BusinessDay 06 Feb 2020

Nigeria to enforce NIN as requirement for SIM card registration, activation JUMOKE AKIYODE-LAWANSON & GIFT WADA, Abuja

… to checkmate kidnapping, other mobile-aided crimes

he Federal Government has moved to enforce the submission of National Identity Number (NIN) by Nigerians as a compul-

sory requirement for registration and activation of Subscriber Identity Module (SIM) card, while foreigners will be required to present valid passports and

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visas for the same purpose.

This move is part of the government’s effort to validate the identity of all mobile phone subscribers and checkmate kid-

napping and other mobile-aided crimes.

Isa Pantami, minister of communications and digital economy, in a statement released on

Wednesday in Abuja directed the Nigerian Communications Commission (NCC) to immeContinues on page 12

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news you can trust I ** thursDAY 06 february 2020 I vol. 19, no 493

deals

Private equity investors say FX risk is their biggest headache in 2020

… Here’s how they are hedging it LOLADE AKINMURELE

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he risk of currency depreciation has been the biggest worry for private equity investors in Nigeria since 2014 and it’s no different this year.

The naira has shed more than 70 percent since 2014 and that has been a nightmare for several private equity investors who manage dollar funds.

But private equity investors are being proactive and finding ways to hedge against any new potential naira depreciation.

“With Coronavirus, we forecast oil prices could go as low

₦3,323,812.53

N300

Sell

$-N 357.00 360.00 £-N 469.00 475.00 €-N 390.00 396.00

+0.99

Crude Oil $ 55.79

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www.

Market

Spot ($/N)

I&E FX Window CBN Official Rate

364.53 306.95

Currency Futures

($/N)

3M 0.00 2.62

NGUS apr 29 2020 362.62

6M

5Y

0.00 3.74

0.00

10 Y 0.22

30 Y 0.14

10.12

10.03

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NGUS jul 29 2020 363.55

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NGUS feb 24 2021 365.71

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Concerns mount over upcoming OMO maturities As foreigners account for 44.3% of short term bills CBN may swap dollars for OMO bills

MICHAEL ANI oncerns are brewing in the minds of investors on the likely implications awaiting Africa’s biggest economy if foreign portfolio investors decide not to roll over their stock of maturing open market operations (OMO) bills sold by the Central Bank of Nigeria (CBN).

“For us, our concern is the risk involved when we do not see a reinvestment of flows in the OMO market by foreign portfolios given that yields have come up high from where they were previously,” said Razia Khan, Africa chief economist at Standard Chartered Bank. “ The near term effect of this

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Continues on page 38

Inside

UAE points the way to economy diversification as Nigeria stuck with oil P. 2

fgn bonds

Treasury bills

L-R: Ogho Okiti, MD, BusinessDay; Olusegun Omosehin, MD, Old Mutual Life Assurance; Alero Ladipo, executive head, marketing and customer experience, Old Mutual, and Frank Aigbogun, publisher, BusinessDay, at the Nigeria Economic Outlook Conference with the theme ‘Nigeria’s Prosperity Ahead 2030: Population, Data, Productivity’ organised by BusinessDay.

Continues on page 38

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news $29.9bn loan: Senate queries 8 ministries over failure to appear, defend allocation SOLOMON AYADO, Abuja

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he Senate on Wednesday queried eight government ministries that failed to appear before it to provide details and defend their allocations in the $29.9 billion loan for which the Federal Government is seeking approval.

The queried federal ministries are education, power, Niger Delta, humanitarian and disaster management affairs, water resources, health, communication, and agriculture.

Consequently, the Senate has given a one-week grace period for the defaulting ministries to appear before it and proffer details of their allocations in the loan.

The agencies and states named to benefit from the loan, when approved, are about 20 but eight are yet to appear before the Senate Committee on Local and Foreign Debts, according to Clifford Odia, its chairman.

Reporting the matter to Senate on Wednesday during plenary, Odia said the agencies are expected to appear before the committee to offer detailed information and explain the nature of projects the loan is meant to be used for.

On Tuesday, Zainab Ahmed, minister of finance and national planning, appeared before the Senate Committee on Local and Foreign Debts to defend the Federal Government’s request to borrow $29.9 billion.

The minister, though, said the 8th Senate had approved part of the loan and that government was seeking approval for only $22.8 billion.

Also, Lai Mohammed, minister of information, and his power and FCT counterparts, Babatunde Fashola and Mohammed Bello, as well as representatives of governors of the three states of Kaduna, Katsina and Kogi, among several others, had appeared before the Senate Committee on Local and Foreign Debts on Tuesday.

Senate President Ahmad Lawan, who directed the queried ministries to immediately appear, said the Senate would not tolerate any act of unseriousness from any ministry.

“This Senate is committed to ensuring that such important issues like the loan are treated with seriousness by both sides. Therefore, we need the details, we need the information and so I ask the ministries that are named to have not appeared before the committee to do so between today (Wednesday) and Monday next week,” Lawan said.

President Muhammadu Buhari had in November 2019 resent to the 9th National Assembly an external borrowing request of $29.9 billion which was earlier rejected by the 8th Senate.

Buhari had said the loan would be used to achieve infrastructure projects, reduce poverty and enhance rehabilitation of the North East.

NASS commences consultation with executive to quicken passage of PIB Solomon Ayado, Abuja

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enate President Ahmad Lawan said on Wednesday that the National Assembly has commenced consultation with the executive arm of government to enact a fresh version of the Petroleum Industry Bill (PIB) and ensure its immediate passage.

Lawan said because the PIB was not passed by the previous assembly, the Ninth Assembly was determined to see to the eventual passage of the bill to address the numerous challenges faced by the oil and gas sector.

Specifically, Lawan said the National Assembly under his leadership would constantly interact and collaborate with the executive to foster quick passage of the bill.

Lawan made the disclosure during a meeting with representatives of the International Monetary Fund (IMF) who paid him a visit at the National Assembly, Abuja.

The IMF delegation was led by Amine Mati, senior resident representative mission chief for Nigeria, ac-

companied by Jesmine Raman, Zainab Mangga, Nanrup Ibrahim, Osana Odonye, and Harrison Okafor.

Lawan while receiving the delegation explained that the interface between both arms of government would birth a new PIB to be drafted from scratch, which would be passed by the National Assembly and assented to by the president before the end of the year.

He said the Petroleum Industry Bill has defied passage over the years since 2007.

“In 2011, there was another effort by the government, that bill was not passed as well. In 2015, there was a legislative effort and the PIGB was passed eventually, but at the end of the day was not signed.

“So, we came up with a new idea in the ninth National Assembly, that the fact that the Executive tried by drafting a bill and bringing it here for two tenures, then the legislature tried to do it on its own, none saw the light of the day,” Lawan said.

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

L-R: Segun Ogunsanya, MD/ CEO, Airtel Networks, in a warm handshake with Dapo Abiodun, governor of Ogun State, when he led a delegation from Airtel Nigeria to the governor’s office, Oke-Mosan, Abeokuta, Ogun State.

UAE points the way to economy diversification as Nigeria stuck with oil DIPO OLADEHINDE

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espite running a successful oil economy, the United Arab Emirates (UAE) is not putting all its eggs in one basket and is set to tackle the next half century with a renewed sense of confidence by intensifying plans for life beyond crude oil, a point Africa’s biggest oil-producing country is yet to come to terms with.

For UAE, building an economy less dependent on the vagaries of the global oil price but more on a skilled workforce in many different industries is beyond lip service.

Organisation of Petroleum Exporting Countries

(OPEC) data for 2020 say the UAE pumped around 3 million bpd and exported 2.3 million bpd of oil, which was worth some $75 billion. Emirati government data from the previous year show oil and gas exports accounted for almost 30 percent of GDP. In Nigeria, oil accounts for less than 10 percent of GDP. It provided over half of all government revenue from 2015 to 2019 and at least 90 percent of export earnings.

Yet, growth in the UAE’s non-oil industries is seen to rise from 1.3 percent in 2018 to 1.6 percent in 2019 and 3 percent this year, according to the International Monetary Fund.

“We have to be ready to celebrate the last export

of a barrel of oil,” Yousef Baselaib, executive director for sustainable real estate at Masdar, told Forbes.

A forward-thinking policy of the UAE has involved actively investing its oil money into projects that would ensure the sustainability of its economy in the long run, even if oil demand eventually dies.

The year 2020 for UAE will involve all segments of its society shaping the country for the next 50 years and preparing for the country’s Golden Jubilee celebration in 2021.

The new theme called “2020: Towards the Next 50” comes at a turning point in the country’s history and lays the groundwork for celebrating its golden jubilee in 2021, also

known as the 50th anniversary of the union.

“Today, we announce ‘2020: Towards the Next 50’. We shall develop our plans and projects and reinvent new ideas. 50 years ago, the founding fathers shaped our life today, and next year, we will shape the coming five decades for the future generations,” Shaikh Mohammed bin Rashid Al Maktoum, vice president and prime minister of UAE, said in a series of tweets.

“In 2020, we will work on making giant leaps in our economy, education, infrastructure, health, and media to share the UAE’s new story with the world.

Together, we will build Continues on page 38

CBN to issue N154.4bn NTB by Dutch auction next Thursday HOPE MOSES-ASHIKE

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he Central Bank of Nigeria (CBN) will on Thursday, February 13, on behalf of the Debt Management Office (DMO) offer a total of N154.4 billion to investors by Dutch auction at the primary market.

A Dutch auction is a public offering auction structure in which the price of the offering is set after taking in all bids to determine the highest price at which the total offering can be sold.

The government security to be issued next week consists of N4.4 billion for 91-day tenor, N10 billion for 182-day, and N140 billion for 364-day tenor.

Consequently, the CBN directed all money market dealers to submit bids through its S4 WEB INTERFACE between 8.am and 11.00 am on Wednesday, February 12.

Ayodele Akinwunmi, relationship manager, corporate banking, FSDH Merchant Bank Limited, said investors’ interest would be high because of limited investment channels in the market with minimal risk.

The CBN said each bid must be in multiples of N1,000 subject to a minimum of N50,001,000 and that all authorised money market dealers could submit multiple bids.

A statement by the CBN says a bid may be for authorised money market dealers’ own account, non-money market dealers or interested members of the public.

While the result would be announced next week Wednesday, allotment letters would be issued for successful bids on Thursday, February 13, while payment for the successful bids would be made to participants’ account with the

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CBN on the same day.

“Going by the increase in rate across maturities in the last auction, I expect investors’ interest to be uptick in next week auction,” Akintunde Olusegun, analyst at Polaris Bank Limited, said.

There were sell-offs last week at the Nigerian Treasury Bills secondary market as investors reacted to the potential squeeze in system liquidity by about N 294.2 billion as at Friday, occasioned by the increase in the Cash Reserve Ratio (CRR) from 22.5 percent to 27.5 percent by the CBN. According to analysts at Afrinvest Securities Limited, the bearish sentiments slowed towards the end of the week amidst the Primary Market Auction (PMA) and inflows from maturing OMO bills (about N 495.0bn). Subsequently, average yield across all tenors rose from 3.5 per@Businessdayng

cent to 3.7 percent week-onweek. Major sell-offs were recorded on the short and mid tenor bills, particularly the 2-Apr-20 (+117bps), 12-Mar20 (+46bps) and 16-Jul-20 (+21bps) maturities.

At the PMA on Wednesday last week, investors’ demand contracted across all tenors relative to that of previous auctions. While the significant decline in subscription levels was surprising, investors benchmarked yields to the FGN promissory notes which traded at higher levels. Consequently, stop rates across the short, medium and long-term instruments rose by 0.6 percent, 0.6 percent and 1.4 percent, respectively. The average bid to cover ratio was 1.1x with the 91-day tenors enjoying the most interest at 1.9x.

•Continues online at www.businessday.ng

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news

Eko Atlantic City to contribute over $1bn to Nigerian economy annually ENDURANCE OKAFOR

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hen completed, Eko Atlantic, Nigeria’s international commerce city, being constructed on land reclaimed from the Atlantic Ocean is expected to add at least $1 billion to Nigeria’s economy annually.

Standing on 10 million square metres of land, Eko Atlantic City is expected to leverage real estate, services, tourism and employment to achieve more than $1 billion GDP contribution. The projected contribution represents 0.25 percent of Nigeria’s current GDP size of about $400 billion.

“When it matures it will easily be contributing about 10 percent to the total revenue generated in Lagos State per annum, in figures that will be more than $1 billion a year to Lagos and Nigeria’s economy,” Olawale Opayinka, MD/CEO, Eko Development Company, told BusinessDay at a recent tour of the projects in the city.

According to Opayinka, the city, which is going to be the new financial centre in West Africa, will be contributing to the GDP of Lagos and Nigeria, “through real estate, tourism, services and the employment that it will generate.”

With a size area that is twice that of Victoria Island (VI), Eko Atlantic City is expected

to house about 250,000 residents and 400,000 people are projected to be employed as workers in the city.

Describing Eko Atlantic City, Opayinka said for many who had visited the city, they refer to it as the Dubai of Nigeria and Africa, noting, “We have independent power that will be generated internally, there will be nothing like generators and in the next two years, we’ll have that solution fully implemented. We have state of the art drainage system; it is the best of what you can expect to find in a city anywhere in the world.”

Eko Atlantic City, according to the developer, is created to protect the Victoria Island shoreline. “More than a decade ago and many decades, the Atlantic Ocean use to bather the Amadu Bello Way and Victoria Island and pretty much pushed out some of those state liaison offices and would cause a lot flooding,” he explained.

The discussion to develop Eko Atlantic was first held around 2002, and according to the city developer, they came about with the need to protect Victoria Island because it was under threat of the surge from the ocean.

“With the acceleration of the impact of climate change, if we didn’t have a solution to protect and to stop the flooding that was generated from the

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surge of the Atlantic Ocean, eventually Victoria Island as we know today would have been under a lot more threat,” he said.

The city, which has been undergoing development for almost 10 years, is said to have been progressing at a pace faster than projected.

“The pace of infrastructure development has been impressive; it goes ahead of what we think it’s going to be,” the MD said.

On the expectations from the city, he assured that it would be the headquarters of the big banks of West Africa, “more so when you are talking about the convergence of the currency in West Africa like you have in the ECO, because of the infrastructure that we have, those institutions will be based here.”

A most recent project that is expected to be completed from Eko Atlantic City is the Azuri Towers, a large mass development comprising of three towers - office tower and two residential towers. One of the residential towers, which is called Azuri One, “is today the tallest residential tower in Nigeria and the tallest in West Africa. It is the only the second tallest residential tower in Africa after the one in South Africa,” the development company said.

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news

What Lagos will achieve with Resilience Strategy - Sanwo-Olu JOSHUA BASSEY

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overnor of Lagos State, Babajide Sanwo-Olu, says the Resilience Strategy unveiled by the government will serve as a compass to transform Lagos into an innovative, inclusive and prosperous city.

According to the governor, the state government will be leveraging the document and strategy therein for an inclusive environment and build enduring infrastructure that will empower both the residents and businesses to thrive and grow sustainably.

Sanwo-Olu spoke at the launch of the Lagos Resilience Strategy, in Ikeja, where he told a capacity audience of critical stakeholders that the document would aid the state’s resolve to confront its social, economic and physical challenges.

“With the implementation of the Resilience Strategy, we will develop a sustainable approach to combat flooding incidents, stop haphazard urban planning, improve emergency response, provide quality healthcare services, support the immense potential of our youths through technology and deliver a robust, multimodal

and integrated transportation system, without excluding the poor and vulnerable,” he said.

The Lagos Resilience Strategy contains three pillars, 10 goals and 31 initiatives, which provide a framework for improving the capacity of the city to respond to present and future shocks and stresses. It aligns with the Lagos State Development Plan, the ‘THEMES’ agenda and the Sustainable Development Goals.

The governor, represented

by Sam Egube, the commissioner for economic planning and budget, further noted that the document would provide an empirical background for all policies and also facilitate speedy transformation of the state to a more resilient city.

The resilience document is an attestation to the readiness of his administration to bequeath a legacy of good governance to the residents of Lagos and also guarantee their wellbeing, he said.

According to Sanwo-Olu, with the pace of development going on across the state and its attendant effect on the environment, Lagos cannot afford to rely on traditional concepts in tackling its challenges but must adopt a cross-sectoral planning and implementation approach.

CBN to work with NINAS to ensure cassava laboratories standard … as China rejects 30 container of cassava from Nigeria HOPE MOSES-ASHIKE

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entral Bank of Nigeria (CBN) on Tuesday said it was working with Nigeria National Accreditation System (NINAS) to ensure that all laboratories have a standard referred to as ISO 17025.

This follows a rejection of 30 containers of cassava from Nigeria by China. “30 containers of cassava were rejected in China, which means that our laboratories here are not testing them. So, CBN is going to work with the laboratories,” Richard Maikai, principal manager, trade and exchange department, CBN, said at GTR West Africa event sponsored by Rand Merchant Bank (RMB).

The CBN does not build labs, it is already working with NINAS, a regulatory body that oversees all the laboratories in this regard, Maikai said,

saying, “Once we can upgrade and make sure that every lab is ISO17025 certified, then we are good to go and we won’t have such lose again.”

According to Maikai, every investor would want to know that when they invest their funds, they could be able to recoup such funds back. In the past 36 months, there has been relative stability in the exchange rate.

“Our reserves even though marginally increasing, we are always ready to defend the Naira and because of that, investors will certainly come because we have access and no restrictions to withdrawals,” he posited.

Trade is a major tool for boosting economic growth and capital formation. According to a World Bank report, “foreign trade helps to end global poverty and grow economies faster.”

“At RMB Nigeria, we have vast experience in facilitat-

ing global and international trade by leveraging on our infrastructure encompassing people, process and systems to deliver customized trade solutions for our clients,” Michael Larbie, managing director/CEO, Rand Merchant Bank Nigeria Limited, and regional head of West Africa, said.

As at third quarter (Q3) 2019, Nigeria’s foreign trade hit N9.18 trillion driven by non-oil exports, the second largest contributor to the country’s GDP. “ Trade will remain a pivotal part of the Nigerian economy. RMB Nigeria’s interconnectivity with several banks across the globe will harness trade opportunities and deliver economic and capital growth to the nation.

“At Rand Merchant Bank, we take Trade Finance seriously. Our solutions which cater to our clients’ needs, addresses known risks as-

sociated with Trade Finance.

“Whether you are an importer or exporter, RMB will help you navigate the waters of international trade and reduce inherent risk. It is for this reason we are recognised as a leading trade finance bank on the African continent,” Larbie said.

Speaking with BusinessDay, Minos Gerakaris, global head, trade finance, trade and working capital, Rand Merchant Bank, said the forum was for trade finance practitioners, banks corporates, government and development finance institutions to get together and discuss trade finance in West Africa.

“It is a useful exercise once a year to together as all the parties involve in trade finance to have dialogue relating to unlocking regulation looking at new technology which will facilitate trade and enhance relationships,” he said.

Resolution of Samsung, LADOL dispute bolsters Korean firms’ confidence in Nigeria ISAAC ANYAOGU

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ntervention by various agenciesoftheFederalGovernment in the resolution of the rift between Samsung Heavy Industries Nigeria Limited (SHIN) and LADOL Group has bolstered the confidence of Korean companies in doing business in the country, enquires show.

The promoters of these companies believe that the intervention of the various agencies of the governmentis a demonstration of the commitment of the administrationofPresidentMuhammadu Buhari to encourage foreign companies to invest in the country.

A number of Federal Government agencies like the Nigerian Ports Authority (NPA), the Nigerian Content Development and Monitoring Board (NCDMB), the Department of State Services (DSS) and other agencies have made intervened in resolving the feud, which tore the partnership between SHIN and LADOL apart.

A rift bordering on the ownership of SHI MCI FZE (the integration and fabrication yard in LADOL Free Zone), the existing subleasearrangementandSHIN’s operating licence renewal threatened to ruin the partnership that delivered one of the most successful engineering projects in the country.

Oneoftheinterventionsbythe Federal Government was made by the Nigerian Ports Authority (NPA) recently when it leased a total of 11.2426 hectares of the land (where SHI-MCI FZE yard is located) at the LADOL free zone to SHIN with a view to protecting

the company’s investment on the base.

This action reassured foreign investors, particularly Korean companies that the Federal Government is determined to protect their investments in the country.

SHIN’s new lease with NPA has reassured investors of the security of their investments.

“This development has encouraged other South Korean companies to look forward to coming into the country,” said a source close to one of these Korean companies, who spoke to journalists in Abuja. He said that some of these companiesare now favourably disposed to investing more in the Nigerian economy.

SHIN came into Nigeria and constructed Africa’s first ever Fabrication and integration yard, other Korean companies, including companies in the Samsung group had showed interest to come into Nigeria but were discouraged by the feud between SHIN and LADOL. Some of these companies are looking forward to the final resolution of the dispute to make their investment decisions.

Some of the Korean companies reportedly interested in Nigeria include other members of the Samsung Group of Companies such as world-leading Koreanautomobilecompanyand Samsung Construction & Trade, which came to global limelight when it built the Burj Khalifa, the tallest skyscraper in the world. It was also gathered that Samsung Construction & Trade, which was operating in Nigeria later left due to the harsh operating environment in Nigeria. www.businessday.ng

L-R: Boladele-Dapo Thomas, permanent secretary, Lagos State Ministry of Wealth Creation and Employment; Jude Idimogu, chairman, House Committee on Wealth Creation and Employment, Lagos State House of Assembly (LAHA), representing, Mudashiru Obasa, speaker, LAHA; Yetunde Arobieke, commissioner, Ministry of Wealth Creation and Employment, representing Babajide Sanwo-Olu, Lagos State governor; Ifueko Omoigui-Okauru, chairman, board of trustees, Lagos State Employment Trust Fund (LSETF), and Teju Abisoye, acting executive secretary, LSETF, at the LSETF Employment Summit, themed “Showcasing Leading Practices for Job Creation”, in Lagos, yesterday.

Pic by David Apara

Edo reads riot act, commences state-wide demolition of illegal structures, others … demolishes T. Latifa Hotel for building across road

idris umar momoh, Benin

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do State government has commenced state-wide demolition of illegal structures, reading a riot act to defaulters of building codes and those who have encroached on government property to remove their structures or face the dire consequences.

In a statement, Commissioner for Communication and Orientation, Paul Ohonbamu, said demolition of illegal structures became imperative as defaulters and violators had failed to heed several notices issued them.

According to Ohonbamu, “The Edo State Government has commenced the demolition of illegal structures across the state to bring sanity to urban areas and restore government prop-

erty to their original uses. The flagrant disregard of building codes and respect for extant laws guarding property development needed to be checked, hence the exercise.

“The process has commenced in earnest in different parts of the state and those with structures on unapproved sites or without necessary building plans are hereby put on notice.

We warn all those who have built on roads, Right of Way (RoW), school property and on Federal and State governments’ land to remove the property immediately as demolition of such buildings statewide has commenced.”

He added that the state notices served on the defaulters still subsists, noting that whoever is

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caught violating the law will face the dire consequences.

The Commissioner said the state government had issued warnings on the defaulters severally and would not tolerate disruption of the exercise as enough leeway was allowed for the violators to do the needful by removing the illegal structures.

Meanwhile, the state has demolished T. Latifa Hotel owned

by Tony Adun also known as Kabaka, for violating building laws as the structure sits across a road in the Ugbor-Amagba axis of Oredo Local Government Area of the state.

The hotel building was reduced to rubbles on Wednesday afternoon, after an injunction secured by Adun against the exercise was vacated by the state @Businessdayng

government.

The government pencilled the structure for demolition, as it was illegal, without an approved building plan for a hotel and sitting across a road.

The deed of transfer being paraded by Adun is also not registered with the state government, according to court papers filed by Solicitor General of Edo State, Oluwole Iyamu.

Bulldozers and caterpillars were mobilised to the site for the exercise while security operatives mounted guard to ensure the process was not disrupted by thugs in the area loyal to Adun.

The leader of the security team cordoned off the area and urged residents and shop owners around the area not to panic while the exercise lasted.

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Harvard Business Review

BUSINESS DAY

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ManagementDigest

Taming complexity Martin Reeves, Simon Levin,

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n business, complexity gets bad press. That’s not surprising. It can be cognitively demanding to understand how a system made up of many very different interconnected elements actually works. But the fact that such systems are difficult to understand doesn’t make them inherently bad.

Below we draw on our knowledge of business, biology and physics to offer some reflections on the nature of complexity. For our purposes, we define complexity as a large number of different elements, such as specific technologies, products and people, that have many connections to one another.

Having many different elements increases the resilience of a system. A company that relies on just a few technologies, products and processes doesn’t have many ways to react to unforeseen opportunities and threats.

Ecosystems with a diversity of elements also benefit from adaptability. In biology, genetic diversity is the grist for natural selection, nature’s learning mechanism. In business, as environments shift, sustained performance requires new offerings and capabilities — which can be created by recombining existing elements in fresh ways.

Another advantage that complexity can confer on natural ecosystems is better coordination. Flocks of birds or herds of animals, for instance, share behavioral protocols that connect the members to one another and enable them to move and act as a group rather than as an uncoordinated collection of individuals. Thus they realize benefits such as collective security and more effective foraging.

Finally, complexity can confer inimitability. Whereas individual elements may be easily copied, the interrelationships among multiple elements are hard to replicate.

A case in point is Apple’s attempt in 2012 to compete with Google Maps. Apple underestimated the complexity of Google’s offering, leading to embarrassing glitches in the initial versions of its map app, which consequently struggled to gain acceptance with consumers.

Of course, the costs associated with complexity are not to be sneezed at. Creating and maintaining a variety of elements can be significantly

more expensive than using standardized ones. In addition, as complexity increases, a system’s understandability decreases. This can be challenging for business leaders, who may struggle to grasp and navigate the system.

Lack of understandability can also lead to unmanageability.

As complexity increases, identifying the value and function of any individual element gets harder. This, in turn, leads to unpredictability, whereby spontaneous and unexpected behaviors can emerge from the system, and interventions can lead to unintended effects.

Fortunately, runaway complexity is not inevitable. The following strategies can help mitigate the risks of complexity: — CREATE MODULAR STRUCTURES: Robust complex organisms have a modular structure: Each functioning part operates with a degree of independence from the rest. That’s why it’s possible to transplant hearts and livers. Similarly, businesses can build structures to be modular rather than fully interconnected so that elements can be changed or removed later. This also increases resilience by ensuring that failures are contained at a local level rather than allowed to spread across the entire organization. For example, Apple’s iOS is designed to be modular — each function of the iPhone is handled by a separate app.

Therefore, the failure of any one app won’t prevent the phone from performing the rest of its functions.

— USE SIMPLE, COMMON

OPERATING PRINCIPLES: In nature all organisms are derived from a handful of unique molecules and remarkably common set of biochemical processes. These molecules and processes form the basis and diversity of all life. In a business organization, the equivalent is a set of simple underlying principles with which all elements and connections must comply. That increases the chances that new elements and connections will fit comfortably into the organization and also contains complexity.

A good example is provided by the hedge fund Bridgewater, which runs its business on 16 foundational principles. One of these is transparency, and all processes and protocols that Bridgewater puts in place must be transparent. For example, managers are penalized if they withhold information.

— EMBED A BIAS FOR CHANGE: In nature elements and connections are constantly evolving through genetic mutations and recombination. This process reinforces both the fitness of species and the resilience of populations.

Unfortunately, mutation doesn’t happen automatically in businesses. In fact, organizational dynamics tend to resist change. Structures and processes become ossified as employees adapt to them. To prevent this ossification, organizations need to embed a behavioral bias for change.

Consider the Chinese tech giant Alibaba. One of its six core values is “embrace change.”

Unless there is a good reason not to change an element or process, Alibaba will proceed to do so. In 2012 it rotated its 22 most-senior business unit

managers across departments to break down silos and demonstrate its commitment to flexibility.

— RELAX CONTROL: Human beings have a natural propensity to assert control.

But especially for complex or dynamic problems, an emergent solution is often superior to a designed and micromanaged one. Instead of micromanaging each decision, smart companies realize that allowing individuals the freedom to engage in constant, iterative experimentation can lead to more powerful outcomes than can deliberately designing and tightly managing each step: The more autonomous small teams experiment with new elements and connections, the more options they create for the organization.

— OPTIMIZE GLOBALLY: In natural organisms, healthy cells don’t multiply unnecessarily, because that would crowd out other cells whose functioning is required for the organism’s survival. For the same reason, it is essential that the evaluation of new initiatives, processes and structures be based on their impact not only on a certain group but also on the organization as a whole. This helps balance the trade-offs of complexity: The benefits of any single component may be concentrated in one small area, whereas the complexity costs may be distributed across the organization.

— FIX, REPAIR AND PRUNE: Nature has built-in repair mechanisms. At the cellular level, antibodies identify and neutralize foreign matter that doesn’t belong. On a

larger scale, small forest fires keep a forest healthy and reduce the likelihood of a major fire. Organizations can replicate these mechanisms by creating protocols and social norms that encourage people to look out for and eliminate obsolete processes. At Netflix, for example, the company’s famous “Reference Guide on Our Freedom & Responsibility Culture” stipulates that it is the duty of managers to eliminate unnecessary rules.

Managers may prefer simplicity over complexity, but the truth is that complexity is increasingly necessary for viability and competitiveness in today’s dynamic, unpredictable business environment.

Maintaining complexity within productive bounds, however, is a difficult task. Fortunately, we can learn from pioneering businesses and biological systems how to harness complexity on a sustainable basis.

Martin Reeves is a senior partner and managing director in the Boston Consulting Group’s San Francisco office and the chairman of the BCG Henderson Institute. He is the co-author of “Your Strategy Needs a Strategy.” Simon Levin is the James S. McDonnell distinguished university professor in ecology and evolutionary biology at Princeton University and the author of “Fragile Dominion.” Thomas Fink is a physicist and mathematician and the founder of the London Institute for Mathematical Sciences. Ania Levina is a project leader at BCG and an ambassador to the BCG Henderson Institute Strategy Lab.

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Thursday 06 February 2020

BUSINESS DAY

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Abaribe; Na you BIKO! … And between proletarian solidarity & criminality be!

ik MUO

J

anuary 2020, beyond the singsong nature of 2020, was like every other January: Harmattan, dry winds, dust and cold; acute “pocketities” as people have “finished” themselves financially during the Christmas holidays, (especially my people who spend in 11 days, December 20 to January 1, what they had accumulated in 11 months); students reluctantly returning to school and people gradually readjusting to the world of work, business and politics (the most lucrative industry in Nigeria), from which they took a break in the previous weeks.

In Nigeria however, beyond the signs and wonders (judicial mathemagic) in Imo State, the ferocious war between the falcon and falconer in Edo state, the revenue at all cost strategy of the federal government, our “improved” rankings on the Transparency International and Global Terrorism Index and fire disasters everywhere, especially that of Balogun Market, Lagos, January 2020 was a month in which security issues and concerns forced themselves into the centre stage of national discourse. It was the month of Amotekun! A lot had happened on the security front in the South West and with the certainty that more would happen; (with about 1200 herdsmen cells allegedly camped in the western forests) the people and government of South-West established Amotekun “Western Regional Force”(Remember the West African Frontier Force?). The federal government declared it illegal, surrendered to public and popular opinion, called for a reconciliatory meeting and negotiation (yes; everything is negotiable) and let Amotekun

It was the month in which Orthom, the weeping governor of this generation was attacked by herdsmen in his own farm, when the decimated Boko Haram rejected N50 million ransom and brutally murdered Rev Andimi Chairman of the Christian Association of Nigeria in Michika LGA of Adamawa state, when their cousins, (the bandits) murdered Mike Nnadi, (a youngorphan seminarian) and Ataga (after Dr Ataga had donated a police station to the community). It was a month in which the “operation finish them” in the Plateau continued unabated, when our President, expressed shock at the rising insecurity and when Femi Adesina told us to rejoice because BokoHaram bombings have reduced and that his principal (PMB or GMB??) had transformed the North-East into HEAVEN, unlike the HELL it was under GEJ. It was also a month in which our Senate President declared pointedly that our centralised security system had failed. It was also a month in which BokoHaram terrorists attacked our troops in Damasak and carried out an “extremely violent” attack on a vital aid facility housing United Nations workers in Borno State. It was also under this serious and worrisome state of affairs one of our legislators felt that the most important matter was to introduce his 4 wives and 27 children... “And still counting”!

It was in the midst of all this that security, the central matter of the day, came up for discussion at the sleeping chamber of NASS and it was the day that Senator Abaribe delivered two quotable missiles, which in addition to his previous interventions, will keep his name among those who know what they had gone to do at Abuja. The whole world knows what he said but let me repeat it for emphasis. Nigeria did not elect the IGP; we did not elect the chief of staff, we did not elect the joint-chiefs or national security adviser, we elected the government of APC because they continued to tell us that they had the key to security.

“When you want to deal with a mat-

ter, you go to the head. So, we will go to government and ask this government to resign. The clincher, to me as an Organisational Behaviour Scholar and management consultant is: when you want to deal with a matter, you go to the head. I thought that Abaribe was just a lawyer and politician; I did not know he was/is also a management guru because he brought in John C Maxwell into the discourse. Maxwell had said that ‘Everything rises and falls on leadership’. His second quote on that day has nothing to do with management but I have everything to do with our current realities, especially when compared to promises and pretentions of the pre-2015 years. It is that those who live by propaganda will die by propaganda. If you have not been following the activities of Abaribe in the NASS, try and check some of them online and do not forget the question he asked our honourable Chief Justice during his anointing session, sorry screening, at the senate. (To be concluded).

Other matters: Proletarian solidarity and criminality, drawing the line!

Marx is long dead and most of his followers have joined him on the other side. Marxism has suffered a what one of my friends called “loss of currency” ( declining popularity) to the extent that, whoever says he is a Marxist or exhibits Marxian paradigm today will be looked at with a left eye; as if he/she is wearing a DIRTY cloth. That is how concepts rise and then “fall and die”. One of the key words associated with Marx is the “proletariat”. It is even worse when he speaks of “lumpenproletariat”! It refers to those who are just POOR; those who are poor, who are defined by poverty and who have naturalised into their poor habitat and digging deeper rather than making efforts to escape. They are also unorganised, ignorant and not interested in understanding the why and how of their wretchedness. The only similarity to that is the current World bank/UNDP phrase: Multidimensional Poverty. Marx’s greatest grouse against the poor was their failure to unite and deal decisively with their traducers; the bourgeoisie who oppress, suppress and

‘

So, where do we go from here? Is this proletarian solidarity or criminality? So, every car-okada accident caused by the car driver and the okada drivers must meet out instant justice? Where are these okada drivers from and how are they licensed and controlled? Are they above the law? Are we safe?

repress them.

However, even in his grave, Marx will be happy with the proletarian solidarity shown by Lagos Okada Riders, most of who are said to be from Niger et al. It is about how they pounce on anybody (except soldiers) who oppresses them on the road. It doesn’t matter whether they are wrong and in 90 percent of the cases, they are at fault. I am a living witness to this but an “unknown soldier” has so documented it that there is no need to reinvent the wheel. Read on “Last week, a motorist in Festac Town hit an okada rider, an accident which damaged both car and motorcycle, and injured both rider and passenger... about fifty okada riders appeared out of nowhere and descended on the driver, screaming for his blood and chanting Islamic slogans, beat the driver, senseless, damaged his vehicle and forced him to part with N35,000. In December 2019, a woman was making a turn into her compound, when a crazed okada rider came out of nowhere and rammed into her car… a mob of okada riders attacked her and tore her clothes.

By the time help came from people in the area, her purse and phone had been stolen and her children watched in horror as their mother was beaten and fondled by okada hooligans. Before my very eyes a policeman at Mile 2 tried to impound a motorcycle for parking on the expressway, and a dozen of them drew daggers and threatened to stab him and his colleagues. This happened on Monday at Mile 2!”

So, where do we go from here? Is this proletarian solidarity or criminality?

So, every car-okada accident caused by the car driver and the okada drivers must meet out instant justice? Where are these okada drivers from and how are they licensed and controlled? Are they above the law? Are we safe? And even then how does this trend play out with the recent Lagos onslaught against okadas and their younger brothers, the ‘kekes’? Questions, questions and more questions.

Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

Loan-to-Deposit ratio: Between the devil and the deep blue sea

T

he minimum Loan-to-Deposit Ratio (LDR) for banks set by the Central Bank of Nigeria at 60 percent was further reviewed upward to 65 percent in September 2019. Compliance to the upward review was expected to commence at the end of 2019. The central bank is clear about the reason for this policy: increase lending to the real sector of the economy. Many banks in the past have preferred investment in risk-free assets to lending especially to small and medium scale enterprises due to the volatility of the Nigerian economy and sometimes lack of predictability of the business environment in the country.

Other reasons for bank’s reluctance to lend to companies include the poor character of borrowers and high interest rate on risk-free assets, among others.

The minimum LDR policy by the Central Bank of Nigeria compels banks to lend. The fact that there is a higher weighting on the loans granted to SMEs, Retail and individual borrowers makes them an attractive option for banks to meet up with the policy. However, it still remains difficult for banks to take the higher risk of offering loans to individuals or corporate firms for whom repayment is not guaranteed or certain and where the loan recovery rate is low. The penalty for noncompliance with the CBN regulation is 50 percent of the shortfall in LDR in additional

cash reserve requirement at 0 percent interest rate and this will be debited directly from the banks’ holding with CBN. In October 2019, the central bank of Nigeria demonstrated her readiness to penalise banks who do not meet up with the new policy by debiting up to N499.1 billion in additional cash reserve from about 12 banks who were found to be in violation of the directive and had below the expected minimum LDR requirement of 60 percent at the time. This stance by the apex body in October 2019 confirms that they are ready to follow through on the penalty as stated in the circulars sent to banks to ensure compliance with the policy.

Nigerian banks are now clearly in a dilemma. Should they lend to low-quality borrowers with the attendant high risk or allow CBN penalise them for non-compliance at 0 percent interest rate? This is no doubt the case of choosing between the devil and the deep blue sea. A choice between the two will definitely involve a marked trade-off between risk and return.

If banks choose to lend to low-quality borrowers, SMEs, individual and retail lenders, there is a high risk of default and this might even have nothing to do with the character of the borrowers as they might just not have the capacity to repay due to the volatility of the business climate in Nigeria, foreign exchange

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risk or even changes in government policy.

If banks do not lend to them however, their chances of meeting the LDR requirement will be low and markedly reduced and they will then have to face the penalty of 50 percent of the shortfall in additional cash reserve at 0 percent interest rate. The potential penalty is particularly expensive for banks as they will be denied billions in liquidity and this will have an adverse effect on both their business operations and profitability. It will grossly reduce the funds they have for trading and investment in less risky assets which has characterised the operation of Nigerian banks for some time.

Foreign banks operating in Nigeria will particularly feel the full brunt of this policy due to the typically stringent measures they have for granting loan requests. Even some large corporates find it difficult to meet up with some of the requirements of these banks.

It remains to be seen how retail and individual borrowers will meet up. It is not clear if these banks will lower their standard in order to be able to grant the loan requests of lower quality borrowers or if they will choose the possibly less risky measure of facing the penalty of additional cash reserve at 0 percent interest rate and ultimately experience reduced returns and profitability.

Banks are clearly faced with a difficult choice and what they choose to do will depend

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Philip Oguntoye on how much trade-off between risks and return that the banks are ready to make. If the banks choose to increase their lending to the real sector as required by CBN, they will most likely be in the good books of the apex body which is determined to drive economic growth through monetary policy, but might have to expose themselves to a higher credit risk and bad debt which will ultimately have a negative impact on profitability. If the banks however choose to face the penalty of additional cash reserve with funds growing at 0 percent, they will have grossly reduced liquidity which will impact their business negatively and won’t be in the good books of the Central Bank or customers either.

Banks have to find a delicate balance between the increased risk associated with lending to individual and small and medium scale enterprises and incurring penalty on their LDR shortfall in additional cash reserve. Which is better, I obviously cannot say but banks might have to test the waters to determine which the better is for them; a choice between the devil and the deep blue sea. Both will surely impact profitability.

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Thursday 06 February 2020

BUSINESS DAY

comment Making tough decisions (1)

Brian Reuben

E

xecutives many times have to make tough decisions to keep the business on track. It’s just the way the job is. But the toughest of decisions comes in the dark areas. These are cases where you and your team mine all the data you can, and do all the analysis you can yet the situation seems inconclusive.

For example, Ngozi Okonjo-Iweala’s choice to defile the ultimation of the people who kidnapped her 83 year old mother with a demand that she resign from her position as the Finance Minister in Nigeria and sign their fraudulent contract papers or have her mother executed was a tough choice. Think about it how do you risk the execution of your mother by choosing to fight corruption? If she dies, will you be able to forgive yourself? Can you stand public condemnation in exchange for being a corruption war lord? Under such circumstances it’s easy to become paralyzed and seek any available route. But it is your responsibility as a leader to judge the situation fairly and take the right decision. Which again begs the question of which decision is right?

Your judgement is critical in mov-

ing the organisation forward. Yet your judgement could be limited by your thinking, feelings, experience, imagination, and character.

Through history leaders have found themselves in situations where they must make tough choices, decisions that define the life and destiny of people whether as a large group or small group. Imagine a decision to go to war or fire a key executive for corruption.

But by relying on the principles I intend to discuss here you can improve your chances of making better informed and effective decisions every time even with incomplete, unclear data, divided opinions and different interest.

Effective executives rely on these principles when tough decisions must be made for better decisions and I’m sure it will help you and your team in navigating through tough decisions.

When next you have a tough decision to make, don’t get upset, relax and use the following principles: Every decision has a net consequence; your office is defined by your core obligations; effective decisions must take cognisance of the world as it is; every organisation must stay true to its identity; your choices will have outcomes.

Every decision has a net consequence You have to understand that every decision carries a real world effect.

So, difficult questions are ever hardly resolved in a flash of intuition. So you need to thoroughly and analytically consider all courses of action available to you in terms of real life human consequences of each option.

Let go of your presumptions, and get your team together and list all

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possible options, considering who will be helped or hurt, short term and long term by every option possible.

This is not the same as cost benefit analysis, so you should take a broad, deep, concrete, imaginative, and objective look at the full impact of your choices.

Indeed it is difficult to predict with accuracy the full impact of any choice but what’s important is that you walk from the position of love, see others the way you see yourself.

Knowing that your decision on grey issues carry real life consequences which affects the lives of people and communities, you want to focus on the picture and the greater good even when you and maybe others must suffer immediate pain. So it’s important to take the time to open your mind, assemble the right team, and analyse your options through the lens of love.

Your office is defined by your core obligations Your position as a business leader is defined by your obligations. You are obligated to both shareholders and other stake holders in your business. But besides this is our moral responsibility to safeguard and respect the lives, rights, and dignity of our fellow men and women. All of us owe this to ourselves and our world.

When you have a hard call to make, step out of your comfort zone, put yourself in the shoes of others especially the ones likely to be affected by your decision. How would you feel in their position? What would you react if someone else were to make this decision about someone related to you? How would you want to be treated? What would you see as fair?

What rights would you believe you had? What would you consider to be

‘

Through history leaders have found themselves in situations where they must make tough choices, decisions that define the life and destiny of people whether as a large group or small group.

Imagine a decision to go to war or fire a key executive for corruption

hateful? You might speak directly to the people who will be affected by your decision, or find someone in your team to fish out that information.

At your business school classes you were taught that your core responsibility is your company but you’ll need to understand that this is a broad statement that includes the environment, workers, government, customers and the community the company serves. You have serious obligations to everyone simply because you are a human being. When you face a grey-area decision, you have to think—long, hard, and personally—about which of these duties stands at the head of the line.

Dr Reuben is one of the most sought after thought leaders on the subject of Strategy in Nigeria. He speaks at business events globally.

He has written over 150 articles and facilitated over 200 strategy training programs for senior executives in diverse industries. He has advised and mentored senior executives in several organisations including Africa-Reinsurance Corporation, Savile Energy Luxembourg, Department of Petroleum Resources, Trident Energy United Kingdom, BusinessDay, and Dolphin Telecom among others.

Dr Reuben is one of the most sought after thought leaders on the subject of Strategy in Nigeria. He speaks at business events globally. He has written over 150 articles and facilitated over 200 strategy training programs for senior executives in diverse industries. He has advised and mentored senior executives in several organisations including Africa-Reinsurance Corporation, Department of Petroleum Resources, Trident Energy United Kingdom, BusinessDay, and Dolphin Telecom among others.

Reiwanku’s water challenge and the organisation rising to address it

F

or 25-year-old Jummai Musa and her 30-year-old husband, Samaila, the reality of Nigeria’s water crisis hits extremely close to home. In their community of Rewianku, Plateau state, accessible clean water is hard to come by. As a result, they are forced to use water from a nearby stream to bathe, wash clothing and kitchen utensils. This has taken a heavy toll on the health of their 2-year-old daughter, Safiyah, who has contracted a skin infection that community doctors have traced to the stream. As she talks about her daughter’s condition, Jummai explains that the itching makes it difficult for her to sleep.

With the under-five mortality rate at 127 out of 1,000 infants, this little girl’s condition, though worrying, is not isolated in its occurrence. In the community, Jummai and Musa’s daughter is not the only one suffering from a waterborne skin disease. Several other families, who also use the stream as their source of water, have been put in a precarious position.

For them, the problem is not solely the lack of access to clean water, but also inadequate sanitation facilities; these two issues, have put the residents of Rewianku at a greater risk of waterborne diseases.

Access to potable water is a basic human right. In Nigeria, however, on 67.3 percent of

the population has access to clean drinking water services, according to data available on Takwimu Africa. Unsurprisingly, in rural areas, this figure reduces to 56 percent because basic water services are unavailable.

Globally, a basic drinking water service is drinking water that comes from an improved source (piped water, boreholes, packaged water, protected wells, etc.), which takes no more than 30 minutes for a round-trip to and from the source. However, for many communities, the only access to water often comes from unsanitary sources.

The challenges around water access and sanitation in Rewianku are a reflection of the wider challenges of access to clean water access in Nigeria. According to World Bank estimates, there are 123 million people without the basic household toilet and 60 million people are without clean water close to home.

For Nigeria, addressing these challenges is a top priority to achieve the SDG 6 target of clean water and sanitation for all. The Nigerian government has come up with a National Plan of Action, which aims to address water sanitation and hygiene in order to achieve 100 percent basic water access by 2030.

For residents of Rewianku, their access to clean water has reduced significantly in the last 20 years. Although the community once

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had other basic water sources, after years of use and constant repairs, they have been left with only a faulty borehole. The government has made commitments to resolve this problem within the community but in the meantime, Rewianku residents have resigned themselves to sourcing water from the nearby stream. “If that water can cause skin diseases, imagine what it is doing to our internal organs” says Samaila Musa. As open defecation is the norm in this community, Samaila’s concerns are well-founded. Data from UNICEF has shown that over 56 million Nigerians defecate in the open by-and-large, because of the lack of access to adequate sanitation facilities including toilets with running water.

Despite the seeming insurmountable challenges, Rewianku has not been left completely alone in its fight for clean water access. Not-for-profit organisation, WaterWide, works within and alongside the community, as well as its key stakeholders, to help put an end to its water and sanitation challenges.

WaterWide works across Nigeria tracking government and international aid organisations’ spending and involvement in WASH services. For WaterWide, creating avenues for communities to keep their governments accountable is crucial to receiving better

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WILSON ATUMEYI

public services. To support its citizen engagement efforts, WaterWide also develops advocacy campaigns through which it seeks to influence policy-decisions and practices. In Rewianku, the NGO launched the campaign #WaterRewianku to create awareness about the community’s water issues, while being a driver for government action.

Active citizen engagement ensures governments fulfil their commitments to the people. Citizens can only keep their governments accountable when they have access to information. Governments can only make informed decisions about budget allocation and spending when they have access to information. Donor organisations and other development actors can only make good investment decisions when they have access to information. It is this crucial role of providing actionable insights situated within the appropriate political and economic context that platforms like Takwimu Africa and other platforms, continue to play, providing actionable insights for development actors like WaterWide and communities like Rewianku.

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BUSINESS DAY

Thursday 06 February 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

Impact of VAT on small businesses Increased costs, consumers’ low disposable income are looming risks

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

Bashir Ibrahim Hassan

M

icro, small and medium scale enterprises (MSMEs) are very instrumental to economic growth and development with the potential to reduce Nigeria’s unemployment rate, create wealth and also re-distribute income. This is why in addition to the goal to grow the revenue base of the federal government through the newly approved Finance Act, certain incentives were put in place for MSMEs based on certain thresholds.

The Value Added Tax (VAT) Act is one of such. Although the FG increased VAT – a consumption tax on the “value added” to the product throughout its production process ­– to 7.5 percent from 5 percent, companies with turnover of N25 million or less were exempted from filing VAT returns and Company Income Tax (CIT). Others above this threshold aren’t exempted.

This is aimed at reducing the tax burden of small businesses.

However, there are implications to this.

A slow paced economy results to lower disposable income – income remaining after deduction of taxes and social security charges, available to be spent or saved as one wishes. Therefore, businesses not exempt from the VAT hike and sell directly to the final customers, especially in the fast-moving consumer goods and services sector, will experience pressure to remain competitive and may have to absorb part or all the VAT increase so that the price of goods and services are not affected. This could affect their profitability going forward with lower fund reserved for expansion.

Also, for MSMEs whose goods or services are VAT exempt, they would have to deal with increased cost from incurring inputs liable to VAT. Although the federal government expanded the list of VAT exempt products, there exists cascading effect on customers and businesses that operate in a value chain where VAT is un-claimable.

This is a cause for concern. A

sustained pressure on cost could see these businesses seek to reduce cost from other cost outlets. This will limit the ability of MSMEs who have been identified by the National Bureau of Statistics (NBS) as the largest employers of labour across all sectors of the economy with significant contribution to GDP. According to NBS statistics, the total number of MSMEs as at December, 2017 was 41 million, with micro enterprises (ME) accounting for 99.8 percent and small and medium scale businesses accounting for 0.2 percent.

With a total employment contribution of about 59 million people, including owners, at December, 2017 (equal to 86.3 percent of national workforce), MEs alone contributed a whopping 95.1 percent. Still, they had a weaker capacity for creating jobs (1.37 persons per ENTITY compared with 39.5 persons for SMEs). Also, the contribution to exports of MSMEs by the subsector improved marginally to 7.64 percent (from 7.27 percent

in 2013). They accounte for close half of the GDP(49.78 percent).

In a recent 2020 economic outlook by Deloitte, tax experts pointed out that some of the products exempted from VAT have in their value chain inputs not exempted from the tax. This will result in higher production cost and investment, which will be passed on to consumers. Hence, some large firms may prefer to engage suppliers who are registered for VAT to enable them claim all input VAT across the value chain.

For an effective tax system, the Nigerian federal government may need to consider allowing input tax credits – i.e. reducing the taxes paid on inputs from taxes to be paid on output. Most quoted consumer goods firms’ today battle with dwindling revenue as consumers move to cheaper options. The current VAT hike puts them in a dilemma as to whether to pass on cost to final consumers and risk more migration, hence further revenue decline or absorb the cost which will have a negative impact on profitability.

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

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BUSINESS DAY

Thursday 06 February 2020

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The hunchback on Hope Uzodimma The Public Sphere

CHIDO NWAKANMA

F

ormer Senator Hope Uzodinma attracts more than his fair share of attention in his new capacity as Governor of Imo State because of the manner of his ascension to the post. It was a judicial heist. He is the receiver of a mandate that Imo State citizens did not give.

Uzodinma carries a huge hunchback of negative perceptions into his occupation of the Governor’s Office in Imo State. As the days go by, and the reality of his residency of Douglas House sinks in, citizens and watchers of Imo State wonder what he will or will not do. It is essential to understand why.

The second term of former governor Rochas Okorocha left many Imo State citizens bewildered. It exposed and presented Government and governance as trickery and mockery. They contended with many barefaced lies and broken promises. They lived in a new moral universe.

In eight months, Emeka Ihedioha and his team worked valiantly at rekindling hope in the citizens. Ndi Imo

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began, once again, a deliberate attempt at investing trust in government and governance. They saw possibilities. Elite and masses agreed on the need to work together for a new direction.

Then Hope Uzodinma struck with the wondrous 388 electoral units and the fiction of the Supreme Court. That judgement is loading in the Guinness Book of Records for the infamy of having more votes than voters.

As a man under a halo, Uzodinma should tread warily. His inaugural statement was full of sound and fury.

It did not articulate any plans and programmes.

Since then, Governor Hope Uzodinma has made the appropriate noises and some actions. He is growing in confidence and doing some things right. It is in the area of those promises that he should tread with caution. On January 28, Douglas House announced that Uzodinma would forfeit his security vote entitlement to ensure the payment of workers and tackling other pressing issues in Imo State. The alleged sacrifice is because of the financial limitations of the state.

It was a subtle jab at populism.

Unfortunately, it is one of those sound and fury statements. As George Orwell noted in 1946, “Political language — and with variations, this is true of all political parties, from Conservatives to Anarchists — is designed to make lies sound truthful and murder respectable and to give an appearance of solidity to pure wind.”

What does it mean in concrete terms

for a governor to state that he would forfeit his security vote? It amounts to making the wind appear solid. The security vote is a secret sum known only to the governor and his kitchen cabinet. It is not subject to auditing, nor is there any accountability to it. Such a subhead cannot possibly be the basis of any promise.

Furthermore, it is curious to hear of alleged challenges with the finances of Imo State necessitating this enormous sacrifice for which citizens need to hail the governor. In eight months, the immediate past administration did not speak of any such challenges. Instead, they outlined programmes and plans and went ahead with the execution.

Unfortunately for Uzodinma, comparisons would trail every action and pronouncement that he makes. It is the nature of these matters.

Citizens would also pay attention to the moral tone of the state under Uzodinma. The report card does not look good thus far. Members of the Imo State House of Assembly confirmed the characterisation of politicians as scoundrels and harlots by moving en masse to the All Progressives Congress Party.

They came from both the Peoples Democratic Party and the All Progressives Grand Alliance.

House of Assembly Speaker Collins Chiji claimed that the members defected because of the alleged personality of the governor. The word on the streets of Owerri reads something more dubious.

What fib! “Imo State House of Assembly is comprised of 27 lawmakers

‘

but as I speak to you now, 26 of us have joined the APC because of our governor.

Nine lawmakers joined immediately the Supreme Court delivered judgement in our governor’s favour. On the next legislative day, eight more lawmakers defected to the APC. Just watch what will happen on the next legislative day, more lawmakers who have not defected will defect, making it 26 APC lawmakers.”

The Imo State House of Assembly banks on the alleged closeness of Governor Uzodinma with President Muhammadu Buhari for significant progress. It is unclear how this would translate beyond constitutional provisions.

Imo State brings to the fore again one of the core issues of concern for Alaigbo.

Questions of character and values are critical and contributory to the conduct and perception of a people. Imo State.

Imo State. Imo State. Chai!

Governor Uzodinma would need clear pronouncements and even better actions to remove the hunchback he carries. He should set to work and surprise all those who doubt both his motivation and capacity. What a pleasant surprise it would be for Imo State and the narrative of governance in Alaigbo for Uzodinma to turn out right no matter how long he stays on the seat.

Best of luck.

What does it mean in concrete terms for a governor to state that he would forfeit his security vote?

It amounts to making the wind appear solid

Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

No national award for Anthony Joshua yet

F

rom leadership and nation-building perspective, I am worried about what our youth will relish from the display of some so-called role models and leaders in Nigeria. One notable exception to the wrong culture being entrenched by influencers of our youth is Anthony Joshua, the heavyweight boxing champion from Sagamu, Nigeria.

I’m sure you will clamour for a national award for Anthony Joshua based on his feet at work and for portraying Nigeria and United Kingdom in good light to the world through boxing. I will instead want to give a national award to someone else for Joshua’s exploits and comportment so far.

The world is changing. The youth are changing at a faster speed than the world. As the world rewards specific skills, talents and behaviours, the youth are quick to desire to be that skill or aptitude for the fame and the reward it gives. In leadership parlance, if you want something to be repeated and repeated, reward it. In other words, a behaviour that is rewarded will be massively repeated.

Our youth are encouraged to find their talents and build entrepreneurial skills around it to the masters of their giftings. In today’s world, young adults and kids want to be like the celebrities- the sports stars, musicians and be in any vocation that evokes limelight.

They have finding role models in these people.

They are massively influenced by the lifestyle of people who appeared to be rich and famous.

One thing we need to give to these celebrities is that most of them are reaping the reward of discovering their callings and the boldness to follow through. Behind a successful athlete is discipline and sacrifice to be what he or she is today. It is no joke to be outstanding in a competitive world.

However, the set of behaviours being exuded at stardom by these superstars’ models worries me. The naïve youth are watching and copying the actions as what makes up the person and the stardom. One unfortunate outcome from this is that we are modelling the

future we don’t desire for our children.

Let’s check a few examples of what stardom have been giving to our society to emulate in recent time. One is a great vocalist and became world famous with is magic single a few years ago. He rewarded us by impregnating five girls and turned them into the baby mamas. He ended up with one of them with four having children with little or no attention from him.

However, he is responsible for their financial upkeeps.

Another one came into limelight, and he is very arrogant on twitter abusing people of failure. His yardstick is money. You are not making money as I’m making, so leave morality, I can do whatever I want. He showed wealth and love on social media lavishly. He is also with baby mamas and controversially fights and reconcile with them now and then. Another is a man but claimed to have been born a woman.

He is now dressing like a woman claiming to be a risk to her new self and other people. He is a gossip news headliner, and I wonder why attention is being given to someone who has no moral worth for emulation. Another soloist is also with baby mamas and now chases older women as a lifestyle, though with more civility in manner and approach on social media.

I know these guys have the rights to live the way they have chosen. But being celebrities have automatically placed them in positions where their followers, mostly the youth, will emulate them for one or two things. Primarily, the behaviours they exude will be interpreted as a part of stardom and copy by the stars of tomorrow. After all, nothing is wrong in having baby mamas if you are rich and famous like superstars X, Y, X and others.

If you feel these guys are showing youthful exuberance and because they have money, you are wrong. It is merely part of our nonappreciation for moral standard or falling standard. Degenerating behaviour is not just among these youngsters.

The new comedy at our national house by the ‘powerful lawmaker’ is evidence of lengthy moral self-indulgence degenerating from one

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generation to other. I wish and will accept if Hon Ado Doguwa claims the video where he was showing his four respectful wives at the house representative is not real and a video shop. Powerful parliamentarian Doguwa, your show of personal assets and baby producing factories are not what you are paid to discuss with the taxpayers’ money on the floor of the assembly. I don’t know your motives for this, and there is no rejoinder to explain such to Nigerians yet. One thing is clear: leaders who showcase this type of power and genital prowess are contributing more to the backwardness of the north and Nigeria in the long run. If you think my last statement is wrong, check what the Emir of Kano said a few days ago. He said the culture of marrying many wives and producing many children is responsible for poverty and backwardness in the north.

Hon Ado Doguwa has been seen donating computers and education materials to help to educate the people of his Dadin Kowa LGA in Kano. He also distributed fertilizers to farmers, and he is a member of one committee or the other. One wonders why the show of private power for someone who is perceived as a power parliamentarian by his colleagues.

Could it just be a period of comic relief in the house of representative?

Be it as it may be the action of the power parliamentary contradicts what is required at this stage in our national discussion. The house is being funded by the impoverished Nigerians to engage in qualitative debates with its time and help in solving the numerous economic and security challenges the nation is facing.

As a nation, we are more divided than before, more threatened by religious bigotry, banditry and leaders who see nothing go in doing things what will promote equity and unity. There are more serious issues to be discussed than impressing Nigerians with Doguwa household of babies and wives.

Back to my headline, so you won’t tag it as deceiving. Anthony Joshua is an exceptional example in the ways our youth and celebrities should behave for moulding the future

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Positive Growth with Babs

Babs OlugbemI generation. As a world champion with wealth denominated in the Great British Pound (with no noise like those with naira denominated fortunes), Oluwafemi Olaseni Joshua has remained humble in defeat and victory. The motivational boxer (my name for him) is devoid of arrogance to his opponents and audience. He recently showed how well trained he is and the massive influence of his parents when he prostrated to present his world boxing belts to the president. He could have called off the advice to do that for being educated and brought up in a different culture.

Anthony Joshua is as at now an example of a celebrity we need to showcase to our youth. I know he deserves to the respected and honour with a national award for his exploit in boxing.

However, the parents of Anthony Joshua have done well bringing up this champion with values beyond fame and money. If fame and money have not magnified harmful vices in Femi as at now and unlike others, we should have a national award to reward parents of successful people who are good role models to others. I will not give Femi Joshua any award now but would clamour for national awards to be given to Yeta Odusanya and Robert Joshua for a good parenting job that is portraying this young Nigerian as a right product and positive ambassador for the youth.

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

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14

Thursday 06 February 2020

BUSINESS DAY

COMPANIES & MARKETS

Company news analysis insight

Okomu, Presco fail to realize border closure gains as weak demand bites SEGUN ADAMS

O

il palm makers on Tuesday announced significant declines in top and bottom-line, mirroring industry-wide challenges that defied gains from favourable CPO prices and border closure last year.

Okomu Oil posted its biggest profit decline in over five years as profit hit a four-year low while peer, Presco saw profit hit the lowest since 2015, although it suffered a softer decline in profit.

Okomu oil palm producer posted a profit of N5.5bn for 2019, 35.25 percent lower than it raked in the same

period of 2018 while Presco announced made 8.16 percent less as profit at N3.9bn.

Both consumer goods firms noted the biggest decline in revenue in over 5 years.

“There seems to be an industry-wide problem and the results suggest weak consumer wallets pushed consumers towards unlisted brands which are cheaper compared to the listed ones,” said Oluwashina Akinremi, an agriculture analyst at Lagos-based United Capital. “However, the environment is still positive for the oil makers especially with the land borders still shut.”

The border closure, which took effect from Q3

2019, is expected to frustrate the illegal importation of banned products and CPO from neighbouring countries and boost local demand.

Okomu’s revenue in 2019 slipped 3.24 percent to N19.6bn in 2019 while Presco’s fell 6.85 percent to N19.88bn in the year.

However, revenue in the fourth quarter of 2019 jumped by 13.6 percent for Okomu Oil to N4bn but Presco suffered a doubledigit decline to N5.1bn.

For Okomu Oil, exports sales improved in the year while local sales fell by 4 percent.

A breakdown could not be determined for Presco given limited information.

Gross margin of Okomu Oil fell by N4 to N70 per hundred naira sales while for Presco margin fell by N5 to N73 per N100 sales.

Cost of sales for Okomu rose nearly 10 percent paring gross profit by 7.9 percent to N13.72bn.

The company’s operating profit dropped 21.5 percent to N8bn.

Finance Cost of Okomu Oil fell by 29.2 percent while finance income fell by 71 percent.

The company noted a profit before tax of N7.98bn, 22.8 percent lower year-onyear which resulted in a profit of N5.5bn.

For the fourth quarter of the year, however, Okomu’s profit rose 10.7 percent to

N1.39bn.

On the other hand, Presco’s cost of sale rose 13.4 percent to N5.391bn paring gross profit to N14.49bn compared to N16.59bn noted a year before.

The company said it had an operating profit before change in biological assets of N6.89bn, about 32.65 percent lower year-on-year.

Ho w e v e r, a g a i n o f N511m in the year boosted operating profit including gains from biological assets to N7.4bn, only slightly below 2018 figures.

Finance expenses for Presco rose about 47 percent to N1.88bn resulting in a profit before tax of N5.5bn versus N6.32bn from 2018.

Profit of the oil maker

dropped to N3.9bn in 2019 making little of its bottomline turn-around ( profit of N287m vs 2018 loss of N257m) in the last quarter of the year.

Okomu Oil Palm PLC develops oil palm plantation, mills palm oil, and processes palm kernel. The Company also develops rubber tree plantation.

Similarly, Presco Plc produces specialty fats and oils.

The company specializes in the cultivation of oil palm and in the extraction, refining and fractioning of crude oil into finished products.

It possesses oil palm plantations, a palm oil mill, a palm kernel crushing plant and a vegetable oil refining plant in Nigeria.

Real Estate

Constrix Real Estate restates commitment to provide affordable, luxurious homes for Nigerians IFEOMA OKEKE

C

onstrix Real Estate Development, a real estate services firm that specialises in design and construction of commercial and residential buildings has reiterated its commitment to the provision of affordable luxurious homes for middle and low-income earners.

According to the company, its affordable pricing, unique architectural designs, and more importantly its transparency and honesty with our clients set it apart.

Speaking during an interview, Nura Danmusa, the managing director of Constrix, disclosed that the fact that Constrix never borrowed a dime from any bank, or any investment house helps keep its prices in its control, adding that all the company’s projects are 100 percent off taker funded.

He however noted this has its own challenges as economic situation may affect their streams of income, thereby causing some slight delay as it

concerns timely delivery.

Danmusa said he has a team of people with different backgrounds and experiences that help drive the vision of the company, who are also passionate to hit their targets and realise the company’s vision.

He explained that coming from a middle class family, he knows first hand the challenges of owning a house in Nigeria especially in Abuja where he was raised.

He stressed that home ownership shouldn’t only be for the rich because in developed countries, almost everyone owns a home, however small; adding that this fact is what drives the vision at Constrix, to deliver affordable housing to the middle and low-income earners in choice locations of the country, one city at a time.

Speaking on the challenges facing the Nigerian real estate industry, Danmusa said, “The biggest challenge with Nigeria real estate is that nobody cares about the people, not even the government,

not the banks or financial institutions, and not the landowners. Everyone only cares about his or her bottom line; how to maximize profit.

“As developers, we care, for two reasons; first, because we are part of the people, in fact that is why we got in the business, to solve a problem and secondly because we are the only ones that interact with the people on daily basis so we understand their challenges.

“However, most people involved in real estate are involved, do it for fat profit. For instance, most of these projects you see are done under a joint venture agreement, with developers and landowners. Now because landowners are greedy and want to maximize profit, they over value their land, which makes it difficult for a developer to build the affordable houses he dreams of delivering to the people.”

Speaking on some of the projects the company is currently working on, he said Constrix is working in Lafiya, Nassarawa State,

Jos, Plateau State, Guzape and Mabushi and almost finalising two new projects in Jabi district, Uyo and Akwa Ibom State.

The managing director of Constrix said the company however deals with different challenges on daily basis ranging from financing, to land owners disputes, others.

Danmusa said success for the company is defined by the number of lives it

touched, from its employees to its clients who are living happily in homes built for them, adding that looking around and seeing that you’re the reason someone own a home and is smiling is also success for Constrix.

He advised start-ups and investors who want to go into the field to be passionate and resilient to go through the entire process of challenges.

“This is critical and my advice for young entrepreneur is, you must be passionate about what you do. As for Investors, it’s the patience to trust in the brand and be supportive.

We also advocate for more investors to come into the real estate space. We can achieve great things in this country as it concerns providing affordable luxury homes with the right kind of investors,” he said.

Femi Gbajabiamila (m), speaker, House of Representatives; Ndudi Elumelu (l), minority leader, and Yusuf Tanko (r), chairman, House Committee on Health Services, at an interactive meeting between the House Committee on Health Services and the Nigeria Centre for Disease Control (NCDC) to ascertain the Nation’s level of preparedness against Coronavirus outbreak in China at the National Assembly, Abuja.

Thursday 06 February 2020

BUSINESS DAY

COMPANIES&MARKETS

15

Business Event

Services

GDM group e-commerce solutions target efficiency across marketing ecosystem KELECHI EWUZIE

D

etermined to improve the efficiency and effectiveness of a company’s sales efforts, GDM Group a marketing and innovation firm has unveiled three new e-commerce solutions into the marketing ecosystem in Nigeria.

The products namely Retailar, Retailscope and Alpha Geek was unveiled as part of the company’s contribution in transforming the B2B e-commerce space and to celebrate its 10th year anniversary as a business.

Victor Gbenga Afolabi, founder GDM group speaking in Lagos at the unveiling of the e-commerce solutions said Retailar will help merchants and shop owners source their products directly from manufacturers thereby improving the efficiency and effectiveness of a company’s sales efforts.

According to him, “Through the Retailar app, the retailer can be linked to any warehouse or distributor to order for goods.

The retailer can see price slash, see promotions and adverts. Today, we have about three to five thousand retailers on-board, and we have been doing transactions in the last three months every day on that app. This is one of the things we have learnt and feel we can use that experience to transform the landscape.”

Afolabi explains that Retailscope, the second solution unveiled is an in-house audit platform, adding that GDM Group is deploying this because of the importance of retail audit for the growth of the market.

It understands that for brands to stay competitive in today’s marketplace, it is imperative to design and implement a strong retail execution strategy.

While explaining further, Afolabi noted that the Alpha Geek which is a subscription based solutions platform which

the firm has used in the past two years for enumeration, for validation and managing point of sales material for salesmen automation like a Sales Force Automation, SFA, developed for big projects.

Afolabi says its new identity as a marketing innovation firm puts it in a position to democratise innovation by opening up to the ecosystem.

“This is also the way we can help increase the number of brands. While the multinationals are growing, the middle level brands are struggling because they can’t scale up”.

“We want to help them grow.

We are also doing this so that BTL agencies will stop fighting over the few available brands.

The only way this market can be sustainable for BTL agencies is by having more brands in the space. Beyond pitching for businesses, we need to ensure that we keep developing more and more brands in order to improve the Market”, Afolabi said.

L-R: Nwosu Chizibere, student, Holy Trinity College (HTC); Olorunfemi Tomiwa, student, HTC, Lagos; Toki Mabogunje, president, Lagos Chamber of Commerce and Industry (LCCI); Adewole Moyinoluwa Patricia, student, HTC; Asuku Favour, student, HTC, and Celine Onwukwe, teacher, HCC, during a courtesy visit of the School to the President of the Lagos Chamber of Commerce and Industry at Commerce House, Victoria Island, Lagos.

Real Estate

Xymbolic launches The Nook to address Nigeria’s housing deficit Josephine Okojie

X

ymbolic, a leading real estate brand committed to providing cuttingedge design and technology in real estate to boast excellent customer satisfaction, has today announced to launch its innovative mega housing model, the Nook.

In a market characterized by increasing demands for housing development, The Nook is set to deliver sustainable solutions to the housing deficits through disruptive technological innovations in the state.

“Xymbolic is committed to providing a more exquisite and comfortable community offering seclusion and secu-

rity to all residents and occupants,” Olisa Umerah, chief executive officer, Xymbolic Development Limited said in a statement.

“One of the main highlights of this innovative real estate is a solar-hybrid housing development with zero pollution, noise and power generating sets,” Umerah said.

“The housing system in Nigeria has placed a lot of demands on Nigerians especially mid-income earners, hence the project will help address the issue and bring a lasting solution to noise pollution which Lagos is usually associated with,” he added.

The project which is situated in Epe area of Lagos state

- the new development area of the Lagos Island region will cater to the mid-income earners and will also help solve the noise pollution suffered in the state.

Also, the new housing community will deliver unparalleled real estate services to those who will eventually have to work within and around the Lekki Free Trade zone which has been projected to create over 500,000 direct jobs.

Some of the other spectacular features in the estate include; interlocked roads, perimeter fencing, Drainage system, street lights, waste management, sewage system, and potable water.

L-R: Olumide Bolumole, head, listing business division, The Nigerian Stock Exchange (NSE); Oluwaseun Johnson; Emeka Nwagboso, acting executive director, Project Pink Blue; Ebunola Anozie, president/ CEO, COPE Foundation; Bola Adeeko, head, shared services division, NSE; Eno Essien, chief executive officer, Rheytrak; Abigail Simon-Hart, co-founder, Bricon Foundation; Chuks Igbokwe, and Omolola Salako, founder, Sebeccly Cancer Care, during the Closing Gong Ceremony to commemorate the World Cancer Day at the Exchange

L-R: Pawan Sharma, chief executive officer, West Africa, Tolaram Group; Chris Ngige, minister of labour and employment, and President Muhammadu Buhari during a visit to the President at the Aso Rock Villa in Abuja.

L-R: Thompson Ukpebor, channel relationship manager, Lagos Island and Ogun, Lafarge Africa Plc; Richard Zhou, winner, Lafarge Retailers’ Promo, and Itune Brown, retail manager, Lafarge Africa Plc, at the Lafarge Retailer’s promo reward ceremony in Lagos.

L-R: Kehinde Smith, chairman, board of governors, Igbobi College Yaba; Victor Adegbite, bishop, Diocese of Ikeja, Methodist Church Nigeria; Olumuyiwa Kinoshi, president, Igbobi College Old Boys’ Association, and Akinpelu Johnson, bishop, Diocese of Lagos Mainland, Anglican Church of Nigeria, at the Thanksgiving and Communion Service marking the 88th Founders’ Day Anniversary of Igbobi College, at the Rev Canon Parker Chapel, Igbobi College, Lagos.

16

Thursday 06 February 2020

BUSINESS DAY

Research&INSIGHT

In association with briu@businessday.ng

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

08098710024

Nigeria in the last decade ISAAC ESOWE

I

t is fascinating to know that every single daily economic activity that occurs in the past decade triggered a range of responses from those who were directly or indirectly affected, although, the difference is the context at which they measure the performance of the economic indicators.

The year 2020 is the beginning of a new decade. Government, economic enthusiasts, analysts, business owners and investors tend to measure the economic performance of the nation using some indicators to predict the direction of economic activities for the next decade.

A deep look at the past decade shows that the Nigerian economic growth since 2015 remains unimpressive. The Gross Domestic Product (GDP), a loose name given to the money measure of the over-all annual flow of goods and services in an economy, has been trending downward since the past decade.

This hit an all-time low in 2016 and the decline can be attributed to the economic contraction witnessed between 2014 and 2016.

Following the fall in oil prices and combined negative production shocks, the GDP growth rate dropped to 2.7 per cent in 2015. In 2016, the country witnessed its first recession after 25 years, as Nigeria was plunged into an economic

Source: NBS, BRIU

trough, that is, a state in which the minimum level of economic activities – consumption, production, investment and employment were at their lowest level, and thus, the economy contracted by 1.6 per cent.

In 2017, the economy picked up, but at a decreasing rate when compared with its level two years earlier. The recovery was driven by improvement in oil prices and production volumes. During the same period, the non-oil sector contributed significantly to the economic growth trajectory due to an improved foreign exchange (FX) liquidity.

And again, the economy grew at a slight pace as growth rate averaged 1.9 per cent in 2018 and remained constant at 2 per cent in the first half of 2019. On the production side, growth in 2019

was primarily driven by services, particularly telecoms.

Analysis done by BusinessDay Research & Intelligence Unit (BRIU) shows that, in terms of growth rate, the country’s growth trajectory has not changed much in the last 10 years. Nigeria remains the biggest economy in Africa and 25th in the

than Sub Sahara Africa’s countries’ average ($1,585.772).

In spite of Nigeria’s per capita income higher than Sub Saharan Africa’s average, how come 89.6 million Nigerians are still in extreme poverty?

Why is the quality of life and living standards deteriorating? These are few questions beckoning for answers.

It is so worrisome to know that Nigeria has overtaken India as the country with the most extreme poor people in the world. India has a population seven times larger than Nigeria’s. The struggle to lift more citizens out of extreme poverty is an indictment on successive Nigerian governments which have mismanaged the country’s vast oil riches through incompetence and corruption.

A pointer from the world poverty clock, an online platform shows that 86.9 million Nigerians are now living in extreme poverty; this represents

Source: CBN, BRIU

world; the country’s GDP was worth N69.79 trillion at the end of 2018, a value which is N1.3 trillion higher than the value recorded in 2017. A decade ago, the real GDP which was valued at N46.01 trillion was up by 51.68 per cent to N69.79 trillion in 2018 making the country Africa’s largest economy by GDP and the 25th in the world.

This feat, however, in real terms did not translate to an improved living standard of the populace because the level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or a certain geographic area across the country is still not evenly distributed.

On the contrary, the per capita income has been on the downward trends since 2010. If the nation’s GDP were to be distributed amongst the citizenry, each person will get $2,028.18 which is a value higher

Source: NBS, BRIU

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nearly 50 per cent of its estimated 200 million population.

“As Nigeria faces a major population boom—it will become the world’s third-largest country by

Source: ATLAS, BRIU

@Businessdayng

2050—its problem will likely worsen.

But having large swathes of people still living in extreme poverty is an Africa-wide problem”, the report highlights The report also emphasised that, significantly, of those countries in the top ten, only Ethiopia is on track to meet the United Nations’ Sustainable Developmental Goal (SDG) of ending extreme poverty by 2030.

Outside the top ten, only Ghana and Mauritania are also on track with the SDG target. Indeed, of the 15 countries across the world where extreme poverty is rising per World Poverty Clock data, 13 are currently in Africa.

“As a consequence, the mission to end extreme poverty globally is already at risk. By July 2018, about 83 million people would have been lifted out of extreme poverty since January 2016—but the number is 37 million people fewer than the required to meet the 2030 target”, the report stated.

In the same vein, the country’s unemployment figure at the close of 2018 looks creepy, as of the Q3 2018, the unemployment figure released

by NBS was put at 23.1 per cent; the underemployment rate was 20.1 percent, and the combined unemployment and underemployment rate was 43.3 percent.

Conversely, this means that a total of 20.9 million Nigerians are unemployed as the time this figure was released. Following the recent Lagos State ban on tricycle and motorcycles (okada), this would exert more pressure on the already high unemployment status.

By implication, unemployment rate among the underemployed might increase which may result in higher crime rate among others.

Thursday 06 February 2020

17

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

1,315.26 1,274.95

394.15

130.82

558.05

254.45

2,056.31

1,266.17

1,131.52

373.79

132.00

558.55

251.55

2,019.73

1,230.37

1,088.90

-5.17

0.90

0.09

Week open (24– 1–20)

29,628.84

N15.262trillion

2,520.68

1,173.97

734.99

Week close (31 1–20)

28,843.53

14.857trillion

2,444.04

1,147.72

734.99

Percentage change (WoW) Percentage change (YTD)

-2.65

-3.04 15.49

7.46

-2.24

0.00

-3.06

0.00

-0.35

4.75

8.25

4.91

-5.79

NSE Lotus II

NSE Ind. Goods Index

-1.14

-1.78

-2.83

-4.19

10.08

14.39

NSE Pension Index

-3.77 3.31

Honeywell: Finance cost, Ikeja segment major drags in 9 months scorecards Iheanyi Nwachukwu

H

oneywell Flour Mills Plc recently released its financials for the nine months (9M) period ended December 31,

2019.

The company berthed the Nigerian Stock Exchange (NSE) with a disappointing scorecard which shows record N925million loss after tax (LAT) despite 6percent rise in its revenue. The unaudited results for the 9M period shows a revenue growth of 6percent from N55billion to N58.2billion when compared with the same period in 2018.

About the company Honeywell Flour Mills Plc produces high-quality bread flour and other wheat-based food products. Its range of popular brands include: Honeywell Superfine Flour, Honeywell Semolina, Honeywell Whole Wheat Meal and variants of Honeywell Pasta and Honeywell Instant Noodles. The company has three operational segments –Apapa, Ikeja, and Sagamu.

Performance of various segments Its Apapa segment accounted for the largest chunk of the overall revenue. The result shows N47.22billion revenue came from Apapa segment against N46.31billion in 9M’2018. Its Ikeja segment recorded N4.17billion revenue in 9M’2019 as against N8.75billion in 9M’2018. From Sagamu segment, Honeywell Flourmills raked in revenue of N6.82billion. The segment

Date

Price (N)

Volume

February 3, 2020

1.06

319,935

January 31, 2020

0.97

633,015

January 30, 2020

1.07

972,493

January 29, 2020

1.08

414,135

January 28, 2020

1.10

January 27, 2020

1.18

January 24, 2020

1.18

operating profit shows only Apapa at N4.72billion, while other segments –Ikeja and Sagamu –recorded operating losses of N940million and N420million respectively. Sagamu plant commenced operation last year.

In 9M’2018 while Apapa operating profit was N3.77billion, Ikeja recorded operating loss of N951million.

Other financials Gross profit stood higher at N10.24billion in 9M’2019 against N9.4billion in same period of 2018.

Operating profit of N3.36billion in 9M’2019 far outweighs N2.82billion operating profit it reported in 9M’2018. The company’s finance cost (which arises from borrowing of money to build or purchase assets) increased remarkably to N4.24billion in the review period as against N2.64billion in 9M’2018.

The record N925million loss after

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tax in nine months to December 2019 when compared to profit after tax (PAT) of N143million in 2018 represents a decline of 747percent. It also reported loss before tax (LBT) of N878million against profit before tax (PBT) of N173million in 2018, which represents 608 percent decline.

Management comments Following the disappointing outing in the review nine months period, the company is still confident that its performance in the coming quarter and the new financial year thereafter will record significant improvement. It linked the growth in revenue to corresponding growth in sales volume by 5percent.

‘Lanre Jaiyeola, Managing Director commented: “Despite the challenging operating environment occasioned by rising input costs, reducing spending power of

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1,413,269 23,547 1,085,003

consumers and product evacuation challenges due to the traffic logjam at Apapa, the company grew its 9 months revenue by 6percent to N58.2billion, when compared to revenue of N55billion recorded in the corresponding period of the last financial year. This was driven by sales of our various Flour and Pasta products.”

“In line with our objective to continuously improve operational efficiency, the execution of well– embedded operational efficiency initiatives led to 9-month operating profit accelerating at a faster rate than revenue by 19percent from N2.8billion to N3.4billion. We will continue to improve our operational efficiency in order to maximize value to shareholders,” he noted further.

“We have implemented strategies

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to maximize shipment of products to our customers in spite of the Apapa traffic gridlock. We are also well positioned to substantially increase our capacity utilisation of the Pasta production through continuous flow of input materials to the Pasta factory in Sagamu. We are also working on the introduction of new products tailored towards the preference of our most valued consumers in terms of satisfying their nutritional needs, taste and spending power”, Jaiyeola said in a statement following the released scorecards.

Share data/trading information As at Monday February 4, 2020 the share price of Honeywell Flour Mills Plc closed at N1.06percent, representing 7.1percent increase in year 2020. It had reached 52 week high of N1.40 and a corresponding 52 week low of 90kobo per share. Listed on the consumer goods sector of the NSE (food products sub sector), the company’s market capitalization is slightly in excess of N8.406billion on shares outstanding of 7,930,197,658 units.

Shareholding structure Report on director and indirect interest of directors in the issued share capital of the company as recorded in the register of directors’ shareholding show that Oba Otudeko and Obafemi Otudeko have indirect holdings amounting to 5.29billion and 618million units respectively through Siloam Global Services Limited who is a 75percent equity holder in the company. Also, First Bank of Nigeria Limited owns 5 percent stake in Honeywell Flour Mills Plc which amounts to 400.96million units.

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Investor’s Square

United Capital Investment Views

Equities Market: NSE dips 2.7%, investors snub 2019 unaudited results

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he equities market sustained a bearish run throughout last week snubbing the influx of unaudited full year 2019 results.

The broad market index was down by 2.7percent to close at 28,843.53 points, dragging the year-to-date (YtD) return lower, to 7.5percent.

In terms of activity on the exchange, the market was upbeat, as average volumes and value traded increased by 26percent and 15percent to 312.2million units and N5.2billion respectively.

However, judging by the performance of the Nigerian Stock Exchange (NSE) All Share Index (ASI), market participants sold off larger volumes of large cap stocks like Access Bank, FBN Holdings and BUA Cement. Notably, more than 90 companies submitted their unaudited results following the recent implementation of the SEC rule (39 & 41) on Annual and Quarterly report.

Looking at the sectors under our coverage, we observed mixed performances across board, as two sectors out of the five sectors under our coverage

(-1.1percent) followed suit, as BUA Cement (-2.1percent), Lafarge (-12.9percent) and Total (-8.6percent) lost.

Market sentiment deter iorate d, as market breadth decreased from 1.3x in the previous week to 0.4x. Specifically, 16 stocks gained against 36 decliners.

Meanwhile, in a bid to boost activities on the exchange and deepen the equity market, the NSE launched a new board for high-growth companies during the week.

This is to complement the existing Premium and Main boards but with less stringent listing requirements to attract SMEs that exhibit the potential for fast growth in their corporate earnings and are in the growth phase of their business cycle.

This week, we expect buying interest to improve due to sell off observed in the previous week. Also, market participants will continue to digest the latest results released by companies, and position appropriately, in anticipation of better earnings and dividend pronouncements.

However, the currently tight state of financial system liquidity might constrain the

closed in the positive region.

Starting with the gainers, the Insurance sector (+0.9percent) led the team with Linkage Assure (+18.8percent) and Law Union (+1.5percent) driving the positive performance.

Similarly, the Consumer goods sector (+0.1percent) gained on the back of price appreciation in NB (+5.8percent) and Champion Breweries (+6.6percent).

On the flip side, the Banking sector (-5.2percent) bled, with bellwether stocks like FBN Holdings (-10.3percent) and Access Bank (-3.4percent) dragging the sector down. The Industrial goods (-2.8percent) and Oil & Gas sector

overall activities.

Money Market : Rates resumes uptrend as system liquidity tighten In the previous week, system liquidity tightened as naira outflows for the week outweighed inflows due to CRR debit by the CBN following the CRR hike to 27.5percent by the Monetary Policy Committee (MPC).

In terms of naira, fund flows, NTB maturities (N229.6billion), OMO maturities (N495billion), B o n d c ou p o n p ay m e nt s (N49.6billion), were further mopped up partially by OMO (N210.3billion) and NTB (N229.6billion) sales. In all, average interbank funding rates

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(OBB and Overnight) spiked from 4percent levels to close the week at 14.6percent.

At the primary market for NTBs, the tides were turned, as market participants bided for high rates, after weeks of succumbing to lower stop rates.

Across the tenors offered, the 91-day and 182-day received the most demand, with bid to cover ratio at 1.9x and 1.7x respectively. However, the long end (365-day) was undersubscribed, with bid to cover ratio at 0.9x.

As such, average stop rates edged upwards by 84bps (91-day: 3.5percent, 182day: 4.5percent and 362-day: 6.5percent), with a total of N229.6billion bills sold. For the primary OMO market, demand remained significant, as total subscription hit N478.2billion versus N200billion that was on offer.

More specifically, no sales were made on the 82-day bills, while a total of N20.1billion and N190.2billion of the 180day (bid to cover: 2.0x) and 362-day bills (bid to cover: 2.5x) were sold respectively.

Also, the CBN remained wary of borrowing costs, tweaking average stop rates lower by 9bps to 12.3percent.

On the back of the increase in CRR and the need to meet up with the associated funding pressures, some Deposit Money Banks exited some of their short-term positions, driving average NTB yield upwards by 21bps w/w to 3.7percent.

This was also observed at the secondary OMO market, as average yield rose by 42bps w/w to 13.2percent. However, activity level strengthened as the value of bills traded at both the NTB and OMO market rose by 69.6percent and 9.8percent week-on-week (w/w) to N20.5billion and N266billion respectively.

This week, we expect the upward repricing in NTB yields to continue as DMBs adjust to the increase in CRR. Also, with OMO maturities worth N311.5billion expected, we anticipate an OMO auction, with stop rates dropping further, which will ease interest costs on the Apex bank.

Bond Market: Interests for Eurobond continue to wane Activities at the secondary market were upbeat, as yields across the entire curve declined.

Accordingly, the average yield fell by 23bps w/w to 9.8percent.

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Let us know and investor will help you investigate and report back.

E-mail: iheanyi.nwachukwu@businessdayonline.com

Economy & Markets

SEC says Private Equity firms agents of economic growth Iheanyi Nwachukwu

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he Acting Director G eneral of the Securities and Exchange Commission, Mary Uduk, has said that Private Equity (PE) firms are important agents of business and economic growth, as they bring capital to business.

Uduk, who was at the Udo Udoma & Belo-Osagie (UUBO) second private equity summit with the theme: ‘Drivers, Disruptors and Unlocking Value’ noted a connection between adequate capital and business growth “as such capital helps businesses grow, generates profits for the investors, creates socioeconomic benefits to the consumers, and enhances overall growth of the economy.”

According to her, Nigeria has lots of startups with robust business plans, many profitable unlisted companies with established cash-generating capacity, as well as public companies with solid customer bases, proven products, and high-quality management.

She noted that all these businesses and opportunities were yearning for investments, and PE firms can tap into this.

“I see an improved investment climate, friendly market rules and regulations as well as increased investor education as essential elements for attracting PE investments in Nigeria. “Towards this, the Commission is working on Rules and Regulations to ease participation of, and disclosures, by more PE funds.

Initiatives in registering and developing the FinTech space in the capital market will also provide good opportunities for PE firms to invest in innovative start-ups operating in in the capital market.

“The ISA 2007 empowers the Securities and Exchange Commission to register PE Funds. Based on their scope and the need to attract investors such as the Pension Funds, many PE firms and Infrastructure funds (often structured as PE), file their returns with the Commission,” Uduk said.

Uduk said the capital market provides the most efficient gateway opportunities for PE firms. The NASD Enterprise Portal, as a collaborative development in the market, aims at aiding PE firms invest

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in and dispose of eligible companies’ securities in an easy and cost-effective manner.

According to the acting DG of SEC, As PE activity rises in the country, PE funds can utilise the opportunities provided on our various organised exchanges when exiting their investments. This will increase the quality of our listed public companies, while allowing PE firms benefit from the market liquidity, efficiency and increased participation available on the exchanges.

“It is therefore my hope that the outcome of this Summit will impact greatly and positively on the PE segment of our market, the capital market in general and our economy as a whole.

Niyi Adebayo, Minister o f Indust r y , Tra de a nd Investment while delivering keynote address on ‘Fostering an enabling environment for investment in Nigeria’, said that the federal government would seek to localise at least 40 percent of its expenditure on stipulated goods and services, to facilitate local markets access for Nigerian made products.

The minister said that government had realised that building production capacity alongside strategic partners with strong track record in some priority sectors was critical to success.

“Through the Nigerian Investment Promotion Commission, bilateral investment agreements are being modernised with a greater sense of purpose.

“Much of our most recent agreements target countries that align with our ambition of building local production capacity,” he said.

According to him, government will seek a comprehensive approach in mobilising capital, incentivising priority sectors and expanding market access for local producers.

Adebayo said that government would further enhance the ease of doing business and support the growth of MSMEs. He said that the ministry had begun implementing a number of key initiatives, including the reactivation of the six special economic zones and the special agro-industrial processing zones project.

“In supporting the growth of MSMEs, we are easing access to capital, deploying shared facilities across the country and facilitating the delivery of @Businessdayng

Mary Uduk, acting director general, SEC

tax and regulatory incentives for MSMEs. “Our priority sectors cut across agriculture, construction and the automotive industry,” Adebayo said.

He said that Niger ia would remain critical to the global economic market as the country prepared for the inevitable rise of the world’s third most populous country.

“This also presents a compelling case for global investors when viewed against the backdrop of the country’s capacity for growth.

“Achieving a GDP per capita rate comparable to South Africa would catapult Nigeria’s GDP to over one trillion dollars.

“The dwindling prospects of oil and our growing population leaves us with no choice but to develop a Nigeria that is investor-friendly, exportoriented, high producing and high growth,” Adebayo said.

He said that government’s primary objective in the present decade was economic diversification and job creation.

“Diversification of our economy, or more precisely government revenues, must accommodate both short and long-term efforts because we no longer have the luxury of time; considering the realities of our growing population and the dwindling prospects of crude oil,” Adebayo said.

S e na t o r Ud o ma Ud o Udoma, Founder of Counsel UUBO, stressed the need for private sector participation in the development of the country’s economy.

Udoma said that government must engage private sector to ensure economic expansion, noting that government could not do it alone. He said that government needed to create an enabling environment that encouraged growth of private equity in Nigeria.

Thursday 06 February 2020

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Earnings season

Stanbic IBTC: Analysts target price signposts upward potentials Iheanyi Nwachukwu

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ecently, Stanbic IBTC Holdings Plc released its full year 2019 unaudited results.

The Holding company saw modest year-on-year (YoY) improvements across its topto-bottom line scorecards. In their commentary following the released result, analysts want investors to buy the stock as their target price (TP) implies the stock has potential to maintain upward trajectory.

Stock performance/trading information The share price of Stanbic IBTC Holdings Plc had reached as 52 week high of N49 and a corresponding week low of N33. At N38.25 per share as at Monday February 3, the stock has yielded negative return of -6.7percent this year underperforming

the Nigerian Stock Exchange (NSE) benchmark index which has risen by +6.30 percent this year. As at last Monday, the market capitalisation of Stanbic IBTC Holdings Plc stood at N401.815billion on shares outstanding of 10.504billion units.

The FY’19 scorecards Stanbic IBTC Holdings Plc grew its gross earnings by 6 percent to N233.8billion in 2019 from N220.9billion in 2018. Net Interest Income (NII) decreased by 0.47percent to N 77.83billion in 2019 from N78.20billion in 2018.

Profit After Tax (PAT) of N75.03billion in 2019 against N74.44billion in 2018, represents 1percent increase; while profit before tax (PBT) was N90.92billion in 2019, higher by 3.14percent compared with N88.15billion in 2018.

Its basic/diluted earnings per ordinary share (kobo) decreased to 692kobo in 2019

from a high of 704 kobo recorded in 2018. An interim dividend of N1 per share was

paid at half-year (H1) but the Holding Company is yet to declare final dividend for

full year 2019 as its board of directors scheduled to meet today February 6 to propose

final dividend among other matters.

Stanbic IBTC Holdings Plc is a member of Standard Bank Group –Africa’s largest banking group ranked by assets and earnings which has been in business for over 150 years.

Analysts buy rating Guy Czartoryski, head of research at Lagos-based Coronation want investors to buy the stock following their target price of N61.35 per share for Stanbic IBTC Holdings. “Given the potential upside relative to current price …we maintain our buy rating on the stock”.

Also, Joshua Odebisi, analyst at Vetiva Capital believes that Stanbic IBTC Holdings stock has the potential to reach N49.09 per share, which represents an upside value when compared with the current price. Vetiva assigned a ‘buy’ rating for the stock.

Vetiva Research

Total Nigeria: Better margins, debt cut to buoy FY’20 earnings

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n Wednesday last week, Total Nigeria Plc released its unaudited full year (FY) 2019 results, reporting a 6percent year-on-year (y/y) drop in turnover to N291 billion (Vetiva estimate: N294 billion).

Meanwhile, after-tax earnings came in at N2.4 billion (-70percent y/y) for the full year, mainly supported by gains (N2.7 billion) on asset disposal recorded in fourthquarter (Q4) 2019.

Border closure to weigh on fuel supplies in 2020 As expected, TOTAL’s Q4’19 fuel segment posted a decline of 18percent y/y to N58.1 billion (Vetiva estimate: N58.4 billion), taking FY’19 sales to N239.7billion (-7percent y/y).

We attribute the underwhelming performance in Q4’19 fuel turnover to seemingly lower imports of petroleum products by the NNPC, following the move by the federal government to close all land borders.

With the expectation of the borders remaining closed for

most of first-half (H1) 2020, we foresee a further moderation in imports of fuels. Thus, we envisage that FY’20 fuel turnover will come in lower at N226.3 billion (-6percent y/y).

Stiff competition caps lubricants growth to a single digit Despite heightened competition in the lubes space, TOTAL’s lubricants operations reported a modest performance in Q4’19, with revenue from the segment climbing 4percent y/y to N11.0 billion. This, however, underperformed our estimate of N13.4 billion. Overall, FY’19 lubricants sales recorded a singledigit growth of 4percent, coming in at N51.2 billion (Vetiva estimate: N53.5billion). In FY’20, given the aggressive drive by other industry players (notably Forte and Mobil) to further expand their market share, we forecast a conservative growth of 2percent in Total’s lubricants revenue to N52.3 billion and project a CAGR of 3percent over the next four years.

Balance sheet deleveraging to support bottom line www.businessday.ng

in 2020 In Q4’19, Total significantly deleveraged its balance sheet, as the company trimmed its bank overdraft to N35.9 billion from N53.9 billion as of nine month (9M) 2019.

As a result, finance costs fell 22percent quarter-on-quarter (q/q) to N1.7 billion (Vetiva estimate: N2.1billion). We believe the cut in bank overdraft was funded by the significant

jump in operating cash flows, which improved to N16.9 billion in Q4’19, a Uturn from a negative balance of N7.4 billion as at 9M’19—we specifically note that receivables fell by N17.3 billion during the quarter.

Following comments from management at our last corporate visit, we expect a further cut in Total’s debt portfolio, as management

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aims to reduce the company’s exposure to bank overdraft.

With our projection for FY’20 operating cash flows at N14.4 billion, we expect the firm’s debt balance to decline to N29.9billion, bringing finance charges lower to N5.6 billion (-29percent y/y) in FY’20.

2020 ROE to improve to 14percent (FY’19: 8percent) We are somewhat optimistic about Total’s bottom

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line this year, despite our anticipation of a drop in turnover to N278.6 billion (-4percent y/y). For instance, we expect the improvement in gross margin, stemming from anticipated higher lubricants contribution to revenue mix, to take gross profit to N35.7 billion (+5percent y/y). More so, we project a 6percent y/y decrease in selling, general and administrative expense (SG&A) in FY’20, moving in tandem with turnover. Additionally, we project a surge in FY’20 profit before tax to N5.9 billion (FY’19: N3.7 billion), supported by our expectation of a 29percent y/y drop in finance costs. Overall, we expect aftertax profit to come in at N3.9 billion (+63percent y/y), translating to a ROE of 14percent (FY’19: 8percent).

Business Description Total is one of the largest marketers and distributors of petroleum products in Nigeria.

Total offers various fuel products, including petrol, diesel, and kerosene. Total operates 550 service stations, 5 LPG bottling plants, 3 lubricants blending plants; and 5 aviation storage facilities.

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cityfile Police nab 5 ‘fake army’ officers in Edo IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

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Joshua Nimmyel (r), commandant of the Nigerian Army Amphibious Training School in Calabar, supervising soldiers from the school who were carrying out road rehabilitation on Ekorinim road in Calabar. NAN

IPMAN crisis: Court bars PTD, others from collecting levies in C’ River MIKE ABANG, Calabar

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ross River State Hi g h C o u r t , sitting in Calabar, has issued an injunction, restraining the Petroleum Tanker Drivers (PTD) from collecting any levy meant for the Independent Petroleum Marketers Association of Nigeria (IPMAN), in the state.

This is coming against the backdrop of an unresolved leadership tussle, which has factionalised the state chapter of IPMAN since last year.

The court, presided over

by Justice Edem Ita Kufre, also granted Edet Umana, the factional chairman of IPMAN and two others (claimants) for themselves and on behalf of IPMAN,

leave to serve the writ of summons and originating processes on the national chairman of PTD, Oladini Salimon, the zonal chairman, Peter Modebelu, factional chairman of IPMAN in the state, Robert Obi and seven other defendants.

The judge, after hearing A. A. Anah, counsel to the claimants, held that “an order of interim injunction restraining the defendants whether by themselves, agents, privies, in any manner whatsoever and otherwise however from collecting any IPMAN tariff in Calabar unit pending the hearing and determination of the claimants motion on notice.”

Umana and others had dragged the national chairman of PTD, the zonal chairman of PTD, fac-

tional chairman of IPMAN in the state, Robert Obi and seven others to court in suite No.HC/451/2019 challenging why they were still collecting levies on behalf of IPMAN and why Obi was still parading himself as chairman of IPMAN when the Supreme Court had since December 14, 2018 declared Chinedu Okoronkwo as the national president of IPMAN and by extension all the state executives, like Umana who he (Okoronkwo) put in place as true leadership of IPMAN. The lingering crisis sometime last year created an artificial fuel scarcity in Calabar and environs, thereby forcing the state government to intervene and subsequently ordered the immediate suspension of IPMAN activities

in the state.

The government, through a press statement issued by Christian Ita, special adviser, media and publicity to the governor, Ben Ayade said “No group is to parade itself as the leadership of the association.”

It went further to announce that a 12-man interim committee led by Robert Obi has been put in place after due consultations with all relevant stakeholders.

Reacting to the injunction placed on them by Justice Kufre, Obi and his group have petitioned the acting chief judge of the state, Akon Ikpeme, asking for the matter to be transferred from Kufre to another court as they are not sure of justice and at the same time accusing him of bias.

Oyo decries shoddy job by contractor REMI FEYISIPO, Ibadan

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yo State government has decried the poor quality of job executed by contractor handling the 2017 FGN-UBEC/OyoSUBEB intervention project at Celestial Church of Christ High School, Ibadan.

Executive chairman, Oyo State Universal Basic Education Board, Nureni Adeniran expressed his dissatisfaction during an on-the-spot inspection to the site of the projects

in Ibadan.

Adeniran, while speaking at the school, located at OkeAdo, Ibadan, described the job as ‘shoddy’ noting that the state government would not accept substandard job by any contractor.

He appealed to contractors to always consider the lives of children and staffs who would occupy school buildings, while carrying out their jobs.

“Governor Seyi Makinde’s administration cherishes lives of these children and we will not permit this kind of job, www.businessday.ng

which lacks quality. As such the contractor must return to site to correct anomalies on the building”, he said.

While noting that there were several cracks on the school building, he also pointed at columns on the fences.

Adeniran also expressed dissatisfaction with the failure of the contractor to install security lights at the school. He said the security lights would serve as checks against any intended burglary.

“As we can see here, the contractor has not finished

his job. He needs to return to site to complete his job”, he said.

Meanwhile, the chairman has hinted that St. Michael Primary School, Apata, Ibadan is a beneficiary of the 2018 intervention projects.

This, he said, was in fulfillment of his promise that the school would as a matter of urgency, receive a block of three classrooms, four toilets and a borehole.

Adeniran had earlier visited the school, where he noticed they were short of necessary facilities.

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he police in Edo say they have arrested five persons for alleged impersonation as men of the Nigerian Army in the state.

Chidi Nwabuzor, spokesperson of the police in Edo, who paraded the suspects at the command headquarters in Benin, said the suspects were arrested in army camouflage uniforms.

Nwabuzor gave the names of the suspects as Ehiorobo Evans (28), Osariemen Agho (25) Solomon Hussaini (28) Idoro Solomon and Ezeyi Kelechi.

He said the fake army officers were arrested on a tip-off from members of the public.

‘The operatives of anticultism unit acting on a tip-off along PZ road, off Sapele road, Benin, that five young men were seen gathering in the area, dressed in army camouflage uniforms, mobilised to the scene and arrested five of the suspects who confessed being fake army officers.

He said the suspects have also confessed to have been terrorising the areas and other environs in the state.

He listed items recovered

from them to include army camouflage uniforms and jack knives.

However, one of the accused, Evans Ehiorobo said he served four months in the Nigerian Army but has been on AWOL for eight months.

“I am a soldier from 2 Division, Ordinance Unit, Nigerian Army. I came to visit my friend; I knew him from Zaria. There is one of my course mates upstairs playing game and I joined him before the police came to arrest us.

“I was on mufti, it was my phone that they found my picture that I am a soldier too and that is how I was arrested. I am still serving as soldier but I have been on AWOL for eight months now and I didn’t return.

“They have not been paying for a while. I served four months in the army. I have been arrested twice; the first one was robbery,” he confessed.

Chidi further disclosed that men of the command foiled a robbery incident in the early hours of Tuesday along the Benin-Lagos expressway.

He added that one of the armed robbers was killed, one arrested with gun injury while another escaped with bullet wounds.

Man bags 6 months over drug peddling

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34-year labourer, Salisu Bala, was, on Tuesday, sentenced to six months imprisonment by Justice Patricia Ajoku of the Federal High Court, Ibadan, for p e ddling 13.2kg of cannabis.

Ajoku said she convicted and sentenced Bala based on the evidence before her and on the fact that he pleaded guilty.

“I have considered the provisions of Section 270 of the Administration of Criminal Justice Act (ACJA), 2015 and the agreement reached between the National Drug Law Enforcement Agency (NDLEA) and the convict in this judgment.

“I have also considered the fact that Bala is a first time offender who can still contribute positively to the society and that he now appears remorseful after his incarceration.

“With all these in mind, and to serve as a warning to others intending to commit the crime, the convict is hereby sentenced to six months in prison.

@Businessdayng

“The sentence starts from the date Bala was first arrested and detained,” Ajoku said.

Shortly before the judgment, the defense counsel, Beauty Ekah, had prayed the court to be lenient with her client in sentencing him.

Raphael Himinkaiye, counsel to the NDLEA, had informed the court that the convict was facing a one-count charge, bordering on unlawful dealing in Indian hemp.

Himinkaiye further said that Bala committed the crime on November 14, 2019 at Aget Mining Centre in Itesiwaju local government area of Oyo State.

He said that Bala was apprehended with two white sacks containing cannabis, which weighed 13.2kg.

According to the counsel, the offence is contrary to and punishable under Section 11(C) of the NDLEA Act, Cap. N30, Laws of the Federation, 2004.

The Act prescribes a maximum of life imprisonment for anyone convicted. NAN

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BUSINESS TRAVEL IATA to strengthen cooperation on standards for intermodal travel Stories by IFEOMA OKEKE

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he International Air Transport Association (IATA) announced it signed a Memorandum of Understanding (MoU) with the International Union of Railways (UIC), to strengthen their cooperation in standard setting and interoperability initiatives, with a focus on data exchange standards supporting intermodal travel.

Under the MoU, the collaboration opportunities will be explored from the dual perspectives of existing distribution processes and standards as well as transforma-

tive retail-based “offer-order” processes and standards, typified by the New Distribution Capability and ONE Order initiatives. These activi-

ties offer significant opportunity for value-creation within intermodal partnerships.

Specific areas for dialogue and cooperation around

standards and interoperability include: Journey planning and shopping, reservations and servicing , ticketing, including irregular operations

processes; industry coding, including location codes; check-in and validation control, accounting and settlement and legal aspects “For 75 years, IATA’s mission has included supporting and facilitating the development of the commercial standards that enable the smooth and efficient operation of a globally inter-connected air transport network. As customers increasingly seek sustainable travel options, it is important that providers work together to provide seamless exchanges of passengers and passenger information.

“IATA has extensive experience in facilitating standards development to support intramodality and our

MoU with UIC is an important step toward strengthening this activity,” said Alexandre de Juniac IATA’s director general and CEO. François Davenne, UIC director general, said, “This MoU confirms the desire to really promote multimodality. Offering customers a single ticket for rail and air travel gives them the opportunity to choose the best of both worlds by optimising their journey as well as their carbon footprint.

“In addition, both IATA and UIC are currently developing tomorrow’s digital standards for ticketing applications: to work on established interfaces right from the design phase is an exciting prospect.”

PrimePort Logistics bags award at PH airport Air France, KLM, Delta and Virgin Atlantic he Federal Airports awards like this encourages us next year” Adewunmi said. launch partnership to increase destinations He further explained that Authority of Nigeria indigenous companies like

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(FAAN) has awarded PrimePort Logistics, a Port Harcourt based Logistics Company specialising in clearing & forwarding for being the best supporting indigenous company at the Port Harcourt (PH) International Airport.

According to FAAN, the award was given to PrimePort because of its unflinching support to the Port Harcourt airport.

The award which took place at PH international airport terminal was attended by stakeholders, airlines and top government officials and the Rivers State Governor in Port Harcourt.

Speaking shortly after the award ceremony, Femi Adewunmi, the founder and CEO of PrimePort Logistics appreciated FAAN for the award, stressing that

PrimePort to do better and continually strive for further recognition and success.

“One of the challenges in Nigerians is that we always have this attitude of looking for what people are not doing right, whereas we have a lot of successes we can talk about and it is very important that those success are recognised in order to induce more successes as this will be reflected in increased employment for the local indigene, PrimePort has clearly demonstrated this, since we started our operations at the airport” “PrimePort has grown its staff strength organically and continue to so, with a good percentage from the local & host communities” This award sets a new benchmark for other players at PH airport indigenous to attain, if they want to take the award from

Femi Adewunmi, MD of PrimePort Logistics receiving an award www.businessday.ng

the award makes PrimePort feel a huge sense of belonging, knowing that FAAN recognises it not only as a stakeholder but also as a customer.

He noted that the award ceremony also provides an avenue for interaction and networking with other stakeholders, which help in relationship building, not-theless its only once a year which will invariably help boost the efficiency and success at PH airport.

“This award has a lot of value. It validates our standard most especially to foreign stakeholders and potential foreign investors. It provides credibility to PrimePort especially in the area of CSR (Corporate Social Responsibility)” the CEO of PrimePort Logistics said.

Speaking about the role of FAAN as the gatekeeper of PH airport, Adewunmi said, “Back in 2014, FAAN was instrumental in validating the idea that I had in solving the huge gap in the freight forwarding process in PH airport. I approached FAAN and they coordinated all the key stakeholders at the airport including customs, security agencies, the airlines and the handling companies. FAAN stretches beyond airport operations PrimePort invested in walkie talkies and gave all the stakeholders at the cargo airport far back as 2015. Some of them are still using them till today, these are some of the contribution we made towards better operations at the airport

…Customers to earn and spend on frequent flyer points

A

ir France, KLM, D e l t a a n d V i rgin Atlantic have launched their expanded joint venture offering a greater choice of routes and loyalty options when travelling between Europe, the U.K. and North America.

The new partnership provides customers with more convenient flight schedules and a shared goal of ensuring a smooth and consistent travel experience, whichever airline they fly.

The partnership also provides the flexibility to book flights on any of the four carriers through their respective mobile apps, websites, or through travel agents.

Customers will enjoy awardwinning service, top-tier premium cabin products and complimentary food, drink and seat-back in-flight entertainment in all cabins on all trans-Atlantic flights.

Enhanced customer benefits starting from 13 February mean that loyalty programme members will be able to earn and use miles or enjoy elite benefits for flights on any of the four airlines’ worldwide operations, including a trans-Atlantic trip, intra-Europe hops, or domestic U.S. journey, offering more opportunities to quickly move through loyalty tiers and reach a higher status.

Eligible Elite loyalty programme members can also

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enjoy priority boarding and relax in over 100 airport lounges when travelling internationally.

The partnership will enable up to 341 peak daily trans-Atlantic services, covering the top 10 routes on a nonstop basis, onward connections to 238 cities in North America, 98 in continental Europe and 16 in the UK and a choice of 110 nonstop trans-Atlantic routes.

The enhanced network is also fully available to cargo customers and is built around the carriers’ hubs in Amsterdam, Atlanta, Boston, Detroit, London Heathrow, Los Angeles, Minneapolis, New York-JFK, Paris, Seattle and Salt Lake City. It creates convenient nonstop or onestop connections to every corner of North America, Europe and the U.K. Shai Weiss, Virgin Atlantic CEO said: “Customers are at the heart of this expanded joint venture with our partners Delta, Air France and KLM, where seamless connections, greater range of flights, unrivalled customer service and increased frequent flyer benefits will reinforce its position as the choice passengers most love to fly.

“One of the pillars of our strategy is successfully collaborating with our partners.

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allows us to achieve more together.”

The customer benefits effective this month are just the start with more initiatives being rolled out later this year such as the launch of more codeshare routes, aligning schedules to reduce connection times and smoothing the airport experience from check-in to baggage claim.

Customers will also soon be able to check-in and select their seat through any of the partner airline mobile apps or websites.

Ed Bastian, Delta CEO commented: “Our expanded partnership is a major step forward for all of our airlines as we deliver greater reliability, top travel benefits and leading service that our customers deserve. Today’s launch brings our historic, longstanding collaboration to a new level as we continue to build the partnership of choice across Europe and North America that sets us apart from the rest of the industry.”

“Ten years after starting our joint venture with Delta, this new agreement is a major milestone that will even further reinforce our presence on the Atlantic, by allowing our passengers the choice between four major airlines combining their network for the benefit of our customers,” Benjamin Smith, Air France-KLM Group CEO said.

Thursday 06 February 2020

BUSINESS DAY

23

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Over dependence on subsidised petrol slows down development in renewable energy Olusola Bello

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ver-dependence on subsidised oil and gas as primary energy sources has slowed down the development of renewable energy in Nigeria. Diversification to achieve a wider energy supply mix will ensure greater energy security for the nation.

The domestic demand for petroleum products is growing rapidly. More importantly, the prices of fossil-related fuel stock such as natural gas, coal, uranium, and diesel have continually grown over time, while these sources will eventually run out.

A national strategy that ties the future of energy supply to sources that may likely become too expensive or eventually run out is neither sustainable nor wise. This strategy will certainly not enhance energy security according to Federal Government on renewable energy.

In contrast, hydro, biomass, solar, and wind energy are infinitely available.

These are home-grown energy sources that cost nothing. While the capture technologies are expensive, the feed stock cost is essentially zero and operating costs are restricted to maintenance costs once the investments

are made.

In addition, improved energy efficiency yields the prospect that economic life cycle savings are greater than the costs of implementing measures.

The development of renewable fuels from locally available energy resources and an energy efficient use

Confidence in oil and gas industry growth stalls on market volatility Olusola Bello

T

he oil and gas industry enters the new decade with a full agenda as organisations across the value chain face the pressure of several evolving threats and opportunities, while navigating current market volatility.

Most of the industry must work to balance short-term tactics with decarbonisation and business transformation to ensure long-term competitiveness.

According to DVN –GL Industry Outlook 2020 Report, it says the outlook for 2019,76 per cent of senior oil and gas professionals were confident about industry growth – more than double the figure from 2017.

For 2020, however, confidence in industry growth has stalled.

DVN –GL says it latest survey – including 1,031 respondents from 78 countries – finds 66 per cent confident of industry growth in the year ahead. “This is still a strong majority, confirming the newfound resilience to lower prices and volatile markets that we reported last year. However, looking ahead to 2020, enough doubt has crept in to correct the upward trend in industry confidence”.

It stated that the story beneath this weaker optimism holds several positives for the oil and gas industry. While there is persistent uncertainty and growing complexity, the industry is also taking bold decisions, building greater effiOlusola Bello, Team lead,

ciencies, and rising to long-term challenges as the world pivots to a lower carbon energy future.

It reported that organisational confidence is steady, despite industry jitters underlining these positives is the fact that, when asked about their own organisations rather than the industry in general, respondents’ confidence had not fallen to the same extent.

Confidence in the overall prospects for their organisations in 2020 is down just four percentage points, to 70 per cent, compared with 2019.

Optimism about reaching revenue targets in 2020 is down just three points, to 66 per cent, and respondents’ confidence in reaching their own profit targets is, in fact, up two points, to 64 per cent.

Organisational confidence may be evolving – still correlated with oil and gas prices, but increasingly sustained by stronger efficiency, new business models and digital (and other technological)innovation.

Momentum is also growing behind longer-term strategies to decarbonize oil and gas production and consumption, and to diversify away from fossil fuels.

“It is a very interesting time to be in the oil and gas industry,” says Liv Hovem, CEO of DNV GL - Oil & Gas. “It is demanding intellectually because everybody is considering new directions and needs to make complex choices that have powerful impacts for the long run, while at the same time we all need to

Graphics: Joel Samson.

deliver annual results, maintain the shorter-term business, and keep the workforce focused and motivated.”

The report said oil and gas prices are no longer the most important factor influencing how confident respondents are in their organisations’ prospects.

This has been replaced by organisational strategy, which includes respondents’ current projects, planned investments, and expansion into new markets. Strategy is considerably more important to those that report higher confidence in their organizations’ overall prospects, as well as those reporting higher confidence in revenue and profit targets. This suggests that, in current conditions, a strong strategy can drive robust confidence, even in the face of considerable market uncertainty.

This is not to say there is a ‘best strategy’ for any sector of the industry; companies are profiting from a diverse range of approaches to regions, risk, costs, investment, modernization, diversification, decarbonisation and more. As Sebastian Koks Andreassen, CEO of the Scandinavia arm of INEOS Oil & Gas, part of the multinational energy and chemicals company, says: “Companies can choose a strategy and apply it successfully or unsuccessfully.

So, sometimes it is more about execution than a right or wrong strategy. We try to be very aware of the deficits and pitfalls of any given approach.”

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should therefore be vigorously pursued and that is the fundamental aim of this policy document. More evenly distributed and efficient power generation is an important consideration for the Nigerian energy sector, in terms of energy security and geopolitical balance between the North, the Central belt, and

the South of the country.

The reason is that solar, the primary and most abundant renewable resource, increases in intensity as one moves from south to north.

The rural populaces, whose needs are often basic, depend to a large extent on traditional sources of energy, mainly biomass, used on inefficient appliances. This class of fuels constitutes over 50 per cent of total energy consumption in the country.

Fuel-wood supply/demand imbalance in some parts of the country is now a real threat to the energy security of the rural communities. Efficiency in energy use bears the potential to meet demands better while reducing the consumption of scarce resources.

Electricity supply in rural areas is largely non-existent, denying access to such things as lighting and refrigeration for almost half of the nation. Hence, special attention needs to be paid to the diversification of the energy supply mix in the rural areas.

Building into this diversification strategy on effective energy platform will allow rural residents to imbibe a conservation culture as they become more energy dependent.

To meet the Nigerian vision targeting 40,000MW, generation capacity would require to be grown by 4.3GW every year. It is obvious that every energy source will need to be considered, if this target is to be met. Correspondingly, large investments will also have to be made. It is expected that these sums cannot and will not be funded directly by the Federal Government. Rather, incentives will have to be provided to the private sector and communities to partner with government in this endeavour.

The President of the Federal Republic of Nigeria, Goodluck Jonathan, in launching the Power Sector Roadmap, stated that the growth, prosperity and national security of any country are critically dependent upon the adequacy of its electricity supply industry.

How to maintain sustainable growth in Nigeria’s mining sector Olusola Bello

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s part of its efforts to ensure sustainability in the Nigerian mining sector, global law firm, Hogan Lovells, recently hosted a forum to discuss global best practices and establish solutions that can lead to sustainable growth in this sector. The symposium was chaired by Hogan Lovells Partner and Head of Africa, Andrew Skipper, during the recent UK-Africa Investment Summit in London.

During the session, it was noted that the federal government of Nigeria had embarked on several economic initiatives to make the mining industry attractive, robust and conducive for investors and operators.

These initiatives include tax incentives on equipment and practical steps to encourage export and downstream processing, which are in line with the government’s agenda of diversifying the nation’s economy.

While addressing stakeholders, Skipper highlighted the significance of gaining insights into the Nigerian mining sector, stressing the need to understand the different laws backing the industry.

He noted that there are huge opportunities in mining in Nigeria, which need to be recognised and harnessed by stakeholders. “It’s vital that there is a thorough understanding of mining legislation, including applications for and renewals of exploration rights, mining rights and permits in all of the various mining sectors,” said

Skipper.

At the summit, Nigeria’s Minister of Mines and Steel Development, Olamilekan Adegbite, explained that, because Nigeria has primarily been known as an oil and gas producer and explorer, the country’s focus for the past four decades has been on this sector. This has led to 30 years of under-development and stagnation in Nigeria’s solid minerals industry. However, the government now wants to diversify from oil and gas and revive Nigeria’s rich mining sector with attractive incentives for investors. Adegbite said, “Our approach to the enactment of a ‘Nigeria Beyond Oil’ era is holistic; this integrated method involves the development of the necessary infrastructure to support the mines and mining communities”.

African Energy Ministers storm Abuja for NIPS 2020

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op African Energy Ministers will storm the Nigeria International Petroleum Summit (NIPS) holding next week in Abuja .

The theme “Widening the integration circle: technology, knowledge, sustainability, partnership,” is quite apt considering the presence of the African Ministers at the summit.

Some of the African Energy Ministers who have confirmed their attendance include Noel Mboumba, Minister of Oil,

Gas and Hydrocarbons, Gabon; Foumakoye Gado, Minister of Petroleum, Republic of Niger; Mike Sangster, Mustapha Sanalla, Libya Minister of Petroleum and Chairman of NOC and Jean-Marc Thystere, Minister of Hydrocarbon, Republic of Congo.

“It has been our tradition from inception. We gather the best brains and key policy makers from across the continent to chart the way forward and posit strategies for the management of Africa’s huge hydrocarbon resources,” says

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James Shindi, Managing Director of Brevity Anderson, the event producer.

Also expected at the summit are H.E Mohammad Sanusi Barkindo, SecretaryGeneral, Organization of Petroleum Exporting Countries (OPEC); Mahaman Laouan Gaya, Secretary-General, African Petroleum Producers’ Organisation (APPO); Sun Xiansheng, SecretaryGeneral, International Energy Forum (IEF) amongst other reputable international stakeholders.

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Thursday 06 February 2020

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

What states’ IGR data should tell growth startups FRANK ELEANYA

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early every quarter, the National Bureau of Statistics (NBS) releases its report on internally generated revenue (IGR) by states.

The data more than any other thing is an indicator of the health of a state’s economy and therefore should get the attention of any growth startup seeking to expand.

“The amount of IGR a state makes should tell a growth startup something about the state,” Chuba Ezekwesili, co-founder and partner at Future Africa told BusinessDay. “What they do with that information from a strategic point of view is highly dependent on their intention, which might be to focus operations on an economically active environment or establish themselves physically in a business-friendly environment.”

The NBS released the IGR report for the first three quarters of 2019 on Thursday. The top five states with the least IGR for the three quarters include Yobe (N3.34 billion); Gombe (N4.24 billion); Taraba (N4.72 billion); Ebonyi (N5.64 billion) and Kebbi State (N5.9 billion).

Leading the top five best performers table are Lagos State (297 billion); Rivers State (107 billion); FCT (N55 billion); Ogun State (N52.8 billion); and Delta (N49 billion).

While Lagos as the state with the

largest IGR isn’t a surprise, it also shows why the state host the most tech hubs and start-ups as well as account for 90 percent of the total investments that have gone to Nigerian start-ups.

“There is a reason why Lagos attracts lots of startups,” Collins Onuegbu, vice chairman of Signal Alliance told BusinessDay. “The IGR numbers in Lagos is a reflection of the level of economic activity and the services that the state can accommodate.”

On the other hand, poor IGR

numbers send the wrong signal to investors.

Adedeji Olowe, CEO of Trium Networks, list some of the things that could be wrong with a state that has small IGR. “A state with poor IGR wouldn’t be well managed,” he says.

Other problems could be bad roads, high level of insecurity, no respect for the rule of law, corrupt officials (money generated is small, so they are poorly paid or delayed) and businesses would be frustrated as they would need to bribe every

How Dragonfly in Japanese culture inspired HP’s slimmest laptop FRANK ELEANYA

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ith designs in personal computers (PCs) breaking competitive barriers it is perhaps befitting that HP chose to draw its inspiration for its latest recordbreaking laptop from the Japanese dragonfly.

The dragonfly which has also inspired many poets, geishas, artists and warriors in Japan and some Asian countries, symbolises power, agility, and victory. Japan is also known as the island of Dragonfly which in Japanese is Akitsushima.

One legend has it that the mythological Emperor Jimmu ascended a mountain some 2,600 years ago and declared that Japan resembled a dragonfly.

With their iridescent wings and jewel-toned bodies, they have long been an object of fascination and may well find immortality in the recently released HP Elite Dragonfly.

At 1kg starting weight (2.2 pounds with the base 38-watt-hour battery), a mark of its Japanese ancestry, the HP Elite Dragonfly is the lightest and thinnest personal computer there is in the world.

The 2-in-1 convertible notebook has the capabilities and features that corporate customers desire, such as an ultra-silent and excellent keyboard, mil-spec durability, and

a light and stiff chassis that is easy to take on the road.

The Elite Dragonfly features the top-end 8th generation Intel Core i7-8665. You can view the full details of the Core i7-8665U on Intel’s ARK database, but in performance, you get about 200MHz higher clocks in Turbo Boost and 100MHz higher base clocks on paper “It is targeted at mobile mobility if you do a lot of work on the go, this is for you,” Adeyinka Fakunmoju, HP’s Consumer Personal Systems Category Manager for Central Africa said during the launch in Lagos. “It can fit into any bag. Screento-body refers to the proportion of your device that is covered by your screen.”

That lightweight is due to HP’s use of magnesium throughout the Dragonfly’s chassis. For better durability, HP used thicker magnesium on the lid, keyboard deck, and bottom of the machine, which allows it to withstand mil-spec drop tests without breaking.

HP offers three screen options for the Dragonfly: A 4K UHD OLED screen that hits 500 nits; a blazing 850-nit Sure View Gen 3 FHD screen that lets you switch on a privacy mode so people to your right and left would not be able to read the screen; and a power-sipping 1-watt FHD screen.

There is also enough space for

your videos, songs, and files on the 512GB capacity Intel H10 Optane Memory hybrid drive. If you love watching videos for long hours, you can loop 1080p video for 8 hours and 11 minutes on the Elite Dragonfly, which is more than you can get on the PCMark8 Home battery.

When you use it strictly for work, the battery is capable of going for 24 hours. But if the battery dies and you need to do a quick job, there is a fast charge which gets you 50 percent in 20 minutes.

It also comes in a gorgeous Iridescent Dragonfly Blue color option that simply stands out wherever you plop it down. The Pantone Blue color is very pleasant and bold for a corporate environment.

The Elite Dragonfly is also unique in that most of the raw materials (about 80 percent) used in designing it were sourced from waste products, which makes it a very sustainable piece of technology.

“Sustainability is now demanded around the world,” said Ifeyinwa Afe, managing director, HP Nigeria. “How long can this planet be sustainable? We are looking for solutions that ensure we enhance this with our products.”

The Elite Dragonfly comes with a hefty price tag of $2,169, but HP Nigeria says the first three shipments have already been sold out.

step of the way.

So any startup that wants to go to such a state needs to determine the size of the opportunity for its business in the state.

Ezekwesili also makes the important point that the IGR is but one factor and using it as a proxy for pulling the trigger could be illadvised.

He explains that the amount of IGR a state generates is highly dependent on its revenue source.

“A state like Lagos could have a high IGR that’s driven by industri-

alization or the service economy, which indicates a development pattern that’s favorable to startups.

In this case, such a state economy reveals the economic opportunity and the potential presence of a market for the startup. A state capable of building an efficient tax institution is also likely to have the capability to build out other institutions necessary to the growth of startups.

“However, this isn’t guaranteed.

In the other scenario, a South-South state could have a high IGR that’s entirely comprised of earnings from oil-related revenue, but have little in terms of actual development, which shows in a high rate of unemployment,” he said.

There are clearer metrics for startups to focus on. The metrics include the potential market that exists in a state and how businessfriendly a state is in terms of its tax rules, infrastructure, policies and quality of life for its employees.

“Sadly, we will continue to see several services offered by startups being limited to Lagos and a few other states in Nigeria; Abuja, Port Harcourt mostly,” Onuegbu said.

To be fair, states like Kaduna, Oyo and Ekiti with IGR at N28.1 billion, N20 billion, and N8.3 billion respectively, have shown promise in creating an enabling environment that accommodates small businesses. This is already paying off in the growing number of tech hubs and startups springing up in Kaduna and Ekiti.

BiCS5 3D NAND to set new standards in storage technology CALEB OJEWALE

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estern Digital Corp has announced the successful development of its fifth-generation 3D NAND technology, BiCS5, as the company aims to deliver what it describes as the industry’s most advanced flash memory technologies.

BiCS5, built on triple-level-cell (TLC) and quad-level-cell (QLC) technologies, delivers exceptional capacity, performance and reliability at a cost. This, the company says makes it ideal to address the exponential growth of data associated with connected cars, mobile devices and artificial intelligence.

The company in a statement says it has commenced initial production of BiCS5 TLC in a 512-gigabit (Gb) chip and is currently shipping consumer products built on the new technology. Production of BiCS5 in meaningful commercial volumes is expected in the second half of 2020.

BiCS5 TLC and BiCS5 QLC will be available in a range of capacities, including 1.33 terabit (Tb).

“As we move into the next decade, a new approach to 3D NAND scaling is critical to continuing to meet the demands of the rising volume and velocity of data,” said Steve Paak, senior vice president of memory technology and manufacturing at Western Digital. “Our successful production of BiCS5 is an illustration

of Western Digital’s ongoing leadership in flash memory technology and strong execution to our roadmap. By leveraging new advancements to our multi-tier memory hole technology to increase density laterally as well as adding more storage layers, we have significantly scaled the capacity and performance of our 3D NAND technology, while continuing to deliver the reliability and cost which our customers expect.”

Built utilizing a wide range of new technology and manufacturing innovations, BiCS5 is Western Digital’s highest density and most advanced 3D NAND technology to date. Second-generation multi-tier memory hole technology, improved engineering processes and other 3D NAND cell enhancements significantly increase cell array density horizontally across the wafer. These “lateral scaling” advancements in combination with 112 layers of vertical memory capability enables BiCS5 to offer up to 40 percent more bits of storage capacity per wafer compared to Western Digital’s 96-layer BiCS4 technology, while optimizing cost.

New design enhancements also accelerate performance, enabling BiCS5 to offer up to 50 percent faster I/O performance compared to BiCS4.

BiCS5 technology was developed jointly with technology and manufacturing partner Kioxia Corporation.

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

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Thursday 06 February 2020

BUSINESS DAY

25

Corporate Social Impact

Take charge of your lives!’ – Ibukun Awosika charges youths at First Bank ‘let’s talk’ Onuwa Lucky Joseph

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bukun Awosika’s story has been one of decidedly massive transformations. So, it’s understandable when she’s all up in the face of today’s young folks to put in the work for the glory they so crave.

She’s not someone I know exactly up close. We’ve never sat down to a conversation. But I used to go to her Chair Place then at Oyin Jolayemi Street, on Victoria Island, Lagos. The place was literally next door to my office back when I worked at Standard Trust Bank as Head of Corporate Communications. I had a childhood friend, now late, who worked for her. So I would, every now and then visit him at the office, particularly when I felt overcome with the unending stress from my own office.

From time to time I also would run into her at Fountain of Life church where my friend attended and where she was a pastor. I was just a few years married then. This was in the early 2000s.

Before getting married, I had been a frequent participant at the late Pastor Bimbo Odukoya’s massively attended (by everyone from every denomination) singles programme. After marriage, I still would attend from time to time because I loved Pastor Bimbo and had a few friends not yet married who still attended the programme. I had no inkling that Mrs. Awosika’s trajectory would ‘verticalize’ so dizzyingly radically and that the lady I used to know then, who favoured tight

fitting clothes, would become the conservative Chairman of First Bank, Nigeria’s very first bank.

I gave all of that background just to properly situate today’s Mrs. Awosika who is a blazing presence in the motivational talk circuit. She doesn’t do it as a job, clearly, but she does some of the best talks. She speaks from the heart; a mother’s heart, a sister’s heart, an auntie’s heart. Like all the older African women we know who absolutely detest any drop of saccharine in their verbal offerings, you will find a straight talking big sister who makes a big impression on you by not making any effort to impress you. You get what I mean…

Unsurprisingly, she was all geared up with the garb at the 3rd Edition of the First Bank Youth Empowerment series that held on December 27, 2019 at Victoria Island. With a theme like ‘Let’s Talk’, what do you expect? The young men and women were there to talk about their lives and how the bank intersecting their lives can help make it a lot more interesting and infinitely more rewarding. To help give direction for how the audience should approach their enterprising future were role models like Gbemi Olateru Olagbegi, Derin Fabikun, Tubobereni Sandrah, Alexander Sandra Ashimole, VJ Adams, Kelechi Amadi Obi, Vector, and

also Reminisce.

The Talk was focused. It was about figuring out the figures.

Even though most of the participants were from the artistic end of things they were individuals who had ventured as entrepreneurs and failed and got up and become the respected people they had become in their different areas. And as every entrepreneur knows, figures of speech don’t move business; you got to be conversant with literal figures (pun, intentional).

First Bank did a good job by appointing, for once, a motivational figure as Chairman (or Chairperson, in case some fundamentalist feminists are reading this). She sure can move people. She certainly can move young people. They had forsook music shows, family get together and all the things that attend year end festivities. These focused folks were looking at their lives for the next year and the rest of their lives. And for that, she was grateful, she told them.

She said the reason First Bank is desirous of building a nation of entrepreneurs is because only such people would go ahead to put in the diligent work that helps build a nation. How many jobs can government create? Not that many, as everyone knows. So if the participating young men and women and others of their kind not there present would do the needful, Nigeria would be brimming with jobs and lots of hopeful young men and women invested in the future of the country.

Here’s one long quote: “The

youth need to take charge of their lives by making the right decisions at any given time and avoid being vulnerable. Early enough, you must have a sense of ownership of your life. When you fail, it’s not your parents that failed.

Everything you do is essentially for you and the sense of ownership is very important. You must fight and protect it. If you do not do well, your parents will be sad, but it your future. Youths should pay attention to the decisions they make for a better future”.

Another nugget she volunteered was for the need to steer clear of arrogance; this, even as she extolled the virtue of networking, as according to her, ‘your network determines your networth’.

Gbenga Shobo, Deputy MD, representing the MD, had earlier tried to right the wrong impression in some people’s minds that First Bank is an old people’s bank.

This is ostensibly in view of its being a legacy bank that’s been around for more than a century.

She said it would surprise people to know that about 35% of the bank’s customer base is consisted of young people. Which is why according to him, the Youth Empowerment Summit is a well thought through investment to enable young Nigerians to be enterprise minded.

With her ‘extracurricular’ motivational speeches, balanced hopefully by professional discharge of duties by staff at the branches, Mrs. Awosika’s pulling power is sure to bring in even more people to sample the First Bank fare.

Why the hue and cry over Vanessa Nakate’s image crop out is valid Onuwa Lucky Joseph

I

t does look like some systematic pattern where black people are not just consigned to the background but erased altogether. That’s the powerful symbolism of Vanessa Nakate’s story. Though denied by AP, it is what it is, and might we say, what it always has been.

The saviour complex adopted wholesale by lots of not quite reflective black people is an unwholesome brew that perpetuates self-loathing and a feeling of powerlessness in the wake of challenges. And so, when actual effort is made by natives and locals, (read, Blacks), it is rarely media captured. However, negative undertakings by ‘Black Natives’ takes excessive media acreage internationally as well as in the local media.

Okay, just in case you can’t make head or tale of this rant.

It’s about the young Ugandan climate activist who went to Davos (Jan 21st – 24th) alongside Greta Thunberg, Isabelle Axelsson, Luisa Neubauer and Loukina Tille.

We, over here at BusinessDay Corporate Social Impact (CSI), had joined in championing the embryonic activism of Greta as something refreshing the world needed to prick its conscience.

The future of the world, we had argued, and this is also the foundational logic of the young lady’s activism, is too serious to be left in the hands of ageing white males (overwhelmingly) who see the world only in terms of profit and loss statements while its long term health is not considered an issue of significance.

So the girls (all girls, by the way; where are the boys! Where are the boys?!), set out for Davos to make their case. And Vanessa, an integral part of the team was left out altogether in www.businessday.ng

the media representations that came out thereafter. Her image was cropped out of the group photo and her eloquent take on the issue was not captured in the earlier reports done by AP. Yes, AP has come out to apologise and talk about ‘soulsearching’ within the organ-

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isation, as well as expanded diversity training, etc.. But the only reason we are taking about this matter is because Vanessa Nakate would not be stilled. It’s not for nothing that she is an activist. She immediately flagged the issue and followed up with a strong media campaign which @Businessdayng

drew support from thousands including her ‘leader’ Greta who chimed in with a strong solidarity message.

The issue of Nakate’s image crop out is no less significant than the climate change issue.

If we must remake the world or improve it, addressing both matters is one that must be done.

Africa, though the least involved in the human activities that activate climate change is projected to bear the brunt of the weather pattern change as droughts and floods take turn to ravage the continent. The world cannot therefore allow for the African perspective to be muffled. The world cannot afford to keep seeing the world’s salvation only in Teutonic representations. Every colour in the spectrum pushing for the salvation of mankind ought to be acknowledged.

It is important. And that’s what Nakate is teaching all of us.

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Thursday 06 February 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Peak Milk sings the Unsung Heroes to the 2020 World Para Power - Lifting World Cup ans whose story seems to be the ultimate paradox: folks considered weak by society going ahead to show the grit and strength not usually associated with their kind, and becoming in the process, heroes for many who hitherto had

Onuwa Lucky Joseph

E

very society is greater than the sum of its parts.

That seems the reasoning behind Peak Milk’s decision to pivot a substantial part of its marketing activities around the Nigerian disabled or ‘differently abled’, as some call them, Olympians; specifically the Para Powerlifting Team. Those ladies and gentlemen have brought the nation honours time and again, their haul far more than anything their able bodied counterparts can boast of.

But they have not become national stars, at least not in the way one would expect considering their monumental achievements. You won’t hear their names chanted in popular music, they don’t make cameo appearances on TV series; they are not invited to Big Brother Nigeria as guests; and they are hardly the go to team for corporate organisations and products looking for brand ambassadors. But they are as regu-

lar as everyone else and rue the missed opportunities occasioned by their disability and the perception of negative rub-off on brands they endorse.

It’s heartwarming that Peak

RIL aims to launch waste plastic product for road construction in India

Milk from FrieslandCampina WAMCO has squarely bucked the trend and is having a lot of fun doing so.

They have hitched their horse, so to speak, to the worthy cause of Nigeria’s Power lifting paralympi-

given up hope in view of what they considered their insurmountable circumstances.

Which is why the inspirational tag of the campaign ‘#Be Unstoppable’ is so apt. There are no circumstances capable of holding back a man or woman who is determined to go ahead and make

progress with their life. None. Not when they have the support of others. And that is the critical thing.

Life demands support. No one goes it alone. No one can. There is always that one critical hand lent at some point that helps even the strongest stay on their feet.

Chris Wulff-Caesar, Marketing Director, FrieslandCampina WAMCO echoes this when he said, “Peak’s #BeUnstoppable campaign is aimed at inspiring Nigerians to get up and achieve what they have set out to do regardless of what difficulties exist; and we are doing so by sharing stories of these remarkable athletes who have continued to break new grounds in spite of their physical challenges”.

Peak is counting on the paralympians doing Nigeria proud at the World para Powerlifting World Cup holding in Abuja from 5th to 7th February, 2020. At the 2019 edition which held in Lagos, they had a massive haul of42 medals (20 Gold, 15 Silver and 7 Bronze).

Peak is betting on them to do even better this time around.

At the CVL ‘Walk The Talk’ road show

RIL is in talks with state governments and local bodies across the country for offering the technology.

Rachita Prasad

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UMBAI: After building a road with bitumen mixed with shredded end-of-life plastic in Maharashtra, Reliance IndustriesNSE 0.55 % plans to commercially launch the plastic mix for road builders.

The company is advising National Highways Authority of India (NHAI) to include plastic mix in its specifications for road projects and will assist road builders in adapting to this technology which will utilise plastic waste to build stronger roads, said Vipul Shah, chief operating officer of petrochemical division at RIL. “We just completed phase one which looked at finding and endto-end solution for this. We also realised that the plastic to be used for road construction has to be a certain quality and size. We felt there was a need to launch a brand that would be guaranteed by Reliance for its quality,” Shah said.

“This can be a game-changing project both for our environment and our roads.”

India produces plastic waste of over 25,940 tonnes every day. Waste management is one of the biggest challenges for the country. RIL is already processing 200 crore used PET bottles every year and has plans to double it in the next 15-18 months.

The company launched an umbrella brand R|Elan for eco-friendly fibre made from used plastic, using green manufacturing technologies.

Typically, 8-10% of plastic is mixed in the regular bitumen mix for road construction, which makes the road stronger and water resistant.

Mixing the plastic can also result in savings of up to Rs 1,00,000 for every

one km of road, 3.5 metres wide, as compared with a pure bitumen road, RIL said. While the government has been talking about adapting to this technology, it is yet to be included in tender specifications.

“These are early days but we will get to the scale that is needed. The advantage of someone like us getting into it is that our pan India reach, in every state and municipality, is so high that we can get the right legislation installed in a proper way so that not just reliance but multiple companies that take on this project,” Shah said.

The company did not share any details of the capacity, potential revenue and investments related to this business.

“We have not yet worked out the financial of this project but in the long term any projects on sustainability and circular economy have to be financially viable,” Shah said.

RIL, as a part of its sustainability and circularity initiatives, has built 40-kilometer roads by using 50 tonnes post-consumer plastics as a key ingredient at its Nagothane Manufacturing Division.

The plastics used in the construction includes end-of-life post-consumer plastics, such as multi-layer films used for packaging of wafers, snacks, flimsy polyethylene plastic bags, flexible polyethylene packaging materials used by e-commerce companies, garbage bags, cling wraps and other flexible plastic products.

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he Centre for Values in Leadership (CVL) organised the 3rd edition of its Walk the Talk programme on January 17th, 2020. This year’s theme was Accountability in Good Governance. The project is aimed at ensuring that political office holders provide basic amenities to the electorate in view of the promises they made during their campaign for the respective offices.

This is in keeping with its mandate to ensure sustainable leadership, good citizenship, and governance in Nigeria.

This year’s edition took off at the CVL Building, 6, Balarabe Musa Crescent, Victoria Island, Lagos at 7am prompt, starting with aerobics and the walk all the way

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from the CVL Building (with music, street interactions and discussions), through Ozumba Mbadiwe to Silverbird Cinemas where they watched a movie on nation building cum governance.

Amongst those present were members of the Nigerian Law Stud e n t s A s s o c i a t i o n , of the clergy and some industry leadLeaders of civil society ers. Prof Pat Utomi, founder of CVL, organisations, members ably anchored the day’s proceedings. @Businessdayng

Thursday 06 February 2020

BUSINESS DAY

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Garden City Business Digest Belemaoil stirs souls in Kalabari and Niger Delta • Donates duplex and music house to Tamunoemi Gold, surviving member of Jim Rex Lawson band • Golden moment for Tam Gold Ignatius Chukwu

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Introduction elemaoil and its founder/president may have been touching lives all these months but last weekend, the duo did not know they went far beyond that to touch souls in the entire Kalabari land and the Niger Delta. There is evidence to this.

The king and Amanyanabo of Kalabari land does not easily accept to be part of let alone chair an occasion. And, the Edi-Abali 1 of Niger Delta, Asari Dokubo, hardly shows up at most events.

These two men did what they hardly did. This showed that the soul of the region was stirred to the last degree. Almost every relevant monarch in Kalabari land showed up. Men almost cried, women wriggled their waists decked in the best traditional and regal attires.

Rex Lawson himself must be stirring in his graves as his last boy, now an aging man, was being raised and toasted for the entire world to see. Tamunoemi Gold, who was tagging along the master in those days, was the toast of the region.

He was being ushered into a mansion and a music house built, equipped and furnished for him by a son of Kalabari. It was a celebration of a cultural music icon and the hoisting

Commissioning of Tamunoemi Gold Music House in Buguma, Rivers State donated by the Belemaoil JV in Collaboration with the Jack-Rich Tein Aid Foundation and Belema Aid Foundation

of the hand of a Kalabari son that has emerged as Nigeria’s biggest philanthropist, and man who mixes giving and doing business without minding costs. It was double victory for the Kalabari people and the entire Niger Delta. From their tones, one could easily deduce vows to stand by and defend their son and his oil empire.

Details A 74-year old music legend, Tamunoemi Gold, who is a surviving member of the iconic Jim Rex Lawson Music Band, is now a beneficiary of a 5-Bedroom Duplex, a music house and instruments in Buguma, AsariToru Local Government Area of Rivers State.

The gesture is said to be an empowerment initiative by the Belemaoil Joint Venture in collaboration with the JackRich Tein Aid Foundation and Belema Aid Foundation for the

advancement of music, arts and culture in the Niger Delta.

The King and Amanyanabo of Kalabari Kingdom, T.J.T Princewill, represented by his secretary, Alabo Prince Dateme, who commissioned the building, said the kingdom is pleased with the donor who is an illustrious son of Kalabari Kingdom, Tein Jack-Rich, an engineer, for identifying and encouraging what he described as a rare musical talent of Gold.

The Managing Director of the company, Pedro Diaz, represented by the General Manager, Geo-solutions, Sunday Akpaduado, during the commissioning of the building in Buguma on 28th January 2020, said the gesture was an act of magnanimity by the Founder and President of Belemaoil which coincided with his birthday.

He said the company is

committed in making visible footprint in its areas of operation.

According to Akpaduado; “Today is a very important day to all of us in Belemaoil and I believe, to many people here in Kalabari and other people in Rivers State. There are many significant people that have risen from this Kingdom, then came our Tein. Some of our projects are all over the place.

We want our identity to be in all the rural communities where we dwell, where we make our money, that is the idea and I believe”.

For his part, the Manager, External Relations, Belemaoil, Samuel Abel-Jumbo, said the gesture is in recognition of the impact of the beneficiary in music, arts and culture in Kalabari Kingdom, Niger Delta, and the country at large. “Belemaoil has a Founder/President who is very desirous in empowering humanity. Like they used to say that charity begins at home, the Founder/President of Belemaoil, Tein Jack-Rich, has started this demonstration from his home, from his kingdom, Kalabari Kingdom, from Rivers State.”

Also, speaking, prominent Niger Delta leader, Asari Dokubo, commended Belemaoil for giving the beneficiary a new lease of life by recognizing his impact in the music and culture of Kalabari Kingdom. “For me, this is one of the greatest oppor-

tunities that have been given.

Gold has been resurrected, he was dead. If your brother is doing the right thing, you have to praise him. I feel like crying because I know Gold. He is my cousin and lifting him out, lifting him up, is something that should enliven and excite everyone of us. Belemaoil should continue to set the pace for our people”.

For the Chairman, Interim Committee of Performing Musicians Association of Nigeria (PMAN), Rivers State Chapter, Arthur Pepple Jnr, the gesture is the first of its kind.

The music legend and beneficiary, Gold, who thrilled guests at the occasion with his musical performance, expressed gratitude to the Founder and President of Belemaoil, JackRich, saying it would prolong his life. “I’m the happiest man

Tamunoemi Gold Music House in Buguma City, Rivers State donated by the Belemaoil JV in Collaboration with the JackRich Tein Aid Foundation and Belema Aid Foundation

today in this world. I am 74 today and for me to have a building of my own especially with musical instrument means a lot. I have nothing more to say but I give Ten Jack-Rich to the control and guide of Almighty God and I pray to God to prolong his life more than mine.”

In his own remarks, the Amanyanabo of Kula Kingdom and Chairman, Kula Supreme Council of Traditional Rulers, Kroma Eleki, (JP), the Sara XIV, commended the Founder/ President of Belemaoil Producing Limited for resuscitating the ailing Akaso Cultural Society (ACS) of Kalabari Kingdom.

He said the donation of the Musical House to the Kalabari music legend Tamunoemi Gold would do much to promote ACS. For his part, The Amanyanabo of Twon-Brass and former Governor old Rivers State, the king, Alfred Diete Spiff, who was represented by the prince, Iwefa Aganaba, described music as a veritable tool for economic growth. He called it priceless.

Other dignitaries who graced the occasion include Paramount Ruler and head of Belema Community, the king, Bourdillon Ekine, Publicity Secretary of the Pan Niger Delta Forum, PANDEF, His Highness, Anabs Sara-Igbe, President of the National Youth Council of Nigeria, Sukubo Sara-Igbe Sukubo amongst others.

Help, the hardest currency in destiny?

• And the mystery of help Port Harcourt

by Boat

IGNATIUS CHUKWU

H

ow is it said that Help is the hardest currency in Destiny. Is help a form of being? Is there anything the mystery of help and how may we understand it? Dotun Olusanjo, a very senior pastor, in fact a zonal pastor in Redeem in Port Harcourt, tried hard to explain these concepts on the first day of February, 2020.

Every sovereign clime both in the physical and spiritual realm is jurisdictional entity and is thus ruled by concepts and divine templates.

Each has its own currency to enable transactions be conducted. So, Destiny is a sovereign entity and thus has its own currency. It is called Help. He defined help as timely assistance. He called it unsolicited favour. Help is so important a commodity that it has qualities such as timeliness and completeness. Thus, Help is what you cannot do for yourself but someone does it for you.

He spoke as special guest at the Redemption

Model Hall of the RCCG in Elelenwo, Port Harcourt. As far as Dotun is concerned, Help (as a currency) is needed in the journey of destiny.

There is no one that prepares to travel abroad that does not look for the currency of that country or some international currency, the Dollar.

As a currency therefore, Help is the only thing that takes a man to his destiny. It is that which flows between a man and his destiny or that stands between a man and his ambition. Just as most things any ma would need to procure or pay for on his normal journey is money, so is help the thing that would be needed as one strives along the pathway to his destiny. The absence of this currency often leads to aborted destiny.

Heavenly personalities too demand and get help. Many prophets received help to overcome and accomplish their destinies. A prophet received divine help to outrun the chariot of the king. David received divine help to overcome Goliath.

It is thus that even to this day, no man up there that was not helped. That is why many politicians have godfathers. Every man needs help. Even Jesus received help when Simeon Cyrene helped him carry his cross. The stone on the tomb of Jesus was rolled away. The angel sat on it so it does not get rolled back. That is help.

Help is about somebody carrying your cross.

Most times, help comes in half measure and may not deliver the objective. There also is help. If someone is drowning and needs help, if it comes soon after the victim is dead, the help came but is of no use.

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That is why help sometimes needs desperation. So, many have to cry for help. From the bible times to this day, many have cried and received heavenly intervention. Life would be dastardly and fractious with the currency called Help.

Thus, God makes men help someone.

God also helps you directly. There is a story of a woman who so much wanted a job and prayed and prayed. One day, she got a job and thanked God, but wait, she had no dime to prosecute the job for one month to get paid. From nowhere, one man showed up and promised to be taking her to and bring her from work everyday. This went on for one month. The moment she got her pay and waited for the man to show up so she could show appreciation, the man never showed up to this day. Then, she realized

Dotun Olusanjo

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it was an angel.

There are two major theories of help or two major conditions that help people to get help.

People must imbibe the lifestyle of help so that the store of Help would always enlarge. At love feats, everybody brings food, and the result is that there is so much to eat and spare. That is how the lifestyle of giving will create a world full of what to give.

The next theory is to give the Giver. This leads Christians and many other religious adherents to the support for the work of God. God is the Great Giver, the one that gives even the life we live, but He has a field on earth called the Church of God. In it, there is plenty of vacant slots needing help. Help God’s work, then, so said the pastor.

The message is that god can do all things for Himself, but he gives man the opportunity to exercise the attitude of Help so as to qualify for His own Help. After all, nothing ever that one gives that he did not first of all receive.

But, Help would not have been the hardest currency in Destiny if man were to be really wise. It is hard because people do their best to dodge helping, but they do their best to receive help. Whatever that everybody wants to get but everybody tries not to give is hard.

So, as the second month signifies breaking forth, it is required for men to explode and help to get help. It is called give help, get help. This is the true one. So, first month is gone, February is here. Those who want to fly should cry for help and Help. In doing so, sow help so you reap Help.

@Businessdayng

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Thursday 06 February 2020

BUSINESS DAY

Investing in Rivers State Local tractor manufacturers cry for role in Nigeria’s $1.1bn tractor revolution deal with Brazil • Recalls local content rule that wants action to start from local to foreign players • Say thousands of foreign tractors dumped on Nigeria soil have since evaporated • Say local manufacturers like Bobtrack have local products that suit the environment Ignatius Chukwu

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ocal tractor manufacturers have cried for role in the proposed $1.1Bn Green Imperative scheme between Nigeria and Brazil which would lead to importation or assembling of over 10,000 tractors from Brazil. The Nigerian investors and producers warned that if the local manufacturers are not integrated into the Green Imperative, the scheme would definitely turn brown by running into hitches as previous schemes did.

Ibifiri Bobmanul, the CEO of Bobtrack Nigeria Limited, one of the local manufacturers, told BusinessDay in an exclusive interview in Port Harcourt that if local players are not involved, failure would still greet Nigeria in few years to come. He explained, saying if spares and other accessories are not readily available, the tractors would become idle and perish thereafter.

He urged the planners of the scheme which he described as laudable to broaden the scope for local players to come in, saying they would come in with local expertise to help the scheme. “Let the local players be part of the tractor to be acquired.”

Other investors said most investors followed the body language of the President Muhammadu Buhari administration to invest in tractor manufacturing industry because the gap was there. The government allegedly encouraged them with assurances of expanded markets.

They say they do expected the FG to work with local investors and manufacturers before bringing foreign products if there is any gap to fill.

On this, Bobmanuel pointed to the Nigerian Content regulation and executive order that stipulated that such schemes must satisfy certain clauses which insist that attention must start with Nigerian manufacturers. “The reason why Africa fails repeatedly is because we forget the home solution in anything we want to do. We do not start any scheme from what we have and bring in what we do not have. Instead, we

Ibifiri Bobmanuel

create a brand new scheme and dump it on the local resources and kill the local effort. When the foreign one crashes, the economy would have none of both.’

For instance, he said, a FG agency once brought in 500 tractors. “Ask for them now and you will find that these tractors have evaporated. This is because only 4-wheel tractors can survive in Nigeria, not 2-wheel ones which the FG agency flooded Nigeria with. We must understand that climates are not the same. Bobtrack has over $50m investment facility which runs in three phases’.

Saying the local manufacturers were not against the Green Imperative scheme of the FG, said it is good, at least it shows that the government is thinking in the direction of agric mechanization, which he said is large. “Nigeria as a giant of Africa needs to move in that action.

So, the action is a big leap.”

As he stated, for an investor with over $50m, it would be good for the FG to look inward. “It is good to make the local players to participate shoulder to shoulder with foreign players. Some local players are strong and even export products to foreign countries. Bobtrack tractors are found as far as Dubai. We did over four years research around the world to come up with tractors and processes that can work in Nigeria.

So, we say, involve local investors.

“Government must know that foreign tractors are not suitable for Nigerian soil. That’s why Nigeria has endless tractors everywhere that are no more in use. In Bobtrack, we

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have a range of tractors that suit the Nigerian environment; 60, 80, 100, and 120 horse power categories.

Our market presence is increasing everyday. Farming now is with fun.

Some have factory-fitted air-conditioners. You can be in your tractor for hours. The 120 HP are special with a mapping devise. It uses GPS to map the farm area and charge or to manage co-ownership. This way, two or more persons can buy one and use the devise to manage their jobs and income. Many Middle East countries no longer have land, so Africa is the next target.

“Saudi Arabia today co-owns farms in Africa with Egypt and the likes, Africa with over 60 per cent global arable land space, it is key for us to maximize and patronize home grown solutions to our agricultural challenges through our local content laws.

Such companies that have proven tracks records should be given an opportunity to contribute their vast technological knowledge of the farming challenges.

“This loan scheme may be good but implementation may be fraught with potholes. We want the FG to

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implement it in such a way that local companies playing in that space will grow organically. Let the scheme be sustainable. O not destroy existing technology, investment and efforts; and wipe off the labour force already groomed around this industry. Play the balancing act by dedicating a percentage of the fund to boosting the existing tractor producers.

“Everybody is talking about the upstream aspect of the scheme or loan. The moment the foreign firms dump the tractors on Nigerians, they go. The sustainability and recycling of the tractors and the fund would not be anybody’s problem anymore. That is why we are calling for organic growth from this scheme.

“In our recognition of the sincere efforts of the federal government it should not be at the disadvantage of the only indigenous tractor manufacturing industry rather it should be an opportunity to consolidate and expand existing capabilities readily available in country. We must always understand that our problems require home grown solutions.”

@Businessdayng

Green Imperative Nigerian government last October (2019) said it would take $1.1 billion loan from the Brazilian government to boost the agricultural sector and provide five million jobs.

This, the government said, would be done through ‘The Green Imperative’ - a Brazil – Nigeria bilateral project conceived to enhance the agricultural sector through the provision of modern machinery tools.

According to the government, the partnership also includes 10,000 tractors to be assembled in Nigeria, more than 707 centres to be established to train not less than 10,000 Nigerians.

Yemi Osinbajo, Nigeria’s vice president, who launched the project in Abuja, said the ‘Green Imperative’ is aimed at boosting agricultural production in Nigeria.

Osinbajo described the project as “signature focused”, noting that “We cannot bring our nation out of poverty without investment in agriculture. Also, the sheer number of young people coming of age will not only need to be fed but employed. They want dignified jobs with decent pay.”

The Brazilian Ambassador to Nigeria, Ricardo Guerra de Araujo, explained that Brazil would inject the $1.1Bn into Nigeria’s agriculture, telling NAN that an agreement between Brazil and Nigeria on the matter was being concluded.

According to him, Brazil would help to transform Nigeria’s agriculture with the fund by establishing a tractor assembly plant in Bauchi State. He said that sustainable use of tractors and modern technology for farming in Nigeria would boost productivity.

He added that mechanised agriculture would enhance value addition, food systems development and other opportunities for farmers. The ambassador told NAN that mechanisation of agriculture would reduce hard labour and labour shortages and improve the timeliness of agriculture operations.

“It will also keep the youth busy because they will be employed, and create development in the area where the plant is established,” he said.

He said that the package proposed by Nigeria’s Ministry of Agriculture and Rural Development would move Nigeria’s agriculture sector forward.

The ambassador said that the project to be financed by the Brazilian Exim-Bank would come in three phases while the Central Bank of Nigeria would make available concessional resources through local banks.

According to the envoy, the proposed term of financing is 13 years including 10 years of repayment and two years of grace.

Thursday 06 February 2020

BUSINESS DAY

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LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Mentors have been influential in my life thus far - Mayowa Abiru …Says internship at Africa Finance Corporation (AFC), most impactful

In this edition, we bring excerpts of our interview with Mayowa Abiru, best graduating student of the Nigerian law school, 2018/2019, who bagged 11 awards at the Call to Bar ceremony held in November 2019. He speaks about life after call; his future in the legal profession; mentoring; disruptions in the legal industry among other things.

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tionships dear to myself till today.

I noted that my internship at AFC was one of the most impactful because I became enamored with the work they do there. They are primarily an investment bank with the mission to remedy the great infrastructure deficit in Africa by funding infrastructure projects for the development of African nations. The work they do impacts so many lives and was really something that felt good to be part of. They are an internationally oriented organization with an amazing structure and they truly employ some of the brightest minds I have ever come across.

I think it was also an enjoyable internship because they actually had a plan for the interns from the onset. This is unlike some places where you intern, and you might find that there is really no plan for your internship and the organization just assigns you any mundane task they come across.

ongratulations on your outstanding performance in law school. So, what has life been like since your call to Bar? Well, life has been good – God has been very kind to me and I am extremely grateful. I was quite busy in the weeks after my call to bar, I did a number of interviews and had a few meetings with some notable individuals who were kind enough to give me words of advice and much goodwill in my future endeavors. I also met with a number of law firms to discuss my immediate future in the legal profession, that was the process that culminated in me deciding to take up employment in a law firm.

Did you always plan to work in a law firm?

No, I did not intentionally plan to work in a law firm for my NYSC year. I have always been fascinated by the idea of combining my law with finance and seeing as I just completed six years of legal training, I was eager for some finance experience, at least for the duration of my NYSC year. This was to enable me experience finance first hand, acquire skills and truly decide if law and finance was the direction I wanted to follow. However, as fate would have it, I have decided to take up employment in a law firm for my NYSC year, and I still believe I will be afforded the opportunity to experience finance law in the course of my new role. I accepted an offer from Olaniwun Ajay LP. I am also fortunate, because my parents are quite understanding and very supportive, and as such, even if I had decided not to work in a law firm, they would have still been in support of what I decided to do.

Of the many firms that must have approached you, what informed your decision to go with Olaniwun Ajayi?

A number of factors, I would say are responsible for my decision and I will briefly elaborate on them. First, Olaniwun Ajayi is a top tier law firm in Nigeria and a firm with international renown. They have a well-established practice and can easily boast of having some of the brightest minds in the legal profession in their employ.

Olaniwun Ajayi LP is a firm of professionals and a solid training ground for an aspiring professional like myself.

Also, I had numerous consultations with some of my mentors and confidants, some of them within the legal profession, and others who are well established

professionals in their own industries. We all assessed and came to a conclusion that Olaniwun Ajayi LP would likely be the best fit for me at the moment.

Finally, I might add that Professor Konyinsola Ajayi SAN, was one of my lecturers back in university.

He taught me banking in my 4th year and he is someone I have always respected and admired from afar. I guess the opportunity to work with someone of that caliber also went quite some way in influencing my decision.

You mentioned the role mentors played in helping you reach a decision regarding where to do your youth service. What role would you say mentors have played in your successes so far?

Mentors have been very influential in my life thus far. One I always like to mention is Prof. Deji Olanrewaju, my Dean at Babcock University who has always been a strong pillar of support. He was my lecturer, project supervisor and dean, at different points in my undergraduate years, and his influence in my life cannot be overemphasized. I became a Chartered Secretary and Administrator at the young age of twenty years old, and this was because he challenged me to take those exams and assured me that I had the wit to perform well. He was also one of the people

who believed I would make a first class in Law School.

Other mentors include my family members – my mother who is my strongest pillar of support, my father who is a former bank director and Chief Compliance Officer, my uncles who include – a bank managing director, a Justice of the Court of Appeal and many others.

I have always been surrounded by achievers, and this in itself, is an inspiration to achieve.

Clearly, mentorship plays an important role in achieving success. What advice would you give your peers regarding building a successful mentor-mentee relationship?

That is a good question – I would definitely say that, the mentormentee relationship has to be an organic one, it is not a relationship you can force into existence. Many people do not want to be asked “Can you be my mentor?” – I do not believe that is the best way to go about it. If you admire someone and you want to make the person a mentor, I believe that a better approach is to draw closer to the person and show the person the quality of your work. It is your mentor that will choose you, based on the qualities that they have been able to identify in you.

In recent times, many stu-

dents undertake internships while in school. Did you undertake any, and if so how did they impact you?

Yes, I did, I was fortunate to have interned in a number of places during my undergraduate years.

I interned at law firms like – Babalakin & Co., Perchstone & Graeys and Jackson, Etti & Edu. I also interned in non-legal organizations like MainOne Cable company and Africa Finance Corporation.

When I began to intern in my 2nd year, I went the traditional route of always interning at law firms, as I was a law student seeking to have a peek into the realities of life after law school, however, as I grew older, I deviated a bit from that approach, and tried to acquire other experiences aside law, that could possibly influence the area in which I would love to practice my law. My internship at Africa Finance Corporation was one of the most impactful internships I ever did, and I think that was probably when I began to toy with the idea of doing law and finance in future.

Internships generally exposed me to the practical aspects of what I was being taught in school. They helped me glean an insight into what life is like in the workplace, and how the corporate world works. I also built meaningful relationships at every single place I interned, and I hold those rela-

Your comment on the impactful nature of your work with AFC is one that is typically associated with Millennials. Research indicates that most Millennials and Gen Zs seek meaningful and impactful work. Whilst this is a positive attribute, there are so many negative stereotypes about Millennials being difficult to manage in the workplace. What are your views on this?

That is a very thoughtful question, the answer to which could probably fill up many pages. However, let me say this – I think the tussle between the new generation and the older generation is sometimes centered on the manner of doing things. The traditional approach that the older generation has become used to, is constantly being disrupted and challenged by the younger generation, and as such, you have a conflict between two sides that are both seeking to advance their own ideologies.

As a result of the above, while I agree that there are a number of negative stereotypes surrounding millennials in the workplace, I don’t necessarily believe those stereotypes to be true. Like I said, it is a conflict between two different methods of doing things. The older generation believe the millennials are too forward, the millennials believe the older generation are too rigid. Technology has played such a great role in shaping the mindset of my generation, and as such, we are more aware than ever, of developments all over the world. We know what is obtainable Continues on page 31

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Thursday 06 February 2020

BUSINESS DAY

IN-HOUSE

BD

LegalBusiness

Akpata calls for more recognition for in-house counsel

Olumide Akpata, immediate past Chairman of the NBA-SBL Section on Business Law during the General Counsel (GC) connect in Lagos themed, “GC’s Path to Corporate Leadership”

L-R; Immediate Chair, Olumide Akpata, current chairman, Seni Adio, SAN and NBA-SBL Administrator, Endurance Uhumuavbi

Members of NBA-SBL Council with the Section’s in-house members.

Immediate past chairman of the NBA-SBL, Olumide Akpata, flanked by members of the corporate counsel commitee during the General Counsel (GC) connect in Lagos themed, “GC’s Path to Corporate Leadership”

THEODORA KIO-LAWSON

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he immediate past chairman of the Nigerian Bar Association Section of Business Law (NBA-SBL) Olumide Akpata has congratulated the current Council of the Section, led by Chairman Seni Adio, SAN, on the phenomenal growth so far recorded by the Corporate Counsel Committee of the NBA-SBL.

Akpata made this commendation while delivering a Goodwill Message at GC Connect- a Cocktail event’ organised by the Corporate Counsel Committee of the NBA-SBL, held on Thursday, 30th January, 2020 in Victoria Island Lagos.

The Corporate Counsel Committee of the NBA-SBL since the tenure of Akpata as chairman of the Section has made very significant strides through the provision of diwww.businessday.ng

verse platforms for the continued professional development of in-house lawyers.

Speaking at the event, Akpata explained that the idea behind the establishment of the Committee was borne out of the need to ensure that the interests of in-house Counsel, who are a very important segment of the legal profession, are adequately catered for by the Section and indeed the NBA noting that their contribution to the profession cannot

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be over emphasized and ought to be duly recognized.

He went on to state that “those at the helm of affairs in our profession must understand that it consists of many component parts which are of equal importance and those who make up these component parts of the profession, including in-house Counsel, must be duly considered and carried along when decisions affecting the profession are being made.” @Businessdayng

Recognising the crucial role of the Corporate Counsel to the development of the law, enhancement of legal practice and the formulation of business policies, the Council of the Nigerian Bar Association Section on Business law (NBASBL) has continued forge a strong partnership with its inhouse/general counsel members. In turn, the NBA-SBL Corporate Counsel Forum works with ‘Council’ to engage with regulators and policymakers.

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BUSINESS DAY

INDUSTRYFILE

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LEGALBUSINESS celebrates one of Nigeria’s leading law firms, Banwo & Ighodalo as it marks 29 years of excellence and providing innovative legal solutions.

We wish you more remarkable years ahead.

Congratulations!

Mentors have been influential...

Continued from page 29

in more advanced societies and we strive to replicate same in our own society – this will often conflict with the traditional methods of our older generation.

Millennials are kicking against “traditional thinking” and the traditional ways of doing things.

We do not believe that “suffering” is equivalent to “hard work”, we believe that if there is a smarter, easier way to get things done, we would rather go that route and work smarter. We are seeking innovative ways to advance our society, and trying to show that, any society that desires development, must be ready to accept “change” as a pre-requisite to development.

As they always say, “it is insanity to do the same thing, the same way forever and expect a different result”. We have clearly been doing things the same way for a long time in Nigeria, and I truly wonder if any of us are satisfied with the results currently on ground.

The older generation inherited a better Nigeria than the one they are giving to us, and yet, they are often quick to say that we are the problem.

That being said, I try not to look at any issue from one angle. I admit that there are flaws on both sides of the conflict. The younger generation can often be quite radical in their approach and seek to effect change in a rash manner, without necessarily doing the research, due diligence and having the proper manner of approach to effect these changes. Regardless, change is required for progress, and the sooner we all accept that – the sooner we will develop as a people.

You are 22 years old and so actually straddle 2 generations. What would you say are the key factors younger Millenials and those in Generation Z are who looking for in the workplace.

In my own opinion, I would say that some of the important things that people in my generation look for in a workplace are as follows: Fulfilment, Growth, Professional-

ism, Adequate remuneration and to feel valued. We want to work and find joy in the work that we do.

We want to be allowed to grow and progress up the corporate ladder at a natural pace that rewards the efforts we put in. We want to work in a professional environment free of harassment and not be subject to the whims or emotional idiosyncrasies of our superiors. We want to be paid wages that reflect the situation of the larger economy and that are humane. We want to be valued as an asset to the organization and be treated as though we matter. I think that should sum it up to some extent.

Based on your interactions with your peers, which would you say is the preference for most young lawyers; working in a law firm or as in-house counsel?

I think this largely depends on the career goals of the individual, their passion and their reality.

Although, I would say that more people desire to start out in a law firm, in the early years of their legal career so as to be properly trained and grounded in the profession, before eventually moving in-house or doing something else.

Not a lot of people desire to specialize immediately after leaving law school, and indeed – I do not think that it is the more popular approach.

However, also because the reality is that, not everyone will get into a top law firm immediately, and employment is not something that is so easy to come across, many of my peers will often decide what course to pursue based on the realities available to them and the options they have, preference might not necessarily take precedence over necessity at that point. A lot of young lawyers may “prefer” to play at the highest level of the legal profession and work in the biggest law firms, but the reality is that, many might not get that chance, and as such will have to make alternative arrangements.

So therefore, it might sometimes seem like, those who don’t get offers from the top law firms, might decide to go in-house.

So, what would you say this pattern means for medium and small sized law firms?

I think that employers in Nigeria are uniquely advantaged as a result of the high unemployment rate in the country. You have so many qualified applicants for very few positions, and as such, many employers are spoiled for choice in picking the very best. Some of my peers recently went for a job interview at a law firm in Lekki wherein about fifty applicants were invited for an interview for only three positions. In this kind of unfortunate situation, wherein a small law firm can have such sway over job seeking youths, I think the medium and small sized law firms are very fortunate in that, they still get to employ many brilliant young people, simply because of the general state of unemployment.

Let’s take this back to Law School. Did you set out to be the overall best student?

Truthfully, I did not originally have such lofty ambitions. I originally set out to attain a first-class grade and make my parents proud.

However, like I’ve said before, my ambitions kept growing over the course of the year in law school.

The better I would perform in a snap test or in a task, the more my self-belief and confidence would increase. At a point, I started to dream of winning only one prize in addition to my first class degree, and I worked very hard at it – funny enough, I always thought it would be property law practice that I would eventually win a prize in, I wanted to win that for my mentor Prof. Deji Olanrewaju. Eventually, I came first overall in Lagos in our campus snap tests, and I guess from there, I was free to dream as wildly as my imagination could conceive.

What specific steps did you take to achieve your initial goal of achieving a first class?

The truth is, I just took my studies very seriously. I was ready to do everything within my power to work towards my goal of attain-

ing a first class. I can’t tell you that I attained this feat because I went to class and read my books, everyone did that – I think I was just extremely devoted to my goal, my focus was near 100%. I also committed all my efforts to God’s hands from the beginning because I knew I could not do it alone.

I was in the Lagos Campus, and anyone that attended law school in Lagos Campus will tell you, it is impossible to do everything that you are instructed to do. The standard in Lagos is so high, and the demands on you as a student can be a bit overwhelming, so even for me, I was never able to complete every assignment or every reading or every practice test – I would just say that I did as much as I could. I worked very hard and I started very early, I never procrastinated. I think hard work, discipline and consistency, summarize my law school efforts.

“Hard work” because the actual work is not easy, and there is a lot to cover in a short period of time.

“Discipline” because I still maintained a social life in law school, so I had to balance that alongside my studies. “Consistency” or maybe I should say “Perseverance” because there were so many times I wanted to give up – so many times my body would not want to open that book or pick up that pen, but I had to remember why I was doing it and force myself to do the work that had to be done.

You said in one of your interviews, that good grades do not necessarily dictate who you are. Can you expand a bit on this?

Well, the context in which I made that statement, was a reflection on the situation in my university and many Nigerian universities where deserving students are not necessarily always awarded a first class. You have so many brilliant students across Nigeria who never made a first class in university simply because the university did not want them to, not because they did not merit same, and not because they were unqualified. So in this sense, I meant that, the fact that someone did not make a first class,

or a certain grade, is not always an accurate reflection of the person’s capabilities – people should still be given a chance (particularly by employers and recruiters), to show that they can perform better than the grades they were awarded in school. I made a second class upper in university, but I went to law school and gave myself a chance, I had to prove a point.

What advice do you have for anyone reading this interview, and hoping to be like Mayowa Abiru?

There is a quote that I keep repeating and if I am not careful, people will start to think I am the originator of the quote (laughs).

The quote is this – “Discipline, not desire, will determine your destiny”. It is not enough to want success, or hope for success, and yet still do things in a leisurely manner. Imagine that the amount of effort you put into your craft will directly translate to the amount of success you will have, I bet you, more people would work harder.

There is no long advice, you just need to be disciplined and work hard, be focused and prepare to sacrifice some pleasures and relaxation to achieve your dreams.

Work hard and strive to maintain a relationship with God, it goes a long way.

MAYOWA ABIRU graduated with a first class from the Nigerian law school in 2018-2019. He was the best graduating student of the year and won 11 awards at the Call to Bar ceremony held in November 2019. The awards include; the Justice J.O Shofolahan prize for the best student in corporate law practice, the Boinime Jackson Lott Foundation prize for the best student of the year, the Director General’s prize for first class students and the Council of Legal Education Star prize. While still in his 4th year in the university, Mayowa enrolled for the Institute of Chartered Secretaries and Administrators of Nigeria exam and was inducted as a certified member of the Institute in 2019.

Mayowa is a graduate of Babcock University, where he graduated with a second class upper degree.

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LegalBusiness

Fallouts: Towards Optimal Management Contract Relationships in the Entertainment Industry (1) Titilade Adelekun Ilesanmi

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hilst the entertainment industry comprises of individuals using their creative skills, abilities and contents for wealth and job creation; its management is running the affairs and careers of such individuals to ensure full optimisation of opportunities.

The benefits of having a manager in any industry or organisation is indisputable: properly utilised, they help to run the day to day activities of the entity/individual, thus improving productivity. Imagine an artiste having to manage his own publicity, social media, calls, messages/email etc.; this will distract him from focusing on his ‘real’ job which is either making music, movies, writing, painting etc. From an opportunity cost of time point of view, such ‘a jack of all trades’ approach is inefficient.

Having a manager also adds credibility to an artiste’s career as they help bargain best deals, opportunities and give valuable advice on career decisions.

The relationship between a manager and his client/artiste could be very deep and personal, hence it is advantageous if steered along positive paths (leading to mutual benefits and long lasting friendships) rather than other-

wise, which can result in economic losses and career and/or personal setbacks. For instance Jenn Rosales, Rihanna’s manager, also popularly referred to as her right hand woman, has been with Rihanna since 2007, at the early stages of her career. As some other examples has however shown, management relationships could be fraught with disputes, involving conflicts of interest, accounting, breach of trust and fiduciary duty etc., often culminating in the end of such relationships.

This article highlights roots of failed management relationships and proffers solutions through well crated, water tight management agreements, under various subheadings below.

Common Roots of Failed Management Relationships Breach and Forestalling Breach

of Fiduciary Duty It is often considered that managers, record labels and publishers are in a fiduciary position to their artist, as such they are expected to act in good faith in their dealing with the artists. Conversely this is not entirely the case, as there are numerous instances of malpractices by fiduciaries. For instance, Matthew Knowles manager of the 1990’s female band ‘Destiny’s Child’ was fired due to mismanagement of the band’s funds. In Ibrahim v. Osunde & Ors (2009) LPELR-1411(SC) at 30, Paras b-d, the Supreme Court stated that “… a heavy duty is placed on those in whom trust and confidence are reposed to show the righteousness of their transactions…”

Fiduciaries’ lack of transparency, exemplified by their failure to give proper account of monies

received/spent has resulted in some failed management relationships. In 2018, a popular Nigerian female musician reportedly fired her manager- husband over alleged claims that he received money for a show on her behalf without informing her and squandered the money. Consequently, she still had to perform, but for free.

Again, in 2014, a Nigerian male musician reportedly had a public fallout out with his then manager ; whereby the manager was accused of stealing the musician’s money by only declaring N5.5 million out of N58 million the artiste made from shows and performances. In Nelson v. Rye [1996] 1 WLR 1378, it was held that failing to give account was a breach of fiduciary duty.

One effective way of controlling/forestalling potential fiduciary breach is separating the roles of financial reporting and general management, which should be carried out by a financial manager and manager respectively. This is common practice in other developed countries. In addition, all management contracts should provide that undertakings on behalf of the artiste should be mutually approved by both parties to the management relationship. Thus, there will be some form of checks and balances, thereby preventing abuse of power.

Abuse of Powers

In most management relationships, managers are given the power to act on behalf of their clients in specified or all legal or financial matters, depending on the agreement of the parties. In most cases a power of attorney (PoA) is used, empowering the manager to sign specifies contracts, institute lawsuits, hire and fire attorneys or other third parties, approve use of an artiste’s likeness for advertising and promotional uses etc. all on the on the artiste’s behalf. On the contrary, these powers have caused ultra vires acts and actions against the wishes of artistes.

Notorious examples include former manager of the Beatles, who allegedly and unilaterally signed away 90% of the Beatles merchandising rights to a third party in England. Also, David Bowie’s former manager spent the singer’s money lavishly; at one time he famously flew American journalists’ first class to London to watch Bowie perform. By the terms of the MC he was entitled to, half of Bowie’s earnings

To be continued next week

Titilade Adelekun Ilesanmi is a commercial lawyer and practices with LeLaw Barristers & Solicitors, Lagos

Thursday 06 February 2020

BUSINESS DAY

GREYMATTER

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LegalBusiness

Financing the Creative Industry in Nigeria: Matters Arising

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s part of efforts to boost job creation, particularly among Nigerian youths, the Central Bank of Nigeria (“CBN”), in collaboration with the Bankers’ Committee, established the Creative Industry Financing Initiative (“CIFI”) in May 2019. The CIFI is to be funded from the Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS), operated by the Bankers’ Committee, with a seed fund of Twenty-Two Billion Nine Hundred Million Naira (N22.9 billion) (the “Fund”).

CIFI was developed purposely to improve access to long-term, low-cost and sustainable financing for entrepreneurs and investors in the creative and information technology sub-sectors of the Nigerian economy (generally referred to as “Creatives”). The initiative is envisioned to complement other development finance schemes of the CBN, to accelerate financial inclusion in the country and harness entrepreneurial potential of the youth in the target sectors, ultimately for economic development.

Thus, on July 1, 2019, the CBN took further step towards concretizing the CIFI by releasing a framework for its implementation.

The framework, tagged Modalities for the Implementation of the CIFI, defines the objectives, sets the scope and prescribes the operational guidelines for accessing and administering the fund.

This article critically examines the CIFI implementation framework and provides clarifications on the general requirements for benefiting from the fund. It is also the aim of this piece to identify any potential challenges, which may impede smooth implementation of the CIFI, for possible regulatory actions.

Scope of CIFI As stated in the framework, eligible activities under the CIFI are categorized into three groups, namely: • Existing enterprises in the creative industry; • Start-ups engaged in the creative industry; and • Students of higher institutions engaged in software development.

The focal sub-sectors of the eligible activities for financing purposes include: (i) Fashion (ii) Information Technology (“IT”) (iii) Movie and (iv) Music.

How to benefit from CIFI Creatives whose businesses fall within the focal sub-sectors of the eligible activities can obtain a loan ranging from N3 Million to N500 Million, depending on their areas of business. An interested Creative is expected to approach any of the Participating Financial Institutions (“PFIs”) with a clear business plan or statement, detailing how much capital is needed to execute the drawn business proposal, and complete the loan application process in the manner prescribed by the chosen PFI. All commercial and microfinance banks, licensed by the CBN to operate in Nigeria, are PFIs.

Application & Documentation Requirements Documentation requirements for accessing a loan under the CIFI are to be determined by each PFI, in line with its internal processes for customer credit requests.

Where a PFI finds an applicant successful after conducting due diligence of the application and documents submitted, it will issue such applicant an offer letter containing the terms of the loan agreement, including repayment schedule. Afterwards, the PFI is required to forward the successful application with the offer letter to the CBN for consideration.

Upon a satisfactory evaluation of the process, the aggregate facility amount shall be released by the CBN to the PFI for on-lending to the successful applicant.

Key Features of the CIFI MAXIMUM LOAN AMOUNT PER BORROWER – The implementation framework sets single obligor limits (“SOL”) for each of the available loans under the CIFI. Whilst the SOL is N3 million for Student Software Development Loan (“SSDL”), it is N50 million and N500 million for movie production and movie distribution respectively. The framework does not specify applicable SOL for loans relating to the other eligible sub-sectors, such as fashion, IT and music industries.

FUNDING STRUCTURE – The stipulated funding structure, for financing successful applicants’ projects, is made up of Minimum Equity Contribution (“MEC”) and Term Loan. With the exception of SSDL which is to be fully financed by banks (100% Term Loan with 0% MEC), Creatives applying for CIFI loans in the other focal subsectors will have their projects partly financed by MEC and Term Loan. Whilst eligible movie industry loans require 30% MEC (by borrowers) and 70% Term Loan (from the banks), loans relating to eligible activities in the fashion, IT and music industries require 20% MEC and 80% Term Loan, appropriately.

SECURITY ARRANGEMENT – For SSDL and movie industry loans, required collateral includes the MEC by borrowers (where applicable) together with execution of All Assets Debenture and Legal Mortgage, as well as Personal Guarantee and the provision of Credible Guarantor.

However, for SSDL, a borrower is required to deposit, with the PFI, certificates of his/her university degree and National Youth Service Corp (NYSC) in lieu of debenture and mortgage deeds. In addition to the foregoing collateral security, borrowers in the fashion, IT and music industry shall have a lien www.businessday.ng

placed on their connected stock of trade and items of equipment.

INTEREST RATE – The rate of interest payable on all CIFI loans shall be 9% per annum (all inclusive).

REPAYMENT (MODE & SOURCE) – For SSDL and loans granted for movie distribution, the mode of repayment is monthly.

However, for movie production, repayment is required quarterly.

Also, loans granted for other eligible activities in the fashion, IT and music industries are required to be repaid on a quarterly basis.

The source of repayment shall be the proceeds of software sale or patent usage, movie tickets at the box office and other channels of distribution, sale of music record and income from services provided generally, as the case may be.

TENOR & MORATORIUM – Whilst the longest tenor available under the CFI loan is ten (10) years, repayment periods generally vary and depend on the focal sub-sectors involved. Save for SSDL which has a tenor of 3 years, other loans relating to production & distribution of movies and equipment purchase & rental/ service fees in the fashion, IT and music industries all have a 10-year tenor. Also, while SSDL enjoys 9-month moratorium from date of loan disbursement, the equivalent period for movie industry-related loans is 24-month. For loans relating to fashion, IT and music industries, the corresponding moratorium each is 36 months from date of loan disbursement.

OTHER CONDITIONS – The implementation framework provides for other general and important conditions for the grant of CIFI loans to Creatives, which include: a good (“No bad”) credit history with Credit Risk Management System (CRMS) or any commercial banks in Nigeria; preference for areas where their businesses have low penetration; and in certain circumstances, minimum of three (3) years relevant experience or at least three (3) referrals from recognized sponsors, bodies or associations.

Commentary At any rate, the development and rise of youths-centered entrepreneurial skills remain, at this critical time, a low-hanging fruit for Nigeria. Policies capable of driving the growth of intellectual property and spurring the establishment of an enabling environment for the advancement of the media, entertainment and technology industries – sectors most appealing to young people – are generally canvassed as a necessary vehicle for transiting from a consumption based and

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crude-oil dependent economy to a production based and competitive knowledge-economy. In this connection, the establishment of the CIFI and release of its implementation framework could provide the much needed incentives, for maximally unlocking the potential of the country’s bourgeoning youthful population and harnessing same for the targeted growth in the Nigerian creative industry.

Whilst the aims and objectives of the CIFI are laudable, we consider that certain challenges remain in the modalities for operationalizing the scheme. It is thus necessary, that the identified challenges, highlighted below, be holistically addressed in order to position the initiative for maximum success.

We note that the CIFI implementation framework suffers from lack of certainty and uniformity of documentation requirements for loan applications. This is, perhaps, the most glaring factor which may pose problems to the smooth operation of the scheme.

The wide latitude granted to each of the PFIs, to determine what documents/information to be required from a loan applicant, leaves too much to the discretion of the banks and may throw up transparency issues in the selection process. In our view, the CBN’s framework ought to have prescribed a uniform and industry-wide documentation requirements to ensure a seamless regime.

Another issue is the restriction in the scope of the CIFI. In this regard, we consider that the listed eligible activities in the focal sub-sectors do not cover all the segments of the creative industry. It therefore leaves the fate of other Creatives, whose businesses, talents and skills are outside the listed four areas (Fashion, IT/ Software Development, Movie and Music) hanging. It is our considered opinion that the eligible sectors of the creative industry be expanded beyond the listed four or, in the alternative, the initiative be made to cover all economically viable activities within the creative industry. Accordingly, the CIFI should be extended to Creatives whose skills and investments are in other segments of the industry, such as Performing Art; covering dance, music, drama/theatre and many aspects of Visual Arts; covering painting, drawing, print-making, sculpture, ceramics, photography, design/ industrial design, graphic design, interior design and decorative art, among others. By excluding some creatives from the CIFI, the government and other corporate sponsors have continuously undermined the potential of these @Businessdayng

sectors to engender cultural, social and economic transformation of the Nigerian nation.

For example, performing artists, particularly dance artists, musicians, and theatre practitioners have been very instrumental to our cultural renaissance and are strategic to the success of the other sectors within the industry. They contribute in no small measure to the growth of the advertising industry through television commercials and are central to the movie industry, with many dance creatives working for private organizations while others work/ consult for governmental institutions like the Councils for Arts and Culture.

Similarly, the visual arts do not only provide critical means of artistic expression but also enhance innovation and present viable opportunities for creating and owning intellectual property rights. In other words, visual artists create wealth capable of spurring both individual and national development and surviving through generations. Whilst skills such as photography and interior décor/ design have become major occupations for many, others such as industrial/graphic design, ceramics, print-making and drawing form an important element in certain industries.

Collectively, performing and visual arts effectively project a good image of the country abroad, create jobs for millions of people (especially youths), generate wealth and are capable of attracting foreign direct investment through exhibition at annual international festivals, workshops, and multi-cultural performances.

Thus, because of the identified huge potential of the excluded sub-sectors, we are of the opinion that a minimum threshold for measuring viability of projects across the entire creative industry be introduced, such that any Creative, in any segment of the industry whatsoever, can benefit from the CIFI where the prescribed minimum threshold is met.

It is also noted that the CIFI framework does not provide any timelines for the implementation of the scheme. In other words, there are no stated checks in place to ensure efficiency of the funding process. We believe the CIFI should not be left without a proper review mechanism, so as to prevent it from going the way of similar initiatives in the past ; which only appeared on paper and made waves as news headlines, without achieving much in terms of beneficiaries and outputs.

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

Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

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LegalBusiness

Eghobamien takes to the road again... to run for Justice Reform THEODORA KIO-LAWSON

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he managing partner of Perchstone & Graeys, Osaro Eghobamien, SAN is once again set to participate as a runner in the 42 kilometres (km) Lagos City Marathon organized by Access Bank and Lagos State government, which would hold on Saturday, February 8th 2020.

Speaking to BusinessDay about this development, Eghobamien who is a committed advocate of justice reform revealed that his passion for reforming the justice delivery system in Nigeria was the driving force behind his decision to run this race in 2019 and also again in 2020.

He said, “As a vanguard cause for justice, I was able to make an appeal for, and raise voluntary donations which have remained in a designated account. Subject to further guidance from the Chief Judge of Lagos State, the sums received through the various donations have been earmarked to assist in training the Court Registrars. This will be by virtue of the concept of a blind trust to prevent conflict of interest.”

According to the learned senior advocate, the underlying objective

of his participation is to create awareness and support reforms in the administration of the justice delivery service.

“I and my team have since the last Marathon, been quietly galvanizing support for a movement, that is, a movement to bring about positive change in the administration of the justice system. I remain optimistic that with individual and collective effort we will stimulate the much-needed change we desire.

“You can support by joining me to run the marathon (this is unlikely and dangerous if you have not trained), or contribute financially to every step Eghobamien who revealed that his obsession with reforms

inspired him to run the race again this year, has vowed to conclude marathon, which takes approximately 55,374 steps to complete at an average male step length of 30 inch per step.

Last year, he was supported by his father and Herbert Wigwe’s father; who are both 84 years old.

They supported the initiative by waiting and running with him at the finish line. He described their support as “extremely inspiring”.

The P&G partner who was recently presented with a Presidential Enabling Business Environment Council (PEBEC) IMPACT Award in recognition of his firm’s contribution to the 2016-2017 Ease of Doing Business Reforms has however this year conceived

a more productive way for professionals to support the initiative.

He revealed that he would be calling on all professionals to offer to contribute their time towards the objective of the Justice Reform Project (JRP) - an NGO to which he belongs, which seeks to complement the activities of traditional institutions created to effect justice reforms.

“JRP recognizes that these institutions are themselves plagued by bureaucratic inhibitions and recognizes that those same institutions require reforms. You may donate your time resource to do something, which will support reforms in the administration of Justice delivery. It could be time spent in research or gathering rel-

evant data on the administration of justice or time spent in drafting a policy on corporate governance in the justice delivery institution or building a scheme, such as the whistle blowing scheme. It could be time spent in changing behavioural pattern amongst lawyers. It could also be by coming up with innovative models designed to vigorously tackle delay in justice delivery, and engendering speedy and efficient administration of justice system in the country.

“I will be most excited to know that we all in our individual spaces are doing something, no matter how small that is geared towards pushing for the reform in the administration of justice,” Eghobamien said.

Legally engaged concludes the second edition of its practice preparation course THEODORA KIO-LAWSON

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egally Engaged, a career centre for lawyers, recently concluded the second edition of the Practice Preparation Course (PPC).

The course is a two-week programme that covers a wide scope of corporate/commercial law practice areas.

In keeping with Legally Engaged’s aim to increase the employability of the Nigerian lawyer, the PPC is organized to bridge the gap between legal education and commercial law practice by giving young lawyers an appreciation of the different facets of commercial law practice, and thus the Nigerian economy as a whole.

At the two-week long programme, sessions on Taxation, Corporate Finance, Capital Markets, Intellectual Property, Mergers & Acquisitions, Legal Writing & Drafting and Legal Research were taken. Sessions were practical and delegates

attempted various case studies based on real-life transactions and legal scenarios.

All the sessions, which were about 20 in total, were facilitated by highly regarded legal professionals. Some of the facilitators were Chike Obianwu, Partner at Templars; Chinyere Okorocha, Partner & Head of sectors at Jackson, Etti and Edu; Dr Adeoye Adefulu, Partner at Odujinrin & Adefulu; Stella Duru, Partner at Banwo & Igwww.businessday.ng

hodalo; and Reginald Udom, Partner at Aluko & Oyebode.

Some other facilitators were Chinyereugo Ugorji, Partner at AELEX ; Zelda Akindele, Partner at Templars; Abayomi Adebanjo, General Counsel at MainOne; and Seyi Bella, Partner at Banwo & Ighodalo.

The course ended with a soft skills session themed “The Building Blocks of a Successful Legal Career”. Oyetola M. Atoyebi (SAN) who made hishttps://www.facebook.com/businessdayng

tory by becoming the youngest lawyer to ever be elevated to the rank of Senior Advocate of Nigeria, spoke to the lawyers about the tools that they need to build successful legal careers.

Other panellists such as Abiola Laseinde, Former Company Secretary at PZ Cussons, Oyeyemi Immanuel, Senior Associate at Templars and Yimika Adesola, Founder of Legally Engaged, shared their experi-

ences, and various tips and approaches to scaling hurdles that might be encountered in the course of a young lawyer’s career.

“It was an exciting experience. The facilitators were very detailed, and I could relate more with the topics because they largely spoke within the context of their years of experience leading different transactions. I made very significant connections and was able to build what I believe will be life-long friendships in the corporate space” Akorede Omotayo, an attendee and Associate at Odujinrin & Adefulu stated.

“Completing the course has made me better appreciate my responsibility as a member of my Firm’s Capital Market Team and aided my development of requisite soft skills for a Legal Practitioner. I return to work better equipped and prepared to do more” another attendee Stanley Omotor, an Associate at Banwo & Ighodalo added.

@Businessdayng

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PrivateEquity &fundraising

Nigeria can unlock liquidity by attracting private capital – Teriba Stories by MICHAEL ANI

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n a world awash with liquidity, Nigeria can tap in by attracting huge capital inflows to enable it to solve its current fiscal challenges, according to leading economist and chief executive officer of Economic Associate, Ayo Teriba.

This would help in boosting economic growth above population, build a strong external reserve to withstand economic shocks and set the country on a path of prosperity, Terriba said.

Teriba who addressed private equity players, fund managers and Limited Partners (LPs), at the 2nd Private Equity Summit with the theme “Drivers, Disruptors and Unlocking Value,” said the world has never been this liquid.

“As Nigeria interfaces with the global economy, there are numerous benefits and immediate gains it can make in attracting liquidity as currently, some countries interest rate are negative,” Teriba says.

Africa’s biggest economy by size and population has been faced with a revenue challenge after a fall in oil prices, pushed the economy into five quarters of negative growth, making the government handicapped in fulfilling its fiscal obligations.

Since then, the economy has reported an average an-

L-R Udo Udoma, founder Udo Udoma & Belo- Osagie; Otunba Richard Adebayo, Minister of Trade, Investment and Industry; Yewande Sadiku, executive secretary/CEO, Nigerian Investment Promotion Council, at the 2nd Private Equity Summit in Lagos

nual growth of 2 per cent, trailing behind its population that is increasing at 3.2 per cent, based on data from the National Population Commission (NPC).

This slow growth and shrinking consumers wallet have culminated into increasing the number of its poor, with over 90 million of its citizens living below $1.90 a day, according to World Poverty clock data. It

has also worsened the level of unemployment which statefunded agency, National Bureau of Statistics puts at a record high of 23.1 per cent as of the third quarter in 2018.

Teriba argued that Nigeria’s focus should shift from growing exports to attracting more capitals, particularly by way of direct investments and Diaspora remittances.

Trade minister says 3 sectors are in focus to diversify revenue, create jobs MICHAEL ANI

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igeria’s Minister for Trade, Investment and Industry, Adeniyi Adebayo, says the agricultural, construction and the automobile industry are three key sectors which the government is focusing on to grow the economy away from the dependence of oil and create jobs for its burgeoning population.

He noted that by focusing more on this sector, President Buhari’s administration would be able to fulfil its mandate in diversifying government revenue and creating jobs yearly that would lift 10 million of the citizens living below the poverty trap through the next 10 years.

“Our economic revitalization

strategy seeks to expand our production capacity whilst simultaneously reducing the cost of production in pursuit of increasing our stake in the global manufacturing market,” he said.

Adebayo who spoke at the 2nd private equity summit organized

by Udo Udoma & Bello-Osagie with the theme “ Drivers, Disruptors and Unlocking Value,” said in order to achieve success in this four areas, the government has set key performance ratings in scaling up the manufacturing sector, attracting foreign direct investment, boosting non-oil export and creating at least six million jobs a year.

He noted that in boosting local production, the ministry has begun implementing a number of its key initiatives, including the reactiva-

tion of six special economic zones and the special agro-industrial processing zones project.

In expanding market access, Adebayo explained that the Federal government will seek to localize at least 40 per cent of FG’s expenditure on stipulated goods and services and facilitate local market access for Nigerian made products.

In supporting the growth of the micro, small and medium enterprises, and the government is easing access to capital, deploying shared facilities across the country, and facilitating the delivery of tax and regulatory incentives for MSMEs. He noted that success depends on the government’s ability to create an enabling environment for foreign direct investments into all sectors of the economy.

His position was based on the fact that there is slowing demand in advanced countries which is hurting growth as seen in two of the world’s largest economies, China and the United State, however, with the negative interest rates in advanced countries of the world; investors are looking into emerging economies to invest in other to get good returns.

Teriba noted that Nigeria

needs liquidity to shore up its reserve to be in a comfortable position to wage off an external shock as illiquidity would mean slower growth and increasing poverty.

According to him, the strong growth fundamentals posted in the last 10 years was as a result of being able to attract liquidity.

For Nigeria to achieve this, he said, the government must have to disclose what it owns so the country can ascertain their true valuation.

He categorized Nigeria’s assets into corporate, which are government wholly-owned or majority equity holdings in State-Owned Enterprises; Financial Assets, which represent the government’s minority equity holdings in Joint Ventures and other companies; and finally, tangible non-financial assets.

Teriba identified the various options for unlocking liquidity in the economy, which include; privatization by partially selling its equity across all State-Owned Enterprises, SOEs to retain a minority stake; securitization to get future income streams from all financial and non-financial assets; liberalization, deployment of idle land and building and unbundled infrastructure projects to attract greenfield foreign direct investment Inflow); commercialization, by getting rental income from wholesale leasing of idle lands and buildings.

Nigeria drops out of IFC’s top 5 investment destinations MICHAEL ANI

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igeria, Africa’s largest economy has dropped out of the top five countries where the International Finance Corporation maintains investment portfolios.

The size of IFC’s investment in Nigeria now ranks only among the top 10 after a shrinkage occasioned by the country’s devastating economic recession in 2016.

Head of the IFC in Nigeria, Eme Essien Lore said the ranking is on the basis of absolute amount of investment portfolio

in US dollars.

According to her, “given its strong fundamentals, Nigeria should be top 5 as it had been but the recession slowed investment activity across many sectors.”

She said “Nigeria will need bold reforms in such areas as power, infrastructure, monetary policy as well as human capital in order for it to maintain its status among the top and fastest growing emerging market investment destinations such as Brazil, China and India.”

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: SAMUEL IDUH ) 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

Continues on page 34

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news

Edo business community parleys British High Commissioner, UK investors

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L-R: Tijani Muftahu, business manager, corporate banking group; Oluwatoyin Aina, group head, Energy Downstream; Ikenna Egbukole, head, structured trade commodity; Omolara Akinbogun, head, trade products, Transaction Banking Group, and Olugbenga Ogunyale, business manager, Commercial Banking Group, at the GTR West Africa 2020, in Lagos. Pic by Pius Okeosisi

Labour demands downward review of salaries of political office holders ... urges states to expedite action on minimum wage Innocent Odoh

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abour movement in Nigeria has urged the Federal Government to make a downward review of salaries of political office holders, stressing that Nigerian political office holders are highest paid in the world.

President of the Nigerian Labour Congress (NLC), Ayuba Waba, made this demand following the recent move by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) to review salaries of political office holders with “current realities” in the country.

Waba told a press conference in Abuja on Tuesday that Nigerian political office holders were over pampered, saying the political elite were paid more than other political

office holders anywhere in the world.

He said, “I was thinking that wage review should be upward or downwards, but in the case of our political elites, it should be downwards.”

The NLC President compared the salaries of office holders in Nigeria with other countries such as South Africa, saying “the margin between the minimum wage and what a politician earns can be determined because there are imperial data to arrive at the differential. In our own case, what is the differential?”

Meanwhile Waba gave an update on the implementation of the new Minimum Wage signed into law on April 18 last year by President Muhammadu Buhari, and urged states to expedite action on the implementation of payment.

While some states have

34 arrested, vehicle, bicycles burnt as ‘Okada’ riders, police clash again in Lagos JOSHUA BASSEY

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nforcement of the restriction on the operations of commercial motorcycles (Okada) and tricycles (Keke) in some parts of Lagos State is proving a herculean task, as the Okada riders have for the second time this week, clashed with policemen enforcing the traffic laws.

The clash, at Aboru area of Iyana Ipaja, on Wednesday, resulted in the burning of a vehicle belonging to the Lagos State Traffic Management Authority (LASTMA) and two patrol bicycles of the Lagos State Neighbourhood Watch.

No life was lost in the incident, but a police inspector identified as Salifu Umar was critically injured and taken to a hospital for medical attention.

Bala Elkana, spokesperson, Lagos Police Command, who confirmed the incident, said 34 suspects had been arrested and 86 motorcycles impounded by the combined enforcement teams of the police and the Lagos State Taskforce on Environmental and Special

Offences.

The first clash on Monday, January 3, had seen 24 suspected motorcycle riders arrested in the Ijora area of the metropolis. They were making bonfires on the road and protesting their ‘ban’ by the government when the police swooped on them.

The clash in Iyana Ipaja, Wednesday, was said to have left economic activities in the area disrupted for hours.

That happened, also, as the motorcycle riders have returned to the Mile 2 axis of Oshodi-Apapa, and LagosBadagry Expressways, where their operations are restricted.

Several of them were seen on Wednesday picking and dropping off passengers on the Mile 2 Bridge, while policemen watched helplessly.

The Iyana Ipaja protest, according to witnesses started when policemen attached to the Lagos State Taskforce moved to the area to enforce the restriction order. The riders were said to have revolted against them, forcing the police to applied maximum force. www.businessday.ng

concluded negotiations on the consequential adjustment in the payment of the Minimum Wage and commenced payment, others are still negotiating, he said.

He said there were at least eight categories, which each state falls under on the implementation of minimum wage and consequential salaries adjustment.

He noted the First Category, has 16 states “that have agreed and signed” for the implementation, they are Abia, Akwa Ibom, Anambra, Bayelsa, Borno, Delta, Ebonyi, Edo, FCT, Jigawa, Kaduna, Kano, Katsina, Kebbi, Lagos, Ondo.

In the second category, he said three states “have reached an agreement but have not signed”. They are: Cross River, Enugu and Sokoto.

According to Waba, there

are 17 states in the third category “where negotiation is ongoing”. They include: Adamawa, Bauchi, Benue, Ekiti, Gombe, Imo, Kogi, Kwara, Nasarawa, Niger, Ogun, Osun, Oyo, Plateau, Rivers, Yobe, and Zamfara.

The fourth category, he said, includes states “that have commenced implementation”.

They are Borno, Delta, Ebonyi, Edo, FCT, Jigawa, Kaduna, Kano, Katsina, Kebbi, Lagos, Ondo, Sokoto, and Yobe.

The NLC president said in the fifth category, is Taraba, which “has not started anything, a committee has not been inaugurated, the process of dialogue has not commenced.” He advised the Taraba State government to respond immediately to the demands of the minimum wage act, adding that it has become law and must be obeyed.

Presidency lists gains of New Visa Policy TONY AILEMEN, Abuja

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residency on Wednesday reeled out gains of the new visa policy of the Federal Government, which is expected to boost trade and investment.

There have been fears that the visa policy could be abused, but Femi Adesina, presidential spokesman, in a statement on Wednesday dispelled the fears.

Adesina said the visa on arrival policy announced by President Muhammadu Buhari at the Aswan Forum in Egypt in December would rather check the influx of criminals into the country following a biometric system that will expose such criminals.

He said the policy was greeted with loads of condemnation from some quarters, largely due to misconception and, perhaps, mischief.

Chief among the allegations, he said, was that it was a ploy to import more killers into the country under official cover, and that foreigners would come to take available job opportunities meant for Nigerians.

Adesina, however, explained that the new visa policy was a direct product of well-conceived policy, after a rigorous debate during retreats in 2019 devoted to conceiving and enunciating the policy.

The retreats, conferences and engagements with stakeholders by the Nigeria Immigration Service were held in August, October, and December in Lagos, Benin, and Abuja.

“The NVP 2020 is a global visa system, and there is biometrics linked to online applications for each applicant.

Chances of criminals beating the system are negligible. Biometrics is to be conducted at port of entry,” he said.

He said the visa on arrival would be issued only at airports, not at land borders.

The new visa policy includes three categories of visas: short visit, temporary, and permanent residence.

Federal Government expanded the classes of visa from six previously to 79 classes and also introduced visa for diaspora Nigerians by birth, with dual citizenship.

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n the back of far-reaching reforms by the Edo State governor, Godwin Obaseki, to open up the state for business opportunities, the state has continued to witness an influx of foreign investors with the British Deputy High Commissioner, Harriet Thompson, leading a new batch of investors from the UK to meet the state’s business community.

The meeting, which held in Benin City, the Edo State capital, had business experts from the private sector including the Manufacturers Association of Nigeria (MAN); Guinness Nigeria plc; Azura Power; Benin Chamber of Commerce, Industry, Mines and Agriculture (BENCCIMA) and Small and Medium Enterprises (SMEs), among others in attendance.

Head, Edo State Investment Promotion Office (ESIPO), Kelvin Uwaibi; Commissioner for Wealth Creation, Co-operatives and Employment, Felix Akhabue, and Commissioner for Agriculture and Natural Resources, Richard Uyi Edebiri were in attendance.

Deputy British High Commissioner said the essence of

the meeting was to understand the business environment in Edo State and ascertain the opportunities available for UK investors.

“Further, we will like to work with partners in the state to strengthen the specific skills needed by investors and employers,” she said.

Thompson was accompanied by Director, International Trade, British High Commission, Paul Grey and other officials of the High Commission.

Uwaibi, while giving an insight on the business environment in the state, said Edo was ready to receive UK investors and support a seamless process to locate investments in the state.

He assured that the Obasekiled administration was keen to providing 24hrs electricity for industries and government offices with an understanding with Ossiomo Power and Infrastructure Company.

On their parts, Commissioner for Wealth Creation, Akhabue, and his agriculture counterpart, Uyi-Edebiri expressed readiness of the state in supporting investors from the UK with emphasis on the comparative advantage of the state.

Ibadan Disco’s customers to suffer power outage as TCN transformer caught fire Olusola Bello

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ome electricity customers under Ibadan Electricity Distribution Company will suffered some electricity supply interruption as the Transmission Company of Nigeria (TCN) says one of its 150MVA, 330/132/33kV power transformer in Ayede Substation caught fire in the early hours of Wednesday.

It however says that the fire has been contained and TCN is currently working to isolate the burnt circuits, to enable restoration of bulk supply through the substation.

“This incident would temporarily affect power supply to Ibadan and environs. We

therefore appeal to customers in the affected areas to bear with us as we would restore normal supply as soon as our engineers complete the restoration of the cables,” the company states.

Ndidi Mbah, general manager, public affairs, TCN, in a statement says normal bulk supply would be restored as the substation has enough redundancy to adequately transmit the Disco load requirement.

The head transmission service provider and general manager transmission are already, she says, on their way to Ayede Substation to ensure the situation is properly attended to.

FG to launch National Gas Transportation Network Code at NIPS 2020 Olusola Bello & HARRISON EDEH

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ederal Ministry of Petroleum Resources (FMPR) in conjunction with Department of Petroleum (DPR) will formally launch the National Gas Transportation Network Code on Monday, February 10, 2020, as part of opening day of the third edition of Nigeria International Petroleum Summit taking place at the International Conference Centre (ICC) Abuja.

The Nigerian Gas Transportation Network Code is critical to government’s objective in firming up the country’s domestic gas obligation as well as promoting export. The network code, which will ensure wrong quality gas does not go into the pipeline in addition to guaranteeing gas pipeline integrity, opens access to pipeline and common understanding on metering.

“The review of the Network Code licensing framework and development of all its ancillary agreements have been firmed,” @Businessdayng

says DPR. The code will also provide a uniform platform in terms of guidelines for agreements between buyers and sellers, which will ensure transparency and eliminate existing bottlenecks. It is a major policy thrust of government to unlocking the potentials of gas as a resource and revenue earner for Nigeria, which President Buhari (minister of Petroleum Resources) and minister of state for petroleum resources, Timipre Sylva are very passionate about it.

According to the DPR in its latest report, Nigeria’s natural gas reserves have been on the increase from 2013 and are projected to continue to grow at a conservative rate of about 1.0 percent. It said the reserves volume of the operated deep-water acreages in Nigeria is about 21 per cent of the country’s total reserves of liquid hydrocarbons (7.746BillionBbls/3 7.002BillionBbls).Yet the acreages accounted for about 36.08% of the Nation’s total production in 2018.

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FG to commence Forensic Audit of NDDC soon - Akpabio CYNTHIA EGBOBOH, Abuja

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inister of Niger Delta Affairs, Godswill Akpabio, has reiterated that the directives by President Muhammadu Buhari for the forensic auditing of the Niger Delta Development Commission (NDDC) is aimed at developing a governmental structure that will be result oriented, a process, and will soon commence.

Akpabio said the Bureau of Public Procurement (BPP) had assessed the firm, which government had chosen for the audit, and found them fit to be the consulting firm that would lead the appointment of other forensic auditors for the NDDC audit spanning between 2001 and 2019.

The minister was speaking at the tripartite meeting with the Interim Management Committee (IMC) of the NDDC, the lead forensic consultant and the Ministry of Niger Delta Affairs in Abuja.

“We have received the approval of BPP to now commence the exercise,” he said.

Speaking further on the proposed methodology of carrying out the exercise, the minister noted that the next task was to work in collaboration with the ministry to bring in experienced

and notable forensic auditors with international reputation, so that whatever report was produced would be accepted and enforceable within and outside the country.

Olusade Adesola, permanent secretary, MNDA, explained that the tripartite meeting was to bring at par the various stakeholders in the forensic audit team, and address all grey areas of concern.

“If we recall, the directive of President was to address the issues of irregularities in NDDC, and the Auditor-General for the Federation Mkpe Ayine, interacted with the Consulting Firm to verify if they have the capacity to do the Job,” Adesola said.

The executive director, projects, NDDC, and the chairman of NDDC Contracts Verification Committee, Cairo Ojougboh, described the presentation as thought-provoking, that the consulting firm was well equip and deemed fit to carry out the forensic exercise.

Cairo clarified that NDDC was an agency under the Ministry of Niger Delta Affairs that the forensic auditing was above the limit of the Commission to supervise, adding that the ministry was the procuring entity but the Commission had to be carried along in the exercise.

US announces additional $40m to assist humanitarian efforts in North East ... strengthens Nigeria’s anti-graft, anti-terrorism war Innocent Odoh, reporting from Washington DC

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he United States has announced an additional $40 million to assist the humanitarian efforts to rehabilitate victims of Boko Haram insurgents and others in the North Eastern Nigeria.

US Secretary of State, Mike Pompeo, made this announcement on Tuesday, while briefing reporters after a meeting with Nigeria’s Minister of Foreign Affairs, Geoffrey Onyeama, as part of the events to mark the closing ceremony of the 5th Session of the US-Nigeria Binational Commission (BNC) in Washington DC. According to Pompeo, US had provided $350 million to help victims of insurgency in 2019, adding that US and Nigeria are sharing intelligence to combat the scourge of terrorism

even as he admonished the Nigerian government to uphold human rights of citizens in the war against terrorism.

The theme of the this year’s Session was ‘US-Nigeria Relations: Mutual Prosperity Through Ingenuity.’ It was aimed at strengthening key areas of both countries economic development, intensify the war against terrorism and fight corruption.

Pompeo also said the US was determined to help Nigeria fight corruption, which was why the US signed a tripartite agreement with Nigeria and Island of Jersey on Monday to repatriate another tranche of over $318 million allegedly looted by Nigeria’s former Head of State, the late Sani Abacha.

“Doubling down on anticorruption efforts is the surest way to grow prosperity in Nigeria and all across the region, and we are pleased that President

Muhammadu Buhari has prioritised that fight against corruption,” Pompeo said.

On the war against terrorism, the Secretary of State said “the US will assist Nigeria fight against ISIS in West Africa.”

He noted that war against terrorism would further be boosted with the purchase of 12 A29 Tucano aircrafts from the US by Nigeria. He added that this would “support the security force with the best training and weaponry.”

On economic development, Pompeo pointed out that Nigeria is the second trading partner of the US in Africa stressing that efforts are being made to “tighten our trade ties even further, including infrastructure investment, free market policies and attract private capital.

“US companies from Google to Chevron to KPMG invested over a billion dollars in Nigeria in 2018 alone, creating over 18,000

jobs and indirectly supporting 3 million others,” Pompeo said.

Nigeria’s Minister of Foreign Affairs, Geoffrey Onyeama, in his remarks, lauded the US government for its assistance to Nigeria to combat terror and fight corruption as well as address the humanitarian crisis in the North East.

He said, “Corruption has been a real scourge on our country and that is the reason the Government of President Muhammadu Buhari has made the fight against corruption one of the major keys of his administration and we are determined to win it.”

On economic development, the minister noted that Nigeria had embarked on diversification of the economy away from over dependence on crude oil, noting, “Diversification of our economy is what President Buhari has prioritised, especially on agriculture.”

$29.9bn loan: Senate queries 8 agencies over failure to appear, defend allocation Solomon Ayado, Abuja

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enate on Wednesday queried eight government ministries that failed to appear before it to give details and defend their allocations in the $29.9 billion loan the Federal Government was seeking approval.

The queried federal ministries are education, power, Niger Delta, humanitarian and disaster management affairs, water resources, health, communication and agriculture.

Consequently, the Senate has given one week period of grace for the defaulting ministries to appear before it and to proffer details of their allocations in the loan.

The agencies and states named to benefit from the loan, when approved, are about 20 but eight are yet to appear before it, according to chairman, Senate Committee on Local and Foreign Debts, Clifford Odia.

Reporting the matter to Senate on Wednesday during plenary, Odia further stated that the agencies were expected to appear before the committee to offer detailed information and explain the nature of projects the loan was meant to be utilised.

On Tuesday, the minister of Finance and National Planning, Zainab Ahmed, appeared before the Senate Committee on Local and Foreign Debts to defend the Federal Government request to borrow the $29.9 billion.

Although the minister claimed that the 8th Senate had approved part of the loan and that government was now seeking approval for only $22.8 billion.

Also, minister of communication, Lai Mohammed, and his power and FCT counterparts, Babatunde Fashola, Mohammed Bello, as well as representatives of governors of the three states of Kaduna, Katsina and Kogi, among several others had appeared before the Senate Committee on Local and Foreign Debts, on Tuesday.

Senate President, Ahmad Lawan, who directed the queried agencies to immediately appear, said the Senate would not tolerate any act of unseriousness from any ministry.

“This Senate is committed to ensuring that such important issues like the loan is treated with seriousness by both sides, therefore we need the details, we need the information and so I ask the ministries that are named to have not appeared before the committee to do so between today (Wednesday) and Monday next week,” Lawan directed.

President Muhammadu Buhari had in November 2019, resent to the 9th National Assembly, an External Borrowing request of $29.9 billion that was earlier rejected by the 8th Senate.

Buhari had said the loan would be used to achieve infrastructure projects, reduce poverty and enhance rehabilitation of the North East. www.businessday.ng

How sustainable? The Ijora/Apapa bridges, Lagos.

Pic by Pius Okeosisi

Cancer cases will increase by 60% unless countries step up action, WHO warns ... urges countries to control tobacco use, improve HPV vaccination Godsgift Onyedinefu, Abuja

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orld Health Organisation (WHO) has warned that countries across the world will see a 60 percent increase in cancer cases over the next two decades, unless cancer services are stepped up, especially in low and middle-income countries.

The WHO said the greatest increase (an estimated 81%) in new cases will occur in lowand middle-income countries, where survival rates are currently lowest.

This, according to WHO, is largely because these countries have had to focus limited health resources on combating infectious diseases and improving maternal and child health, while health services are not

equipped to prevent, diagnose and treat cancers.

“In 2019, more than 90 percent of high-income countries reported that comprehensive treatment services for cancer were available in the public health system compared to less than 15 percent of low-income countries” , WHO said in a statement to commemorate the 2020 World Cancer day.

“This is a wake-up call to all of us to tackle the unacceptable inequalities between cancer services in rich and poor countries,” Ren Minghui, Assistant Director-General, Universal Health Coverage/ Communicable and Noncommunicable Diseases, WHO was quoted saying.

“If people have access to primary care and referral systems then cancer can be detected

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early, treated effectively and cured. Cancer should not be a death sentence for anyone, anywhere,” the WHO notes.

Tedros Adhanom Ghebreyesus, director-general, WHO, notes that at least 7 million lives could be saved over the next decade, by identifying the most appropriate science for each country situation, by basing strong cancer responses on universal health coverage, and by mobilising different stakeholders to work together.

WHO highlighted a wide range of proven interventions to prevent new cancer cases.

These include controlling tobacco use, which is responsible for 25 percent of cancer deaths, vaccinating against hepatitis B to prevent liver cancer, eliminating cervical cancer by vaccinating against HPV, screening @Businessdayng

and treatment, implementing high-impact cancer management interventions that bring value for money and ensuring access to palliative care including pain relief.

“The past 50 years have seen tremendous advances in research on cancer prevention and treatment,” says Elisabete Weiderpass, director of IARC. “Deaths from cancer have been reduced. High-income countries have adopted prevention, early diagnosis and screening programmes, which together with better treatment, have contributed to an estimated 20 percent reduction in the probability of premature mortality between 2000 and 2015, but low-income countries only saw a reduction of 5 percent. We need to see everyone benefitting equally.”

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diately revise the policy on SIM card registration and

L-R: Ahmed Mansur, president, Manufacturers Association of Nigeria (MAN)/group executive director, strategy and government relations, Dangote Industries Limited; Joseph Sanusi, former CBN governor; Joseph Makoju, outgoing group managing director, Dangote Cement plc; Olusegun Osunkeye, former chairman, Nestle Nigeria Plc, and Ernest Ebi, non-executive director, Dangote Cement plc, at the luncheon in honour of Makoju’s retirement after 45 years of active service, at Metropolitan Club, Lagos.

Concerns mount over upcoming OMO...

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would be pressure on the external reserves that might happen in the wake of falling oil prices,” Khan said in a media parley at the bank’s headquarters in Lagos.

Sources told BusinessDay the CBN may look to enter into swap arrangements in which dollars are exchanged for OMO bills if a large chunk of foreign investors choose not to roll over their positions.

Foreign portfolio investors and commercial banks are the sole players in the CBN’s shortterm bills, after the apex bank in October last year barred local institutional investors from accessing the market.

While the move has helped in moving liquidity to various asset classes particularly the equity market, analysts fear of a possible downside risk of a carry trade when central banks in the advanced economies make a U-turn from their dovish stance.

As of August, the share of foreign portfolio investors in the CBN’s OMO market

stood at N6.2 trillion ($17.1 billion), about 44.3 percent of the total N14 trillion worth of bills, according to latest CBN data. Average one year yields of the short-term bills stood at 15 percent, CBN data show.

The CBN’s stock of reserve has fallen by over $8 billion to $37 billion, as it continues to wage off any external risk from affecting the naira which has been pegged at N305 against the dollar.

Brent crude which stands as the international benchmark for oil prices traded as low as $55 per barrel, as concern mounts over how much impact the deadly coronavirus would have on the global economy.

Analysts say an oil price at $55 doesn’t sit well for Africa’s largest economy which depends on the commodity to get over 85 percent of its revenue and which has its benchmark oil budget pegged at $63 per barrel.

“There is always that risk on FX stability in the domestic economy when there

Concerns mount over upcoming OMO...

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as $40 per barrel so we are

preparing for a world in which there could be a devaluation,” said Gbenga Adetoro, a partner at Africa Capital Alliance.

“We took hard lessons from 2008 and 2014; so in our plans with our companies, there’s a devaluation built in this year,” Adetoro, who spoke at a private equity event organised by the Private Equity and Venture Capital Association (PEVCA) and Rand Merchant Bank, said.

Adetoro will prefer a gradual decline rather than the CBN’s dogged pursuit of a stable exchange rate that didn’t end well in 2016.

Danladi Verheijen, CEO of Verod Capital, is ensuring his

private equity firm is buying companies at discounted value to minimise the impact of an exchange rate depreciation.

“We are focused on great investments, not buying great businesses so that we are less impacted by devaluation,” Verheijen said. “The last transaction we closed is one where every product is exported which also helps minimise the risk of currency devaluation.”

Africa’s largest oil producer relies on crude oil exports to keep its currency stable but volatile oil prices have left the naira vulnerable to shocks from the oil market.

Although the exchange rate has managed to stay largely stable in the last two years, thanks to the Central Bank’s interventions, there’s www.businessday.ng

is a tightening of external financing conditions or a severe tightening of the risk curve in the global environment, especially given the fact that foreign portfolio investors hold a larger chunk of your securities,” Omotola Abimbola, a macro and fixed income analyst at Chapel Hill Denham, told BusinessDay. Since the decision to bar local institutional investors from its OMO market, there has been a rush into FG Treasury bills, making yields in shortterm Federal Government securities average about 6 percent based on FMDQ data.

Inflation rose to 11.98 percent, its highest jump since April 2018, with the CBN fearing the excess liquidity might further push up commodity prices.

In its last monetary policy meeting and the first for the year, the CBN while holding other key parameters constant raised commercial banks’ Credit Reserve Ratio (CRR) from 22.5 percent to 27.5 percent, in what it said would help in cushioning inflationary pressure that might

arise from the excess liquidity.

Although the CBN has allayed fears of a possible devaluation, saying it sees no “currency devaluation in sight except otherwise crude oil falls below $45 per barrel and the foreign reserve goes below the $30 billion mark”, analysts say a devaluation may likely occur in the near time in the wake of falling crude prices.

The CBN could devalue the naira between 5-10 percent in 2020, analysts at EFG Hermes said in January.

Global rating agency Fitch in a December note where it downgraded Nigeria’s outlook to negative said that the CBN’s incentives to non-resident investments in its short-term Open Market Operations (OMO) bill have increased the country’s susceptibility to portfolio inflows.

According to Fitch, the revision reflects the increasing vulnerability from the current macro policy setting that is raising risks of disruptive macroeconomic adjustment in the medium term amid continued real appreciation of the naira.

a new threat to oil prices in coronavirus.

The first case of the pneumonia-like coronavirus was reported on December 30,2019 in Wuhan, the capital of China’s Hubei province.

As of 10 a.m. Central European Time on 5 February, 25 countries have reported confirmed cases of the novel coronavirus, including China, where 24,363 people had contracted the virus, or over 99 percent of all cases, according to information on WHO website. In all other countries, 191 cases of the virus have been reported.

For oil markets, it has had a troubling effect. Oil prices have fallen to their lowest in more than a year as the virus spread to 20 other countries, and the impact may worsen.

Oil analysts say oil prices

could go to $40 per barrel and that brings a world of trouble for the naira which the CBN has kept stable using the petrodollars from oil exports.

The CBN has said in the past that it will remain committed to defending the naira, but that was before the coronavirus threat.

Many forecasts point to a slight depreciation in the naira this year and private equity investors are wasting no time to create buffers to avoid a repeat of the crisis in 2016.

The steady decline in external reserves since the start of the year coupled with a widening current account deficit have been a source of worry for investors, even though it has helped mask the health of the naira which has shed less than 1 percent in that period at the investors and exporters window.

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usage to include this as well as other prerequisites.

The new policy requires all formally registered and active SIM cards to be updated with their users’ NIN before December 1, 2020.

In addition, it will allow only a maximum of three SIM cards to be tied to a user or subscriber’s identity, meaning that a subscriber may only use three SIM cards in all.

The directive is in line with the powers of the minister as stated in Section 25(1) of the Nigerian Communications Act 2003, which says, “The minister shall, in writing, from time to time notify the commission or and express his views on the general policy direction of the Federal Government in respect of the communications sector.”

The Ministry of Communications and Digital Economy said in the statement that the policy revision was deemed necessary based on feedback from security agencies following the successful revalidation of improperly registered SIM cards in September 2019 and the blocking of SIMs that were not revalidated.

The updated policy states that only fully accredited agents support the SIM card registration process without pre-registering SIM cards themselves, while the eventual registration should be done by the operators and no unregistered SIMs will ever be allowed on mobile networks.

Also, it will ensure that all subscribers can easily check the number of SIM cards registered to their identity, along with the associated phone numbers and networks. It will ensure that mobile network operators fortify their networks against cyberattacks and that they adhere to the provisions of the Nigeria Data Protection Regulation (NDPR).

With this, all SIM cards that have previously been or are currently being used to perpetrate crimes will be permanently deactivated.

“The NCC is to provide the minister with progress reports on the implementation of the revised policy,” the ministry said in the statement signed

by Femi Adeluyi, technical

assistant (Information Technology) to the minister.

The National Identity Management Commission (NIMC) has intensified efforts to enroll as many people as possible, more so after the Federal Government enforced the mandatory use of NIN before service delivery in organisations like the Federal Road Safety Corps (FRSC), National Hajj Commission of Nigeria (NAHCON), Nigerian Immigration Service (NIS), Federal Capital Territory Administration (FCTA) and now telecom operators.

Nigeria has over 184 million active mobile lines as at December 2019, according to data from the NCC website. However, these numbers cannot be associated with the amount of mobile subscribers in the country as one subscriber can have an unlimited amount of SIM cards registered. The NIMC currently has about 39 million registered Nigerians in its database. This is believed to change with the new policy.

Stakeholders say creating a truly digital economy by enforcing traceable digital identification is advantageous and poses a ray of hope for a boost in Nigeria’s economy in the future. The absenceofuniqueidentitynumbers for every citizen in Nigeria may have been a contributory factor tothe underdevelopment as well as security hazards of certain services and industries in the country.

“We need valid data to associate with the numbers of the amount of individual subscribers and not just subscriptions. The database we currently have only measures the subscriptions and not the people using the service. If we want to know the true number of Nigerians we must use the National Identity Database and not SIM registration,” Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON), told BusinessDay in a telephone interview.

“The policy makes a whole lot of sense because we have to reduce the number of frivolous registrations that we cannot associate with an individual, and the National Identity Management Commission (NIMC) has to be the custodian of Nigeria’s data,” Teniola said.

UAE points the way to economy diversification...

Continued from page 2

the Emirates of the future in 2020 with the winning spirit of the union, a spirit that strives for progress.

Our development journey has no end,” he tweeted.

The plan aims to strengthen the country’s reputation and investment in future generations, build on basic tenants such as investment in education with a focus on advanced technology, rely less on oil by diversifying exports and imports, enhance cohesion in societies, improve the productivity of the @Businessdayng

national economy and build on Emirati values for the benefit of future generations.

“Our mandate is about preparing the UAE for its biggest challenge: The post-oil era. For this, we n e e d t o c o mp l e m e nt government and privatesector efforts to empower young talents,” said Mohamed Al Qadhi, general manager, Sandooq Al Watan, about the big ambition and challenge take up to 50 years of work.

•Continues online at www.businessday.ng

Thursday 06 February 2020

Retail &

BUSINESS DAY

consumer business Luxury

consumer spending

Strategic response to competition menace sees UACN’s revenue improvement by 10% BUNMI BAILEY

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he strategic move

by UACN, Nigeria’s oldest conglomerate has led to an improvement in its revenue year-onyear by 10 percent to N84.0 billion in 2019 from N76.6 billion in 2018.

According to consumer analysts, the improvement is attributed to the reduction in the price of their animal feeds segment which pushed up its sales.

“The intensified competition in the animal feeds segment following aggressive market penetration efforts

by Olam International, one of the leading food and agribusiness company in Nigeria led to loss of market share to UACN, resulting in a decline in revenue from its animal feeds business,” Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers said.

“This was further exacer-

major business segments which are animal feeds, paints, packaged food, QSR (Quick Service Restaurants) and Logistics. It had a Real Estate segment before but was discounted late last year due to it making a loss.

Revenue from its animal feeds which accounts for 54 percent of the company’s revenue improved by 14.3 percent year-on-year to N48.9 billion from N42.8 billion.

bated by reduced bird population, higher input prices and relatively low market prices of eggs and poultry. And in order to combat the decline in sales, UACN reduced prices by like 10 percent in the fourth quarter of 2018 to recover market share. And this recovery has been sustained for over five quarters by my estimates,” Akinloye further said.

The UACN group is a diversified business with five

Profit before tax jumped to N8.1 billion, up 5.2 percent from N7.7billion posted in 2018, while tax expenses decline by 9.1 percent to N2.0 billion. But despite the improvement they made a loss after tax of N9.2 billion for the period from discontinued operations of N15.3billion Abiola Gbemisola, a Consumer analyst at Lagos-based investment firm, Chapel Hill Denham said, “The company’s management in the last two years has been trying to revamp the company and that is why you see the better performance. Before this full year result, I have noticed improvement in their revenues sine the first three quarters of 2019.”

“But there is still an opportunity for more improvement. The company should be in a revenue category of N150 billion but this is just N84 billion,” Gbemisola said.

UACN is a public limited company, which is listed on the Nigerian Stock Exchange domiciled in Nigeria.

consumer spending

Coronavirus: Nigerians could experience delay in new phones, consumables BUNMI BAILEY

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ew stock of Tech products such as mobile phones, gadgets etc and consumer items like clothes, shoes, bags, and others may experience delay or shortage in the Nigerian market as a result of the wide outbreak of the Coronavirus.

According to Gbenga Adebayo, a smartphone salesman, the virus if it continues may delay new phones gadgets coming into the market. “Most of these tech items come from China. The virus has kept factory workers’ work on. Thus, stalling production,” He said.

Apart from tech products, consumer items like shoes, bags, cloths, bags etc. are also not left out. China is Nigeria’s biggest source of import. In 2018, Nigeria imports from China was $8.35 billion, according to the United Nations COMTRADE database on international trade “The virus outbreak has a

significant impact on China.

Production activity has been shut down across sectors; to prevent the spread of the virus.

This will impact the ability to export to other markets such as Nigeria which depends on foreign clothes, shoes and home and personal items,” Abiola Gbemisola, a Consumer analyst at Lagos-based investment firm, Chapel Hill Denham said.

“Although the impact is not expected to be immediate, until current inventories across local importers are depleted.

At the end of the day, they may have to re-route by importing from other countries with cheap clothes - India, Vietnam, Phillipines etc,” Gbemisola further added.

The spread of the Wuhan coronavirus shows no signs of slowing, as China reported another major spike in both confirmed cases and deaths in the region at the heart of the epidemic.

As at Tuesday morning, the total number of confirmed cases in China stood at 20,438,

including a one-month-old baby in southwestern Guizhou province, an increase of 3,235 on the previous day -- an over 18 percent jump. The death toll is now at 425 in China, an increase of around 65 from Sunday.

Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers said, “Nigeria might issue a travel ban soon and the psychological impact on Nigerians would deter them from wanting to travel there to bring in goods. It could lead to scarcity if the virus epidemic is prolonged.”

The outbreak has sent a shudder through China’s already-slowing economy, with experts predicting annual growth could fall below 4 per-

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cent in the first quarter.

The World Health Organization (WHO) declared the novel coronavirus outbreak a public health emergency and the State Department heightened its travel advisory for China to Level 4: Do Not Travel due to the virus outbreak.

According to the WHO, coronaviruses are a large family of viruses that range from the common cold to much more serious diseases. These diseases can infect both humans and animals. The strain spreading in China is related to two other coronaviruses that have caused major outbreaks in recent years: Middle East respiratory syndrome, also known as MERS, and severe acute respiratory syndrome, or SARS. Symptoms of a coronavirus infection range from respiratory problems, difficulties breathing, fever and cough, to the much more severe cases of pneumonia, kidney failure, acute respiratory syndrome (when fluid builds up in the lungs) and death.

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Malls

Companies

Deals

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Spending Trends

consumer spending

Cheng Fuller, retail expert gives winning formula for modern stores

etail expert, Cheng Fuller has stated that the winning formula for retail business especially retail chain stores are to adopt modern trade.

In a chat recently with journalists, he pointed out that modern trade had evolved past putting up fancy stalls outfitted with gadgets and items but actually becoming part and parcel of the lives of its customers.

Fuller who played a key role in the setup and roll out of Indigenous Retail Chain Store Hubmart Stores urged retail players to focus on creating experiences for customers that they would wear in their hearts as they would wear their clothes on their bodies.

He said “Nigerians are emotional shoppers and more often than not, their emotional affinity to a brand or product is engendered by their experience the first time they come in contact with the services rendered by these brands” He posited that ultimately the quality of service would be the defining factor that would determine the lifespan of retail brands

- (etc). Today, all brands are striving for aggressive expansion and the retail explosion has gained critical mass. I believe there is no turning back. It is inevitable that Modern Retail will find a way to increase penetration with many different innovative formats from hypermarkets to small discounters. Today, there are a couple of hundred stores across the nation and these account for about 5-6 percent of the retail space.

In a couple of years, Modern retail will take up more substantial share annually. I predict that this share will be somewhere around 10-15% within the next 5 years. That means that existing brands will keep driving aggressive expansion and new players will hit the ground. Pick-n’ Pay is already knocking on the door as we speak.’

In conclusion, he stated, ”Consistency and ensuring sustainability, for me is the biggest challenge in ensuring continuity. Sustain your store, sustain your people, sustain your range, sustain even your payment system and sustain your stock. Sustainability is a key challenge.

Maintaining the continuous flow of goods, service levels and even power is a problem.

A dearth of skilled experts

in the future. He stated, “Quality of Service is directly interpreted by the customer based on the level of delight in the shopping experience enjoyed by the customer during the shopping trip. This is hinged on 6 pillars outlined from the customer perspective, Good prices, Courteous Staff, Fewer Queues, Easy and Enjoyable shopping experience, rewards for loyalty.

Speaking on the future of retail for the next 5 – 10 years, he opined that consistency was a key factor in ensuring sustainability for most retail stores. In his words, “About 5 years ago, we witnessed real Modern Trade explosion and new brands started to flourish and test their models i.e. Hubmart – Miniso, Jara,

and of trained personnel who understand the dynamics of the market and can perceive sense the trends is equally an issue. However, organisations that are able to wholly translate the brand promise in their services to customers and collaborate with vendors to give the best relevant offer to the customer will remain kings in this market for a long time to come.”

It will be recalled that Cheng Fuller has over 15 years of work experience managing multifaceted teams in various multinational and local businesses to deliver value in process, strategy, brand management, business development, retail, as well as business advisory in the emerging markets

Modestus Anaesoronye

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Thursday 06 February 2020

BUSINESS DAY

POLITICS & POLICY

Electoral reforms: Sonaiya kicks against two-party system for Nigeria Iniobong Iwok

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emi Sonaiya, a former presidential candidate of the KOWA party in the 2015 presidential election, has kicked against calls for the country to adopt a two-party system practised during the Third Republic as one of the ways out of the nation’s electoral logjam.

Nigeria currently has more than 90 registered political parties; however, in recent times political stakeholders and leaders have said that part of the proposed electoral reforms before the 2023 general election should be a return back to the two-party system practised in the Third Republic.

They, said that deregistration of smaller and non-per-

forming parties was needed as part of the initiatives to solve the logjam bedevilling the nation’s electoral system.

In an exclusive interview with BusinessDay, Wednesday, however, Sonaiya said though the current number of political parties in the country may be too many, the government cannot impose twoparty system on Nigerians.

Sonaiya said the current democratic arrangement in the country does not favour smaller parties except the two major parties of the ruling All Progressives Congress (APC) and the People’s Democratic Party (PDP) that had tasted power and had the resources to manipulate elections results.

Speaking fur ther, the scholar accused the two major parties of using state funds to manipulate elections in their favour to the detriment

Remi Sonaiya

of the smaller parties.

According to her, “I agree; there is no doubt that having

like seventy or more parties on the ballot is wasteful; is expensive, it is confusing for

Insecurity: Buhari must rise to the challenge or resign - Group Iniobong Iwok

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group, Nig er ia Awareness Initiative, has urged President Muhammadu Buhari to tackle the security challenge plaguing the country, saying that the increasing loss of lives was becoming unbearable.

In recent times, the security situation in Nigeria has deteriorated and assumed a frightening proportion.

Apart from Boko Haram insurgency, increased attacks, killings and kidnapping by suspected Fulani herdsmen

have compounded the situation.

These herdsmen have terrorised Nigerians, destroyed properties and communities, maimed, kidnapped for ransom, while leaving trails of anguish in the heart of the people.

However, in an interview with BusinessDay, National Leader of the group, Idowu Omolegan said that President Buhari must do more to halt the killings and kidnapping of Nigerians across the country.

Omolegan who is senior lawyer and philanthropist, equally threw his weight behind the Southwest regional

security outfit, ‘Amotekun’ saying that the initiative was an indication that restructuring of the country was inevitable and would naturally take its course.

He urged President Buhari to stop his frequent trips abroad and stay more in the country and resolve pressing issues bedevilling Nigerians.

According to him, “The situation is very bad as you can see; people are being killed and kidnapped daily.

We are saying that the President should do more, let him try and safeguard the lives of Nigerians.

“Awolowo said it then that

Nigerians would one day fight for themselves and as you can see restructuring would naturally take its course in Nigeria either you like it or not. I think the President’s frequent trips abroad are too much. The President should stop travelling up and down and stay here to settle the issues on ground affecting Nigerians,”.

Speaking further, Omolegan equally charged Nigerians to collaborate with security agencies in the insurgency war and share information on criminal activities of individuals and groups to aid the fight against insurgents.

Oyo PDP accuses APC of causing chaos, desperate to destroy the state REMI FEYISIPO, Ibadan

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he All Progressives Congress (APC) in Oyo State has been accused of desperation to cause chaos, derail governance and destroy the State with its orchestrated lawlessness and well-oiled falsehood over the local government dissolution.

The Oyo State chapter of the People’s Democratic Party (PDP) made this accusation on Tuesday in a statement signed by its Publicity Secretary, Akeem Olatunji, in response to a statement by the APC’s falsehood that Governor Seyi Makinde brought anarchy back to the State.

Olatunji maintained that the ongoing violence and threats to peace and order in Oyo State

was orchestrated by the APC, which has remained ever so determined to foist illegality on the State using the Attorney General of the Federation and the Inspector General of Police.

The PDP cited the arrest of an aide of a sacked APC local government chairman for the killing of a PDP member identified as Alajase in Surulere Local Government Area as a vindication that it was, indeed, the APC that had been attacking lawabiding PDP members across the state, adding that scores of PDP members were being treated for different injuries in hospitals across the State.

“We are saddened by the ongoing violence in Oyo State, which is being orchestrated by the APC. We symphathise with the family that lost their breadwinner in Surulere Local Government as well as www.businessday.ng

those who are injured and have been receiving treatments in different hospitals.

“No one would have expected that the APC’s desperation and penchant for lawlessness would go to the extent of shedding bloods.

But we are not surprised that it could come out to tell barefaced lies to the world that Governor Makinde, a peaceloving individual, has brought violence back to Oyo State.

“How can the Oyo APC, which held violent campaigns that claimed lives turn around to say Makinde has brought violence back to Oyo State?

How can the party that was in government when a member of the House of Representatives, who disagreed with their party, was murdered in cold blood accuse anyone of bringing violence back to Oyo State?

“We commend the Oyo State Police Command for its efforts in promptly arresting an aide of a sacked APC local government chairman for the murder of our member in Ogbomoso. This has cleared the air on the false information credited to the Minister of Youths and Sports, Sunday Dare, that his town was under siege. He should have been truthful enough to state that the siege was caused by party members,” the PDP stated.

This was as the PDP charged the duo of the failed governorship candidate of the APC, Adebayo Adelabu and the Minister of Youth and Sports to look for other avenues to promote their inordinate 2023 ambitions and stop shopping for relevance by commenting on the local government dissolution just to score cheap political points.

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a lot of people.

“But I don’t think they can impose PDP or APC on us because many of us believe that they are the same party. They are just a group of people who are just mismanaging the country and taking advantage of the resources of the country to win elections.

“They take money from the government and they are using that money to win elections.

“So they keep saying that the smaller parties are not making impact but you are using the money of the country to buy votes; you give people N5, 000, N10, 000 or more to buy their votes. Because they know that Nigerians are poor they deliberately keep the people poor so that they can buy their votes”.

When asked her view on the recent judgment by the Supreme Court on the Imo

gubernatorial election, the former lecturer expressed surprise by the ruling, stressing that the Supreme Court had questions to answer.

“I don’t understand it.

I reacted like many Nigerians did because I don’t understand how somebody got all the votes that was not counted and they were now added and it happened that all the people in the constituency voted only for this man.

“It is surprising; is it not?

And this is a party that no one voted for the state House Assembly elections but they voted for him in the governorship election are they making fool of us or what?

“Now, somebody who was third in the primaries was now given the governorship election, we have to query the Supreme Court on that judgment,” she added.

KOWA flays Sanwo-Olu over ‘Okada’ ban Iniobong Iwok

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he Lagos State chapter of the Kowa party has criticised the state Governor, Babajide Sanwo-Olu over his decision to ban commercial tricycles and motorcycles popularly known as Okada in some local government areas in the state, saying that the decision was not wellthought-after.

In a statement on Wednesday and signed by the party’s state chairman, Bimbo Oyedokun, a copy which was made available to BusinessDay, Oyedokun noted that the decision was hastily taken, while the Sanwo-Olu ledadministration should have provided alternatives means of transportation for millions of residents across the state before arriving at the decision.

The party further said that Sanwo-Olu’s action was a further demonstration of the failure of similar policies by the state government, especially the ‘Visionscape’ and light rail project, while charging Lagosians to vote out the ruling All Progressives Congress (APC) in the forthcoming local government election and the 2023 general.

According to the statement, “There is no evidence that this action was properly planned, or that any serious thought was given to minimising commuters’ pain as a result.

“This could have easily been piloted in one or two LCDAs before being scaled up. It @Businessdayng

also highlights the absence of proper transportation architecture for the state.

“The light rail project remains a mirage more than a decade after it was started, yet is more expensive than similar projects in many parts of Africa which have been completed. The BRT scheme is grossly overstretched, yet one company maintains an inefficient monopoly over most of the routes. In clear terms, there is no evidence of any people-oriented development master plan for Lagos State.

“The shoddy, condescending manner in which the decision was communicated, and the heavy-handed implementation (courier companies are excluded from the ban, yet were targeted by enforcement agencies, which is indicative of a lack of respect for the citizens of Lagos. The almost comical attempts to explain the ban away on social media, made it even worse.

“This action also represents a shocking policy somersault that paints the state and the government as unserious.

The governor was speaking glowingly about bike-hailing startups publicly just a few months ago, saying they would be integrated into the transportation system. Now, up to $100million of venture capital is reported to be at risk. This recalls the infamous “Visionscape” debacle where the LASG defaulted on a bond payment after the scheme collapsed, lowering the state’s credit rating, a cost that is being borne by tax payers.

Thursday 06 February 2020

BUSINESS DAY

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World Business Newspaper

James Politi, Katrina Manson, Brendan Greeley and Kiran Stacey

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onald Trump claimed “incredible results” in boosting the US economy in an often tense State of the Union address that highlighted the president’s bet that resilient job growth and a pair of trade deals can propel him to reelection this year.

Speaking to lawmakers on the floor of the House of Representatives where he was impeached less than two months ago, Mr Trump said the US was “thriving and highly respected again”, with booming employment, declining poverty and soaring confidence.

“We have shattered the mentality of American decline and we have rejected the downsizing of America’s destiny. We are moving forward at a pace that was unimaginable just a short time ago, and we are never going back,” Mr Trump said.

The president spoke the day before the Republican-controlled Senate was expected to vote to acquit him on charges of abuse of power and obstruction of Congress levelled by House Democrats over his actions towards Ukraine.

Mr Trump avoided any mention of impeachment but his differences with Nancy Pelosi, the Democratic House speaker, were apparent. Before he spoke, Mr Trump failed to respond to her attempt at a handshake. Ms Pelosi frequently grimaced at his words and she ripped up a copy of his speech at its conclusion.

After the address, Ms Pelosi labelled Mr Trump’s remarks a “manifesto of mistruths”.

Mr Trump’s speech set the tone for his re-election campaign as he made little effort to persuade Congress to pass big new policy measures — a recognition that legislative activity will probably grind to a halt this year as the campaign heats up.

The president used much of his speech to outline his commitment

Donald Trump hails economy during tense State of the Union Differences between president and House speaker are laid bare on eve of Senate impeachment vote

Nancy Pelosi, the Democratic House speaker, tears up a copy of President Donald Trump’s speech at its conclusion © Reuters

to conservative causes popular with his political base, from gun rights to fighting crime committed by immigrants. He also awarded the presidential medal of freedom to Rush Limbaugh, the rightwing radio talk show host who was in the audience and was recently diagnosed with lung cancer.

Although the president faced the biggest foreign policy crisis of his term a month ago when military tensions rose with Iran, Mr Trump did not speak about relations with Tehran at length.

Instead, he hewed to familiar themes of US military superiority.

“Our military is completely rebuilt with its power being unmatched anywhere in the world,” he said, celebrating the US missions that killed Isis leader Abu Bakr al-Baghdadi and Iran’s top

military commander Qassem Soleimani.

Mr Trump wondered aloud whether Iran was “too proud or too foolish” to fix its economy by negotiating a new deal to end tough US sanctions, and pointed to peace talks that might allow him to pull US troops out of Afghanistan, saying it was not America’s role “to serve other nations as law enforcement agencies”.

The president also hailed the presence in the gallery of Juan Guaidó, the Venezuelan politician recognised internationally as the country’s president.

“The United States is leading a 59-nation diplomatic coalition against the socialist dictator of Venezuela, Nicolás Maduro,” Mr Trump said, castigating him as “a tyrant who brutalises his people”.

Apart from a fleeting reference to Nato countries finally “paying their fair share” to maintain the military alliance, transatlantic relations, including America’s ties with the UK, did not feature in the speech.

With a US unemployment rate of 3.5 per cent, the lowest since 1969, the president took credit for what he called a “blue-collar boom” that has helped lift up lower-income Americans left behind in earlier stages of the country’s decade-old expansion.

A rare moment of bipartisan unity came when Mr Trump called for more infrastructure investment, though it is far from clear whether Republicans and Democrats can agree on concrete legislation.

Mr Trump expressed support for a drug pricing bill being

promoted by Chuck Grassley, the Republican senator from Iowa, and Ron Wyden, the Democratic senator from Oregon. The measure would impose penalties on drug companies if their prices rise faster than inflation — something some Republicans view as akin to government price controls Mr Trump also recently secured two milestones on trade, reaching a “phase one” deal to pause the nearly two-year-old trade war with China, and gaining the approval of Congress for USMCA, the revision of Nafta negotiated with Canada and Mexico.

“Many politicians came and went, pledging to change or replace Nafta — only to do absolutely nothing. But unlike so many who came before me, I keep my promises,” he said.

Despite Mr Trump’s claims of economic prowess, the Democratic response to the State of the Union attacked him for failing to live up to his promise to rejuvenate working America.

“It doesn’t matter what the president says about the stock market,” said Gretchen Whitmer, the Democratic governor of Michigan. “American workers are hurting . . . Wages have stagnated, while CEO pay has skyrocketed.”

Some Democrats, including Alexandria Ocasio-Cortez, the leftwing Democratic lawmaker from New York, decided to boycott the speech altogether.

“After much deliberation, I have decided that I will not use my presence at a state ceremony to normalise Trump’s lawless conduct & subversion of the Constitution. None of this is normal, and I will not legitimise it,” Ms Ocasio-Cortez wrote on Twitter.

Central banks ‘hesitant’ on digital currencies, says former governor Christian Noyer believes projects available to consumers are a way off yet Philip Stafford

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hristian Noyer, former governor of the Banque de France, has raised doubts that major central banks will launch digital currencies for consumers within the next 10 years, but forecast that digital payments between commercial banks “will happen fairly soon”.

Last month, a report by the Bank for International Settlements noted that more than 50 central banks were working on digital currency projects. Most of this work is focused on a token or account that could be accessed by the general public, as opposed to one used by commercial banks and clearing organisations to set-

tle transactions. At the moment, individuals’ access to central bank money is limited to notes and coins.

Sweden and Uruguay have gone as far as running pilot projects for consumer-focused digital currencies, trialling the e-krona and e-peso, respectively.

Mr Noyer told the Financial Times that the decline in usage of physical cash, along with the rise of private initiatives such as Facebook’s Libra, had prompted central banks around the world to look more deeply into digital currencies. But he added there was “clear hesitation” from the world’s top central banks over whether to launch their own projects, because of concerns over www.businessday.ng

privacy and the impact on the central bank’s ability to conduct monetary policy.

“Whether they will enact the projects in the next 10 years remains to be seen,” he said, pointing to the scale of the task in upending current systems. “I don’t think we are close to the departure lounge, but the fact that they want to study it means a lot of work will continue this year.”

Mr Noyer was governor of France’s central bank for 12 years until 2015, and vice-president of the ECB when it was founded in 1998. He now sits on the board of Setl, a London blockchain technology group that develops electronic ledgers to process payments that are on a central bank’s

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balance sheet.

Policymakers have been put under pressure to innovate by projects such as Libra, which some fear could pose a threat to the role of central banks in the financial system.

But Mr Noyer said the links that commercial banks provide between consumers and the central bank would be decisive.

Central banks “will probably wait to see what the commercial banks are doing themselves,” he said.

Policymakers are not keen on the concept of “private money” such as Libra, he added.

A digital currency for consumers would typically require that people have an account at their central bank rather than a com@Businessdayng

mercial bank. That would mean central banks were responsible for critical checks on customer activity and screening for illegal activity such as money laundering. Such a move would undermine the commercial banks’ traditional roles as trusted intermediaries in the circulation of money.

However, Mr Noyer said digital currency for wholesale payments between commercial and central banks, the way that most payments are processed in modern-day banking, was a possible compromise. “There needs to be a central bank-backed currency somewhere. It’s an important part of the credibility of money that the general public can access [it],” he added.

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Three Credit Suisse investors back Tidjane Thiam in board battle Tensions with chairman Urs Rohner increased since bank was embroiled in spy scandal Stephen Morris and David Crow

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hree top Credit Suisse shareholders have backed chief executive Tidjane Thiam in a highstakes power struggle with chairman Urs Rohner, which has intensified after a spying scandal at the Swiss bank.

Relations between Mr Rohner and Mr Thiam have been increasingly strained since the revelation that Credit Suisse hired a corporate espionage company to follow its former executive Iqbal Khan, who defected to arch-rival UBS last summer.

The battle has intensified ahead of a crunch board meeting on Thursday after reports emerged that Mr Rohner was drawing up a shortlist of candidates to potentially replace Mr Thiam this year.

Credit Suisse declined to comment.

US-based hedge fund Eminence Capital has written to the bank’s non-executive directors to warn them against pursuing “a personal agenda with respect to the CEO rather than act[ing] in a responsible fiduciary way”. A copy of the letter, which also threatened legal action against Credit Suisse’s board, was seen by the Financial Times.

On Wednesday, Silchester International Investors, which said it owned 3.3 per cent of the Swiss bank, said that Credit Su-

isse chairman Urs Rohner should consider resigning if he no longer supported Mr Thiam.

On Monday, the bank’s largest shareholder, Harris Associates, warned the board against “tinkering with management”.

In a statement, Silchester said it was “not aware of any reason why [Mr Thiam] should not continue to have the full support” of Mr Rohner and the Credit Suisse board.

It added that the chairman should “retire as planned in 2021” or sooner if he “feels unable to

continue to support the CEO”.

Tim Linehan, senior partner at Silchester, decided to make the letter public after Mr Rohner rejected his request to circulate it to the rest of the board before the Swiss stock market opened on Wednesday, according to a person familiar with the discussions.

Meanwhile, Eminence founder and chief executive Ricky Sandler wrote in a separate letter this week that it would “hold the chairman and the rest of the board accountable for their behaviour that is value destructive to shareholders”.

Eminence said it “will not hesitate to pursue legal and or governance actions to protect shareholders’ interests”.

Silchester and Eminence’s comments follow those of the bank’s largest shareholder, David Herro, vice-chairman of US-based Harris Associates, which owns an 8.4 per cent stake.

“People don’t want to see the board or anyone tinkering with management,” said Mr Herro on Bloomberg Television on Monday. “To be very frank, it seems [like] envy from competitors or

perhaps something else given that Mr Thiam looks a little bit different than the typical Swiss banker.

Either one of these two rationales behind these attacks against him, to me are extremely distasteful.”

Mr Thiam, who is the first black chief executive of Credit Suisse, has radically reshaped the 163-year-old Swiss bank since joining in July 2015, expanding its wealth management division while downsizing its volatile and capital-intensive trading arm.

After a rocky start with billions of cumulative losses in his first few years, his overhaul is starting to bear fruit.

Credit Suisse’s progress under Mr Thiam has been overshadowed

by Mr Khan’s departure and the spying scandal, which led to a constant string of lurid stories in the Swiss press.

Mr Thiam was initially cleared of any involvement by an external law firm, and two senior Credit Suisse executives were fired.

However, following the news that the surveillance of Mr Khan was not an isolated incident, Switzerland’s market regulator, Finma, announced launched its own formal probe into the bank.

One person familiar with Mr Thiam’s plans said whilst he was “fed up”, he would never quit the bank and that Mr Rohner would have to fire him. He attributed the campaign against Mr Thiam to “clannish” and conservative Swiss members of the board.

Adobe and Salesforce overturn old order in cloud revolution Oracle and SAP fade after failing to change fast enough Richard Waters

S

hantanu Narayen, the chief executive of US software company Adobe, sounds almost incredulous about his company’s recent stock market transformation.

Best known for its Photoshop image-editing software and Acrobat document reader, Adobe had a stock market value of $8bn in the wake of the financial crisis. Late last week, however, it overtook Oracle to become the world’s second most valuable software company after Microsoft, with a stock market value of more than $170bn.

“We’re worth more than Oracle, we’re worth more than SAP — we’re worth a lot more than IBM,” said Mr Narayen, ticking off the old powers of the IT world that his company has eclipsed. His short explanation for this reordering of the pecking order in tech: “We’re all about growth.”

There has been a changing of the guard in the software world.

A rejuvenated Microsoft, under Satya Nadella, still sits at the top of the heap. But below it, companies growing fast on the back of cloud computing have benefited from a surge in investor interest.

Salesforce, known for its cloudbased sales automation software, itself overtook German software maker SAP in market value last week and is now within 4 per cent of overhauling Oracle. For Marc Benioff, the former top Oracle sales-

man who co-founded Salesforce 21 years ago, that would represent a big victory over his former mentor, Larry Ellison. The Oracle boss long scoffed at what he claimed was the faddishness of Wall Street’s infatuation with cloud stocks.

Speaking late last week, Mr Benioff wouldn’t be drawn on the rivalry with his old employer, but was dismissive of Oracle’s own, stuttering efforts to latch on to the cloud. “Customers don’t talk about them much,” Mr Benioff said. Pointing to the sales growth that has lifted companies such as Salesforce, he added: “The customers have spoken, in terms of the revenue acceleration of the cloud companies.”

With stock market investors starved of growth, cloud software has become “one of the only durable growth markets out there right now in a low-interest rate environment”, said Alex Zukin, a technology analyst at RBC Capital Markets.

Public fascination with the most recent generation of highly valued tech start-ups, known as unicorns, has centred on companies that serve consumer markets, like Uber and Lyft (now valued at $62bn and $14bn, respectively). But business software start-ups have turned out to be a more reliable bet, with companies such as ServiceNow and Shopify — each founded within the past seven years — now worth $64bn and $54bn.

The rise of cloud software has been a rapid one. Seven years ago, www.businessday.ng

Adobe became the first traditional software company to jettison its old way of doing business — shipping discs loaded in return for an upfront licence fee — and make the switch completely to the cloud.

Swapping upfront licence sales for regular subscription fees meant delaying the recognition of revenue until future years, leading to a pause in reported sales. It took three years for Adobe’s revenue to get back to the point it had been at the start of the transition. But in the four years since, it has jumped more than 130 per cent.

Both Adobe, which makes tools for creative professionals and marketers, and Salesforce, which expanded from sales to marketing departments, have benefited from the greater penetration of software in the “front office” of businesses, reshaping the jobs of many people whose jobs involve dealing with customers.

This was partly a result of luck, said Mr Zukin: As online interaction began to produce a deluge of data from customers, both companies were well placed to help businesses understand and manage the new flood of information.

We’re just still at the beginning of the digital transformation of so many companies Marc Benioff, Salesforce cofounder Adobe, whose core software products were used by creative types like designers and illustra-

https://www.facebook.com/businessdayng

tors, benefited from an explosion in digital content creation that came with the advent of smartphones and the cloud. The cloud also opened the way for “measurement and monetisation”, said Mr Narayen — giving marketers tools to analyse how people were interacting with their content, as well as ways to cash in on it.

Companies of all types are still at an early stage of reshaping their operations around this new fount of customer data, added Mr Benioff.

“We’re just still at the beginning of the digital transformation of so many companies,” he said.

Making their software applications available over the cloud has also made it possible to reach many more users. “We used to serve the top of the pyramid, people [in creative jobs] viewed us just as people in finance view the Bloomberg terminal,” said Mr Narayen. Low-cost versions have expanded the market, particularly in the developing world, he added.

The huge shift in stock market value to companies that have risen with the cloud also speaks volumes about the struggles of the old guard to latch on to the cloud revolution.

Shares in SAP dropped 6 per cent last week after it reported a fall-off in new cloud business, with a deceleration in bookings to 17 per cent in the most recent quarter, from 34 per cent in the preceding three months.

SAP has placed some big bets on the cloud, including two $8bn @Businessdayng

acquisitions in recent years — of Concur, whose software is used to manage travel expenses, and Qualtrics, which runs online surveys. But SAP’s main growth has come from reengineering its original back-office applications to process and analyse large volumes of data more rapidly.

What cloud growth it had managed had come from “add-on services and applications” rather than its core business, said Kevin Walkush, a portfolio manager at Jensen Investment Management.

Shares in the German software maker have at least fared better than Oracle, whose stock has underperformed the wider US stock market by 60 per cent over the past five years. But SAP and Oracle have been held back by their focus on back-office systems, said Brent Thill, an analyst at Jefferies — a result of their rise at a time when enterprise resource planning, or ERP, was the driving force in business automation. “Neither has figured out the front office,” Mr Thill said.

“It takes years to implement an ERP system, and once it’s implemented you want to run it for years” rather than replace it with cloud software, said Mr Walkush at Jensen, an Oracle investor. In addition, he said, companies using cloud services had become less concerned about the underlying technology they ran on — eroding the loyalty towards Oracle’s database software, which has been a core part of the IT foundation for many corporate applications.

Thursday 06 February 2020

FT

BUSINESS DAY

45

ANALYSIS

Brookfield: inside the $500bn secretive investment firm

An FT investigation into the complex dealings of the group that helped out the Kushners by leasing 666 Fifth Avenue Mark Vandevelde

O

n a busy stretch o f Ma n h a t t a n ’s Fi f t h Av e n u e a few blocks south of Trump Tower, a decaying skyscraper stands as a rebuke to the $1.8bn deal that Jared Kushner helped his family sign a decade ago, at the age of 26. It was the most expensive New York office purchase in history, and for a time it looked likely to sink the Kushners’ business. Steve Roth, the billionaire who co-owned 666 Fifth Avenue, lamented it would “be worth a lot more if it was just dirt”.

By 2016, Mr Kushner was searching for a way out. Destined for a top job in his father-in-law’s White House the following year, he found plenty of people to talk to, but no one who was buying. Discussions with Anbang, the Chinese insurance group, came to a halt some time before its flashy chairman Wu Xiaohui landed in a Chinese jail. The Qatari finance minister Ali Shareef al-Emadi met Mr Kushner’s father in 2017, although Charles Kushner has said he took the appointment “out of respect” and stressed there could be no deal.

Then, with months to go before $1.2bn of mortgage payments fell due in February 2019, the Kushners won a reprieve — one that looked nothing like a favour from a foreign state. It was an investment from financial group Brookfield, which leased the building whole, paying nearly a century of rent in advance.

Brookfield is a name that towers over the global investment industry, even if it receives less scrutiny or attention than rivals of similar size. The name adorns the skyscrapers of London’s Canary Wharf, Berlin’s reconstructed Potsdamer Platz and New York, where Brookfield dwarfs every other commercial landlord. And it reaches far beyond real estate; Brookfield’s eclectic investment portfolio includes 14,500km of railways and toll roads, about one-seventh of France’s mobile phone masts, and Westinghouse, the formerly bankrupt nuclear reactor maker.

Originally an outgrowth of the Bronfman liquor dynasty, the group today attracts money from ordinary stock market investors, sophisticated public pension systems and sovereign states including Qatar, the gasrich Middle East kingdom whose finance minister the elder Mr Kushner appeared to spurn.

“Our reputation is that if you

have a large transaction, if you have a difficult transaction . . . go to Brookfield,” says chief executive Bruce Flatt.

Yet what exactly Brookfield is, and how it operates, is maddeningly difficult to ascertain.

To unpack the Canadian group’s accounts is to discover not so much a company as a giant, triangular jigsaw board that spreads across the world and covers assets worth $500bn. The pieces are hundreds of corporate entities, all locked together by elaborate contracts, which give 40 people at the top the right to rule huge sections of the puzzle almost as if it were their own.

Those insiders wield such power that the companies below them could face risks similar to those of “pyramid control companies”, according to a draft investor disclosure that Brookfield filed with the Securities and Exchange Commission in 2013. (The final version warned instead of risks “associated with a separation of economic interest from control”.)

Over the past six months, the Financial Times has asked current and former executives, and others who know Brookfield well, to shine a light on this empire. Some refused to talk; others requested anonymity, citing non-disclosure agreements or fear of reprisals.

Even as they spoke, the Toronto-based group pushed further into US finance, completing an acquisition of Oaktree Capital Management, the private equity firm founded by Howard Marks and Bruce Karsh. Yet in interviews, securities filings, litigation records and other documents, a picture emerges of an investment group that defies convention: highly secretive, seemingly obsessed with control and susceptible to family squabbles that have few parallels among its Wall Street peers.

Brookfield began with a $15m inheritance and a family feud.

The money came from Samuel Bronfman, founder of the Seagram Company, who made a fortune out of alcohol just as America turned to prohibition.

The feud involved his two nephews, Peter and Edward, and it began in 1952, when Samuel locked the young brothers out of Seagram’s offices and forced them to sell their shares for less than they were worth. The key actor, though, was accountant Jack Cockwell, who teamed up with the two brothers, and whose shrewd dealmaking helped build a behemoth.

A turning point for the Bronfmans came with the acquisition, following a messy takeover battle, of Brascan, the former owner of a Brazilian electrical utility, which was sitting on a pile of cash after the military dictatorship nationalised its biggest asset. In Mr Cockwell’s hands, the New York-listed Brascan became a platform for controlling just about anything: breweries and sports teams, forests and mines, real estate brokers and investment banks.

By the 1980s, Edward and Peter Bronfman were two of Canada’s richest men. They also presided over one of the world’s most complicated corporate structures, with booty from their acquisition spree split between dozens of public companies and hundreds more private vehicles. Edward sold his shares in 1989, retired and took up philanthropy. Peter stayed on to orchestrate the deal that would create Brookfield.

At the centre of the transaction was Pagurian Corporation, which was controlled by executives including Mr Cockwell and shared its name with a species of crab that, having no shell of its own, steals the exteriors of dead snails.

In 1993, with real estate values falling and Brascan selling off assets, Peter Bronfman sought an exit. Pagurian ended up with a majority stake in the Bronfman empire, while Peter Bronfman, whose fortune had seeded the vast enterprise, reportedly received about $25m.

Following a series of name changes, mergers and shareswaps that brought together many of the former Bronfman companies, Pagurian is today known as Brookfield Asset Management. Its leaders have soared in wealth and influence since the departure of the Bronfmans. Mr Cockwell still serves on Brookfield’s board, and holds shares worth about $1.6bn. Mr Flatt, who became chief executive in 2002, has accumulated stock worth another $2.5bn.

Their position seems secure; BAM shareholders have earned compound annual returns of 18 per cent over the past 25 years.

And even if that performance should falter, the two men would be difficult to dislodge, for they own a big piece of a lesser-known company named Partners Limited, which has the power to override the votes of every other Brookfield shareholder.

“In form, Partners is a corporation,” explains a two-page memo sent in the mid-1990s to a handful of Peter Bronfman’s employees, and seen by the FT. In substance, it sounds like something else entirely: a routine of “weekly luncheon meetings” that comes with serious financial perks.

Conceived as a way for executives to “become a financial partner with Mr Bronfman”, Partners today wields enormous power over Brookfield. Its 40 members own about one-fifth of BAM, but have enough votes to appoint nine of its 16 directors. A dualclass structure means they can also overrule shareholder mo-

tions even if they are supported by outside shareholders.

The identity of some of those “partners” is not clear. Brookfield named only a handful in its 2018 public filings, although all are said to be current or former Brookfield executives.

(Among them are Mr Flatt and Mr Cockwell, who own half of Partners between them, according to Brookfield; another five executives were identified who hold about another third.)

Peter Bronfman’s widow Lynda Hamilton, who later married Mr Cockwell, has been named as a shareholder in previous years, as has Mr Cockwell’s brother Ian, who once ran Brookfield’s housebuilding division. (Brookfield says neither currently own Partners shares.)

Mr Flatt likens the system to Goldman Sachs’ former partnership, with insiders promising to forgo most outside business interests, and departing executives ceding their shares to younger partners in exchange for payments stretching over 20 years.

It is not always harmonious.

In one puzzling dispute, a departing executive filed a multimillion-dollar lawsuit against Mr Flatt’s brother Gordon, who has no apparent connection to Brookfield. (The litigation took place in Bermuda and few details are public, but Gordon Flatt denied the allegations against him, and a knowledgeable person said the case had been settled.)

Yet despite an elaborate structure that vests power in insiders, Mr Flatt insists that Brookfield is run by an independent board.

“That partnership does nothing,” he says. “We never have meetings, we don’t vote on anything, there is nothing to do. But it has those rights, and they’re very Continues on page 46

46

Thursday 06 February 2020

BUSINESS DAY

FT

NATIONAL NEWS

Siemens chief lashes out at ‘grotesque’ environmental protests Investors criticise Joe Kaeser over ‘catastrophic’ coal contract

manager at Union, which represents German co-operative banks.

“If all environmental and reputational risks had been carefully examined, Siemens would never have signed this order,” she added, before asking: “Must a catastrophe occur before the company finally understands that coal has no future?”

Winfried Mathes from Deka, which holds almost 9m Siemens shares on behalf of German savings banks, said the “incomprehensible” decision was “threatening to cause massive damage” to the company’s image.

Opening the meeting, Siemens chairman Jim Snabe conceded that “business must fundamentally reinvent itself” and “pay more attention to the environmental impact of investment decisions”.

But protesting outside the event, 23-year-old Luisa Neubauer, who refused an offer to join a Siemens’ board and is a figurehead in Germany’s Fridays for Future movement, founded by Ms Thunberg to protest at the lack of climate change legislation, said Mr Kaeser’s “understanding of corporate responsibility is stuck in the last century”.

“Companies such as Siemens must have a clear plan for how they will phase out fossil fuels,” she added.

On Tuesday, Siemens announced it would spend €1.1bn to take control of the Spanish windturbine manufacturer Gamesa, and make the company “a vital cornerstone” in the transition from conventional to renewable energy.

one-tenth of the fund’s assets are tied up in skyscrapers in Canary Wharf and Manhattan that are co-owned by Qatar, but the connection goes further. Through a sovereign wealth fund, Doha is one of BPY’s biggest investors, holding $1.8bn worth of BPY preferred equity. The securities have a debtlike quality, and Qatar can force BAM to buy them back for $1.8bn over the next six years.

In theory, Qatar has significant influence over BPY. It is entitled to choose one person to sit on BPY’s board, and to receive confidential information that other investors never see. Brookfield says the kingdom has never exercised either of those rights.

(The Qatar Investment Authority declined to comment.) Both sides have previously indicated that, when Brookfield was negotiating a $1.3bn lease on 666 Fifth Avenue, a building that Charles Kushner had discussed with the Qataris the previous year, the kingdom was not involved.

No matter who made the decision or knew about it, rescuing the Kushners strikes some real estate investors as ill-advised.

“It was widely regarded as a very full price, in a midtown office market that’s challenging, in an asset that’s going to require

substantial capex in order to make it leasable,” says a leading dealmaker. Brookfield takes such scepticism almost as a backhanded compliment. “We buy troubled, stressed, things,” says Mr Flatt. “We’re going to reskin the building, and we’re going to fill it up. It’s going to be amazing.”

In the public accounts of BPY, the listed property fund that received Qatari investment, 666 Fifth Avenue has already all but disappeared. Last January, BPY lost control of BSREP III, the private vehicle that owns the building, after reducing its stake to $1bn. New investors piled in, each taking a piece of the Kushner tower, and lifting the private fund’s firepower to $15bn.

That influx of cash has not made the tower’s ownership any more transparent. A handful of US pension funds have acknowledged their participation, but few other investors have been identified publicly. Knowledgeable people insist that no Qatari money is involved. Materials reviewed by the FT show that about $3bn of the total comes from sovereign governments, although they do not specify which ones, and $2bn of it from the Middle East, although the document does not say exactly where.

Joe Miller

S

iemens’ embattled chief executive has lashed out at “grotesque” environmental protests, as he faced the ire of investors over his company’s handling of a controversial Australian coal contract.

Speaking at the German industrial giant’s annual general meeting in Munich, Joe Kaeser said the €18m rail infrastructure deal, which sparked a global backlash, was “irrelevant” to the commissioning of the Carmichael mine in Queensland.

With bushfires raging across Australia, the minor contract became a flashpoint for climate campaigners, who demanded that Siemens renege on its agreement with the site’s Indian developer, Adani.

Last month, after several weeks of co-ordinated protests outside company premises and a social media uproar spurred on by highprofile activists such as Greta Thunberg, Mr Kaeser announced that there was “no legally and economically responsible way to unwind the contract”.

Mr Kaeser, who is due to step

Siemens chief Joe Kaeser insisted ‘protests alone won’t solve anything’ © Peter Kneffel/dpa

down in 2021, insisted that “protests alone won’t solve anything” and emphasised that Siemens was helping its customers reduce their carbon emissions.

Given the company’s commitment to reduce emissions by 50 per cent by the end of the decade, he added, “it is almost grotesque, that a signalling project in Austra-

lia became a target for activists”.

But speaking in front of hundreds of shareholders in the Olympic Hall, institutional and retail investors rounded on the Bavarian boss for failing to foresee the fallout.

“One thing is clear: the Adani case was a communications disaster,” said Vera Diehl, a portfolio

Brookfield: inside the $500bn secretive...

Continued from page 45 important.”

Two days before Brookfield bought the Kushners’ office tower last August, an executive named Brian Kingston dialled into a conference call with analysts and casually disclosed that his team had just closed a $1.4bn transaction involving a different set of New York properties.

Brookfield was the seller. It was also the buyer.

More precisely, the buyer was BAM, which sits a few rows from the top of the Brookfield triangle, and is sometimes known as Brookfield for short. This was already unusual: when the Brookfield group buys an asset, the money usually comes from one of the investment funds it runs for outside investors. “BAM doesn’t do anything,” Mr Flatt confirms. “BAM never puts up any money, for anything. That’s why, if you’ve read any of our materials, we’re increasingly at the point where we generate way more cash than we need.”

But this time BAM was in fact putting up money, to buy a 28 per cent stake in a bunch of New York office towers. And it was doing more besides. The buildings were owned by Brookfield Property Partners, a separate

Nasdaq-listed company that sits further down the triangle, trades under the ticker BPY and — confusingly — is also sometimes known as Brookfield for short.

Because BPY does not employ any property specialists, it delegates tasks such as identifying assets to buy and sell to other parts of the Brookfield empire.

As well as snapping up the New York office tower stakes, therefore, BAM was steering BPY to get rid of them.

“We very seldom sell between companies,” says Mr Flatt.

(Brookfield says that “fiduciary responsibility sits at the centre of everything we do”.) The transaction was vetted by BPY’s independent governance committee, its full board and the board of BAM, Brookfield says, adding that all the directors received extensive information, and a fairness opinion from an independent adviser.

BAM told investors in November 2018 that it planned to sell the property interests to outside investors “in the near term”, but more than a year later, it has yet to announce a buyer.

Even today, shareholders know little about why BPY wanted to sell 28 per cent of its core office portfolio for $1.4bn, or why BAM wanted to buy. The rationale was that BPY needed www.businessday.ng

cash. “The only reason we did that,” Mr Flatt says of the office tower deal, was that “it [BPY] needed some extra capital. And this was an easy way to do it.”

The money was needed, Mr Flatt explains, to pay for a big wager on US malls — a sector that many investors have left for dead. BPY consummated the bet in August 2018 when it merged with retail landlord GGP, whose shareholders received cash payments worth $9.3bn. Yet that was also the month when some of BPY’s cash was committed to 666 Fifth Avenue, the office lease in midtown Manhattan that is still jangling nerves from Washington DC to Doha.

The Kushner deal was assembled from several pieces of the Brookfield empire. The lease was signed by a company named BSREP III Nero LLC, a possible allusion to the emperor who was blamed for the burning of Rome. That company is owned by a fund called BSREP III, which is managed by BAM and was, at the time, controlled by BPY — all of which placed the deal where global finance blends into geopolitics on the jigsaw.

The known links between Qatar and Brookfield all converge on the investment group’s listed property fund BPY. About

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@Businessdayng

Thursday 06 February 2020

BUSINESS DAY

47

Live @ The Exchanges Market Statistics as at Wednesday 05 February 2020

Top Gainers/Losers as at Wednesday 05 February 2020 LOSERS

GAINERS Company

Opening

Closing

Change

N22.6

N24.6

2

CAP

UBN DANGSUGAR

JBERGER ACCESS

Company

Opening

Closing

Change

MOBIL

N147.9

N133.2

-14.7

DANGCEM

N179.9

N170

-9.9

NB

N55

N51.5

-3.5

0.45

CONOIL

N20

N18

-2

0.35

NASCON

N15

N13.5

-1.5

N6.6

N7.25

0.65

N12.45

N12.95

0.5

N21.5

N21.95

N9

N9.35

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

28,093.76 4,729.00 350,207,706.00 4.283

Global market indicators FTSE 100 Index 7,487.55GBP +47.73+0.64%

Nikkei 225 23,319.56JPY +234.97+1.02%

S&P 500 Index 3,318.73USD +21.14+0.64%

Deutsche Boerse AG German Stock Index DAX 13,453.03EUR +171.29+1.29%

Generic 1st ‘DM’ Future 29,006.00USD +217.00+0.75%

Shanghai Stock Exchange Composite Index 2,818.09CNY +34.80+1.25%

14.470

Notore reports N2.04bn Q1 operating profit

A

L– R: Timi Austen- Peters, principal Partner Austen-Peters & Co; Oscar N. Onyema, chief executive officer, The Nigerian Stock Exchange (NSE); Emomotimi Agama, head Registration and Exchanges Securities and Exchange Commission (SEC) Nigeria; Oluwatoyin Alake, head, Secondary Markets, NSE and Jude Chiemeka, head, Trading Business Division, NSE during the NSE, Train Capital Market Operators on Legal and Regulatory Requirements for the Derivate Market at the Exchange.

Stocks shed N380bn in three days as market tilts towards sell-side …presents opportunity for bargain hunting Stories by Iheanyi Nwachukwu

N

igeria’s listed stocks lost approximately N387billion in three trading days to Wednesday February 5, 2020 as the market activities continue to slant towards the sell-side. All key sectoral indices are in the red this week.

The NSE 30 which tracks the top 30 companies in terms of market capitalisation and liquidity has decreased by 2.74percent in

three trading days into this week.

Others are: NSE Banking (-3.5percent), NSE Consumer Goods (-2.25percent), NSE Industrial Goods (-2.93percent), NSE Insurance (-0.17percent), NSE Oil & Gas (-3.12percent), and NSE Pension (-3.41percent).

The Nigerian Stock Exchange (NSE) All Share Index (ASI) has declined by 2.60percent this week to 28,093.76 points as against 28,843.53 points at the beginning of the week.

Listed stocks value has decreased from week-open high of N14.857 trillion to

N14.470trillion.

“In the absence of poor showings by any of the market heavyweights, we expect a positive session, as the opportunity for bargain hunting in recently beatendown stocks is present”, said Lagos-based Vetiva analysts in their Wednesday note.

Only on Wednesday, February 5, 2020, the benchmark index lost 1.19percent, its worst performance this week. 18 stocks advanced in price as against 21 declines.

The market’s positive return is year has decreased to 4.66percent.

Zenith Bank Plc, FBN

Holdings Plc, FCMB Group Plc, UBA Plc and ETI Plc were actively traded stocks on the Nigerian bourse. In 4,729 deals, equity investors exchanged 350,207,706 units valued at N4.283billion.

Wednesday trading session was characterised by early session decline large cap stocks led by Dangote Cement. Others are Nigerian Breweries, Mobil Oil, Conoil and NASCON. Mobil led the losers table after its share price dropped from N147.9 to N133.2, shedding N14.7 or 9.94percent.

frica’s leading fertiliser and agro-allied company, Notore Chemical Industries Plc, has recorded N2.04billion operating profit in the first quarter (Q1) of the 2019/2020 financial year on the back of its plant’s reliability which led to improved production.

The company disclosed this in its unaudited financial statement for three-month period ended December 31, 2019, that is, Q1 2020 financial year.

The result released on the Nigerian Stock Exchange (NSE) shows that Notore recorded revenues of N8.18billion for the three-month period ended December 31, 2019 –that is Q1 2020 Financial Year (FY), compared to N4.32billion for the corresponding period in Q1 2019 FY. The increase in revenue was due to improvement in the plant’s reliability, hence an increase in urea production volumes by 83percent (44,076MT in Q1 2019 FY compared to 80,777MT in Q1 2020 FY).

However, Notore’s operating profit declined by 39percent from N3.34billion in Q1 2019 FY to N2.04billion in Q1 2020 FY; and this decline in operating profit was due to a drop in other income by 78percent. Notore recorded a loss of N1.39billion during the Q1 2020 FY and a Net Finance cost of N3.43billion.

The company noted that opportunities for better performance are high as the domestic fertilizer market is yet to

reach its full potential.

“The fertilizer market in Nigeria during the period under review was robust as Notore sold all the urea that it produced during the period in both domestic and international fertilizer market.

“Furthermore, the demand for urea and compound fertilizers, such as NPK, from the West African markets and neighbouring countries bordering the northern part of the country is also quite significant,” it noted.

The company added that constant natural gas (main feedstock for producing urea fertilizer) supply has been one of Notore’s key strengths, as the company is in line to achieve its 1,500 MTD name-plate production capacity following its successful draw down of the Turn-Around Maintenance (TAM) facility, which will be utilised to increase the plant’s reliability.

“In line with Notore’s TAM, the company has commenced the ordering of critical components of the items under the TAM scope in order to keep with the TAM schedule,” it said.

On the outlook for the 2020 financial year, the company said it expects to exceed its 2019 financial year urea production figures and is also working on various financial initiatives to reduce its finance cost.

The Commission’s Budget Seminar Series has been established as a forum for evaluating the connection between the Nigerian capital market and the annual Federal Government Budget.

A major aim is to identify how the capital market can contribute to and in turn benefit from the budget and its implementation.

The Commission as the host of this event, gathers subject

matter experts with incisive knowledge and experience on various economic activities to deliberate extensively, with the aim of enlightening participants on the area of focus for the seminar. In addition to the learning of the day, which will equip participants, a communique will be drafted and forwarded as the capital market inputs to the appropriate government and private institutions.

SEC holds fourth budget seminar

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he Securities and Exchange Commission (SEC) is set to host the 2020 edition of Budget Seminar.

The theme of the event is “Leveraging the 2020 Budget and Finance Act for the Growth of the Nigerian Capital Market”, the Commission said in a statement Wednesday.

Expected as guest of honour at the event which hold

at the Eko Hotels and Suites Victoria Island, Lagos, is the Minister for Finance, Budget and National Planning, Zainab Ahmed, while Suleyman Ndanusa will be the Chairman.

The seminar, the Fourth of its kind by the SEC, is scheduled for Thursday February 13, 2020, and will bring together experts with professional, policy and academic background in order to delibwww.businessday.ng

Mary Uduk, acting director general, SEC

erate extensively on how the capital market can leverage the 2020 budget as well as the finance Act 2019 for growth and the implication of the budget to the capital market in Nigeria.

Also to be examined are the ways in which the capital market could contribute more meaningfully to the growth and recovery process the budget and the Act are intended to promote.

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Politics&Policy

BUSINESS DAY Thursday 06 February 2020 www.businessday.ng

Trump immigration ban from Nigeria overlooks integration success – Bloomberg A new ban from the White House hits one of the most successfully integrated groups in the country Justin Fox

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his column will not render a verdict on whether the White House decision last week to suspend immigration from Nigeria — the world’s seventh most-populous nation — and five other countries was mainly an expression of bigotry from an administration led by a man who once likened African nations to latrines, or if it was a legitimate reaction to security concerns. It will, however, tell you some things you might not know about Nigerian immigrants in the U.S. To start, there’s a fair number of them (which is why I’m focusing on Nigeria and not Eritrea, Kyrgyzstan, Myanmar, Sudan or Tanzania, the other five countries hit by the new ban). An estimated 374,311 Nigerian-born people were living in the U.S. in 2018, which put the country in 27th place as a source of foreignborn Americans, behind Pakistan and ahead of Japan. These and a lot of the numbers to follow are based on the American Community Survey that the U.S. Census Bureau sends out to 3.5 million households every year, so they’re subject to margins of error (19,648 for the number cited above), plus the inevitable strengths and limitations of selfreported statistics.

For example, the Census Bureau says there were an estimated 462,708 people of Nigerian ancestry in the U.S. in the 2018, but that’s based on what people put on the survey, not the sort of genealogical investigation that would surely reveal that there are millions of Americans whose forebears were brought across the Atlantic against their will in past centuries from the region of West Africa that is now Nigeria. Still, for our purposes the census survey is probably better, in that it restricts the scope mostly to recent immigrants and their kids.

The members of this group have more than doubled in number since 2007, and they are for the most part doing quite well.

The median income for households led by someone of Nigerian ancestry, for example, was $68,658 in 2018, compared with $61,937 for U.S. households overall.

Nigerian-Americans are more likely to have jobs than the rest of us, and much more likely to have college degrees. They’re also much less likely to own their

Army National Guard Pfc. Shamsiyyah Jibo, originally from Nigeria and now a citizen. Photographer: Drew Angerer/Getty Images

homes, and slightly more likely to be below the poverty line — although they’re less likely to collect the Supplemental Nutrition Assistance Program benefits commonly known as food stamps. Nigerian-Americans are younger (median age is 31.6, compared with 38.2 for the U.S. overall), more likely to live in big cities (at least, that’s how I interpret the relatively high share of public transportation users), more likely to work in education and health care (there are a lot of Nigerian-American doctors) and slightly more likely to be married.

The percentage of NigerianAmericans 16 and older with jobs ranked them 10th among ancestries in the U.S. in 2017 (the Census Bureau’s new data

portal is still going through some growing pains that prevented me from assembling these rankings for 2018).

Nigerian-Americans also came in 10th place for the percentage with college degrees.

Australia, Bulgaria and Nigeria are the only countries to make it into the top 10 on both rankings, which to me indicates a sort of integration sweet spot.

Nigerians who come to the U.S. usually speak English before they get here, they tend to be well educated or in the process of becoming so, and they don’t seem to have much trouble getting jobs or otherwise fitting in. I don’t think these are the only things immigrant success should be judged by, and there’s something

In the U.S. with expired visas Top countries of origin* for business and pleasure visa overstays, FY 2018

more than a little creepy about passing such judgments upon people by their country of origin.

But since immigration policy in general and the new immigration bans in particular do just that, it does seem relevant that NigerianAmericans are clearly among the most successful immigrant groups in the U.S. Also relevant is that Nigerians feature prominently on the Department of Homeland Security’s rankings of people who stick around longer than their visas allow. Here are the numbers for business and pleasure visas: Among those with student and exchange-program visas, the numbers are smaller, with 1,664 Nigerian students suspected of overstaying their visas in fiscal year 2018. But that makes for an even higher share (18.6%) of those that U.S. authorities had expected to depart. (Nigeria has been moving up in the ranks of countries sending students to U.S. colleges and universities, to 11th place in 2018-2019, according to the Institute for International Studies.)

One way to look at this data is that Nigerians need to be kept out of the U.S. or they’ll never leave. This has in fact been the reaction of the current administration, which in March of last year suspended a visa-interview waiver program that allowed Nigerian applicants for some visas to apply by mail, and in August jacked up visa fees for Nigerians. Big surprise: The number

of Nigerians visiting the U.S. fell by 21% in the first 10 months of last year, the biggest drop of any country, according to Quartz Africa, which has been all over this story.

Another way to think about the visa-overstay phenomenon, though, is that the U.S. isn’t supplying nearly enough immigrant visas to Nigerians. The demand is clearly there, and Nigerian immigrants have a track record of great success here.

I would guess that those who stick around after their visas expire are less successful than those who come on immigrant visas, but in theory at least they too are represented in all the above statistics from the American Community Survey, which don’t differentiate by visa status.

And yes, if the U.S. allowed a big increase in the number of immigrants from Nigeria, their education levels and success rates might fall. But banning immigration from Nigeria outright, as the administration has now done, seems like a pretty big step in the wrong direction.

This step was taken, Acting Secretary of Homeland Security Chad F. Wolf said Friday, because Nigeria and the other five countries subject to the new ban “lack either the will or the capability” to adhere to new screening and vetting criteria imposed by the U.S. government since March 2017. Now, I am perfectly willing to believe that the Nigerian response to U.S. demands has been somewhat shambolic, especially given how some Nigerian officials reacted to the news. “The travel ban is a wake-up call, a rude one at that, on the need for us to be alive to our responsibility to our people and ensure that we have citizenship integrity,” Ajibola Basiru, chairman of the Nigerian Senate Committee on Diaspora Affairs, told the Punch (a leading Nigerian newspaper) over the weekend. “At the moment, we are a nation of anonymous citizens. We don’t have records of our citizens and anybody can claim to be a Nigerian.”

The Nigerian government will now surely react with more alacrity to the U.S. push for information-sharing, and may well succeed in getting this latest visa ban revoked — as occurred with neighboring Chad in April 2018. But resolving this situation ought to be a policy priority for the U.S. as well. Nigerian immigrants are great. We need more of them, not fewer.

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