obaseki woos voters with impactful projects in Uromi ‘Combating cancer requires combined efforts of stakeholders’

do State governor, Godwin Obaseki, has called on residents in Esan North-East Local Government Area to join the progressives by voting for candidates of the All Progressives Congress (APC) in the forthcoming general elections. The governor, who made the call while addressing the party’s supporters at a campaign rally in Uromi on Monday, thanked the people for their support. He said he had executed impactful projects that had positively touched the lives of Edo people in the past two years. He promised that he would work on Uzea Road and other roads in the area, noting, “There is still much to do for the people especially in the area of road construction, providing potable water, jobs,

and electricity for the people of Uromi. I will do this and more, please vote for our candidates to enable us have representatives in Abuja that will join hands with us to fast-track development in the area.” The governor reiterated his respect for tradition, which he said informed his decision to reinstate the Royal Father, the Ojuromi of Uromi, Anselm Eidonojie, to his position as the paramount ruler of Uromi to further enhance unity and development in the area. “Not minding that late Tony Anenih was from the opposition party, he was given a state burial as an elder statesman. We love our people and all we require from you is to vote for candidates of our party, the APC, to sustain the development in the state and in the country,” he added.

Chairman, Edo State chapter of APC, Anselm Ojezua, thanked residents in the area for their support for the APC, urging them to cast their votes for the party so as to benefit more from the Governor Obaseki’s administration. Among APC candidates seeking the mandate of the people in the forthcoming general elections, include, Hon. Joseph Ikpea, APC House of Representatives candidate for Esan South-East and Esan North-East Federal Constituency seat; Hon. John Inegbedion, APC senatorial candidate for Edo Central; Hon. Frank Okiye, APC State House of Assembly (EDHA) candidate for Esan North Constituency I; and Hon. Emma Okoduwa, APC House of Assembly candidate for Esan North Constituency II.

ANNA OMALE

anaging director of Phillips Consulting, Robert Taiwo, has called on stakeholders, both in the private and public sectors, to support the fight against cancer. Taiwo said to fight cancer, there must be a synergic effort from all stakeholders in order to create cancer-fighting parastatals to defeat the disease. Over the years, cancer, a disease that involves the abnormal cell growth, has become prevalent in Nigeria. “Ultimately, the task of beating cancer requires the combined efforts of all stakeholders,” he said in his company’s report that examined the socio-economic impact

of cancer. The report gathered responses from thousands of Nigerian cancer victims or caregivers, family and friends. “We will not only direct our significant research capabilities towards plotting the way forward; we are also prepared to support stakeholders in ensuring the effectiveness of cancer management through the effective project management of palliative programme and initiatives,” he said. The call also become crucial, as several health management organisations in Nigeria do not cover cancer treatment, neither does the Nigerian National Health Insurance Scheme (NHIS). The report put the cost of cancer treatment at N850,000 to N3.6 million. According to the Global

Burden of Disease Study 2005, total deaths caused by cancer rose by 17 percent between 2005 and 2015. By 2030, cancer incidence worldwide is projected to rise by 68 percent to 23.6 million new cases every year, the report notes. The PCL research shows that every year, tens and thousands of Nigerians troop abroad in search of the best and most affordable medical treatment and health care services. The report further reveals that cancer patients spend astronomical amount of money seeking treatment abroad, up to $60,000 excluding other associated financial cost such visa fee, flight tickets logistics hotel accommodation and upkeep for the patient and their caregiver.

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BUSINESS DAY

Oil prices jumpy on tightening supply, decline in US factory orders STEPHEN ONYEKWELU, with agency report

O L-R: Simisola Salami, investor relations, FBNHoldings; Sunday Ogunnowo, baale of Iwesi in Ijebu North East of Ogun State and also an exco member of Noble Shareholders Solidarity Association; Seye Kosoko, company secretary, FBNHoldings; Mathew Akinlade, president, Noble Shareholders Solidarity Association; Tolu Oluwole, head, investor relations, FBNHoldings, and Kola Durojaiye, member, statutory audit committee of FBNHoldings, at the Shareholders Meeting organised by Noble Shareholders Solidarity Association, held in Ikorodu, Lagos, recently..

Abacha loot: 2 controversial lawyers allegedly received secret payment of N722m DIPO OLADEHINDE

espite uproar over their terms of agreement, two controversial lawyers, Oladipo Okpeseyi and Temitope Adebayo, hired by the Federal Government to handle the recovery of $321 million Abacha loot from Switzerland have been alleged to have secretly been paid N722 million. Although they both demanded $17 million, TheCable reported that they were both paid N722 million ($2m) after pressure from a very popular Lagos-based pastor who is a political associate of President Muhammadu Buhari. Presidency sources told TheCable that the pastor mounted pressure on the President, claiming that the lawyers had spent “a lot of money” in trying to get the Swiss authorities to return the money to Nigeria.

BusinessDay placed a call across to Tope Adebayo Limited Liability Partnership Law Firm were a lady who picked said she was not permitted to speak on the matter and that Mr Tope Adebayo was not within the country to respond to questions. When asked if she could provide his email address or direct contact of Tope Adebayo she hung up, and all efforts to reach her again proved abortive. TheCable said Temitope Adebayo, one of the beneficiaries, confirmed receiving payment in a telephone interview. Temitope Adebayo alongside Oladipo Okpeseyi were alleged to be demanding payment of $17 million for performing an already completed role in the return of $321 million carted away from Nigeria’s treasury by former military dictator, Sani Abacha, with $1.5 mil-

lion interest by the Swiss government. Riding on one of his campaign promises before taking over power, it was former President Olusegun Obasanjo that initiated actions to ensure the return of $321 million carted away from Nigeria’s coffers by late military ruler, Sani Abacha, as the Obasanjo administration engaged the services of a Switzerland lawyer, Enrico Monfrini, to oversee the procedures for the return of the money. Enrico Monfrini has been called “the man who dictators fear the most”. He is renowned for his skill in tracking down billions of dollars salted away by corrupt leaders and their cronies. After series of discussion and negotiations, the Swiss lawyer Enrico Monfrini completed the Luxemburg part of the job in 2014, as the looted funds were then domiciled with the Attor-

ney-General of Switzerland, until the signing of a Memorandum of Understanding between Nigeria and Swiss government that was supposed to act as a commitment that the funds would be appropriately utilised. Long before Abubakar Malami, Nigeria’s attorneygeneral and minister of justice, assumed office, the Nigeria government had paid Enrico Monfrini his full legal fees having completed the procedure for the full recovery as clarified by the Swiss lawyer himself in a stated communication with the Cable online newspaper. After the lawyers were employed, the attorneygeneral demanded the payment of $16.9 million (N7bn) for the services of the two lawyers, an amount far higher than what Monfrini was reported to have been paid in the original contract.

il prices were jumpy Tuesday on expectations of tightening global supply due to US sanctions against Venezuela, OPECled production cuts and decline in US factory orders. The prices struggled for direction in jerky trading on Tuesday, a day after data showing a decline in US factory orders dragged both benchmarks down from 2019 highs. US government data showing new orders for USmade goods unexpectedly fell in November with sharp declines in demand for machinery and electrical are weighing on markets. “Disappointing US factory data sparked fresh concerns over a slowdown in the global economy, although losses were limited as OPEC cuts and US sanctions on Venezuela continued to point to a tighter supply picture,” according to Cantor Fitzgerald Europe, a professional advisory services firm. US West Texas Intermediate futures were down 4 cents at $54.35 per barrel around 10:15 a.m. ET (1515 GMT), after earlier falling more than 1 percent to $53.62. WTI touched it highest in more than two months at $55.75 the previous day. International Brent crude futures were up 12 cents at $62.63 a barrel, bouncing from a session low at $61.72 and off Monday’s two-month high of $63.63. Analysts said US sanctions on Venezuela had focused market attention on tighter global supplies. “Fresh US sanctions on the country could see 0.5-1 percent of global supply curtailed,” said Vivek Dhar, mining and energy analyst at Commonwealth Bank of Australia. The sanctions will sharply limit oil transactions between Venezuela and other countries

and are similar to but slightly less extensive than those imposed on Iran last year, experts said on Friday after looking at details posted by the Treasury Department. A flotilla loaded with about seven million barrels of Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest U.S. sanctions and others whose buyers are weighing whom to pay, according to traders, shippers and Refinitiv Eikon data. Meanwhile, oil supply from the Organisation of Petroleum Exporting Countries fell in January by the largest amount in two years, a Reuters survey found. Saudi Arabia and its Gulf allies over-delivered on the group’s supply-cutting pact while Iran, Libya and Venezuela registered involuntary declines. Russia is fully complying with its pledge to cut oil production gradually, Russian Energy Minister Alexander Novak said on Monday, adding that production fell by 47,000 barrels per day in January from October. Combined flow from Nigeria and Angola, Africa’s two biggest exporters, fell by about 135 thousand b/d at 3.17m b/d Observed shipments to China fell to by 840k b/d in January from revised 1.55m b/d in December This figure will probably rise, as 9 tankers are hauling 15m bbl of West African crude eastwards, but are showing no final destination. The global economic outlook and prospects for growth in fuel demand have been clouded by poor economic data in China and USChina trade tensions. US President Donald Trump last week said he would meet his Chinese counterpart Xi Jinping in coming weeks to try to settle the two countries’ dispute.

Reforms: Acting EBS mgt. remits N5.7m in 6 Human trafficking: IOM says Benin Monarch’s intervention helped fight rantz Celestin, Head with helpful information on place on them are stronger weeks as govt deepens revamp of media houses of Mission, Interna- the tactics of traffickers and than pointing a gun at them.

fforts to reposition state-owned media organisations in Edo State have started yielding positive result as the interim management appointed recently by Governor Godwin Obaseki to oversee the affairs of Edo Broadcasting Service (EBS) has remitted N5.7 million in six weeks. The new EBS management led by Ransley AbuOsagie, is clearing the back-log of inherited debts and meeting with representatives of the business community in the state to communicate the state government’s new direction for the media house.

According to Abu-Osagie, the N5.7 million remitted as Internally Generated Revenue to the state government came after settling the station’s internal financial obligations. Special adviser to Edo State Governor, Crusoe Osagie, said the news of remittances by the new management of EBS was heart-warming and showed commitment to frugal management of resources. “I have often asked why EBS workers who earn their salaries regularly from the state government cannot compete with their peers in private broadcast

stations, where salaries are not paid or irregular. “Well, that era of nonperformance is over with the ongoing reforms of all government-owned media organisations. We thought it was impossible to bring EBS to a point where it can begin to remit as much as N5.7 million in six weeks,” Osagie said. The governor’s aide noted: “What the new development means is that EBS can do much more with the right people, who are transparent and clear-headed about their core functions in society and obligations to the government and other stakeholders.”

tional Organisation for Migration (IOM), said the intervention of the Oba of Benin, Omo n’Oba n’Edo Uku Akpolokpolo, Ewuare II, has helped in fighting human trafficking in Edo State. Celestin made this known in an interview with the News Agency of Nigeria, on Tuesday in Abuja. He explained that following the Oba’s action of breaking curses on trafficked girls and warning the voodoo priests to desist from aiding traffickers, a lot of trafficked persons had started to speak out. Celestin said by speaking out, the victims had assisted law enforcement agents

how to catch them. He said if more traditional and religious rulers being well respected by their followers raised their voices, it would help law enforcement agencies to curb human and drug trafficking to their barest minimum. “Since the Oba’s pronouncement a lot more people are coming forward, a lot more girls and ladies who have been trafficked are talking about it, it is bringing the spotlight to it. “So, I can imagine the fact that people are now free to talk about it, which is bringing more enlightenment. Because to a lot of them, the curses that these traffickers

“And since the Oba removed that curse, they now have the boldness to speak. I am sure that a lot of people are escaping their bondage simply because of that pronouncement. “We found out that a lot of people who are trafficked were deceived into it by people very close to them, either in their church, family or communities. “So, if we can have traditional leaders speaking against this, it would help the Law enforcement side tremendously. The Oba’s pronouncement has helped the situation on our hands as many people are now coming out to witness.

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Tax Issues

Wednesday 06 February 2019

International community makes important progress on tax challenges of digitalisation IHEANYI NWACHUKWU

he tax challenges of the digitalisation of the economy were identified as one of the main areas of focus of the Base Erosion and Profit Shifting (BEPS) Action Plan, leading to the 2015 BEPS Action 1 Report (the Action 1 Report). The Action 1 Report found that the whole economy was digitalising and, as a result, it would be difficult, if not impossible, to ring-fence the digital economy. The Action 1 Report also observed that, beyond BEPS, the digitalisation of the economy raised a number of broader direct tax challenges chiefly relating to the question of how taxing rights on income generated from cross-border activities in the digital age should be allocated among countries. The international community has just made important progress toward addressing the tax challenges arising from digitalisation of the economy and has agreed to continue working multilaterally towards achievement of a new consensusbased long-term solution in 2020. Countries and jurisdictions participating in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) will step

up efforts toward reaching a global solution to the growing debate over how to best tax multinational enterprises in a rapidly digitalising economy. Renewed international discussions will focus on two central pillars identified in a new Policy Note released after the Inclusive Framework’s January 23-24 meeting, which brought together 264 delegates from 95 member jurisdic-

tions and 12 observer organisations. The first pillar will focus on how the existing rules that divide up the right to tax the income of multinational enterprises among jurisdictions, including traditional transfer-pricing rules and the arm’s length principle, could be modified to take into account the changes that digitalisation has brought to the world economy. This will require a re-examina-

tion of the so-called ‘nexus’ rules – namely how to determine the connection a business has with a given jurisdiction – and the rules that govern how much profit should be allocated to the business conducted there. The Inclusive Framework will look at proposals based on the concepts of marketing intangibles, user contribution and significant economic presence and how they can be used to modernise the international tax system to address the tax challenges of digitalisation. A second pillar aims to resolve remaining BEPS issues and will explore two sets of interlocking rules designed to give jurisdictions a remedy in cases where income is subject to no or only very low taxation. Given the significance of the new proposals for the international tax system, the Inclusive Framework will issue a consultation document that describes the two pillars in more detail, and a public consultation will be held on 13 and 14 March 2019 in Paris as part of the meeting of the Task Force on the Digital Economy. Further details on the consultation process, including how stakeholders can provide input and most effectively participate, along with the consultation document, will be published in the coming weeks.

“The international community has taken a significant step forward toward resolving the tax challenges arising from digitalisation,” said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration. “Countries have agreed to explore potential solutions that would update fundamental tax principles for a twenty-first century economy, when firms can be heavily involved in the economic life of different jurisdictions without any significant physical presence and where new and often intangible drivers of value become more and more important.” “In addition, the features of the digitalised economy exacerbate risks, enabling structures that shift profits to entities that escape taxation or are taxed at only very low rates. We are now exploring this issue and possible solutions,” SaintAmans said. Members of the Inclusive Framework renewed their commitment to reaching a consensus-based, long-term solution in 2020, with an update to be presented to the G20 during 2019. In addition to discussions on digitalisation, the Inclusive Framework finalised a report on BEPS Action 5 (Harmful Tax Practices), which has also been released today.

EY Global Insight

How VAT took over the tax world Value Added Tax (VAT) and its cousin, the goods and services tax (GST), continue to evolve as they adapt to digital disruption and other forces

n the six decades since the valueadded tax (VAT) first made its debut in France, this broad-based consumption tax has spread rapidly across the globe. Governments are fond of VAT and its cousin, the goods and services tax (GST), for many reasons. The levies are considered one of the least harmful taxes for economic growth and can raise large amounts of revenue because they apply to a significant proportion of economic activity. One of the biggest issues we had was businesses that did not prepare early enough in terms of systems training and testing. According to the Organisation for Economic Co-operation and Development (OECD), some 166 countries operated VAT or GST in 2016 – twice as many as 25 years ago. Many countries have had a VAT or GST system for decades. Other jurisdictions are recent adopters, such as Malaysia and Tanzania (2015), Egypt (2016), India (2017) and member states of the Middle East’s Gulf Cooperation Council (2018). Today, VAT and GST continue to expand and evolve as new systems roll out and existing ones adapt to the implications of digital disruption and other forces. This transformation has consequences for businesses, which must adequately prepare for new VAT and GST rules and procedures, and update their technology to comply with new e-filing requirements. Early bird Countries planning to introduce a new VAT or GST system should keep in mind that a well-planned transition is

important. The introduction of such a tax requires adequate administrative capacity, training and technology on the part of both businesses and the government. “There’s typically a broad public education program, as well as a lot of publicity about the resources that will be attached to enforcing the tax,” says Alan Schenk, distinguished Professor at Wayne State University Law School in Detroit, who drafted VAT legislations for numerous Caribbean and African countries. In the EU, making changes is particularly difficult because all the countries need to agree unanimously on the change. Royal Malaysian Customs Department Director General Dato’ Sri Subromaniam Tholasy says that it’s critical for businesses to start preparing for new VAT and GST systems far in advance. “One of the biggest issues we had was businesses that did not prepare early enough in terms of systems testing and training,” says Subromaniam Tholasy. “Some companies left the implementation to the finance and accounting staff, but it requires much broader involvement. People from the sales and marketing sides also need to be involved since, for example, agreements may need to be renegotiated. It was also our experience that many small- and medium-sized businesses waited until the last minute, then had issues when it came to filing.” Lessons learned

VAT and GST systems should be broad-based. They should take a longterm view rather than short-term to be effective. Many jurisdictions have learned the hard way that if their initial VAT and GST systems exempted too many items or entire economic sectors, it is hard to eliminate those exemptions later. The task is made even more difficult when multiple jurisdictions require consensus to alter what is subject to tax, as is the case with the EU. “In the EU, making changes is particularly difficult because all the countries need to agree unanimously on the change,” says Christopher Heady, Professor of Economics at the University of Kent in the UK and former Head of the OECD’s Tax Policy and Statistics division. “Many people think there are things wrong with it, but there’s not a great deal of optimism that much can be done about them.” Nevertheless, the EU’s VAT system is moving forward in other ways. “There are multiple ongoing EU discussions regarding VAT issues, including certain VAT obligations for supplies of services and distance sales of goods, administrative cooperation, and a system for intra-community supplies of goods between taxpayers,” says Jenny Netterström, Business Developer at the Swedish Tax Agency (Skatteverket). Since eliminating exemptions often proves difficult or impossible, jurisdictions often turn instead to raising rates. Since the start of the financial crisis in 2008, worldwide VAT and GST rates

have risen rapidly, with the standard rate hitting a high of 27% in Hungary. The trend has now slowed down, however, and as economic conditions improve, some jurisdictions are lowering their standard rates. Heady says that the lesson for countries launching a new VAT and GST system is to start with as few exceptions and reduced rates as they can possibly manage. Some countries have managed to implement this type of broad-based tax, generally referred to as a modern VAT, says Schenk. “This approach started in New Zealand (1986), then was picked up by Canada (1991) and in a number of the new VATs around the world,” Schenk says. Another lesson a number of countries have learned is to avoid lists of specific items to be taxed, according to Heady. Similarly, single rates are preferable. Otherwise, tax administrations may be forced to debate how new products or services should be taxed. “In the UK, most food and many beverages are zero-rated but soft drinks are subject to the standard VAT rate,” says Heady. “In one dispute, smoothies were an issue. Are they a food or a soft drink? How much fruit does there have to be in a smoothie for it to be a food and not a soft drink?” Immediate information VAT and GST compliance and administration is rapidly becoming digital — from the collection of taxpayer data to the process of audits and inspections. Most tax authorities now require electronic filing of periodic

VAT and GST returns, and increasing numbers of tax authorities allow or require the use of e-invoicing for VAT and GST accounting. This is a useful tool for businesses, as e-invoices generally cost significantly less to produce and process than printed documents. E-invoices can also provide a useful source of data for tax administrations and a more transparent audit trail. In 2015, Sweden and other EU member states introduced a new program for the reporting and payment of VAT, called the VAT Mini One Stop Shop (VAT MOSS). The VAT MOSS regime is a program that has provided administrative relief from the compliance burden. It allows suppliers to register online, file VAT returns and pay the VAT to a single member state. “This is one of the first tax systems in Sweden in which officers are working in a fully digital environment using email as the only method of communication,” says Netterström. In increasing numbers of countries, such as Brazil and China, taxpayers now submit detailed transactional information directly to the tax administration. Tax authorities are also beginning to demand the transmission of information on a real-time or nearreal-time basis. Spain’s pioneering near-real-time reporting regime came into effect in July 2017. Rufino de la Rosa, Director of Spain’s Department of Tax Management, reports that the process is going well. Continues next week

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World Business Newspaper

Donald Trump’s likely World Bank pick is wary of globalism David Malpass has been a steadfast critic of multilateral lenders James Politi and Sam Fleming

n late 2017, David Malpass, the US Treasury department’s top official on international affairs, laid out a scathing critique of the world’s leading international institutions. While he opposed “isolationism”, Mr Malpass told a congressional panel that “globalism and multilateralism” had gone “substantially too far”. His office had to contend with more than 100 working groups and institutions, he said, some of them undeserving of support. “They spend a lot of money, they’re not very efficient, they’re often corrupt in their lending practices and they don’t get the benefit to the actual people in the countries,” he said. If Donald Trump has his way, Mr Malpass will become the next president of the World Bank, giving him the most high-profile, if not powerful, job in global development. According to people familiar with the matter, Mr Malpass is expected to be tapped as the US candidate for the role early this week, with Steven Mnuchin, US Treasury secretary, already briefing officials in other countries about the selection on Monday.

For Mr Malpass, a tall, slowspeaking 62-year-old Michigan native, taking the helm of the bank — a pillar of the US-led international economic order — would represent a remarkable reward after a long career that has spanned Wall Street and Washington and included support for Mr Trump’s presidential campaign in 2016. Yet the prospect of such a steadfast critic of multilateral lenders leading the World Bank has already sparked concern and dismay within the institution and among international and former US officials who deal with global finance and development. The arrival of Paul Wolfowitz, the neoconservative architect of the Iraq War, to the helm of the World Bank in 2005 triggered similar fears. “What the World Bank really needs at a time of such complex global challenges is someone who is committed to multilateralism, has a vision and can motivate the institution, and he has none of those things,” said Karen Mathiasen, a former US Treasury civil servant and former acting US representative on the World Bank board. “It is my hope the board will seriously consider alternative candidates,” she said. The World Bank presidency

became vacant last month when Jim Yong Kim, Barack Obama’s appointee, quit to join a private equity fund, three years ahead of the end of his second term in office. Mr Kim’s departure, which became effective last Friday, triggered a succession race that is formally intended to be “open” and “merit-based” but has traditionally gone to the US nominee,

as part of an unwritten agreement in which a European leads the International Monetary Fund and a Japanese candidate runs the Asian Development Bank. Other candidates considered by Mr Trump for the job, including Mohamed El-Erian, former chief executive of Pimco, and Indra Nooyi, former chief executive of PepsiCo, would have been greeted

more warmly by World Bank insiders and finance and development ministries around the world. But despite the consternation about Mr Malpass — which could trigger a rival nomination — people close to the bank say the chances it could be derailed are slim, as few governments appear ready to pick a fight with Mr Trump over the issue.

Alphabet spending spree spooks investors Nigeria election dominated by ‘timebomb’ of youth unemployment Investment binge of $25bn in 2018 overshadows revenue gains Richard Waters

lphabet ended last year with an unprecedented investment binge, denting profit margins and leaving Wall Street with a fresh bout of concern over the internet group’s periodic surges in spending. News of the spending spree wiped more than 3 per cent from Alphabet’s shares when the company announced its latest earnings on Monday, despite a better than expected performance from the Google’s advertising business that underpins its results. Alphabet said it had ploughed another $7.1bn into capital spending in the final months of last year, taking the total to $25.1bn for the year as a whole, up from $13.2bn the year before. That echoed big spending increases at rivals such as Amazon and Facebook last year. The biggest spending increase came from licensing original content for YouTube, which is trying to build a premium subscription business, and expanding the company’s cloud computing division. Alphabet also ploughed cash into new data centres and equipment, nearly doubling its capital spending over the past year. “The main thing you’re seeing in the [profit] margins is, we continue to see tremendous opportunity across Google, so we’re investing to support long-term earnings and revenue growth,” Ruth Porat, chief financial officer,

said on a call with investors on Monday. Pressed repeatedly by analysts about the reasons for the capital expenditure increase, Ms Porat added: “We’re very mindful of the capex impact on free cash flow and earnings growth. So we’re trying to get it right.” “It seems that investors are rattled by what they’re spending in capex,” said Collin Colburn, an analyst at Forrester. “I think they’re trying to scale even bigger” by automating marketing campaigns for small and medium-sized businesses, he added — something that he predicted would help to increase the size of Google’s advertising market. Ms Porat said Google expected that “the rate of capex growth will slow meaningfully” in 2019, and that a big jump in staff numbers last year would also “slow somewhat”. The company added 4,399 employees in the final quarter, taking total 2018 hiring to 18,661 and leaving it with 98,771 workers. In another sign of the spending surge, Alphabet reported a 40 per cent jump in R&D spending in the final quarter, to $6bn. It also reported that the loss from its “other bets”, which include the Waymo driverless car unit, had jumped 77 per cent, to $1.3bn. The increase mainly reflected the revaluation of equity grants given to workers in these businesses to reflect increased value of the businesses, Ms Porat said.

President Muhammadu Buhari’s vulnerability exposed as disquiet over joblessness grows Neil Munshi

au Umar said he had barely managed to earn $3 on a recent weekday at his open-air barbershop, which operates under a sheet of tin hanging off a half-built building in Kano. A few years ago, he lamented, he had made five or more times that amount in a day. The barber pinned the blame for the plunge in his income on President Muhammadu Buhari, who he said was guilty of mismanagement that had sapped people’s earnings and turned even a haircut into a luxury. “Buhari promised us, but he couldn’t do it — that’s why we can’t vote for him,” said Mr Umar, 26. Mr Buhari is seeking re-election on February 16 in Africa’s most populous nation and his record on jobs is one of his greatest vulnerabilities. Running against him is former vice-president Atiku Abubakar, a wealthy businessman whose pointed campaign slogan is “Let’s Get Nigeria Working Again”. Mr Umar said he knew few people with steady employment in Kano, a city of 4m that is the commercial centre of the north — and a microcosm of a national problem. Since Mr Buhari took office in 2015 the unemployment rate in Africa’s largest economy has soared, rising from 8.2 per cent to 23.1 per cent in the third quarter of 2018, according to the most recent data. Another fifth of the working-age population are underemployed. For young people aged 15 to 35, who make up more than half of

registered voters, the figures are even worse: 55.4 per cent are unemployed or underemployed. Abdulmalik Kabir, a 32-year-old market trader who had just finished a shave in the barber shop, said: “I voted for Buhari in 2015 and we were expecting him to do the right thing for Nigerians, but now we know . . . he is ruining Nigeria.” At a business forum in Lagos last month, Mr Abubakar warned that jobless youths were “like a time bomb”. “We must create jobs — if not, we will get mobbed one day by the unemployed youths,” he said. Both he and Mr Buhari have announced plans for tackling the problem, with a shared focus on promoting apprenticeship programmes, vocational training and entrepreneurship. But Nonso Obikili, director at the Abuja-based Turgot Centre for Economics and Policy Research, said that neither candidate’s plan tackled “the systematic problems behind unemployment”. One jobs training programme touted by Mr Buhari, named Npower, had provided training to only “a very small minority of youth”, said Mr Obikili. Mr Abubakar’s policies, meanwhile, regurgitate “the regular youth empowerment schemes that have not really had any impact over the years”. Andrew S Nevin, chief economist for PwC in Nigeria, said that with the working age population of Nigeria growing at roughly 3 per cent a year, the country’s economy would need to expand at 6-8 per cent annually to reduce youth un-

employment. In each of the past two years gross domestic product growth has been only about 2 per cent. “While these issues are being discussed in the election, the issue is whether the winner will take on reforming these difficult structural policies,” said Mr Nevin. Other solutions proposed by the presidential candidates included boosting Nigeria’s credentials as an investment destination and decentralising growth beyond the dominant commercial centre of Lagos. But as is often the case in Nigeria, implementation remains key. There was no consensus at the barbershop. Sani Mukhtar, who sells mobile phone top-up cards from the open-air shop, said the president was doing a good job. The economy had slowed, Mr Mukhtar said, because Mr Buhari had slowed the flow of corrupt money that had flooded the economy during the administration of his predecessor. That, combined with a recession brought on by the oil-price crash, had ground things to a halt. But the pain was worth it in order to stamp out corruption. “Buhari is a gentleman — Buhari is not a thief,” Mr Mukhtar, 44, said. “He’s done a good job on defence, on roads construction, on electricity and power.” The administration has touted its achievements in all three areas — particularly infrastructure spending which it said had dwarfed its predecessors — though a resurgent Boko Haram, the jihadi group, still threatens the country’s north-east.

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NATIONAL NEWS

FT Federal Reserve chiefs meet Donald Trump to discuss US economy

Aid convoys for Venezuela risk becoming flashpoint

Central bank stresses no deviation in policy path and messaging

Maduro claims international humanitarian assistance is pretext for invasion

Sam Fleming

John Paul Rathbone and Gideon Long

he Federal Reserve chairman and one of his fellow governors met President Donald Trump at the White House to discuss the economic outlook, the US central bank said on Monday evening. Jay Powell and Fed vice-chairman Richard Clarida met Mr Trump and Treasury secretary Steven Mnuchin for an informal dinner, the Fed said in a statement. The central bank stressed that the chairman did not discuss his outlook for monetary policy during the meal except to state that any future decisions would be dependent on incoming data. Mr Powell last year was subject to a barrage of complaints by Mr Trump, who expressed frustration about the chairman’s policies and argued that he risked undermining the economic recovery by tightening monetary policy too much. For his part, Mr Powell has repeatedly said the Fed will make its monetary policy decisions without regard to political considerations, and has insisted he would not resign if asked to do so by Mr Trump. Asked about the prospect of meeting Mr Trump last month, Mr Powell said he was not aware of any Fed chairs who had not met with the president of the day, even if such meetings were rare. He said he did not think it would be appropriate to turn down an invitation if one came. However, Diane Swonk, chief economist at Grant Thornton, said Monday’s dinner, a day before the president’s State of the Union address, still needed very careful handling by the Fed given Mr Trump’s criticisms of its policy, which explained the central bank’s unusual decision to put out a public statement about the dinner. “It is not uncommon for a Fed chair to meet with a president on occasion, but it has an unusual, loaded context right now,” she said. “That is what the Fed is trying to manage.” In its statement, the central bank said the dinner came at the White House’s invitation, and that Mr Powell’s comments to the president at the dinner “were consistent with his remarks at his press conference of last week”. It added: “He did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook.” Mr Powell reiterated during the dinner that the Fed would make its decisions based “solely on careful, objective and non-political analysis”, the Fed added. The men dined in the president’s private residence, and conversation ranged from the domestic and global economic issues to the president’s recent golf game with Tiger Woods and Jack Nicklaus, according to a person familiar with the discussions. This was the president’s first meeting with Mr Powell since he announced him as his nominee for the chairmanship in 2017. Mr Mnuchin and the Fed chair meet each other frequently, however.

Wednesday 06 February 2019

T Mexican president Andrés Manuel López Obrador has blamed ‘irresponsible technocrats’ for decades of pro-market policies that have failed to lift growth and living standards in the country © AFP

Mexico’s purge on technocrats fuels fears of expertise shortfall Critics claim President Andrés Manuel López Obrador is becoming deaf to advice Jude Webber

t 7am every day, Andrés Manuel López Obrador talks directly to Mexicans, promising voters the unvarnished truth. Sometimes the leftwing nationalist president praises the “wise” people but also uses the broadcast to bash “irresponsible technocrats”. Orthodox policy wonks educated at elite US institutions have dominated Mexican policymaking for three decades. But Mr López Obrador has accused them of political bias, and blamed them for Mexico’s inability to escape sluggish growth, corruption and inequality. After taking office in December, he promptly purged government departments of layers of senior and middle management. Mr López Obrador has, in addition, promised to hold a “people’s poll” on March 21 on whether Mexico’s past five presidents should be put on trial for pursuing “failed” neo-liberal economic policies that he claimed “pillaged” the country. “They’re definitely hostile to technocrats,” said one former senior official. In an age of rising populism, the Mexican president, though, is not alone in his suspicion of policymakers. US President Donald Trump prefers to follow his gut, Indian prime minister Narendra Modi has ridiculed western-educated economists and piled pressure on the reserve bank,

while UK cabinet minister Michael Gove stated bluntly that people “have had enough” of experts. But the war on technocrats has had consequences beyond Mexico. When the country’s new government and Pemex held a roadshow in New York in January, it received crushing reviews. One investor described the state oil company’s performance as “absolutely disastrous”, displaying “little clue of finance”. Critics blamed the ramshackle roadshow on a dearth of expertise. Under an austerity drive, Mr López Obrador has limited consultants to three per ministry. And his vow to prevent officials from earning more than the president has led to an exodus of experienced officials — many at the Bank of Mexico, the finance ministry and Pemex — who quit instead of swallowing big pay cuts. “All of this experience will take a long time to recover — they’re shooting themselves in the foot,” cautioned Alejandro Schtulmann, a political consultant. Mr López Obrador’s cabinet may include respected academics and a former supreme court judge, but critics fear the president is deaf to advice — and worry that no one is willing to challenge him. “It’s a learning curve,” said Jorge Andrés Castañeda at IMCO, a thinktank, of the new policymaking. “But it’s steep and it’s going to cost us.” The president has ploughed ahead with his priorities: a national energy policy, a crackdown on fuel theft, a

new security strategy, higher social benefits and an apprenticeship programme to create opportunities and growth. At the same time, the finance ministry has quietly backtracked on its firing binge, hiring some staff back to new roles. “They know they need [technocrats], they just underestimated how many,” said the former official. While Mr López Obrador is hugely popular, his methods have alarmed investors. He announced, after a “people’s poll”, that he would scrap a partially built $13bn airport that senior officials had privately assured investors was safe. The president wants to supplement the existing airport by expanding a military base, spurning expert advice that operating the two simultaneously was incompatible. “A lot of the technocrats were very arrogant and, at the end of the day, didn’t deliver . . . you can see why they would be unwilling to talk to them,” said one former policymaker. “Hopefully experience will teach López Obrador that aside from good intentions and being courageous, you need to think things through — and listen to other people.” But John Ackerman, a law professor whose wife is the government comptroller, defended the changes. “Some types of knowledge are presented as neutral expertise but have a political agenda,” he said. “All these years, people have been saying ‘we know best’. This is refreshing,” he said.

Janus Henderson assets under management dive $50bn

Fund house hit by investor outflows and turbulent markets Peter Smith

anus Henderson reported a $50bn plunge in assets under management in the final quarter as the dual US-Australian-listed fund group was battered by a fresh wave of investor withdrawals and weaker performances across the board in its investment activities. Investor migration from higher-cost active managers like Janus to cheap index funds continued to take its toll. The group’s assets tumbled to $329bn by the end of December, down from $378bn at the end of September and $371bn at the end of 2017. Net investor redemptions

nearly doubled over the quarter to $8.4bn and were $18.1bn for the full year. A further $41.2bn was wiped out during the quarter from weaker markets and adverse foreign exchange movements. Janus Henderson’s share price halved last year and the group said yesterday it was parting ways with veteran fixed income manager Bill Gross. Dick Weil, chief executive, said the group faced “market challenges and headwinds” last year and the $18bn outflow in 2018 was “disappointing”. “Against a backdrop of volatile markets and ongoing change in the asset management sector, 2018

was a year of further transformation for our firm,” Mr Weil said. “We made significant progress driving towards merger completion, transforming from two separate legacy companies into Janus Henderson. I am very pleased that we were able to complete our integration efforts and realise our cost synergies of $125m well ahead of plan in 2018.” Net income fell from $111m at the end of September to $107m at the end of December. For the full year it dropped from $656m to $524m. The group plans to spend $200m on share buybacks this year, double its 2018 outlay.

he Venezuelan opposition and its international allies are preparing convoys of humanitarian aid for delivery into the crisiswracked country as early as this week, potentially sparking a border confrontation with forces loyal to President Nicolás Maduro. Canada pledged $40m of aid on Monday, Germany has earmarked €5m while the US has already promised $20m. Over the weekend, Mark Green, head of USAID, posted on social media photographs of boxes of food being readied for delivery, each labelled with a US flag. Mr Maduro has dismissed offers of international aid as a pretext for military intervention. The opposition’s allies counter they are responding to calls from opposition leader Juan Guaidó, recognised by most of the hemisphere and Europe as Venezuela’s legitimate, interim president. “The time for democratic transition in Venezuela is now,” Justin Trudeau, the Canadian prime minister, said. In Caracas, Mr Guaidó implored the military to let the aid through, when it is finally shipped. “You would be on the right side of the constitution, and humanity, and you would also help your family,” he said on Monday. “Will you reject that? If you have doubts, just ask your family. We continue to hope for your support. Your moment is now.” The opposition’s aim is to expose divisions in the military, which has continued to support Mr Maduro even as rank-and-file soldiers go hungry in a country wracked by shortages and hyperinflation. “It’s a very unusual situation. Maduro does not want the aid. Guaidó and his allies want to deliver it. What we don’t know is who will deliver it,” said Diego Arria, an opposition leader and former UN diplomat. “My feeling is if they [the military] let the aid in, that will be the end. I think the military will let it through.” The need for aid is dire given what David Lipton, deputy head of the International Monetary Fund, has called Venezuela’s “unprecedented perfect storm” of food and nutrition crises, protracted hyperinflation, loss of capital and complex debt problems. More than 3m migrants have left the country since 2014 and many have arrived in neighbouring countries emaciated. In Venezuela, as many as 300,000 people are in mortal danger for lack of basic medicines, according to Mr Guaidó. Adding to the crunch are punitive financial sanctions the Trump administration launched last week against state-owned oil company PDVSA, effectively the country’s sole industry. Oil production could halve to 600,000 barrels a day, from 1.2m bpd in December, if sanctions remain throughout 2019, said Francisco Monaldi, a Venezuelan oil expert at Rice University. The timing and mechanics of aid delivery are unclear. Most aid is expected from the Colombian border town of Cúcuta, with more distributed from across the Brazilian border and from the Caribbean, perhaps the islands of Aruba or Puerto Rico.

Wednesday 06 February 2019

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Market calm gives volatility funds a green light to buy Robust start to 2019 for equities set to trigger more purchases from computer-driven funds Richard Henderson and Robin Wigglesworth

omputer-driven investment funds whose activity is based on the level of market volatility are forecast to buy tens of billions of dollars of US stocks, according to analysts, as the strong start to the year lures them back into the equity market. Funds that target a specific level of market movement automatically change their exposure according to the ebb and flow of financial turbulence. Last year’s turmoil caused many to dump equities, and fuel the sell-off, critics argue. However, with the benchmark S&P 500 recording its best January since 1987, these “volatility control” strategies are buying once again. Deutsche Bank estimates that funds following these strategies have already bought $45bn of US stocks in January. A further $45bn of buying could come in the next three months as long as markets remain calm, according to the bank. “It’s quite a big chunk of assets,” said Hallie Martin, a US equity strategist at Deutsche Bank, reversing selling seen during December’s market turmoil. “When volatility increases they de-allocate from equities, which is what we saw in the fourth quarter.” Wells Fargo’s analysts estimate volatility-targeting strategies will buy $10bn to $20bn in US equities monthly, and as much as $160bn could come back into stocks over the year, should the volatility remain muted. “If the current status quo persists and the high volatility of December fades into the background you’ll see these strategies allocate into equities,” Pravit Chintawongvanich, equity derivatives strategist for Wells Fargo, pointed out. There are three primary types of volatility-sensitive strategies:

risk parity funds, such as the likes of Bridgewater’s All-Weather fund; trend-following hedge funds that attempt to surf market momentum up and down; and “variable annuity” insurance accounts with a fixed volatility target. The trend-following hedge fund industry manages about $300bn, and the volatility-sensitive variable annuity side is roughly similar in size. Estimates for the size of the risk parity industry vary wildly, but are generally in the $200bn to $600bn range. Their systematic, volatilitysensitive trading has become controversial, with critics arguing that their automated selling when markets are already tumbling can accentuate vicious swings. Several fund managers blamed managedvolatility funds for aggravating the turmoil that struck markets at the end of last year, and in several other flashes of turmoil in recent years, such as in February 2018 and August 2015. In practice, there is tremendous variety in just how sensitive these strategies are to volatility, ranging from quicker-responding variable annuity products to more ponderous risk parity funds. Industry insiders argue that critics also overestimate how much trading they actually do. But many volatility-targeting strategies calculate volatility based on one-month and three-month windows, meaning that the longer the market edges away from December’s ructions, the more buying will occur, analysts say. One-month realised volatility nudged higher in January than any point in 2018 as December’s stock market woes pushed the figure to 29.7 per cent. The figure has since softened to under 25 per cent. This burst of volatility-sensitive buying, coupled with a still-rosy outlook for corporate share buybacks, will inject more money into the equity market and keep the rally going, according to Ms Martin.

UK pound slips below $1.30 for first time in two weeks Disappointing services sector data add to gloomy mood Adam Samson

ritain’s currency fell on Tuesday to its lowest level in two weeks — slipping below the $1.30 mark — after data showing the dominant services sector almost stalled last month added to the sense of gloom. Sterling dipped 0.2 per cent on the US dollar, trading just below $1.30. The fall was more mild against the euro, with the currency off just 0.1 per cent. The pound has pulled back from January highs above $1.32 with investors and analysts deeply uncertain over the UK’s exit from the EU, which is now just weeks away. A closely watched survey, released on Tuesday, showing UK services sector growth had eased to the weakest pace since the direct aftermath of the June 2016 Brexit vote, highlighted the real-

world effect of the turbulent political climate. Theresa May is expected to kick off the latest round of negotiations with Brussels later this week as the prime minister hopes to make a new deal that can pass parliament. “Expectations for a breakthrough before then are low and it appears the recent positivity baked into the pound from reduced ‘no deal’ is waning,” said Lee Hardman, currencies strategist at MUFG. The weaker pound provided a boost to the FTSE 100 index of large-capitalisation British companies, sending it up 1.4 per cent. The benchmark has as members multinational companies that tend to benefit from a weak pound when they convert revenue earned abroad back into sterling. The more domestically-focused FTSE 250 was up by a slimmer 0.34 per cent.

With the benchmark S&P 500 recording its best January since 1987, ‘volatility control’ strategies are buying once again © FT montage; Getty Images

Whoever runs the World Bank needs a plan for emerging markets Developing nations are an important source of strength in the global economy Robert Zoellick

overnments are now selecting a new president of the World Bank. In doing so, they should be considering the strategic economic context in which the bank will operate. The retrospectives 10 years after the global financial crisis dramatised events in the US and Europe, but rarely cast an eye on developing economies. The next World Bank president needs a better grasp of that history and must know what his or her institution and others should be doing now to prepare for the next downturn. If policymakers overlook the experience of developing countries during the crisis, they are less likely to consider emerging market dynamics, understand developing economies’ sources of resilience and appreciate vulnerabilities. Given the attention accorded to developing economies in earlier crises, it would be ironic to ignore their roles during the “great recession”. The consequences of skewed history could be dire. Multiple poles of growth are a source of strength for the global economy. Breakdowns in developing markets, in contrast, harm the most desperate. Migrations to Europe and North America reveal the human cost for all societies of failures in poor countries. The firefighters of 2008 recog-

nised that the world had changed: they shifted from the G7 to the G20. In the immediate aftermath of the financial shocks, developing economies accounted for about half of the world’s growth. Emerging markets led the recovery in world trade, with demand for imports rising twice as fast as in wealthier countries. Developing economies were even net exporters of capital to high income states. South-south linkages assumed greater importance, representing one-third of global trade and foreign direct investment. The developing economy story suggests five lessons. First, emerging markets were not spared the costs of crisis. Their average growth rate of about 7 per cent in the five years preceding the crisis fell to 1.6 per cent in 2009, knocking an estimated 64m people into extreme poverty. Excluding China and India, average growth rates fell from about 6 per cent to almost minus 2 per cent. Second, China’s huge stimulus offered a critical boost to a tumbling world economy and especially to commodity exporters. Beijing’s high level of debt today reflects the cost of that course of action. Policymakers who claim that Beijing harms global markets, and who want to “decouple” China from the world economy, should take note. India and Indonesia also demonstrated resilience when most needed. Third, trade disruptions were

more likely to harm poor countries than were financial shocks. Global trade plummeted promptly, with trade in the first quarter of 2009 down about 30 per cent from the prior year. Resistance against protectionism proved vital. The World Trade Organization and World Bank had to press G20 central bankers not to strangle trade finance. The current tariff wars — plus a creeping movement in recent years towards “temporary” trade barriers for intermediate as well as retail goods — will undermine resilience in the next downturn. Fourth, developing countries’ structural reforms before the storm created room for timely fiscal expansion. Many governments could rely on well-designed programmes for healthcare, education, social safety nets and infrastructure, even though they had to slow spending growth. They tried to protect their primary productive “asset”: human capital and skills. In the face of a harsh repricing of risk and the pullback of international banks, some countries could mobilise domestic financial resources, including private investment, because they had developed local currency securities markets and inclusive finance for smaller enterprises. Developed economies can help themselves in the future if they assist developing economies to prepare today.

Agribusiness Archer Daniels Midland 4Q profit more than halves Oilseeds unit, which exports Brazil-grown soyabeans, doubles operating profit Gregory Meyer

rushing soyabeans propped up earnings at Archer Daniels Midland as the agribusiness reported profits that fell short of expectations amid a trade war between the US and China. The Chicago-based company, one of the world’s largest traders and processors of grains and oilseeds, reported net profit of $315m, or 55 cents a share, in the fourth quarter of 2018, less than half the $788m or $1.39 a share the company earned a year earlier. Adjusted for asset impairment and restructuring charges and other items, earnings per share of 88 cents were less than the 92 cents Wall Street had forecast. ADM’s oilseeds division, which

crushes soyabeans and other oilseeds and exports Brazil-grown soyabeans, more than doubled its operating profit from the year before to $432m. The division’s strong results came as China’s tariffs on US soyabeans backed up supplies inside the US and led to strong sales from Brazil, enabling companies such as ADM to buy them cheap for processing inside the US or shipping from South America. The origination division, which contains ADM’s grain trading activities and its exports from North America, reported a 30 per cent decline in operating profit to $183m. The company noted “extremely small volume of US soyabean exports to China”, even though overall North American

export volumes were up due to exports of corn and soyabeans to markets outside of China. ADM’s carbohydrate solutions division, which includes its large biofuel operation, suffered a 31 per cent decline in operating profit due in part to weak profit margins for corn-based ethanol refining, a business that has been buffeted by uncertainty over federal motor fuel policy. Juan Luciano, chief executive, said the past year featured “complicated and rapidly changing trade, geopolitical and market conditions”. Looking ahead to 2019, he said: “By continuing to pull the levers under our control, we are positioning ourselves to [increase] profits and returns in 2019 and beyond.”

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Wednesday 06 February 2019

ANALYSIS Five things to watch in the State of the Union ‘Build the wall’, North Korea and US economy likely to be key themes in Trump’s speech Demetri Sevastopulo and Sam Fleming

Spiralling costs, high debt and Brexit: can UK universities survive? After student loans sparked a three-decade expansion, higher education faces a reckoning

Andrew Jack

he School of Oriental and African Studies seemed a symbol of stability when it celebrated its centenary in 2016 by taking over and renovating the University of London’s imposing Senate House building in central London. It was a bold move to lure the best students. But just three years later its future has become much shakier, with its undergraduate intake down 40 per cent and a £7m operating deficit. “The competition is brutal,” says Professor Stephen Hopgood, Soas’s international pro-director. “We are small and specialist, and if undergraduate fees are cut, it’s going to be very hard for an institution of our size to survive. It’s never been as tough as this.” This view is echoed by many of his peers across the UK universities sector who are feeling squeezed by a mixture of domestic pressures, intensifying international competition and a growing debate about the value of higher education for the growing proportion of the population studying at university at a time of escalating costs. Few countries beyond the US match the extent to which English higher education has been turned into a business over the past two decades. But universities have been trapped on one side by government controls and deregulation and on the other by rising costs and rapid expansion in institutions. Chart on the value of a university degree Debts incurred during a typical three-year undergraduate course now average more than £50,000 per student. Government calculations suggest only 30 per cent of full-time students in England, beginning in 2017, will fully repay their loans. But many young people still question whether they should apply. “A higher qualification would be helpful in the long run but the costs are a real concern for me,” says Alex Jay, who has been visiting British universities while trying to decide whether to seek an apprenticeship in cyber security instead. The impact of rising costs on both sides of the Atlantic has been growing pressure for reform from voters and politicians alike. Student debt in the US has spiralled to a record $1.5tn which the 2016 Democratic presidential contender Bernie Sanders dubbed “outrageous” while repeating demands for free tuition. Even President Donald Trump called late last year for the terms of federal student loans to be eased. In the UK, the numbers in higher education have ballooned since the introduction of student loans in the 1990s and government encourage-

ment to expand higher education to reach 50 per cent of school leavers — about 500,000 undergraduates a year. There has been an explosion in the number of institutions, now totalling more than 450; the construction of debt-financed new buildings and campuses; and the provision of an ever wider range of courses. Now the cracks are beginning to show. Last November, for example, the New College of the Humanities in London — a private institution yet to be fully accredited as a university — was acquired by Northeastern of the US. In December, Manchester Metropolitan handed over its Crewe campus to the educational arm of Apollo, the Indian healthcare group. In conjunction with the University of Buckingham, Apollo will offer medical training on the site. “This is a very acute moment for British universities,” says Sir Anthony Seldon, Buckingham’s vice-chancellor. “So many pressures are coming together after a period of relatively untrammelled growth and approbation. They have over-expanded, and there will be a slimming down.” Chart on the value of a university degree With costs for new buildings and pension deficits for teaching staff both rising, the tensions are set to multiply this year. One factor is a governmentbacked commission chaired by the businessman and historian Philip Augar, which is set to report in the coming weeks on the future of post-18 education. As Theresa May, the prime minister, said when launching the commission last year: “The level of fees charged do not relate to the cost or quality of the course. We now have one of the most expensive systems of university tuition in the world.” Leaks of options being examined include cutting the current annual £9,250 in fees by a third; trimming the standard university course from three years to two; imposing higher entry requirements; and a wholesale shift in focus to encourage more students to study vocationally orientated courses in further education colleges. The opposition Labour party pledged to cancel student loans altogether in its 2017 general election manifesto. A second factor is Brexit, which is already damping the recruitment and retention of non-UK faculty and technical staff ahead of Britain’s planned departure from the EU on March 29. Universities are also bracing for substantial reductions in EU research funding. The UK has received €11.4bn from the scheme since 2014, the largest share of any country. A group of vice-chancellors from the Russell Group of leading researchbased universities warned recently that a no-deal Brexit would be “an academic, cultural and scientific setback from which it would take decades to

recover”. Even a softer version of Brexit is likely to reduce the volume of EU students, assuming that their university fees rise from the current level, which is equal to those of their British counterparts, to the two- or three-fold higher tariff for other overseas undergraduates. A demographic dip within the UK means that domestic student numbers are also set to drop over the next two years, as the total number of 18-year-olds falls from a peak of 830,000 in 2009 to a low of 711,000 in 2020. There are scant signs that the shortfall will be made up by applicants from abroad. The number of first-year full-time undergraduates from outside the EU has been almost unchanged at 50,000 annually over the past five years, according to data released last week by the Higher Education Statistics Agency. Aside from the cost, one reason has been tight immigration controls in the UK that severely restrict the ability of foreign students to remain and work after graduating. Universities in Canada and Australia, by contrast, offer far more favourable visa terms and have been actively promoting their courses abroad. Meanwhile, some of the largest traditional feeder countries of students, led by China, are investing substantially to offer more attractive degrees at home. Chart on the value of a university degree The flexibility for British universities to generate additional income is limited. The government fixes the terms of student loans, meaning universities have little scope to increase fees. Instead, the decision to remove caps on class sizes in 2015 triggered an inter-university battle to expand intakes. The result has been ever more aggressive marketing to students. There have been incentives for applicants from book vouchers to iPads; investment in more appealing facilities; a sharp rise in unconditional offers not linked to school exam results; and “grade inflation”, with a significant jump — from 16 per cent to 27 per cent since 2010 — in the award of first-class degrees. That has allowed more applicants to “trade up” to larger and more prestigious institutions. But it is undermining demand for the courses at lower-ranked rivals, and risks diluting both the quality of teaching and the level of pastoral support many need. Peter John, vice-chancellor of the University of West London, which has many students from minority backgrounds, cautions. “They [the higher ranked institutions] don’t realise what they will have to do for individuals without the cultural and social capital in supporting them and dealing with mental health issues.”

onald Trump’s second State of the Union was initially postponed by a spat with House of Representatives speaker Nancy Pelosi over the partial federal government shutdown. Now set to be delivered at 9pm on Tuesday, the speech comes as the Democratic presidential primary race swings into gear with seven declared candidates so far aiming to unseat Mr Trump. Mr Trump currently has an average approval rating of 41 per cent, according to Real Clear Politics. While he has executed many of his campaign promises, such as withdrawing from the Paris climate accord and Iran nuclear deal and passing tax cuts, he has failed to deliver on two of his biggest pledges: reducing the US trade deficit with China and building a wall along the US border with Mexico. His battle to convince Democrats and many Republicans to fund the

wall will be high on the agenda on Tuesday night. Here are five things to watch for when Mr Trump gives his primetime address to lawmakers and the public: The border wall “Build that wall” was one of the signature chants at Mr Trump’s campaign rallies, but he has struggled to convince Congress to fund the project. A stand-off over the issue resulted in a five-week government shutdown over the year-end holidays. Mr Trump has hinted that he might use the State of the Union to declare a national emergency — allowing him to circumvent Congress — unless Democrats and Republicans set aside billions of dollars for the project as they negotiate government funding ahead of a February 15 deadline. Mr Trump will highlight the need for more border security, which is certain to return as a campaign theme in 2020. North Korea The president has hinted that he will reveal details about his upcoming summit with North Korean dictator Kim Jong Un, with increased speculation that the meeting will happen in Vietnam. The US has made little progress convincing North Korea to denuclearise since Mr Trump met Mr Kim for the first time in Singapore in June last year. Mr Trump has argued that North Korea is no longer a threat — a view that has been contradicted by his intelligence chiefs. Dan Coats, director for national intelligence, recently told Congress that it was “unlikely” Mr Kim would abandon his nuclear weapons since his regime relied on them for survival.

Isis The president may use the occasion to talk about US troop drawdowns in Syria and Afghanistan. Mr Trump stunned his military advisers in December by announcing that he would withdraw American forces from Syria — a move that sparked the resignation of Jim Mattis as secretary of defence. The president has since calibrated his language to suggest that the withdrawal in Syria will be slower than first suggested. In announcing the withdrawal, he said that the US had defeated Isis — another statement that has been contradicted by top security and intelligence officials. Another question is how quickly, and by how many, Mr Trump wants to cut the US presence in Afghanistan where the American military has been fighting for 18 years. The economy Mr Trump will tout the strength of the US economy, which — despite

self-inflicted wounds such as the trade war with China and the shutdown — is continuing with a remarkably durable expansion. US hiring was the strongest in almost a year in January, as employers shrugged off the shutdown, marking the 100th straight month of positive job growth. Wage growth is also gaining traction, running at a 3.2 per cent yearon-year rate, while inflation remains tame. While threats of a flare-up in trade tensions or a stand-off over the debt ceiling continue to present risks to the expansion, the Federal Reserve’s lurch in a dovish direction last week should help to bolster growth. The recent shift in stance by the Fed has also lowered the risk that Mr Trump will criticise the central bank in his address. The speech also comes as Trump administration officials continue negotiations with China over a deal to end the trade war between the two economic powers. Mr Trump may hold a summit with Chinese president Xi Jinping when he travels to Asia for his meeting with Mr Kim. Unity and 2020 One question is whether Mr Trump will deliver a speech aimed at creating unity — as he did in a shortlived effort in 2017 — or whether he will hammer the Democrats lining up to oust him in 2020. Seven Democrats — including US Senators Kamala Harris and Cory Booker — have already launched presidential bids, while another three, including Senators Elizabeth Warren and Kirsten Gillibrand, have created “exploratory” committees, which means they will probably run. Others such as former vice-president Joe Biden remain in the frame.

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West Africa: Nigerian offered at high levels, Angolan nearly sold out Page 52 GAS

L-R: Maikanti Baru, GMD, NNPC; Ibe Kachikwu, Minister of State for Petroleum; and Huub Stokman, CEO, OVH Energy during the ministerial visit to the OVH Energy stand at the Nigerian International Petroleum Summit held in Abuja recently.

Debrief

Mozambique: Anadarko signs long-term deal with CNOOC for Mozambique gas Page 53

Still waiting for Nigeria’s refineries’ concessioning? FRANK UZUEGBUNAM

Market Insight

Oil hits 2019 high on Venezuela sanctions, OPEC Page 57 OPEC weekly basket price DAY

PRICE

1/2/19

60.93

31/1/19

61.19

30/1/19

60.93

29/1/19

59.71

28/1/19

59.57 Source: OPEC

n 2017, Ibe Kachikwu, Minister of State for Petroleum Resources, announced in Vienna, Austria, while attending the 172nd meeting of the Organisation of Petroleum Exporting Countries (OPEC), that Nigeria will concession its four ailing refineries whereby the concessionaires will repair the refineries, with no public funds expended. Repair works would last between 12 and 18 months to ensure their optimal operation. The Nigerian Agip Oil Company, a subsidiary of the Italian oil giant, Eni, was said to have committed to repairing the Port Harcourt refinery, as part of a $15 billion investment that includes building a 150,000 barrel per day refinery and a power plant. Oando was also involved as partners in the project. But the Senate weighed in and queried the process of the transactions, which they alleged was without recourse to due process. “The best practice is to select partners through open and competitive bidding, i.e. prepare the business for sale, market the

business, buyers selection and close transaction,” Mohammed Sabo, a senator from Jigawa State, said at that time. The process was suspended. Two years on, there has been no progress. Chidi Izuwa, director general, Infrastructure Concession Regulatory Commission (ICRC), made a case for the refineries’ concessioning for efficient performance saying that the call has become urgent on the heels of poor performance of the refineries, which available records showed it is performing below 30 percent. “Government has to play a role and break the back of government dominance in the downstream sector and bring in the private sector. This is the only way to go. When you bring in the private sector, you must change the incentive structure. The NNPC refineries, we should concession them to the private sector,” said Izuwa, while speaking as a pannelist at the recent Nigeria International Petroleum Summit (NIPS) in Abuja. “There is a huge opportunity in refining. Petroleum is the only thing that increases in volume when you process it. If you take 42 gallons of crude oil, it gives you 45 gallons. It actu-

ally breaks the laws of Chemistry and physics. It increases in volumes because of the cracks. It is a profitable business and we need to bring in the private sector”, Izuwa said adding that “the depot system is a profitable business. You should also at the same time concession it to the private sector, they would make the investment and then, those assets would start to earn revenue for government.” Babajide Soyode, Technical Adviser, Dangote Refinery, on the same panel discussion said that NNPC refineries are goldmine, and are sitting in the best markets in the country; Port Harcourt, Warri and Kaduna. Dangote is going to occupy the fourth market, Lagos. “Why can’t NNPC reactivate or upgrade its refineries. They are not old. Upgrading, as any engineer would tell you is standard in our industry. Follow the industry standard, upgrade what you have. We are talking of NNPC being efficient, those refineries were built at an average of $1 million - Warri for N357 million, when you compare it with 1978, Kaduna was N377 million,” Soyode said. “If you have been subsidising, you don’t accrue enough

to maintain the refineries, not to talk of to upgrade or expand, then it is shameful that NNPC would be looking for $1 million to pay consultants for study. It’s a shame for Nigeria. Subsidy was introduced in 1986, and the aim was to alleviate poverty, now, it’s 32, 33 years of subsidy, can anybody tell me one poor person whose lives have been made better? It’s the elites that have been enjoying the subsidy. Unfortunately, we have one of the worst petrol imported into the country, he said. The solution is one: remove subsidy, two: let the private sector or the NNPC take over, it would solve the problem. Dangote refinery would commence 2021 and when others like the NNPC refineries come on stream, we would have about 1.25 million barrels refining capacity a day; then we can export and do whatever we want to do with the excess.” Between 2003 and 2007, the federal government had attempted to privatise the refineries using the BPE and a consortium of advisers led by Credit Suisse First Boston, now Credit Suisse Securities. But that attempt failed.

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Brief Morocco: Morocco set for fuel price caps by mid-March

West Africa: Nigerian offered at high levels, Angolan nearly sold out

igerian barrels are being offered at high levels. Bonny Light and Qua Iboe for March loading have been indicated as high as $2.50 a barrel above dated Brent, but no trades were said to have taken place at those levels. Forcados was being offered at dated Brent plus $2.50-$2.75 a barrel. The grade has been buoyed recently as it is distillate-rich, producing

a higher yield of diesel that has had a better margin than gasoline lately. Differentials for Nigerian crude held around their recent highs but buyers were becoming increasingly reluctant to snap up any cargoes, given the number of unsold cargoes from the previous month’s export programme. There are still around 15 cargoes of crude still for sale from the February programme, which traders said was

starting to weigh on the market. Indian refiner IOC bought a cargo of Agbami from Norway’s Equinor for March loading, according to trade information. But there are barely any Angolan remained for March loading. Demand for Angolan crude has been more consistent, traders said. Only a handful of March loading Angolan cargoes were left after Chinese refiners

mopped up the market ahead of the Lunar New Year holiday. Chinese teapots have kept up their intake of Angolan crude, leaving fewer than a dozen unsold cargoes from the March programme. Uruguayan refiner Ancap awarded a tender to Total for a cargo of light sweet crude. The company has tended to favour West African crudes over the past few months but the most recent purchase was for a non-WAF grade.

orocco will set caps on the prices of petrol and diesel by mid-March, Lahcen Daoudi, governance and general affairs minister said. “Price caps will be imposed between the end of February to mid-March,” Daoudi said. The decision will be based on an opinion from the Rabat-based competition council which is currently looking at the profit margins of fuel distribution companies, he said. Calls for limiting the profit margins of fuel distribution companies were triggered during a consumer boycott campaign last year, which took aim at big business including Morocco’s largest fuel company owned by agriculture minister Aziz Akhannouch. The country has relied on imports refined oil since the shutdown of its sole refinery in 2015 over unpaid taxes, a factor that has contributed to an increase in its energy import bill to 82.3 billion dirhams in 2018 from 69.5 billion in 2017.

Morocco lifted subsidies on fuel under pressure from international lenders but maintains them on cooking gas, sugar and wheat. In 2014, Morocco had ended subsidies of gasoline and fuel oil and had started to cut significantly diesel subsidies as part of its drive to repair public finances. Morocco is the most advanced among North

African countries in its reform of public subsidies and already started last year to partially index energy prices to international market levels.

Ghana: Ghana gets $866m as returns on oil revenue investments since 2011

hana secured $866 million as returns on oil revenue invested since commercial production, according to the latest report on petroleum funds released by the Bank of Ghana. The report showed that as at the end of December 2018, Ghana’s share of Oil revenue which has been invested in governmentbacked securities outside the country stood at $866 million. The stabilization Levy contributed $381 million dollars to the total investment return. The stabilization Levy was set up so that part of oil revenue secured is put into this fund so that government can fall on it to cushion consumers if petroleum prices go up significantly.

However the data showed some $206 million had been withdrawn from the fund. But checks with the Annual Petroleum Fund gave some explanation. The Petroleum Revenue Management Act (PRMA) allows for withdrawals from the Ghana Stabilization Fund (GSF) to support shortfalls in the ABFA and also allows the Minister for Finance to set a cap on the GSF and withdraw the excess over the cap for contingency and debt repayment. In line with Section 23(4) of the (PRMA), the GSF was capped at $300 million in the 2018 Budget. Thus, in the second and third quarters, an amount of $77,681,757.40 million and $128,662,005.06 million, which were the

excess amounts over the cap, were transferred into the Sinking Fund in accordance with Section 23(3) of the PRMA. The Heritage Fund set up to save some of the Oil

Revenue for future revenues, contributed $485 million ending December 2018. The total petroleum receipts (i.e. proceeds from liftings and other petro-

leum receipts) as at December 2018 is $964 million. According to the fiscal regime covering the Petroleum Agreements (PA), the government is entitled to oil royalties on gross production equivalent to 5 per cent from the Jubilee and TEN Fields and 7.5 per cent from the SGN Field. The PAs also grant Ghana Carried and Participating Interests (CAPI) of approximately 13.64 per cent and 15 per cent in the Jubilee and TEN Fields, respectively. CAPI for SGN is 20 per cent. Corporate Income Tax on upstream and midstream petroleum companies is 35 per cent. The receipt of the proceeds from these and other sources of petroleum revenue is regulated by the

PRMA, as amended. The PRMA establishes the PHF as a designated Public Fund to receive all petroleum receipts, as defined in the Act, and provides the framework for the collection, allocation and management of the petroleum funds. The PRMA requires that not more than 70 per cent of government’s net petroleum receipts is designated as ABFA and not less than 30 per cent designated as GPFs. Out of the amount transferred into the GPFs, the GHF received not less than 30 per cent, with the rest transferred into the GSF. In 2017, the government maintained the 2014-2016 formula for the distribution of petroleum revenues for 2017-2019.

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Australia: Australia LNG exports slip behind Qatar in January

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ustralia’s liquefied natural gas (LNG) exports fell in January due to lower production from an LNG plant and a bout of hot weather, pushing exports below rival Qatar, according to export data in Refinitiv Eikon. Monthly exports from Australia, which overtook Qatar as the world’s top LNG exporter last November, dipped 6.5 percent from December to about 6.26 million tonnes of the super chilled fuel. Qatar, meanwhile, ramped up exports in January by about 4.3 percent from the previous month to about 6.8 million

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Mackenzie analyst Nicholas Browne. “Under extremely hot temperatures the efficiency of liquefaction plants will be impacted somewhat,” he added. Australia endured its hottest month on record in January, with the west coast facing hot, dry weather over the next three months. Asian spot LNG prices LNG-AS have also fallen to a nine-month low on subdued demand in North Asia due to a warmer than winter season. “With (Asian spot prices) in the $7s, there is less incentive to push the trains,” an Australia-based

Mozambique: Anadarko signs long-term deal with CNOOC for Mozambique gas

nadarko Petroleum Corp said a long-term agreement had been signed with the trading division of China’s state-owned offshore oil and gas producer CNOOC Ltd to supply liquefied natural gas (LNG) from Mozambique. The deal will bring it one step closer to making a final investment decision for its East African LNG project, with the decision expected in the first half of this year. Mozambique LNG1 Company, the jointlyowned sales entity of the Mozambique Area 1 coventurers, had signed a sales and Purchase Agreement (SPA) with CNOOC’s gas and power Singapore Trading and Marketing unit, Anadarko said. The SPA is for 1.5 million tonnes per annum (mtpa) for a period of 13 years. “This deal gives China’s largest LNG importer access to Mozambique LNG’s world-class gas resources, which are strategically located off the East Coast of Africa, and will

provide China with a clean source of energy for years to come,” said Mitch Ingram, executive vice president of Anadarko’s International, Deepwater and Exploration division. The agreement demonstrates the progress the company is making towards its goal of taking a final investment decision in the first half of this year, he said, adding that the company is expected to

announce further SPAs in the near future. The Anadarko-operated Mozambique LNG project will be Mozambique’s first onshore LNG development, initially consisting of two LNG trains with total capacity of 12.88 mtpa to support the development of the Golfinho/Atum fields located entirely within offshore Area 1. Anadarko Moçam-

bique Área 1, Lda, a wholly owned subsidiary of Anadarko Petroleum Corporation, operates Offshore Area 1 with a 26.5 percent interest. Other stakeholders include ENH Robuma Area Um, Mitsui E&P Mozambique Area1, ONGC Videsh, Beas Rovuma Energy Mozambique Ltd, BPRL Ventures Mozambique, and PTTEP Mozambique Area 1 Ltd.

Egypt: Shell eyes higher Egypt LNG exports

S tonnes, the data showed. Australia’s exports have grown rapidly following the start-up of new projects. However, one of three production trains at Chevron Corp’s Gorgon LNG project in Western Australia remains shut after it was halted in midJanuary to address a mechanical issue, industry sources said. The Gorgon train shutdown was the main reason for the drop in Australian LNG exports, with east coast LNG plants around Gladstone performing well, said Wood

industry source said, declining to be named as he was not authorised to speak with media. Further out, Australia is expected to regain its position as world’s largest LNG supplier by capacity as output is ramped up from new projects such as Ichthys, run by Japan’s Inpex Corp , and Royal Dutch Shell’s Prelude, said James Taverner of energy consultancy IHS Markit. However, export growth will depend on the availability of feedstock from east coast coal seam gas wells, he added.

hell hopes to increase LNG exports from its Idku plant in Egypt in 2019 having stepped up supplies in the latter part of last year, Maarten Wetselaar, head of integrated gas, said. Wetselaar also said Shell sees potential to expand its LNG business through new project approvals and participation in the Qatari LNG expansion. “We have seen an uptick in gas availability in Egypt recently so we have been exporting LNG and we expect to see that increase further in 2019,” he said. Egypt, he said, is now self-sufficient in gas, enabling Shell to resume more regular LNG exports having been restricted to just the occasional cargo over the past few years. The ramp-up of the Eni-operated Zohr field has been instrumental in Egypt halting LNG imports and becoming a regular exporter again. Egypt’s other LNG export

plant, the Eni-operated Damietta facility, remains idled, however. Increased gas availability across Shell’s LNG portfolio saw liquefaction volumes in Q4 rise by 3 percent year on year to 8.78 million mt, with its integrated gas business, essentially its gas for LNG, LNG and gas-to-liquids

business, seeing earnings rise by 44 percent to $2.36 billion. CFO Jessica Uhl said LNG trading had a good quarter and was going “from strength to strength.” “We had good positioning with our existing contracts so we were able to optimize, and we also

took advantage of shortterm opportunities,” she said. Wetselaar said benefiting from increased gas availability for its LNG plants was the “biggest value opportunity for the onstream part of our business.” He cited extra feed gas serving the Gorgon plant in Australia, Oman LNG, Nigeria LNG and Atlantic LNG in Trinidad and Tobago in Q4. Shell also remains active in looking at expanding existing projects and taking part in new ones. In particular, Wetselaar said Shell wanted a stake in the planned four-train expansion in Qatar, taking the country’s LNG production capacity from 77 million mt/year to 110 million mt/year. “Qatar is scouting for investors, clearly there is a lot more appetite than there is space,” he said. “It would make a lot of commercial sense for us to be part of that development and we will participate and hope to win,” he said.

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Senegal: AfDB approves recommendations for Senegal’s coal-fired project

he board of directors of the African Development Bank Group (AfDB) has approved the recommendations of the Independent Review Mechanism (IRM) to bring the Sendou coal-fired power plant project in Senegal into compliance with Bank policies and procedures. The compliance review report was approved with a mitigation action plan prepared by the Bank’s management. The Board’s decision will trigger the process of resolving the main concerns raised by the complainants that the Sendou power plant will have negative impacts and consequences on their environments and their lives. In 2017, the AfDB received numerous community complaints, which led to the bank announcing it will review compliance eligibility of the project. The IRM will moni-

tor the implementation of the Action Plan and report progress to the Board annually. The Sendou Coal Power Plant project was approved by the Boards of Director of the bank on 25 November 2009. The senior loan was

for €49,392,473, with a total project cost of €164,610,732. The project is a public private partnership initiative, which is also co-financed by Banque Ouest Africaine de Developpement (BOAD), CBAO Senegal (a subsidiary of

Attijariwafa Bank - Morocco) and the Netherlands Development Bank (Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO). The project started producing power in November 2018.

South Africa: Eskom narrows funding gap with $1.1bn loan

outh Africa’s struggling state power firm Eskom moved a step closer to narrowing a funding gap for the financial year which ends in March by agreeing a 15 billion rand ($1.1 billion) loan with a local and international banks. Eskom is vital to the health of Africa’s most industrialised economy as it supplies more than 90 percent of its power, but it is drowning in around 420 billion rand of debt. The government-guaranteed loan comes at a time when President Cyril Ramaphosa is trying to turn around Eskom’s finances. Eskom now only needs

to secure around 5 billion rand of funds by the end of March. “The conclusion of the facility will ensure that Eskom’s liquidity requirements for FY18/19 are timeously fulfilled, which is critical for business operations,” Eskom said in a statement. Experts hired by Ramaphosa to help revive Eskom have proposed splitting it up to make it more efficient, sources said. Analysts expect Ramaphosa to announce his plans for Eskom at a state of the nation address on February 7. Eskom said it had already secured 30 percent of its funding needs for the 2019/20 financial year.

Lebanon: World Bank urges new Lebanese govt to reform power sector

ebanon’s new government should prioritise electricity reform after having spent months wrangling over the cabinet make-up, World Bank and UN officials said, seeking to address daily blackouts and massive

costs to the state. The government was finally formed and Prime Minister Saad al-Hariri said Lebanon needed “bold reforms”. It has suffered years of low growth and has one of the world’s biggest public debts compared to the size of its

economy. Foreign donors have promised to invest billions of dollars in Lebanon’s weak infrastructure to help get its economy moving, but will not release most of the money without steps to curb the deficit. Hariri’s government should prioritise reforms that Lebanon committed to at a Paris conference last year where donors pledged support, said Philippe Lazzarini, the UN resident coordinator in Lebanon. “Making progress on the fight against corruption and reforming the electricity sector will be essential to restore confidence, revitalise the economy and promote growth, stability and employment in the long term,” he added.

French President Emmanuel Macron said France would “accompany Lebanon on a path of economic and social reforms”, especially through implementing the investment programme agreed at the Paris conference. Saroj Kumar Jha, the World Bank regional director for Lebanon, Iraq, Syria, Jordan and Iran, said electricity was “the area where we want to move in very quickly”, with the bank bringing concessional funding to help reforms. Lebanon’s power stations use expensive heavy fuel, and state utility Electricite du Liban (EDL) cannot afford to provide 24-hour power, leaving consumers to rely on costly private generators. In November 2018, parliament had to ap-

prove over $400 million in extra-budgetary spending on fuel to avoid blackouts, adding to Lebanon’s spiralling debt. The sector’s problems put off investors and create “tremendous fiscal pressure on the government”, which sinks large sums in subsidising statesupplied power, Jha said. “I would strongly recommend they prioritise the energy sector engagement,” he added, saying he believed there was consensus on this within the new coalition government. However, Londonbased Capital Markets senior emerging markets analyst Jason Tuvey said he was sceptical the new government could enact major reforms to free the pledged aid. “Its not clear whether

they can actually agree on these measures, so there will be some aid that will continue to be locked up,” he said. Jha wants Lebanon to move ahead with a plan to “corporatise” state power utility EDL and to cut state subsidies of power, while providing a safety net to poorer consumers. The government also needs to ensure it can attract investors for the process of switching from heavy fuel to cheaper gas, and work on its creaking transmission and distribution, Jha said. Lebanon hopes to develop its own gas reserves and is exploring offshore, but in the meantime it wants to use imported liquefied natural gas to fuel new power plants and has issued a tender for temporary import facilities.

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Where is crude oil price headed to? FRANK UZUEGBUNAM

rude oil prices gained about 18 percent in January. Brent crude hit $63.63 a barrel, the highest since December 7, and was up 23 cents at $62.98. US crude hit a 2019 high of $55.75 and was later up 5 cents at $55.31. The three largest oil producers; Saudi Arabia, Russia and US, are locked in a new world order that could mean more volatile crude oil prices. The US has become the world’s largest producer, and thus, has become a major factor in world crude oil supply. But the combined strength of Saudi-Russia alliance, means new market fundamentals and tensions that will square up with US. The Organization of the Petroleum Exporting Countries (OPEC) deal defied US President Donald Trump’s pressure to maintain oil flows and keep prices low. OPEC and its allies began a new round of supply cuts in January. These curbs, led by Saudi Arabia, have been compounded by involuntary losses that the Venezuelan sanctions could deepen. OPEC crude output fell the most in

two years as the group implemented almost 80 percent of its new production cuts deal. Saudi Arabia cut deeper than pledged, while its close allies, United Arab Emirates and Kuwait, also made sizable reductions. Those deliberate curbs were compounded by involuntary output drops in Iran, targeted by US sanctions, and Libya, both of which were exempt from the group’s agreement. Output from OPEC’s 14 current members fell by 930,000 bpd last month to 31.02 MMbpd. OPEC’s 15th member, Qatar, left the group at the end of December. While OPEC and its allies are cutting output, US is expanding supply. Nonetheless, recent figures showed a drop in the number of US oil rigs to their lowest in eight months, lending prices some support. “A break through $55 in WTI and $65 in Brent would be a very bullish signal for these and could be the catalyst for more significant upside, with oil having stabilised over the last few weeks following the post-Christmas bounce,” Craig Erlam, senior market analyst at brokerage OANDA, stated in a briefing. The US sanctions on Ven-

ezuela will limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran last year, some analysts said. The US government is considering a release of oil from the strategic petroleum reserve (SPR). The only problem is that the SPR does not contain heavy crude. Already the market for heavy oil is tight while that for lighter oil is much looser. US refiners that import heavy oil from Venezuela are now looking for alternatives. Canada and Mexico have heavy oil, but have little scope to increase supply. US domestic medium and heavy sour grades, including Mars Sour, have seen their prices jump. PDVSA, Venezuela state-oil company, is scrambling to renegotiate contracts. PDVSA is trying to work around US sanctions, seeking fuel swaps and intermediaries. “We are trying to redo the contracts. It is not yet entirely clear how because customers are being individually called, but we are studying alternatives,” a PDVSA said in a statement. Meanwhile, Iran is trying to sell crude oil on its domestic energy exchange, despite lukewarm interest from traders in

Snapshot A break through $55 in WTI and $65 in Brent would be a very bullish signal for these and could be the catalyst for more significant upside, with oil having stabilised over the last few weeks following the postChristmas bounce,” Craig Erlam, senior market analyst at brokerage OANDA

three previous offerings, with another 1 million-barrel auction, the country’s oil ministry said. The bourse, which Iran has used to continue selling its crude in the face of US sanctions on international sales, will also be used to offer gas condensates, likely sometime in the next few weeks, according to Amir Hossein Tebyanian, National Iranian Oil Company’s representative to the exchange. “National Iranian Oil Company has decided to present a diverse basket in the energy exports arena and it will issue

a statement to carry this out soon,” Tebyanian was quoted as saying by Iran’s oil ministry news service Shana. Iran is struggling to find new buyers for its crude after US sanctions came into force November 5 and is using alternative methods of luring buyers including the domestic exchange, or bourse. The bourse is intended to allow the private sector to buy the country’s crude to resell into the international market, but buyers have largely stayed away for fear that any transactions could still be subject to the sanctions.

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Brief

Global deepwater oil output set to top 10m b/d in 2019

lobal deepwater oil production was expected to grow 700,000 b/d this year to hit a record high of more than 10 million b/d, according to estimates by Norwegian research group Rystad. With a number of large fields starting up in Brazil and US Gulf of Mexico, deepwater liquid production will reach 10.3 million b/d in 2019, Rystad said. In addition to Brazil

and the US, Angola, Nigeria and Norway will continue to be the largest deepwater producers, Rystad said. Deepwater projects have attracted nearly half of global exploration investment over the past decade and have delivered a similar share of new production volumes. As global oil produc-

tion from maturing shallow water areas such as the North Sea declines, new offshore volumes were expected to become increasingly reliant on flows from deepwater fields. The International Energy Agency has estimated that the share of deepwater in total offshore production will rise to 30 percent in 2040, from 23 percent currently. Brazil will be by far the largest source of future deepwater growth, the IEA estimated, by nearly doubling its current output by 2040. Last month, UK energy consultancy Wood Mackenzie predicted that total annual deepwater capital expenditure would rise to nearly $60 billion by 2022 from around $50 billion currently. Most of the new deepwater spending will be directed at major projects in Brazil, Guyana and Mozambique, Wood Mac said. It said, however, that the expected rising spend on deepwater projects could accelerate a return to cyclical cost inflation in the offshore sector. Rig day rates, for example, could double by the early 2020s, according to Wood Mac, as deepwater rig capacity was expected to fall.

ENI Ghana lauds formation of Ghana Upstream Petroleum Chamber

he Chief Financial Officer of the international oil company ENI Ghana, Rosario Letizia has lauded the formation of the Ghana Upstream Petroleum Chamber. “We are very happy that the Ghana Upstream Petroleum Chamber is born and we hope this will bring more unity among oil and gas companies, more collaboration with petroleum commission, with GNPC for

the benefit of the country as well as the companies joining the chamber,” he said. Rosario Letizia was hopeful the Chamber will help bring one voice for all upstream companies on common topics of interest to all members of the Chamber. Letizia noted that in four years the oil industry has witnessed significant improvement. “I came to Ghana in 2015, so in four years the

country has grown, in terms of oil and gas reserves discoveries; it’s a big step ahead”. Rosario Letizia said. He noted that the pace at which the country is harnessing its hydrocarbon resources will attract more oil and gas companies into the industry. The Ghana Upstream Petroleum Chamber has been formed to among others promote, protect and enhance common in-

terests of international oil and gas companies. It is also to ensure that high standards, best practices, supportive legislation, policies and protocols are adopted while collaborating with the government on industry policies. Current membership of the Ghana Upstream Petroleum Chamber includes Tullow Ghana, Kosmos Energy Anadarko, ENI, Vitol and Aker Energy.

GE to combine renewable, grid assets into single unit

eneral Electric Co said it would fold its battery storage and electrical grid units into its wind turbine and hydropower business to cut costs, speed decisionmaking and cater to surging demand for renewable power. The announcement, a day before GE was due to report fourth-quarter results, will eliminate a layer of management mostly based in Chicago, with minimal reduction in staff. The combined unit will have about 40,000 employees and annual revenue of about $16 billion, Jim Healy, GE spokesman said, compared with $10.2 billion for renewable energy last

year. GE’s renewables business currently comprises on- and offshore wind turbines, plus hydropower.

GE’s units handling electrical transmission and distribution grids, battery storage and solar inverters and controls had been

in GE’s Power business, which is focused on fossil fuel generation. Regional leaders for renewables will now deal directly with

the company’s renewables headquarters in Paris. GE does not make solar panels. The move is GE’s first big structural shift since October, when it said the US Securities and Exchange Commission and the Department of Justice had expanded accounting probes to include a $22 billion writedown of goodwill at GE Power in the third quarter. To help its ailing power business, GE said in October it would separate natural gas power from coal, nuclear and grid, and named new leaders for the units. Some analysts interpreted the moves as GE preparing its non-gas businesses for sale. GE’s newest gas tur-

bines are under scrutiny after a broken blade severely damaged a unit in Texas last year, causing a two-month plant outage. The break has forced some utilities to curtail use of their new GE turbines while they await blade replacements, and GE has since said it knew about the problem after a similar blade broke in 2015. GE’s power division took on added importance to GE’s future earnings after the company announced last year it would focus on jet engines, power plants and renewable energy and dispose of its healthcare unit and majority stake in Baker Hughes, along with other restructuring.

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ENERGY intelligence OPEC Flakes OPEC’s output drops the most in two years

Oil hits 2019 high on Venezuela sanctions, OPEC

il hit a twomonth high close to $64 a barrel as OPEC-led supply cuts and US sanctions against Venezuela’s petroleum industry offset forecasts of weaker demand and an economic slowdown. The Organization of the Petroleum Exporting Countries (OPEC) and its allies began a new round of supply cuts in January. These curbs, led by Saudi Arabia, have been

compounded by involuntary losses that the Venezuelan sanctions could deepen. Brent crude, the global benchmark, hit $63.63 a barrel, the highest since December 7, and was up 23 cents at $62.98. US crude hit a 2019 high of $55.75 and was later up 5 cents at $55.31. OPEC supply fell in January by the largest amount in two years, a Reuters survey last week found. That offset limited compliance with the output-cutting

deal so far by non-OPEC Russia. The US sanctions on Venezuela will limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran last year, some analysts said after examining details announced by the government. While OPEC and its allies are cutting output, the United States is expanding supply. Nonetheless, recent figures showed a drop in the number of US oil rigs to their lowest in eight

months, lending prices some support. The main drag on prices has been concern about a possible slowdown in demand this year due to a weaker outlook for economic growth and developments such as the USChina trade dispute. US President Donald Trump said he would meet his Chinese counterpart Xi Jinping in the coming weeks to try to settle the dispute, and there are hopes that the two sides will come to an agreement.

Iran tries to find more buyers for oil sales on domestic exchange to bypass sanctions

ran will try again to sell crude oil on its domestic energy exchange, despite lukewarm interest from traders

in three previous offerings, with another 1 million-barrel auction, the country’s oil ministry said. The bourse, which Iran

has used to continue selling its crude in the face of US sanctions on international sales, will also be used to offer gas conden-

sates, likely sometime in the next few weeks, according to Amir Hossein Tebyanian, National Iranian Oil Company’s representative to the exchange. “National Iranian Oil Company has decided to present a diverse basket in the energy exports arena and it will issue a statement to carry this out soon,” Tebyanian was quoted as saying by Iran’s oil ministry news service Shana. Iran is struggling to find new buyers for its crude after US sanctions came into force November 5 and is using alternative methods of luring buyers including the domestic exchange, or bourse. The bourse is intended to allow the private sector to buy the country’s crude to resell into the international market, but buyers have largely stayed away for fear that any transactions could still be subject to the sanctions.

PEC crude output fell the most in two years last month as the group implemented almost 80 percent of its new production cuts deal. Top exporter Saudi Arabia cut deeper than pledged, while its close allies the United Arab Emirates and Kuwait also made sizable reductions. Those deliberate curbs were compounded by involuntary output drops in Iran, targeted by US sanctions, and Libya, both of which were exempt from the group’s agreement. Output from OPEC’s 14 current members fell by 930,000 bpd last month to 31.02 MMbpd, according to a Bloomberg survey of officials, analysts and

ship-tracking data. OPEC’s 15th member, Qatar, left the group at the end of December. OPEC and its allies renewed their production cuts accord in December after a 40 percent plunge in crude prices, prompted by record American shale flows and doubts about the strength of demand. The group, which is known as OPEC+ and includes Russia, agreed to remove 1.2 MMbpd from the market, compared to October levels, during the first six months of 2019. OPEC’s share of the cut is 800,000 bpd, to be delivered by 11 members excluding Iran, Libya and Venezuela. Those 11 nations implemented 79 percent of their pledged cuts in January, the survey found. That means they would need to cut about another 170,000 bpd to fully implement the agreement. The OPEC+ deal defied US President Donald Trump’s pressure to maintain oil flows and keep prices low. West Texas Intermediate crude futures jumped more than 18 percent last month, the biggest January gain on record, and traded just below $54/bbl.

Saudi oil output cuts exceed OPEC pledge

PEC crude output fell the most in two years last month as the group implemented almost 80 percent of its new production cuts deal. Top exporter Saudi Arabia cut deeper than pledged, while its close allies the United Arab Emirates and Kuwait also made sizable reductions. Those deliberate curbs were compounded by involuntary output drops in Iran, targeted by US sanctions, and Libya, both of which were exempt from the group’s agreement. OPEC and its allies renewed their production cuts accord in December after a 40 percent plunge in crude prices, prompted by record American shale flows and doubts about the strength of demand. The group, which is known as OPEC+ and includes Russia, agreed to remove 1.2 million barrels a day from the market, compared to Oc-

tober levels, during the first six months of 2019. OPEC’s share of the cut is 800,000 barrels a day, to be delivered by 11 members excluding Iran, Libya and Venezuela. Those 11 nations implemented 79 percent of their pledged cuts in January, the survey found. That means they

would need to cut about another 170,000 barrels a day to fully implement the agreement. The OPEC+ deal defied US President Donald Trump’s pressure to maintain oil flows and keep prices low.

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ENERGY intelligence

Nigeria’s hunt for gas buyers GAIL ANDERSON

ressure from government to meet domestic supply obligations (DSOs) remains intense in Nigeria. The current administration’s policy is to not award or renew licences for companies that are failing to meet their DSO. Project approvals won’t be granted unless operators have a gas monetisation plan, while even producers who re-inject gas to enhance oil production will face restrictions. Nigeria’s gas policy states that the government expects that producers will see the obligations as part of their contributions to national development and doing business in Nigeria. The government knows that the domestic market is unappealing, however it expects producers to do their bit regardless. A possible change of government in 2019 won’t ease the pressure either. Although Nigeria’s DSO has been cut significantly in the last two years, the target has still not been met. In 2017 the DSO was double the volume actually delivered. However, the potential costs of DSO noncompliance has focused minds, particularly among the IOCs. All of them are prioritising supply to a market that is constrained in terms of infrastructure and credible buyers. Producers are desperately seeking customers, but are finding that their competitors are on exactly the same mission. A low income is better than no income But suppliers don’t just want to find any offtakers, they want to find reliable offtakers who demand a steady supply of gas and will pay the regulated price of US$2.50/mn Btu. Non-payment for gas remains a chronic problem and the power sector is the major culprit. The sector deficit from 2015 to 2016 was nearly US$2bn. In 2017, the government established a central bank facility of US$2bn over two years to ensure that generators are paid. This in turn should help them pay their gas bills. But the facility will need continual replenishment as long as the industry lacks electricity meters and below-cost tariffs are maintained. To mitigate risk, some producers have experimented with pre-payment arrangements, but the on/off switching of supply is counter-productive for reservoirs and turbines alike. So before producers can dream of accessing deregulated pricing, they would simply settle for getting paid by a reliable customer. Regardless of price, receiving income no matter how low, is preferable to receiving none at all. Can you avoid the power sector? The quick answer is not easily. Large resource holders will struggle to avoid the power sector if they want to market their gas. Not only because the power sector absorbs nearly two-thirds of domestic gas demand in Nigeria (around 650mn cf/d, but because the government largely controls who you sell your gas to, and the power sector is its priority. Gas supply agreements under the DSO are brokered by the Gas Aggregator Company of Nigeria (GACN), a government middle-man which aggregates gas supply and provides a weighted average price to producers. It is a transitional body that is

supposed to make way for direct contracting between buyers and sellers. But after 10 years, it’s still going, even though the current administration views it as “largely unsuccessful”. The trouble is, there is just not enough transmission capacity to carry the available power in Nigeria. Although capacity is officially 7 GW, the grid still struggles with loads much over 4 GW. So power stations (of which 8 GW is available) cannot reach their full capacity. This has knock-on implications for gas suppliers even if they have a supply agreement with GACN. Free trade zones The Lekki Free Trade Zone (LFTZ) is located on the Lekki peninsula to the east of Lagos. It is home to the largest industrial complex under construction in Nigeria including the Dangote refinery, petrochemical plant, a 570MW power station and a deep sea port. Constructed with private money, LFTZ should provide a muchneeded new gateway for goods into Nigeria thus bypassing Lagos’s clogged arteries. The refinery is the lynchpin of the LFTZ, and Dangote Group will construct a short 20 kilometre gas pipeline from Lekki to tie-in with the Escravos-Lagos transmission pipeline, so there are opportunities for gas supply using existing infrastructure, although the possibility of secure supply by extending Shell’s offshore gas gathering system (which has plenty of spare capacity) could be even more attractive. Develop gas distribution In 2017 Shell signed a US$300mn deal with Shoreline Power. It will finance and develop a pipeline network in the Lekki franchise area which Shoreline has owned since 2015. The 20 year franchise provides exclusive rights to distribute and sell gas in Lagos’s commercial centres of Victoria Island, Ikoyi, Lekki and Epe. This includes LFTZ, which Shell is targeting. But as Lagos continues to expand along this eastern axis, Shell foresees opportunities to supply more

commercial and industrial consumers on the peninsula, which has developed rapidly over the past 15 years. Shell has been distributing gas on small networks in Nigeria since 1998, but the Lekki franchise is a significant step-up in scale and ambition. In 2017 Shell also signed an MoU with the Rivers State government which could see them develop a distribution grid in the greater Port Harcourt area. Shell aims to displace some of the 18GW of expensive on-site diesel generation which it estimates is being used in Nigeria. This alone would absorb over 4,000mn cf/d of gas, so even 10pc of this would be a material share. Gas distribution is not currently regulated in Nigeria, and distributors in Lagos make a healthy margin in this sector with some end-users paying around US$8/mn Btu (which is still far below the equivalent cost of running a diesel generator). There is significant upside here for early movers, provided the government resists its regulatory tendencies. Because of the physical transmission constraints, there are opportunities to embed small gas-fired power plants into lower voltage distribution grids. Lagos has a few of these including Mainland Power (5.8MW), while others like Island Power (11.5MW) and Akute Power (12MW) have their own distribution grids or supply direct to local utilities. But in 2017, the Lagos State government initiated the far more ambitious “Light-up Lagos” project to generate and distribute up to 3GW of off-grid power and design tariffs to support embedded generators (to put in context, this would be a 75pc increase in national power generation). It also passed its own power sector reform law in February 2018, and established a Lagos State Electricity Board, to develop new generation, transmission and distribution infrastructure beyond the national grid and distribution franchises.

If Nigeria stays on its current path, then domestic market growth will remain constrained well below its potential. The gas and power sector will continue to fragment away from the limitations and risks of the state-owned grids, and so diverging tiers of service quality will emerge. Where state-control is dominant, the value chain will continue to suffer chronic illiquidity, non-payment, under-investment and intermittent supply. Long-suffering consumers are unlikely to see much improvement in power supply because the transmission grid will remain constrained. Private investors will seek to minimise or avoid these risks wherever possible. Wood Mackenzie expects to see: More point-topoint supply and demand between gas suppliers and large private offtakers; More supply to clusters or ‘islands’ of privatesector industrial demand in the form of free trade zones; The creation of new islands of industrial, commercial and even residential demand for those willing to go downstream and build gas distribution networks where none exist; Smaller islands of gas demand from embedded generators powering smallscale private distribution networks outside existing franchises; State governments increasingly promoting their own grids to the private sector rather than looking to the federal government. Those simply hoping that Nigeria will one day, willingly or otherwise, abandon its paternalistic view of the energy sector and embrace market forces are likely to be in for a long wait. Serious players will be more creative and ambitious in their efforts to build their own markets beyond their upstream bases and ideally beyond the reach of regulation. The message is clear: if you really want to grow and prosper in Nigeria’s domestic gas market, you are going to have to move downstream and do it yourself. *Gail Anderson is a Nigeria specialist at Wood Mackenzie

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The 20 apostles of judicial & legal reforms

FRANKLIN NNAEMEKA NGWU (PHD)

ossibly disturbed by the suspension of Justice Onnoghen, the Chief Justice of Nigeria and the consequent crisis in our legal system, a group of senior lawyers generally referred to as Senior Advocates of Nigeria (SAN) emerged last week to help restore sanity to the system. Functioning under the aegis of The Justice Reform Project, they maintain that the bodies established to regulate and supervise the judiciary and the legal profession particularly the National Judicial Council (NJC) and the Nigeria Bar Association have failed. They premised their intervention on two main reasons: (i) “recognition that the events which have resulted in this debacle is in fact a manifestation of and response to a deeper malaise in the administration of justice and justice delivery in Nigeria; and (ii) a concern that the crisis of confidence that is currently shaking the judiciary and the legal profession in Nigeria is unprecedented”. Seeking collaborations with other stakeholders, they are interested in the review and reform of certain critical aspects of our justice delivery system such as “The composition, constitution, functions and internal controls of the

National Judicial Council; the process for the appointment, continuing education and promotion of judicial officers; the process for the discipline and regulation of judicial officers; judicial ethics, values and the relationship of the Bench with the Bar; the process and criteria for the conferment of the rank of Senior Advocate of Nigeria among others”. While their presumed genuine concern for the decadence of our legal system is most commendable, I am very concerned that they are missing the root cause of the problems in their salvific efforts. While they agree and lament that the whole legal system (both the bar and the bench) is in tatters, they seem to be more interested in addressing the symptoms and outcomes of a failed system rather than the main cause of the problem. The key question that they need to ask and answer is what makes a legal system effective and if our legal system has what it takes to be effective. The major intervention required from our senior advocates is how to make our legal system effective. A study of the legal systems in the world shows that effectiveness depends on the extent to which the law is understood, accepted and internalized, which then leads to compliance. The understanding, acceptance, internalization and willingness to comply with a law highly relate to the origin of the law. Before the emergence of nation states like Nigeria, societies were governed by their respective values and norms (informal laws) generally referred to as culture. At the emergence of nation states (sometimes through aggregation of different societies), some of these values and norms were documented and adopted as formal law or legal system. The undocumented ones became the in-

formal laws. When a formal legal system emerges through this process, the understanding, acceptance, internalization and compliance are normally high due to its derivation and amenability with the inherent norms and values (culture) of the society. This process inculcates a kind of normative moral obligation on the citizens to comply with the Law which serves both the instrumental and intrinsic needs of the society. On the contrary, when a legal system is adopted with little or no origin from the norms and values of the society, it is limitedly understood, accepted, internalized or complied with. The legal system and the law will only be resorted to for instrumental purposes when the informal legal system cannot suffice. The situation is worse for a plural society like Nigeria with little and limited integration of the different sub-groups of the society. This is the main reason for the inherent crisis and failures of our judiciary and legal system. It is also the reason why Nigeria has consistently performed badly in the three key governance indicators –rule of law, regulatory quality and government effectiveness. The ethnic groups that make up Nigeria are inclined and operate more from their respective tribal informal legal systems (customs, norms and values) which are different and most times at variance from our supposed formal national legal system ( mainly adopted English legal system). Law is an institution that stipulates the rules of the game which the individuals and groups use to achieve their interests (become wealthy, control or dominate governance, win an election, pass an exam, marry etc). In this scenario, the wider usage or agreement to the Law will depend upon

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Unless the structure and contents of our legal system is reformed, no amount of cosmetic reforms as currently proposed by our senior advocates will be meaningful and sustainable

the extent to which individuals and groups believe that their interests can be achieved within the legal system in question. Unfortunately, majority of Nigerians don’t believe in our formal legal system including many of our learned brethren. They only canvas for the use of the formal legal system or the primacy of rule of law as it places them in a vantage position as members of the legal profession with a better understanding of how the formal system can be utilized or exploited to achieve our and their own instrumental benefits. As we derived our formal legal system from the United Kingdom, it might be helpful to understand how the effectiveness of a law can be deduced from its origin. “English legal development appears as a historical continuum. There is no obvious rupture, no wholesale wiping out of legal wisdom of centuries and no division of the law into a pre-and post-revolutionary era. In English law the present is never completely shut off from the past and its historical roots are easily perceived. Out of hard and bitter experience, Englishmen had come to learn that the remorseless, incalculable power of the past over the present was not to be dispelled by the strivings of a single generation. From 1660 onwards, England was never again entirely to forget that the secret of a nation’s strength is to have the power of the historic past behind it, not against it”, (Caenegem 1986: 158). see conclusion online: www.businessday.ng

Dr. Ngwu is a Senior Lecturer in Strategy, Corporate Governance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum.

Tobacco tax revenue in Nigeria: To earmark or not to earmark GRACE ONUBEDO & PRECIOUS C. AKANONU

he Federal Government of Nigeria will rake in as much as N67.7 billion (US$187 million) over a one year period from the new taxation policy on tobacco in the country, a report has revealed. The report, authored by Grace Onubedo and Precious C. Akanonu, both Senior Research Fellow and Research Fellow at Centre for the Study of the Economies of Africa (CSEA), Abuja was the outcome of a study by the Centre titled “ A Scoping Study of Nigeria’s Tobacco Market and Policy. In June 2018, the new tax policy on tobacco kicked off. According to the Federal Government, the new excise duty rates would spread over a threeyear period from 2018 to 2020 in order to moderate the impact on prices of the products. Under the new rates for tobacco, in addition to the 20 per cent ad-valorem rate, each stick of cigarette will attract one naira specific rate per stick; that is N20 per pack of 20 sticks in 2018. In 2019, tobacco will attract two naira specific rate per stick or N40 per pack of 20 sticks. By 2020, tobacco would begin to attract N2.90 kobo specific rate per stick or N58 per pack of 20 sticks. The Centre commended the Government for this move as “a step in the right direction,” but noted that duty remains below the standard recommended by the World Health Organization (WHO). The report said the CSEA study highlighted that support for tobacco taxation increases by 17 percent if earmarking is introduced, especially among smokers. “Most of the respondents view tobacco taxation and earmarking as

a means to help smokers quit and improve the wellbeing of citizens,” the report said. “In terms of the wellbeing, respondents prioritize earmarking for public health programmes including treatment of tobacco related diseases, and social programmes for poor households (such as cash transfers).” However, with the exception of Ministry of Health, other government parastatals support adding tobacco revenue to the pool of government revenue. Does it make economic sense to earmark? Nigeria currently has one of the lowest budget allocations to the health sector. The AU’s Abuja declaration of 2001,stipulates that 15 percent of the national budget should go to the health sector, but Nigeria only allocates 3.9 percent of total budget to the health sector in 2018. This implies that government spends a meager sum of N1,888 on each citizen’s health care need for the whole year. This reflects negatively on Nigeria’s health indices; the WHO ranks Nigeria 187th out of 191 countries in terms of health care delivery. Following the arguments of pro-earmarks, earmarking tobacco revenue ensures a continuous, regular source of funding that are not subject to annual budgetary review. From the CSEA’s stakeholder analysis, 25%-50% of tobacco tax revenue is proposed as the earmarking benchmark. Applying 50% to NGN67.7billion expected revenue would yield an additional NGN33.9billion of earmarked revenue to the health sector over a one-year period. This will result to 9% increase to the sum allocated for citizen’s health care.Similarly, earmarking tobacco taxes can provide a sustainable source of financing for tobacco control. In 2017, about 0.028% of the Federal Ministry of

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A prospective tobacco tax earmarking policy should incorporate a timeframe for review and impact assessment

Health budgetwas allocated for setting up tobacco control unit (TCU) in 2017. However, the TCU received no funds in 2018 due to the ministry’sbudget constraints. Another key argument for earmarking tobacco taxes is to provide an appropriate option for countries where the public financial management (PFM) is weak and policy priorities are not aligned with budget allocations. A major challenge of healthcare financing in Nigeria is the misappropriation of health care funds manifested in the: diversion of drugs and medical supplies, procurement and contract inflation, as well as unethical diversion ofbudgeted fund among others. While the 2015 National Tobacco Control Act (NTCA) specifies the provision of an earmarked“Fund” for the tobacco control, budgetary allocations of the Ministry of Health have not yet matched this policy priority. Way Forward For an earmarking policy to be effective in advancing health and tobacco control priorities in Nigeria, certain considerations need to be made in line with best practices. The prospective policy should: •Have a clear expenditure purpose that is neither too narrow nor broad: The expenditure purpose should be narrow enough to link funds clearly to activities and results in order to advance health sector priorities. However, it ought not to be too narrow to introduce excessive rigidities or economic distortion.Philippines, South Africa, Vietnam and Estonia provide notable examples of this. •Have a strong but flexible revenueexpenditure link to avoid unhealthy dependence: Neither should the program/unit for earmarking be totally dependent on the earmarked funds without other sources

of revenue, nor should the expenditure needs of the program/unit determine the tax rate. On one hand, earmarked revenue is seen to be completely driving expenditure in Ghana: earmarked VAT and social security contributions accounts for 90% of revenues for National Health Insurance Scheme (NHIS) in Ghana. On the other hand, the Estonia Health Insurance Fund (EHIF) expenditure has been completely driving the pay roll tax revenue proportions earmarked for EHIF. Hence, when revenue from payroll tax contributions became insufficient to cover expenses in 2013, policymakers set to broaden the revenue base to address the structural deficit. •Be a “Soft” earmark with option for reallocating funds to emerging priorities: To foster tobacco control, an earmarked fund can be dedicated to the TCU within the Federal Ministry of Health, with a reserve fund that allows funds to be reallocated to new priorities within the health sector as they arise. •Incorporate a strong PFM and governance systems for monitoring and reporting the revenue flows and impact: The PFM and governance systems should incorporate reporting systems at different levels to help improve transparency and accountability. •Have a clear medium-term time horizon for earmarking review: A prospective tobacco tax earmarking policy should incorporate a timeframe for review and impact assessment. This should possibly be in line with the Medium-Term Expenditure Framework to give time for the policy effect to crystalize. Dr Onubedo is Senior Research Fellow, Centre for the Study of the Economies of Africa, Abuja. Akanonu is Research Fellow, Centre for the Study of the Economies of Africa, Abuja

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