BusinessDay 06 Jul 2020

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news you can trust I ** monDAY 06 july 2020 I vol. 19, no 599

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CBN’s snail-paced exchange rate unification frustrates investors I C

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Investigation (2)

Broken health centres, roads, schools underscore plight of Imo oil communities

Odinaka Anudu

LOLADE AKINMURELE

entral Bank of Nigeria (CBN) may have taken an extra step towards unifying its multiple exchange rates eventually by devaluing the naira at one of its currency intervention sales Friday, but investor’s confidence remains abysmal.

“Although it does signal that the CBN is gradually starting to come around with the idea of having one exchange rate. This single move however is hardly enough to boost investor confidence and lead to a surge in foreign capital inflows,” a South African-based money manager states.

“I think it’s clear that what Nigeria needs right now to be

Continues on page 28

n Obitti, an oil-producing community in Ohaji/Egbema in Imo State, self-medication is the norm. Villagers Continues on page 29

Inside

Aig-Imoukhuede on the business of saving lives P. 20 These 14 NSE stocks yielded positive returns in excess of +10 as at half-year P. 27 L-R: Ben Akabueze, director-general, Budget Office; Femi Gbajabiamila, speaker, House of Representatives; Zainab Ahmed, minister of finance, budget and national planning, and Ahmad Lawan, Senate president, during a meeting with leaders of the National Assembly on power at the Presidential Villa in Abuja.

Signature 50 ranking unveils Nigeria’s biggest corporations P. 28

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Forex: Oil marketers raise concern over import challenge HARRISON EDEH, Abuja

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ajor oil marketers in the country are expressing concern over inability to access foreignexchangewindowwhichwould enablethemimportandcompetefairly in the petroleum downstream sector.

This, they say, is stifling the inflow of investments into the downstream sector despite efforts by the Federal Government to effect a deregulated market in the oil sector.

RecallthatthePetroleumProducts Pricing Regulatory Agency (PPPRA) earlier informed that the Central Bank of Nigeria (CBN) was working out a forex window for major oil marketers to enable them play a huge part in petroleum importation in the country.

But Adetunji Oyebanji said that they have not had access to the forex window since the assurance was given some months ago.

“There are two major dilemma we are facing now: the rate at which you find the dollars to buy and finding the dollar at all. The challenge is where to get the dollar and at what rate. Adetunji Oyebanji, chairman of the Major Oil Marketers Association of Nigeria told

BusinessDay. The Federal Government said it has deregulated petroleum downstream sector since March to allow oil marketers resume importation and sale petrol, however, marketers say galloping exchange rate and access still remain a major concern for them.

The PPPRA has also said that the official deregulation of the market does not confer on marketers the power to fix prices for the product as they deem, rather guiding prices would be advice by the PPPRA according to market realities.

ButOyebanjitoldBusinessDaythat the PPPRA can monitor compliance by marketers on its directive and still allow marketers determine the price according to forces of and supply as it is obtained in other climes with consumer protection properly enforced by relevant government agencies.

AnalystsalsonotethatNNPC’spersistentroleinimportationcouldstillsee it go back to subsidy payment despite dwindling resources should there be upsurge in the global oil price with lack of effective competition in the sector, whichcouldhavebeeneffectedwithfull deregulationofthedownstreamsector.

Covid-19: Reasons UN-Habitat launched response plan for vulnerable communities CHUKA UROKO

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s the world lives through an unprecedented social and economic crisis caused by Covid-19, the United Nations Human Settlements Programme (UN-Habitat) has unveiled a response plan for the pandemic, targeting vulnerable communities where the impact of the pandemic is severer.

An agency of the United Nations, UN-Habitat which is based in over 90 countries of the world, works for a better urban future and promotes the development of socially and environmentally sustainable cities towns and communities.

Covid-19 has caused the loss of tens of thousands of lives while over 200 countries have been affected. In just a few months, the pandemic has changed the way people live, work, travel and socialize.

SusannahPrice,theagency’schief of communication, noted that over 95 percent of world’s coronavirus cases are in urban areas across over 210 countries in nearly 1,500 cities. She pointed out that people living in slums orinformalsettlementsareparticularly at risk and constitute the most vulnerable communities of the world.

“These people live in overcrowded conditions, lack adequate housing and basic services such as water and sanitation and many are informal workers surviving from one day to the next,” Price said, adding, “this makes it extremely hard to implement measures to slow transmission such as

physical distancing, self-quarantine, hand-washing or community-wide lockdowns.

In Nigeria, the government found it extremely difficult to effectively enforce a five-week lockdown it imposed on the Federal Capital Territory (FCT), Abuja, Lagos and Ogun States because many of those living in slum areas of the three cities are mainly people living on dollar-a-day.

“You can’t expect a man with a family who survives on daily income and is almost homeless in terms of the nature of accommodation he has, to obey the stay-at-home order by the government. He must go out because the continued existence of his family depends on that,” Henry Nwosu, a public health worker told BusinessDay. UN-Habitat’s multi-million dollar initiative to help the most vulnerable in cities and communities is therefore targeted at people in this class. Nigeria is one of the 20 African countries to benefit from the response plan.

Others are Angola, Burkina Faso, Cabo Verde, Cameroon, DR Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Mozambique, Sao Tome and Principe, Somalia, South Africa, South Sudan, Tanzania, Zambia and Zimbabwe.

In Africa, the Arab states, Asia Pacific, Latin American and the Caribbean, the agency is working with its partnersonground,includingmayors, governors,transportandutilityproviders, women, youth and community organizations and NGOs to urgently deliver the $72 million Response Plan.

Wema Bank partners Coursera to upgrade employees’ knowledge

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ema Bank has taken a step further in its bid to deliver quality service to her customers. The bank recently partnered with “Coursera” which specialises in online courses and trainings, to offer free courses to members of staff. This is to enable an increase in staff capacity to keep up with modern day work practices and knowledge.

According to the bank, with the ravaging corona virus, it is important that the employees of the bank key into the opportunity to learn relevant and practicable skills online to boost their competitive advantage and improve the ease and efficiency of innovative methods of working.

“We are constantly looking

for opportunities to upscale our operations and one of the means identified was to empower our staff with relevant online trainings and courses, which will break the boundaries of the norm and elevate the ways things are done,” said Ololade Ogungbenro, chief human resources officer of Wema Bank, in a statement.

Also, Funmilayo Falola, the bank’s head of brands and marketing communication, said that “it’s going to be an exciting time for Wema Bank staff as they embark on this journey of self-development and knowledge acquisition which will be used in providing innovative solutions geared towards delivering impeccable services to customers”. www.businessday.ng

L-R: Busola Wale Micaiah, USL Securities Limited (Registrar); Joshua Ojo, Deloitte & Touche (Auditors); Bola Ajomale, MD, NASD plc; Oladipo Aina, acting chairman; Kasimu Kurfi Garba, audit committee chairman, APT Securities, and Lola Ikwuagwu, company secretary, GIO Nominees Limited, during NASD 7th annual general meeting held recently.

Mr. Price’s exit to propel exodus of foreign retailers from Nigeria BUNMI BAILEY

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he planned exit of Mr. Price, a major South African clothing retailer, from Nigeria, fuelled by the bleak economic prospects of Africa’s most populous country, could propel other foreign nonessential retailers to make similar decision.

The popular affordable clothing, sport, and home wear brand who announced its decision while presenting its financial scorecards for the year ended March 2020, cited supply-chain disruptions and challenges in getting funds out of the country as reasons it has struggled to operate in Nigeria.

“I believe this would mark the beginning of the exodus of several foreign retailers in Nigeria whose prices are typically FX influenced.

The Nigerian consumer market is now in tiers with many consumers patronising the lower tiers of the

market due to declining purchasing power,” Ayorinde Akinloye, consumer analyst at Lagos-based CSL Stockbrokers said.

Akinloye further said, “And with a recession imminent and job losses expected to rise, consumers would face weaker incomes and thus, the demand for costly quality products would become a luxury. Foreign brands will not be able to cope.”

A report by Euromonitor, global market intelligence platform, revealed that clothing retailers have been grappling with weak sales revenue since the 2016 economic downturn, further maintaining that foreign players like Mr Price and Pep have lost market share due to declining real income of Nigerian consumers.

“Leading apparel retailers, particularly economy brand retailers, such as Pep and Mr Price, have struggled during 2019 as low disposable incomes

have led lower-income consumers to seek second-hand substitutes. Such retailers are also seeing competition from a wide range of affordable imported brands that are sold through independent retailers including online retailers, such as River Island and Zara,” the report further stated.

Also, a 2019 half-year Nigerian retail report by Broll Nigeria, one of Africa’s leading commercial property services company stated that international brand interest in the Nigerian retail space has slowed down as strong enquiries in the formal retail market have not translated into actual transactions.

“As Mr Price is leaving, they are also leaving with their investments. Investor confidence in the retail space will drop further too,” Cheng Fuller, a retail consultant said.

Nigeria’s global ranking in retail development dropped to

30th position out of 30 countries in 2019 from the 27th position recorded in 2017, according to a recent survey released by A. T. Kearney, a global management consulting firm. Also, total national sales from the sector also dropped from $109 billion to $105 billion.

“Given the implication of the COVID-19 pandemic on livelihoods - decreased income and job losses, the major headwinds to retailers’ revenue prospects, it is expected that others will follow suit” Damilola Adewale, a Lagosbased research economist said An economic contraction is unavoidable by year-end as the International Monetary Fund (IMF) downgraded its growth projection to - 5.4 percent last week. And the World Bank estimated that the economy would likely contract by 3.2 percent, the worst since the 1980s due to collapse in crude oil prices, coupled with the Covid-19 pandemic.

S/Arabia threatens price war over Nigeria, Rotary commits to end sickle cell, cancer in Lagos Angola’s non-compliance with production cuts otary Club of Eko At- combined efforts of members Olusola Bello

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audi Arabia could enter into another oil price war, as Nigeria and Angola refuse to comply with the production cuts agreed by the Organisation of Petroleum Exporting Countries (OPEC) and its allies, the Wall Street Journal reported.

The country’s oil minister, Prince Abdulaziz said at a June 18 OPEC virtual meeting that the kingdom will sell its oil at a discount to undercut Nigeria and Angola after they denied making specific production cuts, according to the Journal.

“We know who your customers are,” Abdulaziz is reported to have told the representatives of the two countries which count China and India as their biggest clients.

Saudi Arabia last engaged with Russia in a price war in March as the two OPEC allies failed to find common footing on supply cuts, crashing oil prices to historic lows.

The OPEC+ countries, as OPEC and its allies are referred to, ultimately agreed to produc-

tion cuts for three months in April, and further extended the cuts to July, last month.

But Reuters had during the week said Nigeria, Iraq, and Kuwait kept to their promise of adhering to production cut as they lowered their crude oil supply to the international market since May 2020.

The report revived doubts about the fate of the pact, under which OPEC and key allies such as Russia are set to restore two million barrels of oil a day to world market from the start of August. Both companies have since filed plans with OPEC on bringing their production into line, but Petroleum Argus reported that Nigeria’s exports were still above the agreed level in June.

Alexander Novak, Russia’s energy minister, said he expected that relaxation of supply to proceed as planned, given that the global market may return to a physical deficit as early as this month, Reuters reported him as saying.

Global demand still appears to be struggling to recover com-

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lantic has pledged to end sickle cell, cancer, maternal and infant mortality, typhoid and other diseases in Lagos State.

This was stated while donating laboratory equipment to assist accurate testing, diagnosis and treatment at Ogba primary healthcare centre (PHC), Lagos.

The club recently donated electrophoresis machine, medical centrifuge machine, laboratory/research binocular microscope, heamoglobin metre and laboratory incubator to Ogba PHC to upgrade testing and diagnosis capacity in order to reduce death rate.

Sunit Deb Roy, the president of the club, while handing over the equipment, said Rotary has six core areas, with this project focused on healthcare, especially as the club seeks to end mortality arising from child bearing, sickle cell, cancer and typhoid among other diseases, just as the World Health Organization (WHO) declared Nigeria polio free.

According to Roy, the project was made possible through @Businessdayng

based on the need for accurate diagnosis and treatment. Roy stated that Rotary Club of Eko Atlantic adopted Ogba PHC facility and will ensure its upgrade to the highest standard.

“We had inspected the delivery room, laboratory, and all the departments in the facility and how we can upgrade them.

We are donating five laboratory equipment so that people can come to this healthcare centre to do culture test, pregnancy test, typhoid test, genotype and PCV among other tests, and these are the common tests people run around spending money to do,” said Roy. Akinkunmi Tolu, the chief medical laboratory scientist, said the medical equipment are vital in boosting diagnosis in pregnant women and children, who contact respiratory tract infection and other diseases.

According to Tolu, the new equipment will help ensure that proper tests and treatment would be administered rather than trying different types of medication that puts lives at risk.

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New Cold War: Africa is caught in the crossfire of US-China rivalry global Perspectives

OLU FASAN

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frica is becoming the battleground for another Cold War. The old Cold War, from 1947 to 1991, was between the United States and the Soviet Union. The emerging “new” Cold War is between the US and China. However, just like the old Cold War, which turned Africa into a battleground in the US-USSR fight for influence, the new Cold War is also dragging Africa into the fray, as the US and China vie to become the dominant power on the continent!

From the West’s perspective, the old Cold War was mainly predicated upon stopping the USSR from spreading the communist ideology across Africa. But the “new” Cold War is more than just preventing China from infusing African institutions with its development model, the “Beijing Consensus”; it’s also about stopping China from using its economic and technological clouts to achieve its undoubted global expansionist ambitions.

Truth is, China is gaining ground in Africa! Its money is funding huge infrastructures on the continent. African countries, particularly Nigeria, have also embraced China’s development model of state capitalism and debt-funded infrastructure projects. From 2000 to 2016, China lent about $125 billion to Africa, with President Xi Jinping pledging additional $60 billion in 2018, prompting concerns about debt-trap. China overtook the US as Africa’s largest trading partner in 2009; its trade with Africa is now more than 4 times that of the US. Furthermore, while the US is mobilising other Western countries against Huawei, the Chinese technology company, Huawei has no serious rival in Africa.

And the US is worried. It is worried

about China’s growing strategic influence in Africa. Consequently, America’s relationship with Africa, particularly under President Trump, is viewed through the prism of China. As David Pilling, the Financial Times Africa Editor, wrote recently, “Under Donald Trump, the US has looked at Africa almost exclusively as the scene of a strategic and ideological battle with China.” The US believes China is trapping Africa in debt and using the continent to pursue global dominance.

It is concerned that Africa is not wary of China’s “authoritarianism and empty promises”, as the US Secretary of State Mike Pompeo put it, but instead making itself a pawn in China’s expansionist agenda.

But if the US-China rivalry was intense before COVID-19, the pandemic has made it worse, and with it the pressure on Africa. For a start, the US blames China for COVID-19, which, indeed, started in Wuhan, China, and is appalled that China has used the pandemic to boost its reputation and influence in developing countries by portraying itself as their true friend and partner in a time of global crisis.

Of course, while other nations and foreign philanthropists have also supported Africa, China has been very good at promoting and publicising its interventions.

For instance, the private donations made to African countries by Jack Ma, the cofounder of Alibaba, was seized on by the Chinese government as part of China’s humanitarian effort. President Xi Jinping also pledged $2 billion to help fight the pandemic in developing countries and promised that any vaccine developed in China would automatically be made available in Africa.

But critics have pointed out that China’s refusal to grant debt relief to Africa, despite the economic damage caused by the pandemic, and the appalling racist treatment of Africans in China, who were quarantined, harassed and humiliated as potential “carriers” of COVID-19 even when they proved negative for the virus, undermined China’s claim that it’s a genuine friend of the continent.

The US thinks so too and wants Africa to wean itself off China’s “pernicious” influence. And if Africa doesn’t, well, it might be forced, at least under Trump, to

choose sides, just as developing countries were pressured to choose sides during the old Cold War. If you think that’s outlandish, the recent experience of the United Arab Emirate (UAE) shows it is not.

After opening a large COVID-19 testing centre with the involvement of Chinese firms and technology, the UAE, a traditional ally of the US, offered the US embassy hundreds of tests to screen its staff. But the US declined the offer. Why? Because of China’s involvement! Indeed, long before the coronavirus, the US had been warning the UAE that technological collaboration with China would have consequences. One UAE official told the Financial Times: “There is a sense of you are with us or against us in this Cold War.” The “you are with us or against us” attitude is influencing America’s relationships with Africa and African-led institutions. In April, President Trump stopped the US’s $116 million annual contribution to the World Health Organisation after accusing it of bias towards China.

He blamed the African president of the WHO, Dr Tedros Adhanom Ghebreyesus, an Ethiopian, for failing to expose China’s cover up of the coronavirus when it broke out in Wuhan, thereby allowing its spread worldwide. President Trump accused Dr Tedros of cosying up to China and being sympathetic to its views!

Earlier, the US had threatened to withdraw funding from the Africa Centres for Disease Control and Prevention because China had offered to pay for a new building. The plight of Dr Akinwumi Adesina, president of the African Development Bank, who is under fire from the US, is also not unconnected with perceived Chinese influence, as the Trump administration believes the AfDB is following China’s development model and lax attitude of lending and debt.

So, Africa is again at the centre of superpower geopolitical tensions. As President Uhuru Kenyatta of Kenya said recently, US-China rivalry puts Africa at risk. But the rivalry will not go away because the battle is strategic and ideological. African countries must, therefore, manage their relationships with China and the US carefully.

Sadly, it’s a tough call. Both countries are too strategically and economically important to be ignored. Africa cannot

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After opening a large COVID-19 testing centre with the involvement of Chinese firms and technology, the UAE, a traditional ally of the US, offered the US embassy hundreds of tests to screen its staff. But the US declined the offer. Why?

avoid doing business with either. But, let’s face it, China does not offer Africa a better development path. Certainly, China’s development models of state capitalism and authoritarianism, as its current treatment of Hong Kong shows, are worse than the West’s models of democracy, rule of law and free market economy. Yet, Africa can’t simply kowtow to the US. It must identify and protect its best interests.

A pungent view on Nigeria’s unwieldy bureaucracy A Lagos-based lawyer, who wants to be identified simply as OM, emailed me about last week’s column. I share her pungent views below: “l read your excellent article on my pet subject: every word resonated. There are so many Ministries, Departments and Agencies (MDAs) Oronsaye didn’t touch that l encounter in my professional life as a lawyer representing the overburdened corporates in Nigeria. These MDAs were ostensibly created for the people, have remained in the statute books for decades and yet have no impact.

The Industrial Training Fund, ITF, is one. All companies must contribute a percentage of payroll to it, so it can train Nigerians. It’s about 40 years old. It got itself an amendment to expand its scope to capture more companies! So, any company that has revenues of up to N50m is caught (down from N500m)! I know a client who paid ITF over N650m in 2014!

No one is trained. In recent years, its chair has distributed ‘starter packs’ for saloon/ hairdressers in a few state capitals, and recently it announced it will go into ‘large scale farming’!

The NYSC is another, the NSITF – l could go on and on! They all have a template: they engage little known consultants who go about threatening businesses to pay up on statutory contributions. Foreign-owned businesses are easy targets.

Nigeria is not working. l am in my 50s and full of regrets l didn’t secure foreign citizenship for my children when l could.

Thank you for shining a light on Nigeria’s dysfunctions.”

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

Covid-19 and reopening for business – key considerations for the Board (1)

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ith the ease of lockdown in most countries across the world, many businesses are considering re-opening for business. For countries like Nigeria that are still dealing with containing the virus, the decision to reopen has to be balanced against the need to protect health and safety of employees, clients and customers.

The economic cost of lockdown and other restrictions has no doubt hit hard on individuals, businesses, communities and some have said this could cause further harm beyond the threat to health and life that COVID-19 presents.

Management and Boards will now have to make decisions about when, where, and how to reopen their companies. These will include the process of opening offices, stores, factories, and warehouses and planning for the resumption of business activities such as non-essential travel and customer/client meetings.

Beyond the challenges of adapting to what the new norms of business may be—from workplaces and public transportation to consumer behaviour and the accelerated adoption of technology— companies will need to find a way to reconcile the protection of the physical health of individuals with the financial health of the Company and the broader economy.

The continued uncertainty that businesses face may be paralyzing for some executives and

Boards, not to mention employees. The lack of clear guidance from government, the wide range of possible scenarios, and the magnitude of the risk make the decision to reopen business particularly challenging. Yet all business decisions are a balancing act of actions based on limited information and a range of risks.

And so, to help Boards think through these challenges, the National Association of Corporate Directors offers some guidance on what Directors, working with their senior management, should consider in taking the decision to reopen.

For many companies, the question about reopening is around when, rather than whether, to reopen. While principally driven by health concerns, the urgency around reopening will affect the analysis the Board and Management use to reach the final decision. Understanding that urgency and what needs to happen now as opposed to what could be delayed to a later date, are important considerations as Boards think about the path forward.

Boards will want to revisit pre-COVID-19 strategic decisions and assumptions and consider whether current initiatives, such as digital transformation, should be accelerated to help ensure success in the COVID-19 world.

What are the financial implications of remaining closed or virtual only versus opening now, versus opening in the next three months, versus www.businessday.ng

opening later? Is the Company’s industry or business model such that the reopening costs are high and would create risk if the decision to reopen is reversed? For example, the airline industry, where airplanes will need to be made flight ready again, staffed, and deployed to begin flying. These activities require a significant financial investment upfront in order to reopen.

Another question the Board should ask is if reopening allows the Company to quickly resume revenue generation and strengthen financial position. Is there clear evidence that customers in the Company’s industry are ready to spend again and would reopening better allow the Company meet this pent up demand?

How does the crisis impact corporate strategy going forward? Will reopening allow the Company resume critical functions and strategic initiatives that were stalled or slowed down because of the lockdown?

The Board should also consider the Company’s relationship with customers, suppliers, and other business partners such as joint ventures or portfolio companies as well as what key competitors are doing.

Equally critical is to gauge workforce sentiment. How well has Management communicated with employees during the lockdown?

The Board should encourage Management to communicate the idea of reopening to the workforce and receive feedback from employ-

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Bisi Adeyemi ees in this regard.

Many employees would like to go back to the office given the challenges (mostly infrastructure deficiencies in a country like Nigeria) of working from home, just as many are concerned about their health and safety at the workplace and from commuting.

Commerce is a global phenomenon, but it happens locally—in the store, warehouse, or office. The question of reopening may often be framed as an enterprise-wide proposition but will more likely be driven by local conditions at respective factories, stores, and offices, and in the surrounding communities.

Note: The rest of this article continues in the online edition of Business Day @https:// businessdayonline.com/ Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

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A national conversation: Mapping Nigeria’s response to COVID-19 (2)

Bashorun J.K Randle

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he upsurge of rage by those who are aggrieved by our collective ineptitude and abdication of our responsibilities in tackling the Coronavirus epidemic “Round One” caught many of us off-guard.

Matters were not helped by the somewhat cavalier attitude of the Government initially – it was the malcontents and doomsayers in a conspiracy with the opposition who were trying to make a mountain out of a molehill!! Besides, the Government actually issued an official statement that challenged the hue and cry over Coronavirus while Malaria, Lassa fever, HIV, and other diseases had been killing thousands of Nigerians annually without much fuss from the agitators and detractors.

Clearly, with the benefit of hindsight, the government had been caught on the backfoot. Since then, the entire effort has been driven by the strategy of “Catch-up”.

Now is the time to tally the score.

As a chartered Accountant and Management Consultant, for over fifty years, I have been dealing with Risk Assessment and Risk Management. As regards the Coronavirus pandemic, we appear to have mistaken the symptoms for the disease.

What comes to mind is the 1944 novel: “Dangling Man” by the JewishAmerican author Saul Bellow. Its central character who is from Chicago had been wailing to join the Second World War which raged from 1939 to 1945. He wanted to go to war, to certain death, because it would give his life meaning.

Until then he was just waiting.

In our case, the prevailing crisis has provided the cue and perspective for the weak and the poor who are devastated that it took the Coronavirus epidemic to expose the rottenness and decay in our healthcare system or whatever is left of it. Secondly, how come it is the poor and weak who have been the worst victims in terms of infection followed by loss of their jobs/livelihood and eventually death?

Evidently, there are two Nigerians – one for the elite and another one for the rest. Clearly, what we are dealing with is a systemic problem.

The statistics however suggest that it is not a straight forward contest between a seemingly callous elite (seemingly lacking in care and compassion) versus the underclass. In between are the bandits and pirates as well as the vultures.

Ironically, (and painfully so) in terms of sheer numbers, the number one slot on the league of virus belongs to Boko Haram!!

It was my grandfather Dr. J.K. Randle who had direct experience of the Spanish Flu epidemic which raged in Nigeria between 1918 and 1919. At least 21 million people (some estimates claiming up to 50 million) worldwide died from the disease over a 12-month period, becoming one of the world’s worst short-term demographic disasters. The disease was introduced into Nigeria by passengers and crews who came in to Nigeria via ships from foreign countries affected by the influenza.

Coastal ports like Lagos were the primary focus of the spread of the disease. There were reports that Lagos lost close to 100,000 of its population between September of 1918 when the pandemic was introduced to Nigeria and December of the same year. Its spread to the hinterland was facilitated by improvements in transportation technology. Neither maritime quarantine, nor the isolation of patients checked the spread of the disease.

Experts claim that about 500,000 Nigerians, out of a population of 18 million, died in less than 6 months, and it is believed that between 50 and

80% of the population was stricken.

The pandemic drained the nation’s productive capacity and caused an unprecedented food scarcity which took years to recover from.

In 1908, Dr. Randle along with Dr. Akinwande Savage; and Joseph Ephraim Casely Hayford (of the Gold Coast) founded Nigeria’s first political party, The People’s Union. That was long before The National Council of Nigeria and the Cameroons was founded in 1944.

Now, we have almost 200 million Nigerians who are eagerly awaiting our response to the second wave of Coronavirus pandemic which is only a matter of time.

In the meantime, a commentator on social media has suggested that we should start by dumping the current National Anthem “Arise, O Compatriots” and revert to the old one “Nigeria, We Hail Thee” because bus conductors having distributed face masks in order to entice passengers insist on collecting them back as the passengers alight.

They then proceed to hand over the “second-hand” used masks to the new batch of passengers!!

Apparently, some banks did the same thing during the lockdown.

Lockdown or LUCKDOWN, we must survive.

Chief Wole Olanipekun, SAN literally shook not only the legal profession but virtually all other professions (medicine, accountancy, architecture, engineering etc.) to the foundation when in “The Nation” newspaper of May 26, 2020, he disclosed that some junior counsel earn only N25,000 to N30,000 and many of them had not been paid for three months.

He added: “Now, is it not the duty of government to provide this minimal amenity for the people? Using law as a means to foster social justice, the first thing lawyers should demand from governments at all levels is the provision of running water, all over the country, as what we have and use as running water in Nigeria today, majorly comes from boreholes which are sunk in the homes of rich Nigerians.

Do we have functional public toilets

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Post-covid, lawyers must pinch government, educate and encourage it to provide basic amenities for Nigerians, so that they can minimally comply with the WHO protocols, which our own various governments have adopted

in any of our major cities or in most parts of Nigeria? We cannot decree social distancing in the absence of provisions of housing facilities for the lower and middle cadres of Nigerians, most whom live in crowded apartments, and in some cases where you have not less than 10 people in a room or flat.

Post-covid, lawyers must pinch government, educate and encourage it to provide basic amenities for Nigerians, so that they can minimally comply with the WHO protocols, which our own various governments have adopted.

These protocols are taken for granted in all developed and a good number of developing countries.

They do not constitute a privilege, but a right. It should be a reawakening to both the government and the legal profession. Through the instrumentality of the Nigerian Bar Association [NBA], we should remind government, ask government, interface with government, that these are the basic amenities that they have to provide, without any further delay. It is then that we can thumbs up that we are combating coronavirus, preventing a reoccurrence of it in future.”

Also, in “The Punch” newspaper of May 30, 2020, Chief Adebayo Alao Akala, the former Governor of Oyo State prescribed a strange vaccine: “We need a Nigerian who is slightly insane to lead us.”

Regardless, we must seriously reflect on why it took the lockdown and “Panorama Programme” on CBC to reveal to the entire world that in parts of Ajegunle in Lagos State, as many as six complete strangers sleep in one room at night only to be replaced by another lot during the day!!

We can only pray that our failure to care for the weak and the poor as well as the arrogance of power does not trigger our downfall.

J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services.

Email: jkrandleintuk@gmail.com

Making stamp duty the new black gold

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his matter of making the Stamp Duty (and by implication tax revenue) the next black gold has occupied my mind even long before I was appointed the Executive Chairman of the Federal Inland Revenue Service. I have thought that given the way the Nigerian economy has been experiencing some difficulties due to unpredictable shocks in the competitive international oil market, it would be economically wise that the country begins to activate its latent tax potentials such as the stamp duty which has long been neglected.

For me, the key to Nigeria’s economic prosperity is the tax revenue driven by Stamp Duties in the face of dwindling oil revenue.

Although, the Stamp Duty Act has been in place since 1939, not much attention is paid to it. Yet, if properly harnessed and administered it can be a goose that will lay the golden egg for the Federal Government. My optimism stems from the fact that Stamp Duty has the potential to yield tax revenue in the region of trillions of naira per annum. For instance, after we carried out an analysis of transactions in the banking sector, we discovered that in 2019 alone the total volume of transactions both chargeable and non-chargeable was over N52 billion of which the total value of transactions was over N613 trillion. If you compute N50 Stamp Duty on the chargeable transactions, of course, your guess is as good as mine. Presently, feelers from

certain quarters have it that if the records of stamp duties on chargeable transactions from the year 2000 to present were to be scrutinised it would be discovered that trillions of unremitted stamp duty revenue are realisable.

Thus, I feel excited when recently the President and Commander-in-chief of the Armed Forces of the Federal Republic of Nigeria, Muhammadu Buhari inaugurated the Inter-ministerial Committee on the Audit and Recovery of Back Year Stamp Duties. This is an important step towards diversifying the Nigerian economy.

It is obvious that oil revenue has contributed greatly to the various infrastructural developments so far achieved in the country. These developments are noticeable in all sectors of the economy, and they are too many to be accounted for in this short piece. Yet, despite this seeming developmental leap, Nigeria has progressively slid into an import dependent economy from its prime position as an export economy prior to the discovery of oil in 1958.

For me, therefore, it is reassuring that Stamp Duty is an enduring tax type that can withstand

FIXED DUTY INSTRUMENTS

AD-VALOREM INSTRUMENTS

Power of Attorney (PoA)

Deed of Assignment

Certificates of Occupancy (C of O)

Sales Agreement

Proxy forms

Legal Mortgage or Debentures

Appointment of Receiver

Tenancy or Lease Agreements

Memorandum of Understanding (MoU)

Insurance Policies

Joint Venture Agreements (JVA)

Contract Agreements

Guarantor’s form Vending Agreement Ordinary Agreements Promissory Notes Receipts Charter-Party Contract Notes www.businessday.ng

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Muhammad Nami any economic shocks because of the varied instruments on which it can be charged. The table below highlights the various instruments on which the Stamp Duty is payable.

In addition to these instruments, any electronic receipt or electronic transfer, money deposited in any bank or with any banker or any type of account of an amount from N10,000 upwards shall attract a singular or one-off duty of the sum of N50. In the same way, Stamp Duty is payable on receipt (written, printed or in electronic form) for transactions or between corporate bodies or between a Corporate body and an individual, group or body of individuals, which value amounts to N10,000 and above.

This then is the hub of my optimism about making the Stamp Duty the next black gold for the Federal Government. Of course, this is not without its challenges. However, I am upbeat that my team and I are poised to scale the huddles, and to, as a matter of national interest and patriotic zeal, ensure that tax revenue, in deed, the Stamp Duty becomes the next black gold.

Nami is the Executive Chairman of the Federal Inland Revenue Service

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Boosting the frontline and strengthening Nigeria’s response to infectious disease outbreaks How proper Infection Prevention and Control (IPC) practices can strengthen the response to infectious diseases in Nigeria Ameyo Stella Adadevoh

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hen infectious diseases are not properly managed and contained, the effects are disastrous not just locally, but globally. Infectious disease outbreaks have farreaching consequences that transcend not only health but can also cripple economies and businesses, and bring everyday social interactions to a grinding halt. The current COVID–19 pandemic the world is battling offers us a clear example of this fact however, COVID–19 is not the first nor only infectious disease that mankind has faced. Other historically notable infectious diseases include influenza, HIV/AIDS, Middle East Respiratory Syndrome (MERS), Severe Acute Respiratory Syndrome (SARS), Ebola, Lassa fever and others too numerous to mention.

Managing infectious diseases and ensuring patients, health workers and the general public are protected is a major public health challenge.

But Infection Prevention and Control (IPC) – a multi-disciplinary approach that aims to prevent and control the spread of infections in healthcare facilities and communities – is one major part of the solution. Unfortunately, IPC is not widely practiced or properly and consistently implemented in Nigeria and many countries in the world.

Over the years, Nigeria has had her fair share of infectious disease outbreaks. Our country has battled Ebola and still battles HIV/AIDS, Lassa fever, cholera, meningitis, and now, COVID-19. Nigeria’s response to each new infectious disease outbreak demonstrates improvements and the implementation of lessons learnt from previous experiences, however, there is still evidence of IPC gaps that if filled, could ensure the country is better prepared and protected for whatever comes next.

Recently, a study by TJ Okwor et al. revealed that very few primary, secondary and tertiary healthcare facilities in one state in Nigeria practiced IPC, demonstrating the gaps. Sadly, these gaps are beginning to take their toll with the COVID–19 pandemic currently spreading through the country and hundreds of our frontline health workers contracting the disease as they work to

contain its spread and protect the rest of us. This highlights the dire need to train and support our health workers – who are first responders and our first line of defense in every infectious disease outbreak – to ensure they can implement the necessary lifesaving IPC practices.

Acknowledging that the problem exists is one step. However, fixing the problem is another. So, the big question remains, “What is being done to close the IPC gaps that exist in Nigeria’s health care system, especially at this crucial time?”

Dr. Ameyo Stella Adadevoh (DRASA) Health Trust was established to help protect public health and sustain the legacy of late Dr Adadevoh who is popularly known as Nigeria’s Ebola heroine. In 2014 she swiftly identified and contained the first case of Ebola, helping Nigeria defeat the deadly virus.

From its inception, DRASA has taken impressive strides towards achieving its vision of creating a healthy society supported and protected by a strong health system.

DRASA’s initiatives include its flagship Infection Prevention and Control program which combines the science of stopping infections with hands-on practical sessions and simulated scenarios to ensure our

‘

Acknowledging that the problem exists is one step.

However, fixing the problem is another. So, the big question remains, “What is being done to close the IPC gaps that exist in Nigeria’s health care system, especially at this crucial time?

Dr. Ameyo Stella Adadevoh (DRASA) Health Trust

Economic sustainability plan

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he Federal Executive Council on Wednesday 24th June, 2020 approved for immediate implementation the 2.3 trillion Naira Nigeria Economic Sustainability Plan. This is a 12 months transit plan between the Economic Recovery and Growth Plan (ERGP) and ERGP successor plan which we understand is currently under consideration.

As was reported, this approval was given following thorough deliberation by the Ministers. The Committee that was charged with the responsibility for the preparation of this plan comprised all the Ministers including the Governor of the Central Bank and the Managing Director of Nigerian National Petroleum Corporation (NNPC).

Therefore, there is something sort of incestuous with regard to the preparation and approval of the plan; those who prepared the plan were those who in turn jointly approved it. Well I guess in the circumstance there is not much else that could be done as there is hardly any other envisaged option. We commend the Federal government for the presence of mind to have empaneled the Committee. We did not as it were go star gazing or like Nero fiddle while Rome was burning.

It is a relief of sorts that we are at least beginning to witness some action with this plan. For the records the Committee was constituted on March 30, 2020. Following the presentation of the report within the stipulated deadline, there was the familiar silence during which there was some concern as there was the need for prompt, determined, focused and concerted action if the Country was going to experience a V shaped recession; that is in the sense that the recession in itself will be short lived as the length of time it takes for us to experience an uptick in production has considerable implications for the lasting effect of its impact on the economy and the extent of this impact on the generality of the population.

There are some who have argued that we have to wait for the Gross Domestic Product (GDP) to contract in two successive quarters before we could in keeping received wisdom establish that the economy is truly in recession. That is esoteric of sorts pushed a bit far. The reality on ground is that we found ourselves on uncharted waters; an unprecedented situation when because of

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the pandemic all the economies of the world went into shutdown with massive supply chain disruptions across board as most countries of the world were forced to close their borders and focus inwards in the process inflicting considerably and may be permanent damage to the concept of globalisation as we have hitherto known it to be.

There is no doubt that the new normal whenever it arrives would see considerable change in the way and manner economic relations have hitherto been organised. Nigerians must gird their loins for it is difficult to foretell when the pandemic will come to an end except if a vaccine is discovered. The situation in the country was made even relatively worse because before the pandemic suddenly happened on us, we were already experiencing some economic slowdown due to sharp drop in the price of crude petroleum as a result of disagreement between OPEC and non OPEC members led by Russia on how urgent production cut backs were to be shared. The price of crude which was projected in the 2020 Budget at the level of 58 dollars per barrel as some point crashed to as low as 30 dollars and was still falling. Therefor the fiscal challenge that confronted Nigeria could not have been more dire.

The stimulus package as noted above was of a total amount of 2.3 trillion Naira to be sourced from a 500 billion stimulus package already included in the 2020 Budget, 1.2 trillion Naira structured loans from the Central Bank and other development partners and the balance from sundry external and bilateral sources. There are loud complaints that relative to its peer countries that Nigeria would seem to be punching below its weight with regard to the amount of the stimulus package, but Nigeria has to be realistic by not announcing a package that is beyond reach.

But what remains surprising is that before this formulation and release of this package, the Central Bank of Nigeria in its proactive manner had released to the public a stimulus package of a whopping amount of N3.3 trillion which the Bank has already commenced aggressive implementation. Why has it not occurred to us so far that we are talking of the same economy.

And therefore, when we talk of the amount of the stimulus package made available that it should be an aggregation of both the stimulus www.businessday.ng

health workers can prevent, detect, and contain infectious diseases as Dr. Adadevoh did in 2014. To date, DRASA has conducted IPC training for more than 1,200 health facility personnel of all cadres, including doctors, nurses, lab scientists, hygienists, cleaners and ambulance drivers, to name a few.

DRASA is currently supporting the Lagos State Government as a member of the Emergency Response Operations Team in Lagos State, which is the epicentre of Nigeria’s COVID-19 outbreak. DRASA is part of the IPC team training frontline health workers, assessing isolation and quarantine facilities, and monitoring IPC practices in all treatment centers.

To defeat COVID-19 and be better prepared for other infectious disease outbreaks, DRASA plans to scale up their capacity building across Lagos and the rest of the country by establishing a state-of-the-art IPC Simulation Training Center, but needs donations and support to do this.

Through the center, DRASA can train up to 10,000 health workers per year, building a strong network of trained experts ready to protect Nigeria’s public health.

proposed by the Fiscal authorities as well as that proposed by the Central Bank.

To avoid deep recession the Plan has focused us on the need to avoid rebid retrenchment of capacities. There is the urgent need to keep the economy ticking by assisting private sector operators to sustain operations. In some jurisdictions and as has been proposed in the Plan there is the need to assist the private sector to sustain employment through providing direct support for the payment of the wage bill. In some countries of the world, Britain for instance, it has been reported that support of up to 80 percent of the wage bill is underwritten by the Public Sector.

There is the need for urgent action in this regard.

It should be obvious to all that it is unconscionable for us to be experiencing mass retrenchment as recently reported to have been undertaken by some dominant companies as we discuss. Government must intervene to ensure that this does not become a vogue. The recent move with all controversies pertaining thereto to hire one thousand persons in each of the 774 local government areas in the Federation is therefore a movement in the right direction and must be commended. It is also not the time for industrial action as was recently contemplated by our health workers. For shouting out loud the primary challenge of this pandemic is essentially the preservation of lives and thereafter livelihoods and therefore we must all rise to the sacrifice which this realisation entails.

It is also the period to pay particular attention to operators in the Micro, Small and Medium Scale sectors of the economy. This category of businesses constitutes the engine room of the economy as they account for over 50 per cent of the country’s GDP and about 60 percent of total employment. As has been indicated in the plan one of the major thrust of the strategies the country will adopt is that of looking inwards to consume what we produce contrary to the prevalent practice hitherto whereby we import what we should be able to produce thereby putting considerable pressure on scarce foreign exchange as well as the exchange rate of the Naira.

As we discuss could we imagine what could have happened to us if we did not attain local sufficiency in the production of rice! It is now

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that the Central Bank must be roundly acknowledged as the organisation which saw tomorrow as it aggressively championed the local production of rice through its very successful Anchor Borrowers’ program amongst other sundry attempt to deny official foreign exchange for the importation of the now famous 43 items for which it was roundly lambasted and pilloried but stoutly stood its ground.

For SMEs the steady availability of power supply is crucial for their profitable operations.

It has been estimated that just by making meters generously available could easily add 20 million customers to the books of the Distribution Companies and if consumers pay an average of five thousand Naira a month, this will add an additional of 1.2 trillion Naira in yearly revenue.

And for the viability of operations there is the need to allow cost reflective tariffs. In spite of the multi-year structured tariff Order, tariffs have remained without review since 2015 because of lack of political will. But now that the impending World Bank loan for the sector is tied to freeing up the tariffs, it seems that there is a glimmer of light at the end of this dark Tunnel as a review has been programmed to commence in the month of July, 2020.

Nigeria has an informal sector which by many accounts has been estimated as constituting 60 per cent of the economy. There is therefore the need to ensure that all programs aimed at widening the social safety net are accorded deserved urgent attention. There is certainly the need for greater transparency, inclusiveness and for an upgrade in the modalities for the disbursements of unconditional cash transfers. Not a few eye brows have been raised with regard to the amount that have been alleged to have been disbursed under this program particularly when considered alongside the paltry budgetary allocations that have been made to the crucial social sectors of education and health.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng

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Monday 06 July 2020

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun

Nigerians finding it hard to cope with COVID-19 Stressed and stretched, livelihoods worsen without relief measures

editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule 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 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

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

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he battle against COVID-19 is unlikely to end soon. Nigeria’s economic agents are languishing as the effects of the novel coronavirus disrupts their lives and livelihoods.

Noted for their resilience; the fight to survive isn’t new to Nigerians.

Yet, trying to make sense of opportunities presented in times like this, households have to contend with a steep rise in the price of goods and services, and dwindling income For those who still have a job expenses have increased but incomes have decreased.

In response they have had to devise measures that will enable them to cope on their own expecting little or no support from the government.

Pre-COVID, government policies and actions failed to promote sustainable economic growth but bred economic hardship . Nigerians adapted and survived. Now, most Nigerians are worse off .

According to the Nigeria COVID-19 National Longitudinal Phone Survey (COVID NLPS), 51 percent of households have

had to reduce food consumption due to hike in food prices. Also, some 29 percent have had to draw down their savings in response to COVID-19 induced economic shocks.

Increase in food prices makes high quality food scarce for poorer households, forcing them to resort to cheaper or less nutritious foods, hence they are underfed. This increases the possibility of more malnourished children, reduces calories required during a non-active period as an energy-conserving mechanism and may also reduce insulin sensitivity in adults. Low insulin sensitivity could result in chronically high blood sugar levels, which increases an individual’s risk of many diseases, including diabetes and heart disease.

Similarly, drawing down on savings with no corresponding increase in income level amid lower purchasing power as inflationary pressure mounts. This means more households will get poorer and will further worsen Nigeria’s current status as the world’s poverty capital.

Beyond reduced consumption and depleting savings, households have had to reduce non-food con-

sumption, sell harvest in advance, incur debts, purchase items on credit, engage in additional income-generating activities and sell assets among others. These actions can reduce households’ value, degrade health and negatively impact the economy.

Across countries faced with COVID-19 related challenges, the livelihoods of citizens remains a major goal, it is driving policies and actions. We have seen relief in different forms rolled out to meet the basic needs of people to ameliorate the negative effects of the COVID-19 pandemic.

Unfortunately, measures the Nigerian federal government and states to ease sufferings have lacked transparency, effectiveness, orderliness, and innovation. It has been nothing short of bedlam.

Instead Nigerians have been left to cope with salary cuts, job losses, dwindling savings, poor healthcare etc. Still the economic outlook remains bleak and households will have to cope much longer than anticipated.

In line with the World Bank’s recommendations to African policymakers, we urge the Nigerian

federal government to focus on saving lives and protecting livelihoods.

To achieve this, Nigerian health systems must be strengthened and quick actions to minimise disruptions in food supply chains must be prioritised.

Social protection programs, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector must be implemented.

According to Albert Zeufack, Chief Economist for Africa at the World Bank, “it is important to ensure that fiscal policy builds in space for social protection interventions, especially targeting workers in the informal sector, and sows the seed for future resilience of our economies.”

Nigerians are hungry, broke and unemployed. Inflation is eroding the little they have left. While the World Bank has pledged to call for a standstill on official bilateral debt service payments which would free up funds for sub-saharan African countries, the Nigerian federal government must ensure it deploys such funds to ease the suffering of Nigerians.

HEAD, HUMAN RESOURCES Adeola Obisesan

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Friday 03 July 2020

BUSINESS DAY

COMPANIES&MARKETS CONSUMER GOODS

Guinness Nigeria profit warning waves warning flag to other beer makers OLUFIKAYO OWOEYE

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oronavirus is a brewing threat for Nigeria’s beer makers following lockdown measures aimed at halting the spread of coronavirus in the country.

In the wake of the virus outbreak in the country, the Federal Government imposed restrictions on gatherings, social events, closure of restaurants, bars and hotels.

Specifically, on-premise demand for alcohol account for an estimated 64percent of total demand in Nigeria.

The impact of this restriction in the three states of Lagos, Ogun and FCT, which cumulatively account for half of the nation’ economy, is a material decline in beer volume, further worsening the woes of beer makers still struggling to remain profitable amid weak macro-economic environment and cash strapped consumers.

While data on beer consumption volumes across Nigeria for 2019 is unavailable,

National Bureau of Statistics (NBS) 2016 figures show Nigerians spent a whooping N208 billion on alcohol consumption.

Analysts estimate show that between 10-12percent of beer volumes, is consumed in Lagos.

Diageo-owned Guiness Nigeria plc, last week issued a revenue warning ahead of the release of its full year audited financial result for the period ended 30th June, an ominous sign of what to expect from the result of other beer makers in the country.

According to the brewer, the adverse impact of the sharp contraction in economic activities and the knock-on effect of the COVID-19 lockdown took a toll on the on-trade segment of its business across all markets with production and revenues been negatively affected.

The brewers of Origin drink said it carried out a comprehensive review of its asset base and made a strategic decision to impair a certain category of assets, which were generating suboptimal returns, in line with the company’s long-term

strategy of delivering value to shareholders.

“Due to a combination of the impact of COVID-19 and the asset impairment, we expect the profitability of the Company for the Financial Year to 30th June 2020 to be impacted. The Company’s balance sheet however remains strong, and this gives the Board the confidence that the Company has the right resources to continue to deliver the strategy,” the statement said.

The audited financial results for the Year as approved by the Board will be published in accordance with extant rules and guidelines after the completion of the year end audit in the month of August 2020.

This market information forced Shares of Guinness Nigeria traded at N13.95 on Thursday, an all-time low as investors dump shares of the beer maker after it released a profit warning ahead of its full year financial result release.

Guinness reported revenue of N96.08 billion for the nine months that ended March 31,

2020, showing a fall of 5.3% compared with N101.40 billion recorded in the corresponding year of 2019.

In addition, financing cost rose by 97% to N3.582 billion compared to N1.817 billion recorded in 2019. Guinness Nigeria PLC ended the period with a profit after tax of N1.672 billion, plunging by 60% from N4.252 billion recorded in 2019.

While the NSE Consumer Index, the gauge used to measure performance of all consumer companies, has been the worst performer year to date. Shares Nigerian Breweries, Nigeria’s biggest brewer by market share, peaked at N191 in Q2 2017, however, it has seen its share price consistently decline, falling to a multi-year low of NGN25.50 as at the end of Q1 2020. The 3 years old selloff cost the brewery giant its priced place in the elite trillion-naira market cap club as the market valuation declined from N1.5 trillion in Q2 2017 to N204 billion in Q1 2020, losing as much as N1.3 trillion in market valuation over the last 7 quarters.

L-R: Pauline Sanusi, staff of Special Correctional Centre for Girls; Folashade Ashafa, president, Ikeja Viva L’Amour Lions Club; Adenike Adeniji, vice president, Special Correctional Centre for Girls, and Oluyemisi Lasubulu, secretary, Ikeja Viva L’Amour Lions Club, during the Donation of Sewing Machine and Grinding Machine held recently in Lagos.

OIL & GAS

NCDMB signs investment agreement with DUPORT Midstream, ERASKON on Energy Park, Oil blending plant OLUSOLA BELLO

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he Nigerian Content Development and Monitoring Board (NCDMB) on Friday signed equity investment agreements with two companies-Duport Midstream Company for the establishment of an Energy Park in Egbokor, Edo State and Eraskon Nigeria Limited, for a lubricating oil blending plant in Gbarain, Bayelsa State.

The Board’s investments will catalyse industrialisation, with the two partnerships expected to generate about 1,500 direct, indirect, and induced employment opportunities, in addition to several other spin-off economic activities that will be developed where these projects are located.

The planned Energy Park comprises a 2,500bpd modular refinery, 30MMscfd gas processing facility, which will include a CNG facility and 2MW power plant. Similarly, the lubricating oils blending plant will be the first of such plant in Bayelsa State and will have the capacity to produce 45,000liters per day and enhance the availability of engine oils, transmission fluids, grease and other products.

The Executive Secretary NCDMB, Simbi Wabote signed the Shareholders Agreements and Share Subscription Agreements at the Board’s liaison office in Abuja while Akintoye Akindele, Managing Director of Duport Midstream Company and Maxwell Oko, managing director of Erakson Nigeria Ltd equally signed for their firms respectively.

In his remarks, the Executive Secretary explained that the investments were part of the approvals granted recently by the Board’s Governing Council chaired by the Minister of State for Petroleum Resources, Timipre Sylva.

He clarified that the investments were coming under the Board’s commercial ventures program and was in sync with the Board’s vision to serve as

a catalyst for the industrialisation of the Nigerian oil and gas industry and its linkage sectors.

Wabote indicated that the Duport partnership is in furtherance of the Board’s strategy to enhance in-country value addition by supporting the establishment of processing facilities close to marginal or stranded hydrocarbon fields. He stressed that the recent drastic drop in the prices of oil had made it imperative to have refining capacities to reduce if not eliminate cases of stranded oil cargoes without buyers.

Recalling the Board had already had partnered with the Waltersmith Group and Azikel Petroleum Company for the establishment of modular refineries in Imo and Bayelsa State respectively, he underscored the emerging investment opportunity in developing capability and capacity in-country to maintain the various kits in the modular refinery on a sustainable basis.

According to him,”we do not want a situation where the modular refineries are folding up one after the other in a few years due to lack of technical support or inability to secure critical parts.”

He stated further that NCDMB have commenced discussions with some Original Equipment Manufacturers on how we domicile the fabrication and assembly of modular refineries incountry. ”Our strategy is to begin to claw back bits and pieces of the various components of the modular refinery untill we fully domesticate the manufacturing of a large percentage of the kits incountry,” he said.

Giving details of the partnership with Eraskon, the Executive Secretary pointed out that the blending facility had the capacity to be deployed for the production of other chemicals and reagents.

“The packaging section can also be used for generating additional incomes for the business and for creation of employment,”he said.

Omoluabi Mortgage Bank plc changes name, holds 6th annual general meeting IFEOMA OKEKE

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eading financial service provider, Omoluabi Mortgage Bank Plc, on Thursday, held its sixth Annual General Meeting (AGM) in Osogbo, the Osun State capital.

Many of the shareholders took part in the meeting online due to the need to comply with the COVID-19

protocols prescribed by the health authorities.

One of the major decisions taken at the meeting was the approval granted by shareholders for the bank to change its name to LivingTrust Mortgage Bank Plc. Shareholders at the event also voted to ratify the appointments of Messrs Adewole Adekunle as Managing Director, Oyewole Olowu as

Executive Director, and Yemi Adefisan, Olufemi Adesina and Adeniran Adewole as Non Executive Directors, while Fehintola OlatundeAgbeja was elected an Independent Director of the bank.

Others elected were members of the statutory audit committee.

Addressing the shareholders, Adebayo Jimoh, the bank’s Chairman, ex-

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plained that the name change is in line with the bank’s short and mid-term strategic focus, to enhance brand visibility and acceptability, and also reinforce its national outlook.

In his address, the Managing Director thanked the shareholders for the confidence reposed on him and the new management team.

He stated that despite the economic headwinds and

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challenges of COVID -19, the bank is poised to delivering excellent customer experience, as well as superior returns to shareholders in the year 2020.

Also speaking at the event, Yemi Adefisan, the group chief executive, CITITRUST Holdings Plc, the bank’s core investors, said that his group preferred to invest in Omoluabi Mortgage Bank, amongst @Businessdayng

others considered, due to the bank’s healthy balance sheet and strong corporate governance practices.

He expressed confidence in the ability of the management and board, led by Jimoh, a foremost technocrat, in taking the bank to the desired level of playing in the top five in the Mortgage Banking Industry in the next three years.

Friday 03 July 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

15

Why CWG is driving five strategic Pillars – CEO MODESTUS ANAESORONYE

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dewale Adeyipo, the chief executive Officer of CWG Plc, Nigeria’s largest system integration company, has given reasons why the company initiated five strategic pillars when he took up the role about two years ago.

He said the five operating strategic pillars, which include Growth, Profits, Liquidity, Brand and Dividend, has become an essential guide on what CWG will be doing and how it would be done.

“We evaluate every decision and predetermine the contribution to all or any of these pillars. The pillars have created focus and clarity.

They have helped us to know what business to take seriously and what we should cease doing. Not every opportunity is considered to

be a ‘Must Have”. “It mostly depends on its contribution to the pillars” he declared.

According to Adewale, the implementation and strict adherent to these pillars have contributed to the growth of CWG Plc in the last one year, leading to the re-introduction of some valuable IT services and an increase in customized services businesses.

For instance, the five pillars helped the CWG to record a transaction volume of

over N12 billion on its BillsnPay presentment platform.

This record is a major chunk of over 3000 percent of what the company had in 2018, 2017 and 2016 combined.

“I can tell you that the underlining principles that have kept us focused are these five pillars,” he stressed.

According to the Audited Financial Statements, the Company declared a Profit after tax of N73million and Net Assets growth of 67.4 percent, from N115million to N192 million. Other key highlights are the revenue growth of 23.4 percent, from N7.8 billion in the previous quarter to N9.6 billion. Profit before tax stood at N634 million.

This audit report was presented to the shareholders at the company’s Annual General Meeting held at CWG’ headquarters on June 25th 2020.

Valentine Chime appointed as MD of Vodacom Business Nigeria IFEOMA OKEKE

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he board of Vodacom Business Africa (Nigeria) Limited has appointed Valentine Chime in the role of Managing Director for its operations.

Valentine joins the Company from Aruwa Capital, a private equity company investing across West Africa.

Prior to this, he was at Kaizen Venture Partners, a private equity company focused on distressed assets. He has held various C-suite positions in a number of portfolio companies in different sectors.

As MD, Valentine will drive the Company’s vision

of becoming Africa’s leading cloud and digital service provider, bringing to market a very relevant suite of next generation technology solutions in the fields of Edge AI, SD-WAN/NFV and Cloud.

The Company will be

hosting an Artificial Intelligence Virtual Conference at the end of the month to showcase its innovative solutions.

“Vodacom Business Africa (Nigeria) Limited is wellknown and very respected in the industry, and I look forward to taking up this mission. Covid-19 has accelerated digital transformation, and we are perfectly positioned to deliver intelligent connectivity through seamless delivery of cloud and digital services and technologies to our clients. We are about simpler, seamless solutions. I look forward to building on this and growing the business,” Valentine said.

Front L-R: P&G’s Senior Director for Africa for Global Government Relations and Public Policy, Dr. (Mrs.) Temitope Iluyemi; Deputy Governor of Lagos State, Dr. Obafemi Hamzat; Special Adviser to the Lagos State Governor on Civic Engagement, Princess Aderemi Adebowale and Secretary to the Lagos State Government, Mrs. Folashade Sherifat Jaji at the official handover ceremony for P&G’s support to the Lagos State Government’s Hygiene Campaign with the donation of over 100 handwashing stations and 8,000 Safeguard antibacterial soaps.

Abimbola Arasi (l), managing director, Propertymart Real Estate Investment Limited, and an allottee, Gibson Eze, at the physical allocation of plots of land to subscribers of Fairmont Hilltop Estate, Alagbado, Lagos.

Shippers’ Council wants APM Terminals to place export on priority list AMAKA ANAGOR-EWUZIE

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he Executive Secretary/CEO of the Nigerian Shippers’ Council (NSC), Hassan Bello, has suggested that export cargo should be placed on priority list and treated as such going by the current economic realities.

According to him, export cargoes should not attract storage charges and should be accelerated through the terminals.

Receiving Klaus Laursen, the newly-appointed Country Manager of APM Terminals in his office in Lagos, Bello expressed concern about the congestion at port terminals.

A statement signed by Rakiya Zubairu, head, Public Relations, stated that Bello commended APMT for the

acquisition of new cargo handling equipment.

He also informed the APMT Country Manager of Council’s resolve to ensure that all terminal processes are fully automated and integrated with other port service providers’ and users before the year runs out.

He however commended APMT’s collaboration with Nigerian Railway Corporation and barge operators in cargo delivery and evacuation.

Responding, Laursen said congestion at the terminal was due to freight forwarders not coming to clear their containers. This, he said, has contributed in no small way to the back up of ships on Nigeria’s territorial waters.

On a somewhat bright note, he said, APMT has been able to reduce yard occupancy from www.businessday.ng

98 percent to 77 percent.

On automation, Laursen said APMT plans to optimise haulage at its terminal by implementing an electronic platform for truck management, adding that discussions on this are ongoing with the Nigerian Ports Authority (NPA).

He added that the terminal issues, Terminal Delivery Orders online, payments, invoicing and a range of other services are also online so that freight forwarders don’t need to be physically present at their terminal.

With regards to export cargo, Laursen said they need to have all their documentation including Customs clearance before accessing the terminal.

He suggested that the Nigeria Railway Corporation needs to advertise its services in order to increase patronage. https://www.facebook.com/businessdayng

@Businessdayng

16

Monday 06 July 2020

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Investors ignore decline in return on equity performance at Custodian Investment

SHORT TAKES N312m After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

…stock price driven higher by asset and revenue growth BALA AUGIE AND IFEANYI JOHN

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espite posting a consistent decline in return on average equity since the 2016 recession, Custodian Investment has seen its share price jump by 46.34% between 2016 and 2019 as investors have continued to ignore the decline in return on average equity yields over the years.

Custodian Investment during the periods under review saw its return on average equity tumble almost 50 percent from 26.05% in 2016 to 13.94% in 2019. The steady decline in ROAE can be explained by high management expense and lower profitability recorded within the period.

The company’s topline on the other hand has continued to grow strongly over the last 4 years. Between 2016 and 2019, the financial services company saw its revenue grow by almost 60 percent from N38.55 billion reported in 2016 to a record revenue earnings of N61.41 billion in 2019.

Although revenue is up nearly 60 percent since 2016, the profit after tax of the firm is actually down about 12.8 percent as Custodian reported a net profit of N6.01 billion in 2019, which is lower than it achieved in 2016 when it reported a net profit of N5.3 billion.

In the same manner, Custodian has also seen a decline in its return

5

on average assets over the same period. The company’s ROAA declined from 11.66 percent in 2016 to 5.56 percent in 2019, representing a drop of more than 50 percent. The sharp drop in ROAA was largely driven by the 73.31 percent growth in company assets and the small drop in company profitability.

The rapid growth in assets was driven by the astronomical increase in the firm’s financial assets in its

total assets books which moved from contributing as little as 0.15% to total assets in 2015 to contributing almost 70% in 2019. Financial Assets jumped almost 1000 folds from N88m in 2015 to N81.1 billion in 2019.

Analysts believe that the persistent growth in the company’s gross revenue is linked to the sharp growth in assets recorded in the company over the period although the company’s asset turnover has not been

quite impressive lately. The company’s asset turnover has dropped from 0.57 in 2016 to 0.52 in 2019.

It appears investors are only focused on improvements in total assets and revenue growth as the company’s share price has continued to rally over the years, moving from N4.10 in 2016 to N6.00 in 2019.

The recent market selloff has forced the share price lower to N5.50 as at market close on Friday.

Niger Insurance strange expense reporting confuse analysts IFEANYI JOHN

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hat would have seemed like a perfectly normal financial report for Niger Insurance looks odd when analysts take a deeper look at the company’s expense reporting in their Q1 financials for 2020.

The Insurance company reported a positive management expense of N620 million in 2020Q1 which helped the company avoid posting a loss before tax of up to -N233.3million when the management expenses is deducted from it operating income.

What is strange is that on the

P.E

company’s financials, management expenses is expected to be deducted as a company expense and not added as an income. On the contrary, Niger Insurance somehow reported it like an income which is very strange, especially considering that as the name depicts, it is an expense not an income and the company has reported it as and expense for years until 2020.

Between Q1 2016 and Q1 2019, the company reported an accumulated management expense cost of around N1.7 billion which was deducted out as an expense. But suddenly in Q1 2020, the company went from reporting an expense of -N291.46 million to a positive expense of N620 million which adds as an income line rather than deduct-

ing as an expense line that it is.

A further investigation into the notes of the financial report that gave specific details into the management expense line brought even more confusion. The company reported no Director’s emolument, no employee expense and no Auditor’s remuneration, leaving all line items blank as if there were no related cost to these expense lines by the company throughout the first three months of the year.

The company rather reported an expense of N10.6 million for Finance Charges and N344.188 in Other Expenses which fails to add up to the positive inflow of N620 million reported in the income statement as management expense. In fact, once this N354.8 million accrued in man-

The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run.

Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month.

Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week.

“Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn

agement expense is deducted from the operating income, the company is expected to post a loss before tax of -N354.8 million once the positive inflow of 620 million reported as management expenses is ignored.

However, analysts suspect that the N620 million reported as management expense is meant to be reported as -N354.4 million but was erroneously reported as net fair value for financial assets in the financial statement. It will makes sense if the figure reported as net fair value for financial assets is reported as N620 million but there are no notes to the financials prove that this swap will produce a more correct financial report. It is then important for the management of Niger Insurance to correct this potential error.

Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early.

According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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@Businessdayng

Monday 06 July 2020

BUSINESS DAY

Start-Up Digest

17

In association with

How 12-year-old Jessica fulfils her dream as kidpreneur Odinaka Anudu

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any children are still grappling with what they wish to become in the future, but the 12- year-old multilingual Jessica Douglas-Jombo, currently in junior secondary school, has found her passion in the culinary world and is working assiduously at it through the help of her parents.

The kidpreneur is making money with her culinary skills, having authored a book to encourage other children to take up cooking as a career in the future.

According to Jessica, whose brand name is CookingwithJessie, it all started when her parents noticed her admiration for cooking each time her mother prepared the family meals in the kitchen. Her uncanny ability to remember the recipes and reproduce them all by herself at an early age marveled her

parents.

On seeing this ability, her parents decided to harness and encourage her.

Their efforts led to the creation of a cooking channel on YouTube called ‘CookingwithJessie.’

“I use this channel not only to express my culinary prowess, but also to educate other children to love, learn and see the art of cooking as not a skill for only adults, she says.”

Her parents are her first role models as they have spared nothing to give her the push. She also mentions Gemma Stafford, Siba Mtongana and Ozoz Sokoh of Kitchen Butterfly as people she looks up to.

Explaining the progress she has made so far, the kid chef says with the assistance of her parents, she has been able to write an e-book on her culinary journey aimed at inspiring other children to hop into the interesting culinary world as well to prompt parents to have confidence in their children and allow

Jessica Douglas-Jombo

them to cook.

She explains that her book can be found in her Instagram bio with the title ‘Becoming A Genius in the Kitchen’ where she shares

Why Buflus became success story in Nigeria’s event industry Odinaka Anudu

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usola Adeniran is one of a few entrepreneurs who share the beliefthat Nigeria’s economy is full of opportunities. She also believes that entrepreneurs need focus, hard work and persistence to become successful.

These values are what have shaped her to become a success story today as a player in Nigeria’s event industry.

Busola Adeniran is the chief executive officer of Buflus Events Planning and Decoration company in Lagos. She entered the event industry seven years ago, after spending time with one of her cousins who was an event decorator.

“I started my event journey with a cousin of mine in 2013.

I have to acknowledge her role in my success story. Bukola Olalere was one of the first event decorators who worked with the likes of Etisalat and Unilever. She taught me everything I needed— from decor to flower arrangements, to planning and much more.

And when it was time, she had to let go of me to fly,” she says.

The Buflus CEO says she did not rely solely on what was taught by her cousin, but had to improve herself, getting an

Busola Adeniran

advanced diploma qualification in Event Management from a UK-based Academy in 2016 in the process.

She also got a mentor to help scale up her business.

She explains that her journey of personal development is continuous.

Highlighting some of her achievements since inception, Adeniran says Buflus has planned several events, done decoration works and handled jobs for corporate brands such as Linkage Assurance and Primagarnet, among others.

“Today, we’ve been able to diversify by adding Buflus’ sales and rentals of decor items and have also introduced the Buflusfood arm of the business where we do delivery of home-made meals like Ofada sauce, soups, among others, to our clients while observing the necessary food safety protocols,” she discloses. www.businessday.ng

“Aside that, we will be gracing for the second time running, the July edition of the ‘Early MoMo Food Market’ here in Lagos.”

She reveals another milestone achieved by the brand.

The milestone occurred when the firm decorated the first Naijabrandchick Trade Fair at KFA Event Centre sometime ago—a boost for her team.

Describing the challenges faced in the industry, the event expert says the industry is full of competition and there have been reasons to quit, but God and support from her spouse and colleagues have enabled her to forge ahead.

She notes that the Covid-19 crisis has compelled her to temporarily suspend operations of other arms of her business as she currently focuses on Buflusfood, decoration and rental services for events of 20 guests.

Speaking on her brand’s post-coronavirus plans, she explains, “We’re taking all safety measures given by the government with all seriousness, from our store to the kitchen area, and have set up a hand-wash corner, with the alcohol based hand sanitizers in place.

Our delivery boys are mandated to wear gloves before handing out food to clients in their homes.”

tips and lessons from her cooking journey. It was launched on the 1st of July to mark her 13th birthday.

On the type of recipes she loves to make, Jessica

says she likes to prepare African delicacies, especially Nigerian cuisines.

She presently has homemade granola, different variants of tea, jams and other products she puts up for sale. She also has live teaching classes for children who want to build their cooking, camera and speaking confidence.

Jessica reveals that she is a United Nations Sustainable Development Goal 2 champion, promoting Zero Hunger and ensuring that children in her neighbourhood go to bed full and not hungry. She says she does this through her Tripple J Foundation, where food, toys and books are donated to kids. Donations were made by the organisation during the Covid19 lockdown and Children’s Day. She says her cooking channel has given encouragement to parents, some of who now allow their wards to explore cooking.

This has generated loads of positive feedback, making her a role model to most

kids and adults.

On her advice to parents, she says, “I want parents, just like mine, to believe in their kids and allow them grow wings to fly. Most parents are overprotective and never allow their kids to explore or even create opportunities for them.”

She admonishes parents to remove all stereotypes and allow their kids the opportunity to pursue their dreams, giving them necessary support.

The 12-year-old calls on government to do more for children in Nigeria by giving out scholarships as well as support to vocational learning in secondary schools.

Jessie cautions other children to be focused, not waste their time on the social media but make the best use of it with parental guidance.

“Children should go all out to chase their dreams, be bold and know that they can achieve anything they choose to do with the support of their parents.”

UWGN, ABC provide COVID-19 relief for the elderly, support entrepreneurship ODINAKA ANUDU

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he United Way Greater Nigeria (UWGN) in partnership with American Business Council (ABC) has provided palliatives containing staple food, hygiene products and face masks to the elderly in Ita Faaji community in Lagos. The two organisations also support the growth of entrepreneurship in the country through advocacy, support for financial stability and advisory services.

It was an annual day of service, where local UWGN members and individual volunteers canvassed for health, education and financial stability of people in different communities. With the support of ABC, UWGN provided over 200 elders in the community with food and hygiene items with a view of making real difference in their lives.

“Countries all over the world are working effortlessly to address the COVID-19 pandemic and is-

https://www.facebook.com/businessdayng

sues that have arisen as a result,” Kamil Bakare, executive director, UWGN, said in a statement.

“At a time like this when critical relief is needed in the country and beyond, individuals and organisations need to join forces to alleviate the burden on their people and attend to the basic needs of the society,” he noted.

He said this was why the UWGN partnered with ABC to provide care packages to the most vulnerable in society, the elderly, as they are the most endangered during this pandemic and may not have access to adequate care.

“Since the outbreak of the COVID-19 pandemic, United Way Greater Nigeria, with the support of corporate organisations and individuals, has been supporting families and individuals in vulnerable communities. We understand that there are more individuals and families facing ongoing challenges, specifically in the areas of putting food on the table and this is why we call for more partnerships @Businessdayng

to help alleviate their difficulties, he further said.”

Margaret Olele, CEO of ABC, said the council understands the challenges the average Nigerian faces in the new normal.

She said the ABC, its member Halliburton and partner UWGN have made considerable donations to alleviate the difficulties at the Ita Faaji community.

“We remain committed to supporting livelihood of persons in challenged communities and collaborating with government to drive economic recovery post –covid initiatives,” she noted.

UWGN is a registered non-profit organisation that focuses on health, education and financial stability of individuals on Nigerian communities.

On the other hand, the ABC is the voice of American Businesses in Nigeria and an affiliate to the US Chamber of Commerce.

Working with the US Mission and other partners, it drives trade and investment opportunities between Nigeria and the United States of America.

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Monday 06 July 2020

BUSINESS DAY

Start-Up Digest

Investors bet on Nigeria as start-ups raise millions amid coronavirus ODINAKA ANUDU & GBEMI FAMINU

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igerian startups raised millions of dollars in the first five months of 2020 despite the ravaging impact of Covid-19.

Most of the funds come from outside Nigeria, indicating that foreign investors and grantors still bet on Nigeria despite local challenges and Covid-19.

In April, Index Ventures raised $2 billion to fund start-ups in different stages of growth. Index Ventures, a venture capitalist, plans to mitigate funding challenges among Nigerian start-ups, acknowledging that emerging into a great company from start-up is not an easy route.

“We are proud to have raised $2bn in new funds to support this next generation of entrepreneurs,” a statement by the global venture capital firm in April said.

“In such challenging times, it is heart-warming to see so many business founders responding swiftly to the crisis on their doorstep and committing support to others,” the company further said.

Also in April, Okra, a fintech firm, raised $1 million from TL.com Capital, a venture capital firm.

Okra was founded in June 2019 by Fara Ashiru Jituboh and David Peterside—two Nigerian entrepreneurs.

According to Jituboh, Okra is building a super-connector

Oladoyin Phillips

API that allows individuals to connect their bank accounts directly to third party applications.

Also in April, 54gene, an African genomics research and development company, raised $15 million in a series A round of funding.

“I am pleased to announce @weare54gene’s Series A round of funding closed at $15m. The fund raise was led by @adjcap,” Abasi EneObong, CEO of 54gene, Tweeted on April 14.

“With previous participation from YCombinator, KdT Ventures and Better Ventures, this brings our company’s total VC investment thus far to $19.5M,” he added.

In March this year, EneObong launched a $500,000 fund to tackle covid-19 testing challenges faced in Nigeria.

The fund, according to him, was meant to support the efforts of the Nigeria Centre for Disease Control (NCDC).

54gene opened the fund by donating $150,000. Within 24 hours of launch, it secured an additional $350,000 from partners, including Union Bank. The money raised

was meant to help increase Covid-19 testing capacity in the country by up to 1,000 additional tests a day, said 54gene.

Coronavirus hit China in December 2019, but it struck the world like a thunder in the first quarter of 2020. Countries imposed lockdowns to curb the spread of the deadly virus which has killed almost half a million people globally as of Friday.

Businesses were hurt as investors were cautious, but start-up funders did not seem perturbed.

Techpoint Africa claims that foreign investors pumped $55.37 million into Nigerian start-ups in the first quarter of 2020.

“In Q1 2020, Nigerian startups raised $55.37 million which is higher than the amounts raised in Q1 2018 and Q1 2019 combined,” Techpoint report said, adding that fintech startups accounted for 82.2 percent of the total funding.

Nigerian health start-up Helium also raised $10 million in Series A round of funding, CEO Adegoke Olubusi told TechCrunch.

SMEs require insights, skills to transform challenges into opportunities — LCCI ODINAKA ANUDU

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ntrepreneurial insights and skills are needed to transform challenges into opportunities, according to the Lagos Chamber of Commerce and Industry (LCCI).

At a virtual global leadership training held last Tuesday, Toki Mabogunje, president, LCCI, said without such attributes, it would be difficult for micro, small and medium enterprises (MSMEs) to chart a new course for their businesses and position themselves for emerging opportunities.

Mabogunje said the capacity of MSMEs to handle stress and remain calm and focused in the midst of chaos would engender hope within the workforce and enable the business to continue to maintain order while restraining from a fire brigade approach to solving problems.

“A big lesson from the covid-19 disruption is the need for SMEs to leverage technol-

Start-ups looking to build tech products have a range of options for bringing their products to market

ogy to improve on the quality of their service delivery while sustaining relevance and competitiveness,” she said.

She urged entrepreneurs to adopt a flexible management approach to keep tight control on cost and nonrevenue-generating segments of their businesses.

“Flexibility helps business owners to adapt to dynamics,” she said.

“MSMEs can free up liquidity trapped inside the business to increase their chances of survival and improve resilience and sustainability. MSMEs can do this by introducing cost-reduction measures, negotiating new terms with input suppliers and service providers, reviewing portfolios of receivables and offering discounts for early payment to large buyers,” she admonished.

She advised them to reconfigure their supply chains through backward integration for inputs that could be sourced locally.

Backward integration occurs when a company purwww.businessday.ng

chases part of its suppliers or produces what used to be supplied by another firm.

The national survey of MSMEs conducted by National Bureau of Statistics (NBS) and Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) in 2017 said the number of MSMEs has risen from 37 million to 41.5 million MSMEs. The growth is down to the rising number of survivalists who opened micro businesses in the face of economic slump in order to survive, analysts say.

Small businesses face multiple taxation, high energy cost, poor access to credit and infrastructure, but the the spread of COVID-19 has combined with these age-old problems to worsen their plight.

MSMEs contribute 50 percent to Nigeria’s GDP and accounts for 86.3 percent of jobs (59.6million jobs in 2017), according to the report by the NBS and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).

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n the last four months, technology has become unavoidable for most, if not all, businesses.

Where there were restrictions before, now, we are open to a whole world of technologically supported possibilities. So, companies entering the market have to think more carefully about product delivery and place an emphasis on technology that might not have been a requirement before.

For many people, this presents a barrier to entry into building and growing a start-up. A founder might have a strong idea, strategy and business plan, but get stuck when it comes to the development of the product or service. In this case, there are often three options: 1. Technical co-Founder, who will handle the technology development and all the processes therein. This person or entity will own a part of the business.

2. Chief Technology Officer (CTO), an employee, that will direct the technical aspects of the business.

3. Technical Partners/ Consultants, to whom one can outsource the required technical development Perhaps the biggest difference among these three options, is in terms of the compensation. The Tech Co-Founder has equity in the firm, while the CTO is an employee (this does not exclude his/her having a form of ownership), while the consultants are external parties that are paid as they would be for a project.

There are many businesses that start with a tech co-founder/CTO, whereby one founder already has the expertise to handle the technical aspects of the business and assumes the CTO position, while being recognised as the co-founder. Some companies grow and find that they need a senior technical executive, then hire a CTO, while others just outsource. However, not every founder will know or have access to an experienced technical director with the expertise and/or funds to drive the technical development of the business offerings or help to

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grow the business. In this case, an option is to search for a technical co-founder, who can provide both the technical direction for product development and business processes for the firm in exchange for some equity. Given the lack of access most small businesses in the country face, finding this support is not always so straight forward. However, there are companies that are changing that.

Faster Capital, a tech co-Founder in the UAE, provides a novel solution to the start-up ecosystem.

It is an incubator that invests in businesses, asking for up to 50% of the company’s equity, while they provide technical development worth $20,000 to $2,000,000- depending on its value. That is something that one might need

‘ Beyond the

technical development of the start-up’s products or services, Faster Capital assists in finding mentors, and in some cases to weigh against investing the money to get your own technical team to develop the product on your own or hiring a CTO. Faster Capital democratises the start-up ecosystem in a very meaningful way.

A great idea and business model need not go to waste, and we think that is powerful. So far, they have incubated over 100 companies from fashion, to real estate, to education, to food, across the Middle East, Asia and Africa. The support offered is robust, with a technical team on hand to continuously modify, add or fix features. @Businessdayng

Beyond the technical development of the startup’s products or services, Faster Capital assists in finding mentors, and in some cases. Investors. Although they do prefer that the company has already secured 50% of its required funding. It is a virtual incubator. So, start-up founders would not need to physically be in the UAE to be a part of this.

Along those lines of support, Faster Capital has expanded its offering to include two other programs: Idea to Product and Grow your Startup, which capture the rest of the value chain – before building the product, and after it has been built. It works in the same way as the Tech coFounder program, support in exchange for equity. This brings access to the millions of ideas that would otherwise have remained just so.

Taking things, a step further, on June 16th 2020, the company launched its annual women round. It is specifically aimed at startups that have at least one female co-founder. Given their three programs that cut across the business value-chain, from ideation, through technical/product development, to increasing sales channels, there is an opportunity for everyone.

Faster Capital is worth considering as a partner to bring your business to life precisely because it offers the different levels of business support that potential and current startup founders need. Once you have a good proposition that solves a problem, and a willingness to exchange equity for the robust support to offer. You are well on your way.

At Spurt! we are intensely committed to seeing African businesses thrive beyond anyone’s wildest dreams, solving and innovating for the continent.

Faster Capital brings more opportunities to the space, and we are quite confident that this will do good for a good number of people.

Kristin & Oladoyin www.spurt.solutions Reach us at admin@spurt.group if you have any questions or comments.

Monday 06 July 2020

BUSINESS DAY

19

real sector watch

N20bn tomato processing factory underscores GBfoods’ commitment to Nigeria—Egbe, country manager VINCENT EGBE is GBfoods Nigeria’s country manager. In this interview with Odinaka Anudu, Egbe talks about the company’s N20 billion fully integrated tomato processing factory in Nigeria, support from governments and host communities, job creation and future plans of the company.

Tell us about GBfoods and your role in the company? e are part of GBfoods Africa, which is owned

by GBfoods Europe (a large Spanish foods group) and Helios Investment Partners (a Nigerian-owned private equity firm, based in London, with over $3billion in assets under management).

Since inception about 83 years ago, “celebrating local flavours” has remained our key driving force. Through tasty and authentic food with a local touch, we have ensured that families in over 50 countries including Nigeria share memorable moments around good food.

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When did you enter the Nigerian market?

GBfoods has been doing business in Africa for over 40 years and our brands have been in the Nigerian market for over 20 years.

What are your main product offerings?

Our main product offerings cut across taste enhancers, tomato pastes, food dressing and spreads. The key brands of the company in Nigeria include: Gino, Bama and Jago. Under these brands, we manufacture a wide range of top quality products that make the lives of many Nigerian families easier.

Products under our brands include Gino Tomatoes Mix, Gino Pepper Onion, Gino Thyme, Gino Curry, Gino Chicken and Beef Cubes.

Others are Bama Mayonnaise and Jago Mayonnaise.

These products meet local culinary tastes and offer the best-in-class and healthy ingredients for the Nigerian cuisine.

You recently committed N20bn to building a fully integrated tomato processing plant in Nigeria. Tell us more about the plant.

A tomato processing plant is where fresh tomatoes are converted into various other products besides using them as vegetables.

This involves products like tomato concentrate which is

a key component for manufacturing tomato paste, and ketchup which we use in our daily meals.

Fully integrated plants like the one we have in Kebbi State usually house a tomato processing factory and an industrial tomato farm. An industrial farm would usually include drip irrigation systems, greenhouses, drip fertigation infrastructure, seeding robots, seedlings incubation chamber and agricultural machinery.

Why did GBfoods make this commitment and how will it impact the tomato needs in Nigeria?

We identified a challenge and saw the need to address it. Nigeria is the largest producer of tomato in subSaharan Africa, responsible for 65 percent of tomatoes grown in West Africa, yet remains the largest global importer of tomato concentrate due to the absence of tomato processing factories in the country. GBfoods’ tomato processing factory will see that tomato is produced and processed locally while local talents and expertise are employed. We will also ensure that the estimated 1.35 million tons of fresh tomatoes wasted each year are put to productive use.

Our factory is the second largest processing plant in Nigeria. It is the only fully integrated plant in ECOWAS – where the factory is fully backward integrated to our farm and dedicated out-growers. The output of the factory is expected to cover some of GBfoods Nigeria’s concentrate processing needs. As we expand the farm, we expect to produce enough concentrate to meet our needs and supply other packaging companies or even export.

What was your criterion for choosing the location of the farm and the factory?

A key decider for the location was the fact that we needed a land with access to a constant source of water, enough to run an industrial farm sited on thousands www.businessday.ng

hope will engender a lot of joy and ownership in our consumers in all our markets, but more especially, Nigeria, our largest African market.

This project also shows that with commitment and determination as well as government support and encouragement, companies like GBfoods, with good intentions, can achieve a lot in Nigeria and Africa at large.

Vincent Egbe

hectares. We settled in Ngaski Local Government Area in Yauri Emirate because the land site is close to the river.

The farm is where we grow and harvest fresh tomatoes and it is responsible for a majority of the tomatoes used in production. The rest will come from smallholder farmers operating as out growers. The factory is where fresh tomatoes are processed into tomato concentrate used in producing the tomato paste we use in our kitchens.

Who are your partners?

We have had tremendous support from the CBN as well as the Federal Government of Nigeria, Kebbi State Government, and the Emir of Yauri – for all of which we are deeply grateful.

What kind of support did you receive from your partners, especially the government?

The CBN, and in particular, the CBN governor, Godwin Emefiele, has been very supportive in encouraging us and helping engage ministries, departments and agencies to reduce bottlenecks that might cause delays. Furthermore, we successfully applied for and obtained CBN intervention funds.

The Ministries of Agricul-

ture & Rural Development; Industry, Trade & Investments; and Finance, Budget & National Planning have been extremely supportive.

We thank the respective ministers and ministries for their support.

We are also grateful to the Kebbi State government for leasing us land for the project and Governor Atiku Abubakar Bagudu for hosting our project. We also appreciate the host communities, especially the Emir of Yauri and the Ngaski Local Government authorities who have been helpful.

Your Tomato farm is one of the largest in West Africa.

What does this mean to the company and its purpose?

Our purpose is to celebrate local flavours. Growing tomatoes in Nigeria gives us authenticity. We are producing a product that is proudly Nigerian – that empowers Nigerians economically and physically. We are a neighbourhood company in close proximity to its consumers. A good neighbour works for the benefit of the neighbourhood, as we call it GBhood, (GBfoods+ Neighbourhood). When consumers consume our produce, they consume what is produced in their neighbourhood. The close proximity, as I mentioned earlier, we

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How do you source your tomatoes?

Our tomatoes are sourced from our farm and outgrowers (smallholder farmers) who grow the tomatoes on their own farms. We partnered with out-growers for the 2019/20 season. We will continue to do so in the 2020/21 season and beyond, during which we will engage over 5,000 smallholder farmers as out growers.

How have you equipped the farmers? How many jobs has the initiative created?

We have provided the farmers with seedlings from our greenhouses, plastic crates, water pumps, water hose pipes, and trained them on good agricultural practices.

So far, we have created about 500 farming jobs, 150 factory jobs, 100 out-growers’ jobs, and, 150 construction jobs.

You successfully completed the factory during the COVID-19 lockdown.

What challenges did you face?

The pandemic has continued to have an adverse impact on us. A lot of the technical work that is done on the farm requires support from technical expats from Spain and Italy. Owing to lockdowns and travel restrictions, these key staff could not travel. This delayed the successful completion of the factory and we lost some crops as the factory was not fully ready when the first set of tomatoes was harvested. Crops also got damaged especially by early rains.

We want to expand our factory and farm operations – but these ambitions may @Businessdayng

be slowed down because the manufacturers that make these equipment and machinery in Europe have been shut down and will take time to re-open and clear the backlog of items in their order book.

How have you managed the host communities?

Our gratitude to our communities cannot be overemphasised. For this reason, we have embarked on initiatives to help these communities. We have provided 16 boreholes for drinking water to all the villages around our farm/ factory in Kebbi and fenced the graveyard where the community inter their deceased relatives.

We understand the importance the host communities play in the journey of organisations and this is why we gear our efforts towards proactive measures to help these communities thrive by conducting a study on the community needs to determine how we can further support the locals within the neighbourhood of our farm.

Will Nigeria become selfsufficient in tomato production – fresh and concentrate?

Yes, it will, not overnight, however. It took China, Italy, Spain, Turkey and USA over ten years to attain the height they have in tomato processing today— a yield of over 80 metric ton/ha. It may take Nigeria approximately 10 years or less to build the agronomic and technical capacity to get to that level of efficiency if focus, government support and determination come to bear.

What are your expansion plans for factory and farm in Nigeria?

We have plans to invest in more farmlands and expand our factory capacity. And as we expand, we project that the additional jobs to be created will be around 1,500 farming jobs, 300-500 factory jobs, 5,000 out-growers’ farmers, as well as 500 construction jobs.

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Monday 06 July 2020

BUSINESS DAY

INTERVIEW Aig-Imoukhuede on the business of saving lives He speaks with the management of GBCHealth, a New York based leading private sector coalition on health on ongoing plans in Nigeria.

Co-Chair of GBCHealth, (a New York based leading private sector coalition on health), Aigboje Aig-Imoukhuede, spoke to the management of GBCHealth to brief them on ongoing plans in Nigeria – the launch of a private sector led initiative, Adopt-AHealthcare-Facility-Program (ADHFP), which he believes would significantly help Africa win the battle for better healthcare.

Globally known for his relentless efforts to see a totally revamped healthcare in Africa, Aig-Imoukhuede reiterated how unacceptable it is for Africa to continue suffering the effects of diseases like HIV, AIDS and Malaria long after the rest of the world has put them to bed. “Advanced countries built their capacity to solve their own problems”, he said during the 2019 Africa Business: Health Forum, “it is time for us to do the same.”

With the recent scourge of covid-19, the astute healthcare advocate seeks to bring Nigerians and other stakeholders into what he aptly calls “the business of saving lives.”

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hat’s your vision for A D H F P ?

What’s the anticipated timeline for creation/implementation and importantly what’s the potential impact for Nigeria? For Nigerians?

The ‘Adopt-A-HealthcareFacility-Program’ (ADHFP) is driven by my belief that the African continent will continue to carry the painful and shameful burden of high disease mortality long after the rest of the world has overcome such challenges unless we address the poor state of healthcare systems at the primary level.

The goal is to establish a chain of Primary Healthcare Centers (PHCs), across Nigeria’s 774 Local Government Areas and apply market-based reforms to provide low-cost health services at decent standards to the poor and vulnerable. We expect to complete the Program design phase by Q3 2020 and commence pilots before the end of the year.

The ADHFP is a multi-impact initiative with several benefits for Nigeria including: a) Reduction in Mortality Rates. b) Creation of new jobs, entrepreneurship opportunities and health-focused start-ups. c) Improved public sector accountability d) Female gender empowerment e) Increased uptake of MicroHealth Insurance. f) Successful Health Policy Reform.

Why ADHFP - focusing on healthcare facilities/systems/standards/infrastructure - and why now? How

Corporation (IFC), MTN Nigeria Plc, Dangote Group, Zenith Bank, Access Bank, Stanbic-IBTC Bank, PwC, Cisco, Ford Foundation, Nigerian Stock Exchange, Flying Doctors Nigeria, Africa Practice, Cedar Advisory Partners, GBCHealth, Health Federation of Nigeria, Health Law, Eti-Osa Local Government, JNC International Ltd, Johnson & Johnson, Justice in Healthcare, Lagos State Government, MSD for Mothers, Nigeria Economic Summit Group (NESG), ONE Campaign, PharmAccess Foundation, Women-At-Risk International Foundation as well as the SSA to the President on Sustainable Development Goals among others.

Aig-Imoukhuede

did the C19 pandemic influence this decision? How will C19 inform the design of the program? What will change as a result of this initiative?

The ADHFP was conceived early in 2019 well before I had ever heard of the word ‘Coronavirus’.

Interestingly, whilst championing the Global Citizens global goal live campaign in Davos this January, I made the case that it is unacceptable for Africa to continue suffering the effects of pandemics like HIV Aids and Malaria long after the rest of the world has put them to bed.

I said Nigerians and other stakeholders must launch a movement to revive our ailing healthcare sector starting by fixing the 80% of our 30,000 primary health care facilities, which are currently comatose.

COVID-19 is a burning platform for change and reform in Africa’s health sector.

With COVID-19 beaming a spotlight on the weaknesses and inadequacies of our health system, the pandemic has simply reinforced, with devastating effect, the reasons ADHFP was conceptualized in the first place. As the Pandemic spreads, it has become evident to Nigerians that our primary health system must be fixed with urgency, otherwise our people will continue to die needlessly.

Why a private sector led initiative? What is the business case/value proposition for ‘Angels’ to adopt one or more PHCs? Have conversations started, and if so, what’s the response? Do you think this is an easier ‘sell’ in today’s environment, in the midst of the pandemic, when health and healthcare are the recurrent lead stories and priorities?

The government’s track record on annual health spending falls far www.businessday.ng

short of the 15% Abuja Declaration to address the heavy burden of HIV, AIDS, TB and Malaria agreed upon

by African Heads of State in 2001.

Revenue challenges due to global commodity prices as well as poor governance and corruption have also constrained what is spent on health by government. Funding must come from other sources such as foreign assistance and the Private sector. But beyond funding, Nigeria’s primary health sector is largely the responsibility of the Local Government tier of government, which suffers from weak capacity, poor governance, and an absence of accountability.

So beyond funding, we will continue to perform abysmally at the primary healthcare level without the involvement of capable and engaged citizens in the running and administration of our primary health system, hence the need for Private Sector organized participation.

The program will be implemented as a Private-sector-driven initiative. ADHFP will be sponsored by Angel Investors who could be individuals or institutions. Each “Angel” will take responsibility for one or more PHCs. They will build and operate the PHCs for the period of adoption under strict rules and guidelines.

Serious work is ongoing to make this vision a reality. The work is led

by The Private Sector Health Alliance of Nigeria (PSHAN) founded

by Aliko Dangote, Jim Ovia, myself and a number of notable organisations who have established themselves as serious actors in the field of Nigerian philanthropy and have rallied to the cause. They include: Global Citizen, Africa Business Coalition for Health (ABCHealth), Bill & Melinda Gates Foundation, United Nations Economic Commission for Africa (UNECA), World Bank, International Finance

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What is your vision for sustainability of these programs beyond the ‘period of adoption’ by Angels? How will these fit within the current MOH system?

Whilst private sector players have a visible role to play in healthcare delivery, healthcare provision in Nigeria is a concurrent responsibility of the nation’s 3 tiers of government. Since the PHCs are integrated into Nigeria’s political system, a proper understanding of the system and safe navigation though its actors are prerequisites for success.

It is essential to remain clearsighted about the limitations to private sector championed public reforms. Without government champions, health sector reforms will fail.

We will work with actors at various levels of Government, particularly at the State level, where the leverage for reform is greatest and the spending will take place.

Reform champions in government should be identified and engaged vigorously at the levels of Local Government Chairpersons, the Nigerian Governors’ Forum, Federal and State Ministries of Health, the National Assembly and the Presidency to advocate for increased political commitment to executing changes and facilitating effective Primary Care delivery.

To ensure that ADHFP fits seamlessly into Nigeria’s legal system, our design phase incorporates a thorough evaluation of the regulatory, institutional, and legal landscape to identify regulations, legislation and on-going reforms that will support or hinder the implementation of the ADHFP. What are some of the challenges you are anticipating and how are you planning to mitigate those? Do you see this as a replicable model for other countries?

The ADHFP is a ground-breaking, innovative, private-sector driven initiative, but there are a number of risks and challenges associated with its development and implementation.

At the moment, the most significant risk is the on-going COVID-19 pandemic, with attendant effects @Businessdayng

arising from restrictions in movement, risks to life and the damage to the Nigerian economy. Fortunately, a number of tried and tested business continuity strategies have emerged that we can apply to mitigate pandemic risks.

Another key risk to be mitigated is the possible loss of enthusiasm

by ADHFP sponsors, donors and implementing partners. These are mission critical stakeholders whose interest must be sustained through the highs and lows of reform implementation. Great reliance will be placed on our ability to engage the hearts and minds of donors and implementing partners. Adopting best practices in project management, getting some quick wins and successful delivery of program objectives will go a long way to ensuring that our Angels stay the course.

Another risk is misinformation about the ADHFP. To mitigate this, an effective Communication Strategy will be developed to ensure PHC host communities are carried along. In addition, Traditional instittions, Civil society and the Media will be carried along through traditional and technology enabled channels. Extensive stakeholder consultations with both current and past actors at State and Local Government level is also ongoing with the purposeful intent of getting them to support ADHFP. Once we have demonstrated that we can effectively manage these risks, I am quite confident that ADHFP will become a model of reference for strengthening primary health care delivery across Nigeria. Indeed, through the Africa Business Coalition for Health (ABCHealth), it is our intention that the initiative will become a flagship community health development strategy in Africa.

Your legacy already includes building and strengthening Nigeria’s financial and capital markets and the public sector through AIG. Is reimagining the healthcare system the missing piece on the way to a more prosperous Nigeria?

Thank you for your generous compliments. There are many missing pieces required to solve the Nigerian puzzle and I don’t claim to be able to provide answers to all of them. I only try to answer some of them using whatever time and resources the Almighty God has gifted to me.

What’s your call to action?

It takes Leadership for a community to reach its full potential.

I know that each of Nigeria’s 774 local government areas is blessed with citizens who have the capacity to transform the quality of primary health care available to their people.

What are we waiting for?

Let’s join forces and become partners in the business of saving lives!

Monday 06 July 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 03 July, 2020

Top Gainers/Losers as at Friday 03 July, 2020 LOSERS

GAINERS

Company

Opening

Closing

Change

N36.1

N34.05

-2.05

N19.85

N18.35

-1.5

N8

N7.2

-0.8

REDSTAREX

N3.3

N2.97

-0.33

NASCON

N10.2

N10

-0.2

Company

Opening

Closing

Change

ZENITHBANK

N14.8

N15.25

0.45

GUARANTY

N20.7

N20.8

0.1

IKEJAHOTEL

N0.93

N1.02

0.09

UACN

FCMB

N1.76

N1.8

0.04

WEMABANK

N0.52

N0.55

0.03

NB JBERGER

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

24,336.12 3,993.00 144,312,140.00 1.522

…shed N257bn in one week Iheanyi Nwachukwu

N

igeria’s listed stocks lost about N257billion in the trading week ended Friday July 3 as investors approached the market with caution amid analysts views that odds still favour the bears in this early part of this secondhalf (H2).

Week-on-week (wow), the market closed lower by -1.98 percent after Friday’s 0.16percent dip. In just three days into July, Nigerian equities have already declined by 0.58 percent pushing the year-to-date (YtD) negative return further by -9.34 percent.

Domestic equities market remains pressured as the fear of the second wave of the Covid-19 takes a toll on investors’ confidence.

This is in addition to declining Foreign Portfolio (FP) inflow which puts pressure on Naira against the dollar at the FX markets.

Oil, major source of Nigeria’s dollar revenue fell below $43 a barrel on

Friday as a resurgence of coronavirus cases raised concern that fuel demand growth could stall, although crude was still headed for a weekly gain on lower supply and wider signs of economic recovery.

Brent crude was down 56 cents, or 1.3percent, at $42.58 a barrel by 1352 GMT, and U.S. West Texas Intermediate (WTI) crude fell 58 cents, or 1.4percent, to $40.07.

In the review trading week, all NSE Sectoral Indexes closed in the red, led

by NSE Banking (-7.52percent) and NSE Industrial Goods Index (-6.43percent).

The value of listed stocks decreased from to

Guinness hits 52-week low amid notice on threats to Full Year profitability

G

uinness Nigeria has notified the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange, and the investing public on material circumstances with impact on full year financial results for financial year 2020.

It said that the adverse impact of the sharp contraction in economic activities and the knock-on effect of the Covid-19 lockdown took a toll on the on-trade segment of the business across all our markets.

Production and revenues have thus been negatively affected.

Following the notification of the material circumstances with impact on its FY2020 result, shareholders began to take back seat in buying the stock which led to the share price reaching its 52-week low of N14 as against a 52-week high of N47.80kobo.

This year, the stock which

has decreased by -53.4percent underperforms the NSE All Share Index (ASI) which dipped by -8.37 percent as at July 1.

Guinness Nigeria said it carried out a comprehensive review of its asset base and made a strategic decision to impair a certain category of assets, which were generating suboptimal returns. This is in line with the company’s longterm strategy of delivering value to shareholders.

The brewer’s audited financial results for the year 2020 as approved by the Board will be published in accordance with extant rules and guidelines after the completion of the year end audit in the month of August 2020, according to the company.

“Due to a combination of the impact of Covid-19 and the asset impairment, we expect the profitability of the Company for the Financial Year to June 30, 2020 to be impacted. www.businessday.ng

N12.695trillion from weekopen high of N12.952 trillion; while the Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased from 24,829.02 points to 24,336.12 points.

Interestingly, the recent decline in share prices at the Nigerian Stock Exchange created opportunities for bargain investors who are willing to take long term position. This implies that the record negative trend would be reversed on account of bargain hunting by investors.

“The domestic bourse saw another week of sell pressure as investors’ confidence continues to dampen in the face of global

uncertainties and domestic macro-economic challenges. “In the absence of positive catalysts capable of spurring ‘Buy’ decisions, we expect the market to continue on its downward trend next week despite the attractiveness of a number of fundamentally sound stocks”, said equity research analysts at Vetiva Securities in their July 3 note.

Preparatory to the release of their half-year (H1) results, companies have started issuing notification of closed period. GTBank for instance said the closed period for trading in its shares commenced on July 3. The bank’s board will meet on July 22 to consider the audited financial statement for the half-year ended June 30, 2020.

Though many companies first-quarter (Q1) results were not totally negative, but were obviously affected by the Covid-19 pandemic and the lockdown across states. Their second-quarter (Q2) results are expected to more precisely reflect the impact of the Pandemic-driven decline in economic activity.

FCMB organises second virtual training on digital technology, logistics

B

usiness owners in Nigeria have been advised to leverage on the opportunities provided by digital technology to boost productivity, service delivery and overall performance of their organisations despite the challenges posed by the novel Coronavirus (COVID-19) pandemic.

This was the submission of guest speakers at the second edition of the First City Monument Bank (FCMB) organised virtual capacity building programme for Small and Medium Scale Enterprises (SMEs) on June 18, 2020 with the theme, “Leveraging Digital Technology & Logistics to Grow Your Business”. The initiative, under the auspices of the Bank’s free comprehensive capacity building programme, tagged, ‘’Business Empowerment and Sustainability Training (BEST)’’ Masterclass, put together by

FCMB’sTraining Academy and SME Advisory Unit, isone of the value-added offerings of FCMB to complement its efforts in the areas of lending and advisory services to SMEs with the objective of stimulating their growth and contributions to overall national development.

The online seminar, which recorded over 2,016 registered participants, focused on various topics, ranging from innovation, digital technology solutions, business model opportunities and adapting to the new normal.

The outbreak of the novel coronavirus pandemic has continued to pose alarming economic, business and commercial impact globally.

It has adversely limited the ability of businesses to meet high demand of goods and services due to the restrictions and other safety measures put in place by Governments and health authorities to contain the pandemic.

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Global market indicators FTSE 100 Index 6,157.30GBP -83.06-1.33%

Nikkei 225 22,306.48JPY +160.52+0.72%

S&P 500 Index 3,130.01USD +14.15+0.45%

Deutsche Boerse AG German Stock Index DAX 12,528.18EUR -80.28-0.64%

Generic 1st ‘DM’ Future 25,604.00USD -155.00-0.60%

Shanghai Stock Exchange Composite Index 3,152.81CNY +62.24+2.01%

12.695

Stocks new lows create opportunity for bargains

21

Prestige Assurance says implementing initiatives to remain strong, competitive …gives bonus to shareholders Modestus Anaesoronye

U

nderwriting firm, Prestige Assurance Plc said it is aware of the challenges that the business environment will face in the short and medium term as result of the covid-19 pandemic, and so has continued to implement initiatives that will make the company strong and competitive.

The Company said in the current years, a combination of stiffer competition, the entry of big players from abroad acquiring local companies, ongoing recapitalization in the industry, the sudden deterioration of the economic outlook and an unstable environment of interest rates will define the operating environment for the business.

Adedoyin Salami, chairman of Prestige Assurance Plc who reviewed the operating environment during the Company’s 50th Annual General Meeting said all of these heighten the importance of implementing initiatives to improve our positioning in the market place.

He said the Company has issued a bonus of two (2) new shares for every eleven (11) shares during the 2019 business year, stating that this will help with the process of recapitalizing Prestige.

According to him, with the amendment in the recapitalisation timetable by the National Insurance Commission(NAICOM) “we must attain N5 billion by the end of this year and complete the recapitalization by the 2021 deadline. Your Board and Management will continue to work towards ensuring we complete the process well before the deadlines”.

Salami however appealed to shareholders to participate fully in her forthcoming Rights Issue which will open shortly, as this will ensure that we complete recapitalization of Prestige Assurance ahead of schedule.

Disclosing the financials to the shareholders, Salami said the Company as at the end of 31st December 2019 grew its gross premium written to N6.129 billion from N4.792 billion in 2018, indicating a 27.88 percent increase.

From the revenue, the company recorded a 1.9 percent increase in profit for the year, moving from N423.795 million in 2018 to N431.83 million in 2019.

Salami said the modest improvement in profitability compared to the previous year was the result of the combined effects of increased claims expenses and reduction in investment income, as interest rates dropped during 2019.

Julius Berger replaces Transcorp in NSE-30 Index Iheanyi Nwachukwu

J

ulius Berger Nigeria Plc has replaced Transnational Corporation of Nigeria Plc in NSE 30 index following the recent review of market indices by the Nigerian Stock Exchange (NSE). NSE 30 index tracks the top 30 companies in terms of market capitalisation and liquidity.

The Nigerian Stock Exchange reviewed the following indices: the NSE 30 Index, NSE Lotus Islamic Index, NSE Pension Index, Corporate Governance Index, Afrinvest Bank Value Index, Afrinvest Dividend Yield Index, Meristem Growth Index, Meristem Value Index; and the five Sectoral Indices of The Exchange - NSE Banking, @Businessdayng

NSE Insurance, NSE Industrial, NSE Consumer Goods, and NSE Oil & Gas. The indices were developed to allow investors to follow market movements and properly manage investment portfolios. Designed using the market capitalisation methodology, the indices are rebalanced on a semi-annual basis on the first business day in January and in July.

The recent review, which led to the entry and exit of some companies from some indices took effect on Wednesday, July 1, 2020. Though there are no changes in other notable indices, but the NSE Industrial Index saw new entrant like Notore Chemical Industrial Plc replace Premier Paints Plc.

22

Monday 06 July 2020

BUSINESS DAY

INSIGHT

Infrastructure in Nigeria: Unlocking JOHN MACOMBER PIPPA TUBMAN ARMERDING, Harvard Business School

I

n early 2018, Chinua Azubike, CEO of Infrastructure Credit Guarantee Company, Ltd (InfraCredit) sat immersed in thought in his office on Victoria Island in Lagos, Nigeria.

InfraCredit, a fledgling company established and sponsored by the Nigeria Sovereign Investment Authority (NSIA)a, in collaboration with GuarantCo,b was attracting plenty of interest for its innovative and potentially transformative credit enhancement product. But to grow as quickly as planned and have the impact the company’s board members and shareholders expected, Azubike would have to rapidly increase the size of InfraCredit’s balance sheet. Capital could come from new equity, additional debt, or increased credit guarantee commitments from third parties. All three choices were difficult routes and all three paths involved control and dilutive aspects.

If Azubike selected well, InfraCredit could transform the face of power, roads, ports, water and more across Nigeria and sub-Saharan Africa. If he chose poorly, an elegant idea (and a lot of work and reputations) would come crashing down.

InfraCredit was a quasi-private credit enhancement entity formed to address infrastructure finance deficits in Nigeria. The so-called “infrastructure finance gap” was a problem for government and society in Nigeria as in many parts of the world. Infrastructure projects like power plants and dams were very large capital investments that could generate long-term consistent cash flows, but their financing and delivery involved multiple risks and uncertainties. If funds came from traditional international sources like the World Bank or African Development Bank, those lenders would worry about foreign exchange, interest rates, and political risk and would almost always seek sovereign guarantees (payment guarantees from the federal government). Such assurances and guarantees were hard to come by, difficult to negotiate, and project inception could take decades. Nigeria needed power, water, roads, and ports faster than that.

Nigeria had recently reformed its pension administration system so that entities like ARM Pensions (ARM), Stanbic IBTC Pension Managers (Stanbic), and the Nigeria Police Force Pensions Limited (NPFP) could both accept significant amounts of retirement funds from workers and also, more importantly, manage and invest those funds in a transparent and safe structure. Fund managers acted as professional fiduciaries for the benefit of the retirees.

One of the asset classes in addition to government bonds, equities, and corporate bonds that was authorized

for investment by pension funds was infrastructure debt securities.

Other entities took different approaches to raising capital for infrastructure in this market. Africa Plus Partners (Africa Plus), for example, proposed a fund structure with features of American private equity. In January 2018 Africa Plus completed its first fund close, raising 12 billion Naira (approximately US$ 33 million). It was not yet clear if this type of fund arrangement would be as attractive as debt for pension fund investors.

Until recently, few Nigerian infrastructure securities had strong enough credit ratings to be investable by cautious pension funds. InfraCredit hoped to break that logjam by supporting infrastructure issues denominated in local currency with credit assurances taking the place of sovereign guarantees. Clearly this concept had the potential to change the nation in a positive way. Could InfraCredit become a very large player? If the model was proven, could it be replicated in other nations? What would be the conditions precedent to make other nations attractive for an InfraCredit model?

Azubike thought about these options and how to get from here to there.

Nigeria at a Glance Nigeria was located on the west coast of Africa along the Gulf of Guinea bordered by Benin, Chad, Niger and Cameroon (see Exhibit 1). With its multi-ethnic and multilingual population of approximately 191 million, the country had the largest and most diverse population in Africa.1 This size, together with its gross domestic product (GDP) of US$389 billion, abundant oil reserves and strategic international linkages, made Nigeria one of the most important nations on the African continent (see Exhibit 2).

For almost forty years after independence from Britain in 1960, Nigeria experienced a turbulent period characterized by successive military coups, ethnic conflict, civil unrest and instability. The adop-

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tion of a new constitution in 1999 marked the beginning of a sustained period of democratic governance and significant economic progress for the country. Beginning in 2000, Nigeria enjoyed fifteen years of sustained economic growth. In March 2015 through a largely fair and peaceful democratic process, Nigeria elected a member of the opposition All Progressives Congress party, Muhammadu Buhari, as president. This marked the first time in the nation’s history that power was peacefully transferred from the long-standing party in power to the opposition.2 In 2016 Nigeria fell into recession largely due to a major worldwide slump in prices for oil, which had been the nation’s largest source of government revenue and its greatest focus of foreign direct investment (FDI).3 In addition, other sectors including services, agriculture and industry that had become the main engines of the country’s non-oil economic expansion contracted significantly due to a weakening global economy.4 The subsequent reduction of government receipts, combined with currency fluctuations, all wreaked havoc on the country’s economy.5 By the end of 2017, GDP had declined from US$ 405 billion in 2016 to US$ 389 billion and the Nigerian Naira remained at historic lows against the US dollar6 (see Exhibit 2).

The deteriorating economic situation placed severe strains on public finances, limiting the government’s ability to invest in much needed infrastructure, address widespread corruption, deal with security, and institute important policy reform.7 Access to finance became more difficult as banks suffered capital restrictions.

8 The subsequent reduction of government revenue resulted in the percentage of unemployed and underemployed together reaching 35.2% in 2016 and inflation rising to 16.5% in 2017 (see Exhibit 2). While the Naira was officially pegged to the US dollar, during the recession the government often restricted access

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to foreign exchange to prevent currency devaluation. Due to the scarcity of dollars in the official market, businesses resorted to buying the US currency on the parallel market, resulting in a spread of as much as 60% in February 2017 between the official and unofficial rates (see Exhibit 3).

Nigeria came out of recession in 2017. However, the government continued to struggle to stabilize the economy and find a more robust path to economic growth. The country faced additional uncertainty due to factors including President Buhari’s ill-health and related long absences from the country, public security issues (in particular, Boko Haram violence and lawlessness in the north), ethno-nationalism in oil producing regions, and renewed

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secessionist tensions in Biafra.9 Although observers viewed the country’s democracy as sufficiently robust to survive this potential instability, elections planned for 2019 remained a source of uncertainty.10 Infrastructure Finance in Africa Across Africa, a large and growing differential existed between actual infrastructure investment and the amount needed to adequately support the continent’s increasing population, rapid urbanization and expanding economic growth. In a joint report issued in May 2017, the Boston Consulting Group and the Africa Finance Corporation (AFC) estimated Africa’s annual infrastructure finance gap to be approximately US$100 billion. Nigeria, the nation with the largest population on the continent, accounted for a sizable portion of this shortfall.11 According to the country’s own National Integrated Infrastructure Master Plan (NIIMP), the amount required to meet Nigeria’s infrastructure related investment needs was US $3 trillion over a thirty-year period12 – or $100 billion per year for Nigeria alone. Estimated infrastructure spending required to meet the country’s preferred growth plan (the ‘accelerated path’) would need to increase several fold from US$5-$25 billion per year in 2014-2018 to many times that amount - and even more going forward.13 See Exhibit 4 for an illustration of Nigeria’s total infrastructure investment gap projected to 2037.

The power sector in Nigeria (as in much of Africa) faced a particularly large mismatch between required generation and existing supply. According to Azubike quoted in The Sun newspaper, Nigeria’s aggregate electricity need has been estimated at about 160,000 MW to satisfy the local electricity demand. With an installed capacity of 12,132 MW, only

Monday 06 July 2020

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23

pension fund investments (1) an estimated 7,000 MW of installed capacity is operational. Of this, only between 3,000 MW and 5,000 MW are actually being generated due to unavailability of gas, breakdowns, water shortage and grid constraints, which have led to acute shortage of power across the country. Nigeria’s transmission grid is estimated to cover a maximum 40 per cent of the country, with annual self-generating capacity outside the national grid put at over 15,000 MW.14 This implied that more electricity was self-generated by households, businesses, and institutions on their own than was supplied by the utility company – a quite inefficient and unusual situation in the minds of many observers.

Global electricity generating capacity, and usage, varied substantially. With a population of about 325 million, the United States used about 12,000 kWh per person per year. Nigeria’s population of about 191 million used about 129 kWh per person of electricity per year. In Africa, Egypt’s 97 million people sources of private funding (notably banks) were increasingly constrained by the global financial crisis and new more stringent capital requirements imposed by banking regulations, including Basel III capital adequacy measures.

Innovative approaches to infrastructure financing and government encouragement of private capital participation were required to boost infrastructure finance and bridge the investment gap.16 Investing in Power Plants The value-added chain for thermal (fossil fuel) power plants was simple in concept. In operations, fuel was needed.

In Africa this was typically coal, natural gas, or diesel. The fuel was either burned in a furnace to generate steam to turn a turbine that rotated an armature that generated electric current, or the fuel was burned in a reciprocating engine similar to a diesel truck motor to turn an armature to generate electric current. The electric current departed the facility through high voltage transmission lines. Operating risks included cost and availability of fuel, operating and capital replacement costs, and price and quantity of electricity sold (“offtake” risk). For many projects the “offtake risk” was the big unknown: for a plant with a life span of decades, would the price and quantity purchased (and paid for) be sufficient to cover costs and investment?

The inception and delivery of power facilities had clear phases. In the inception phase all of the technical designs, land acquisition, operating permits, and financial arrangements had to be made.

This could take years and be very expensive and there was substantial “dead deal” cost if a project did not go forward. At the end of the inception phase, a milestone generally called something like “financial close,” project construction and delivery started in earnest. When construction was concluded, and the facility was commissioned to operate, a milestone called something like “in service” or “substantial completion” was reached. (The construction phase also was fraught with unknowns ranging from unforeseen underground conditions to cost overruns to land rights protests). This began the operations phase of the facility. Following several years of operations, financial investors might seek to liquidate their investment and convey their interest to new investors. Following several decades

of operation, the plant would eventually be de-commissioned or undergo material refurbishment, and this would be a liquidation phase.

Many local, state, and federal governments around the world financed, owned, and operated their own electric power facilities.

This tended to be the case when the offtake risk was contained and the price for power was reflective of the fully loaded cost of power (both operating costs and a return on the original capital). This route also required that the government entity have access to capital to build a plant that could cost more than a billion dollars.

In many other areas of the world the local government did not have access to this kind of capital, or to the design, construction, and operating expertise to finance and build a large capital project. Many configurations to address this issue were in place around the world. Some of the most frequent included: Independent Power Producer (IPP)In this model the facility was financed, built and run by a separate entity. Output was then sold to an offtaker, usually a government entity, usually under a Power Purchase Agreement (PPA). The arrangement could have a very long duration. Build Operate Transfer (BOT)In this model, the plant was built and operated by an IPP company for a fixed amount of time after which the plant was transferred

to the government. The IPP had to receive tariff revenue from the PPA sufficient to both cover operating costs and repay the original investment for this to be attractive. If all initial capital was also raised by the IPP company, this was commonly called a finance, build, operate, transfer (FBOT).

In the IPP, BOT and FBOT models, the offtake terms were dictated by the power purchase agreement (PPA) so that the privatizer did not bear revenue risk.

Public Private Partnership (PPP) Another variety of project was the PPP where the privatizer performed some or all of the roles performed in the IPP and BOT models and also participated in revenue upside and downside, usually influenced by a tariff that could be charged and volume of electricity that could be sold at that tariff.

Pension Funds as a Source of Infrastructure Finance Pension funds acted as an important source of capital infrastructure investment in many parts of the developing world, with varying oversight and mixed results.17 Pension fund reform and regulations in several African countries, including Nigeria, had resulted in the rapid growth of pension fund assets as individuals and families came into the middle class, generated savings to invest, and started to plan ahead for future financial needs. By the end of 2017, the total assets of pen-

sion funds in Nigeria stood at 7.4 trillion Naira. A significant amount of this capital could potentially be directed toward local investment in infrastructure.18 Pension funds and life insurance companies had similar long-term obligations to pay out benefits to pensioners and policy holders.

Revenue-producing infrastructure elements like power plants and toll roads were long lived assets, so there was a chance to match tenor of liabilities and assets. Operators had an opportunity to raise infrastructure tariffs with inflation, providing added benefits to some fund investors (depending on the form of the security). The incoming pension investment funds were received from individuals in Naira, the payouts would be in Naira, and infrastructure assets collected tariffs, tolls, and fees in Naira. In theory, it would make a lot of sense for long term managers like pension funds to invest some of their portfolios in locally denominated long term safe assets like infrastructure. This could be a transformational new source of capital in Nigeria and in Africa, in contrast to traditional power or toll road investments denominated in US dollars or euros (and with borrowings from large international investors also denominated in US dollars or euros, with all of the cautions, constraints, hedges, and restrictions those arrangements entailed).

To date, infrastructure securities in Nigeria had not been felt safe enough – or high yielding enough for retirement or life insurance asset managers. Therefore, in spite of the conceptual appeal, due to a number of barriers pension fund investment in infrastructure was slow in many countries, including Nigeria. See Exhibit 7 for a discussion of some of these barriers.

The Nigerian government had long sought to encourage pension fund investments in infrastructure.

In 2016, the country’s Minister of Power, Works and Housing, Babatunde Raji Fashola, called for Nigeria’s sizable pension fund assets to be used in building highways, ports, hospitals and other significant infrastructure.19 However, the lack of

available projects that complied with PenCom regulations for pension fund investments in infrastructure had been an impediment to such investment.

PenCom Regulation on Investment of Pension Fund Assets of April 2017 (PenCom Regulations) established requirements to be met for Nigerian pension fund assets to be invested in infrastructure.

These included that projects have a minimum value of 5 billion Naira (approximately US$13.85 million), be awarded to concessionaires with good track records through a transparent and open bidding process, and that any bonds issued to fund infrastructure projects have robust credit enhancements. See Exhibit 8 for the relevant sections of the PenCom Regulations. The absence of eligible transactions and credit guarantees for related bonds had historically been a significant obstacle.

The arrival of InfraCredit had the potential to completely change this.

As noted by Azubike: We were established as a local currency credit investment facility with the mandate to catalyze long term local currency financing for infrastructure using our guarantees to improve the credit quality of what we considered eligible infrastructure assets meeting our criteria. Lending our guarantees to these transactions improves their creditworthiness and ratings to be able to attract pension funds as investors in this asset class.

Nigerian pension funds are authorized to invest up to 35% of their assets in corporate bonds, including 15% in infrastructure bonds and corporate bonds and that translates to about $US 6 billion dollars in Naira equivalent but they have almost no investment in that asset class compared to the industry’s total assets under management.

When pension funds were asked why they do not allocate funds to infrastructure, one of the key reasons given was limited asset classes to invest in and a reluctance to take on credit risk for the infrastructure asset class which they don’t understand.

So, part of InfraCredit’s mandate is to help steer that long-term capital into infrastructure.20 Although pension fund assets were viewed as an important potential source of infrastructure investment, they were susceptible to improper use. Nigeria, as discussed in more detail below, had experienced problems with mis-appropriation and mismanagement of pension funds. Other emerging market countries around the world, including Argentina, Brazil and South Africa have all had to manage challenges in ensuring proper investment of these significant potential sources of infrastructure finance.

Continues tomorrow

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24

Monday 06 July 2020

BUSINESS DAY

BD Money Money Brain with JR

Inflation is stealing your money JR Kanu

I

nflation. You hear it on the news. You hear smart people talk about it. You hear the word spoken, followed by a barrage of esoteric language, but in order to protect yourself from the confusion you’re feeling, you ignore it all and go about your merry life. Okay, maybe you didn’t. But I did.

If you’ve heard about how frogs won’t jump out of a pot of water on fire even as the temperature rises, that’s how inflation works.

Every year, small small, imperceptibly — in theory — the prices of items go up. A mudu of garri today is N100. Come back in six months, and they tell you it’s now N105. That five naira increase in the price is 5% inflation. That is to say, your ability to buy one mudu of garri reduced by 5% in just six months. Another way to put it: the N100 in your pocket is now worth N95 after six months. You didn’t waste it. You were being a smart person. You “saved” it by keeping it in your pocket.

And yet, you lost N5.

It’s not a big deal when we are just talking about N100. But now, imagine that you’ve been good and you’ve saved up a whopping N1 Million. Like the smart person that you are, all that cash is sitting in your bank account and making you feel all sorts of good. But then I come along and tell you that inflation in Nigeria

is sometimes as high as 13% per year. This means that simply by “saving” your one million naira in the bank for the whole year, you will lose N130,000. Sure, the number in the bank will look the same, but as prices slowly creep up throughout the year, the power of that cash is falling in concert, leaving you with the equivalent buying power of just N870,000.

That’s right. Just by sitting in the bank, your hard-earned money has reduced in its power to buy the things you need for life. Now you know what inflation is, and why it is so important in the world’s economy — of which you are a part.

So, how do you counteract the impact of inflation on your finances?

1. Understand infla-

tion. Wherever possible, find out the prevailing inflation rate and adjust your money in the bank. It’s a good wake-up-call.

2. Buy appreciating assets whenever possible.

If you’ve got hundreds of thousands of naira just sitting in the bank, it might be time to go invest in real estate opportunities.

3.

Invest in the money markets. Things like treasury bills and other securities offer a zero-risk way to earn some return on your money. Even if their returns are low, they typically outperform inflation and can guarantee at least a 1% return each year — when corrected for inflation.

Finally, when you’ve amassed quite a bit — say 500K or more, and you won’t need it for 6 months or more, consider converting it to stable world currencies that rarely fluctuate and whose economies rarely experience inflation.

This means, yes, converting to USD, GBP, EUR, YEN or YUAN. Welcome to the global economy, my friend.

Next week, we conclude with the final part of the se-

ries “The 4 Pillars of Personal Finance Mastery” with the topic, how to access, use and repay credit. See you then.

About the column Every Monday, JR discusses topics focused on career and money management, seeking to highlight the lessons being learned by young professionals navigating similar paths. If you would like to submit a topic or question, please send a DM to his social media handles - jrkanu on Instagram or email stories@reach.africa About the author JR Kanu is the creator of the app, REACH: Expense & Money Manager - www. reach.africa. This app has helped thousands of young people across Africa to better understand and manage their money. He is also the author of the book, Money Brain: Career & Money Management in Your 20s and 30s - moneybrain.reach.africa.

He is a builder of African businesses, lover of African art, an avid reader, writer, and huge advocate of the cities of Jos and Lagos.

Money Brain with JR

The 4 pillars of personal finance mastery: Part 4 of 4 JR Kanu

A

t the start of this month, I challenged you to be more diligent with your finances; to track your inflows and expenses to really understand your money’s movement. If you did this, you might have noticed at least one thing: it’s infinitely easier to get money out than it is to bring it in. This is why you need goals and a community of like-minded people to guide your decisions and make you more aware of your motivations when spending.

Be as diligent with your finances as you like, life can still happen. You’re planning a fantastic 2020 and COVID happens. You’re expecting a raise at work, but instead, the company shuts down.

Life happens, unexpected expenses have a way of knocking us off balance and that’s where cash flow planning be-

comes important. Unplanned expenses or horrendously bulk outlays can quickly erode the financial safety net you’ve spent so much time building. This is why insurance and access to credit are so important.

First, let’s talk about unplanned health, family, or other obligations. There are two ways to plan for the unexpected - first, get in the habit of saving a portion of your income away in an emergency fund. We talked about this last week when we discussed how inflation impacts your savings. The other way to plan for emergencies is to have insurance for those specific types of emergencies. Health insurance and car insurance are some of the basic ones.

Next, let’s discuss horrendously bulk outlays such as rent, car purchases, major trips, weddings and so forth.

If your savings allow you to handle these major expenses without depleting you down www.businessday.ng

to zero, that’s fantastic. But imagine the perfect storm of unfortunate events where you depleted your savings paying rent and in that same month, you’re laid off from work. You are likely left with only one option - borrow money to get back on your feet.

Ironically, the only way to ensure you have access to credit when you need it the most is to actually use it judiciously when you need it the least. When all is fantastic and you’re saving reliably and living your best financial mastery life, that is exactly when I suggest you look into accessing credit. Build your credit

profile as needed to ensure that you are viewed as a safe and reliable borrower by any lender.

It is also best to go deep and develop a relationship with a specific one or two lenders rather than spread yourself across the growing expanse of lending providers.

As you develop depth and a relationship with them, your time is actually yielding the dividends of an improved credit profile. If, however, you spread yourself across several players, you run the risk of not being sufficiently profiled by any of them and unable to access any substantial amount

of money when you might actually need it.

When you’re building your credit profile, pick a specific use case. For some it’s all their grocery spending; for others, it’s all of their spending on devices and electronics. But pick a specific category with which you will build your credit profile. Always pay before the due date. Contact the lender and find out exactly what you must do to improve your credit profile. Credit across Africa is growing and very soon, it will become an inevitable part of our lives. That’s a good thing. It will mean better access to housing via mortgages and the potential for a generally improved quality of life for millions of people. You can prepare for this future right now by learning how to use and repay credit before the stakes are high.

About the column Every Monday, JR discusses topics focused on career

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and money management, seeking to highlight the lessons being learned by young professionals navigating similar paths. If you would like to submit a topic or question, please send a DM to his social media handles - jrkanu on Instagram or email stories@ reach.africa About the author JR Kanu holds an MBA from Stanford University, a master’s in Journalism from NYU and a bachelor’s in Engineering from Calvin College. His career has included time at Konga, Amazon, The United Nations, Esquire, CNN, and Black Enterprise magazine. Armed with a strong conviction that you can live a great life no matter how much money you have, JR founded REACH Technologies, www.reach.africa. His company builds software to help young people and companies to manage and grow their money.

Monday 06 July 2020

BUSINESS DAY

NEWS

NSIA reports N36bn profit, N649.84bn assets despite volatility Onyinye Nwachukwu, Abuja

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he Nigeria Sovereign Investment Authority (NSIA), managers of Nigeria’s sovereign wealth fund, at the weekend announced a total comprehensive income of N36.15 billion in 2019.

Although the 2019 profit was lower than the N44.34 billion reported the previous year, the performance has been seen as impressive considering the volatile global and generally challenging local investment environments.

Real performance on core activities of the authority was better than 2018 performance by 35% when currency revaluation income earned in 2018 is excluded, and according to NSIA CEO, Uche Orji, the performance reflects the strength and capability of portfolio and risk management within the institution.

Excluding foreign exchange gain of N18bn in 2018 and N1.28in 2019, net income in 2019 was N34.87bn - compared to N26.28bn in 2018.

As contained in the 2019 audited financial statement, NSIA recorded a 5% growth in total assets to N649.84bn in 2019 as against N617.70 billion the previous year.

Announcing the financials during a virtual conference, Orji said 2019 was quite a favourable year for the Authority in terms of performance.

Interest income, a key com-

ponent of total Income, earned in 2019 was N27.02 billion, representing a 13% increase over the N23.82 billion recorded in 2018 and underscores NSIA’s strategy to generate fixed income returns from securities that generate predictable interest, and steady returns including Eurobonds, Treasury bills and other secured deposits.

“We deployed our diversified asset strategy and secured positive returns from the international markets across all asset class,” Orji stated.

According to him, “all asset classes, including equities, hedge funds and private equity outperformed. In the period, we also judiciously deployed capital toward key infrastructure project and recorded significant progress.”

He said markets experienced a strong bullish run in 2019 due to the accommodative interest rate environment, sheathing of swords by US and China in the trade war and the signing of the Brexit agreement. On this account, the markets experienced fewer bouts of volatility. “The Authority’s fund performed favorably by generating aggregate returns of 6.43%.”

Though operating expenses rose to N4.2bn in 2019 up from N3.8bn in 2018, Orji said in their view, “the 2019 performance reflects the strength of the NSIA strategy across all the funds as the Authority, on the aggregate outperformed its benchmarks on all three funds within the

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period.”

He further clarified that asset allocation strategy remains stable across the various funds, with future generations fund remaining at 25% public equities, 25% private equity, 25% Absolute Returns and 25% Other diversifiers. NSIA’s core capital stood at US$1.5 billion as of year-end 2019.

BusinessDay recalls that the National Economic Council voted for an additional capital contribution of US$250 million in 2019 which, which Orji confirmed was received on April 8, 2020.

Other 3rd party funds managed by the Authority comprised of Nigeria Stabilisation Fund Balance at N33.365 billion as against N20.814 billion in 31 Dec 2018.

Reiterating that 2019 was an active year for the Authority, Orji said several infrastructure projects were closed while significant milestones in project development, implementation and construction works were recorded.

Across both the Stabilisation Fund (SF) and Future Generation Fund (FGF), the NSIA made changes to the allocation to hedge funds as an asset class as it began to implement its Venture Capital (VC) investment strategy.

“The Authority committed significant capital across all three ring-fenced funds as we continued to operate a diverse and global investment portfolio of traditional and alternative assets under the SF and FGF funds,” he said.

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Lagos blames collapsed Mile 2 road, flood on dumping of refuse in drains JOSHUA BASSEY

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agos State government at the weekend blamed the collapse of Mile 2 section of Lagos-Badagry Expressway and its attendant flooding, on blocked drainage channels, and called for attitudinal change on the part of the residents.

The state government, however, said it has commenced palliative works to make the road motorable for commuters who now spend hours in traffic jam occasioned by massive flooding on that section of the road.

BusinessDay reported on Friday that motorists and commuters plying the road were going through harrowing experience. Apart from the daily loss of productive manhour in traffic, the commuters also have armed gangs to contend with, as they (bandits) take advantage of the situation to rob motorists, especially under the Mile 2 flyover.

Aramide Adeyoye, the special adviser to the state governor on works and infrastructure, while inspecting the palliative works being carried out on the road by the Lagos State Public Works Corporation (LSPWC) on the Mile 2 section, stated the need for the residents to desist from indiscriminate dumping of refuse into drainages, as this reduces the life span of the various road infrastructure provided across the state.

According to her, “Though the rehabilitation and expansion work

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…begins palliative works on the Lagos-Badagry Expressway is progressing, it has become necessary to intervene and make the Mile 2 section motorable for commuters plying the route”.

Speaking against the backdrop of the volume of refuse removed during the palliative works from the drains along the Mile 2 section and the attendant impact on the dilapidated state of the road, Adeyoye who visited the site in the company of the special adviser to the governor on drainage, Joe Igbokwe, called for attitudinal change by the residents.

“Any road is as good as its drains and dumping refuse inside drains does not only compromise the integrity of the asphaltic surface, it also undermines the durability of the road, especially now that the rains are here. Without a functional drainage system, the roads provided cannot be sustained”, she said.

While urging residents to

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ensure that the cost associated with providing, rehabilitating and maintaining roads is reduced to the barest minimum, the special adviser said there is need to ensure that when the rains are over, there would be no need to start grappling with bad roads.

“Now that a palliative is being provided, it is also important to address the root cause of the poor state of our roads by changing our habits”, she said.

She added: “By changing our habits, our roads will last longer and by refraining from indiscriminate dumping of refuse into the drains, it will prevent flooding and the attendant bad roads,” she said.

Adeyoye, while seeking the support and cooperation of Lagosians on the need to take ownership of road infrastructure, urged the residents to keep faith with the present government on implementation of its THEMES agenda.

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Monday 06 July 2020

BUSINESS DAY

news

CBN extends operations of regional banks to 3 geo-political zones HOPE MOSES-ASHIKE

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he Central bank of Nigeria (CBN) on Friday extended the operations of all banks with regional authorisation to three geo-political zones from two geo-political zones of the federation.

The move, according to the regulator, is in furtherance of its objective to promote financial inclusion in the country.

In a circular dated June 26, 2020 and signed by Kevin Amugo, director, financial policy and regulation department, the compliance timeline to establish operational footprint at the advised zone shall not exceed six months from the issuance of the regulatory advice to each regional

bank by the CBN. The circular reads: “effective the date of this circular, all banks with regional authorisation shall be required to operate from one additional geo-political zone as may be prescribed for each institution by the CBN, without prejudice to the existing requirement of minimum of two geo-political zones of the federation. The essence is to promote spread and balance of regional banks across the country”.

Commercial banking license with regional authorisation include Globus Bank Limited, Suntrust Bank Nigeria Limited and Providus Bank Plc. Non-interest banking license with regional authorisation is Taj bBank Limited.

Gates, Dangote, Elumelu, others named among business leaders fighting Covid-19 …Sanwo-Olu, Ramaphosa named as political leaders Daniel Obi

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side from being business leaders and two of the richest men in the world, Bill Gates and Africa’s richest man, Aliko Dangote, have something in common - it is their philanthropism.

Dangote, Bill and Melinda Gates have been featured among the 40 individuals, on the Neusroom 100 project, helping the world combat the common enemy threatening and disrupting activities across the world the coronavirus.

Also listed are Alibaba founder, Jack Ma; Facebook CE O, Mark Zuckerb erg; Jack Dorsey; Tony Elumelu; Chairman, BUA Group, Abdul-Samad Rabiu; Thai billionaire Dhanin Chearavanont.

Among the list include Lagos State governor, Babajide Sanwo-Olu, President of South Africa, Cyril Ramaphosa, New York governor, Andrew Cuomo, President of Madagascar, Andry Rajoelina, Chen Chien-jen, former Vice President of Taiwan are among the political leaders and public

servants listed among the 40 individuals.

Each of the personalities, organisations celebrated on the list had a few paragraphs written to spotlight their contributions to the global response to Covid-19.

Sanwo-Olu who is the Covid-19 incident commander in Lagos - the epicentre of the virus in Nigeria, was described on the list as being pragmatic in handling the outbreak in the state.

“He has been leading a frontline response to the pandemic, sharing factual and relevant updates, calling for lockdown when it was necessary, and delivering stimulus packages to help the residents to cushion the effects of the lockdown,” the report read.

The list released recently also includes 30 organisations, 20 nations and 10 things.

Since the virus swept across the world, some of the personalities listed by Neusroom have been supporting nations, individuals and other institutions at the front line of fighting the virus to restore normalcy to the world.

Some stocks investors are prospering during this pandemic IHEANYI NWACHUKWU

Y

ear 2020 no doubt is a dismal year for most Nigerian companies and their shareholders, but there are stocks whose shareholders are seemingly prospering notwithstanding this Covid-19 pandemic.

Despite the early optimism in the first month of 2020, a sharp decline in crude oil prices driven

by Covid-19 led to a now nearly bearish market.

BusinessDay has identified fourteen (14) stocks on the Nigerian Stock Exchange (NSE) that yielded positive returns in excess of +10 percent as at half-year (H1) to June 30 which outperformed the NSE All Share Index (ASI) with record negative return of circa -9 percent.

Two (2) of these stocks that put smiles on investors face are in healthcare sector; 2 are in telecoms sector; 3 are in industrial goods sector; 1 is in consumer

goods sector; 2 are in oil & gas sector; 2 are in agricultural sector; and 2 are in insurance sector.

In the healthcare sector, Neimeth shares rose by +166.1percent in the H1 to June 30 while May & Baker advanced by +48.7percent.

For the telcos, MTNN shares increased by +11.9percent in H1 while that of Airtel Africa rose by +10 percent. The insurance sector saw stocks like Law Union increase by +106.0percent in H1 while AIICO advanced by +27.8percent same period.

Looking at the performance of equities in the agric sector, Livestock Feeds went up by +24percent in H1 while Okomu Oil advanced by +39.2percent.

The two companies in oil & gas sector that their shareholders made money in this pandemic are Mobil (+30.2percent), and Conoil (+13.5percent).

Beta Glass (+27percent) led industrial goods sector rally, Cutix (+20.3percent) and BUA Cement (+10.6percent). Vitafoam shareholders saw their

shares rise by 27percent in the first-half of 2020.

Meristem Securities in their June 29 note recommended most of these stocks for investors to “Buy” “Hold” or “Sell”. MTNN and Airtel, Conoil, and Okomu Oil are on their “buy” list; while Vitafoam is on their “hold” list.

For those on Meristem Securities analysts “Buy” list, it is because their Target Price (TP) is above the current market price by at least 10 percent; while for those in the analysts “Hold” list, it is because their Target Price ranges between -10 percent and 10 percent from the current market price.

Stocks in the health & pharmaceuticals sector and that of telecoms have been on the rally radar. For the health & pharmaceuticals sector, the reason being the significant stimulus plan put together by the Central Bank of Nigeria (CBN) to support operations in the health and pharmaceutical industry.

Also, the N100 billion credit

NNPC reshuffles top management for efficient service delivery Olusola Bello

T

he Nigerian National Petroleum Corporation (NNPC) has announced new appointments and redeployments of its top management as part of the on-going efforts to strengthen and reposition the corporation for greater efficiency and profitability.

Adokiye Tombomieye, the group general manager, Crude Oil Marketing Division (COMD), has been appointed the new Chief Operating Officer (COO), Upstream while Mohammed Abdulkabir Ahmed, the managing director of the Nigerian Gas Marketing Company (NGMC), has been appointed the new Chief Operating Officer, Corporate Services, following the retirement of Farouk Garba Sa’id, last week.

A statement by the corporation’s group general manager, public affairs division, Kennie Obateru, stated that the change witnessed the redeployment of Adeyemi Adetunji, the COO, Upstream, to the Ventures & Business Development Directorate as COO, a position left

by Roland Onoriode Ewubare, who voluntary retired last week.

The reshuffling also affected Billy Okoye, who has been redeployed from the NNPC Downstream Company, NNPC Retail Limited, as managing director, to replace Tombomieye as the group general manager, Crude Oil Marketing Division; while Elizabeth Aliyuda, the general manager, Sales and Marketing NNPC Retail Limited, takes over from Okoye as managing

director.

Similarly, Usman Farouk, Executive Director Asset Management and Technical Services at the NGMC, takes over from Ahmed as managing director The statement also ex-

plained that President Muhammadu Buhari has accepted the resignation of Roland Ewubare, the immediate past COO, Ventures and New Business Directorate of the National Oil Company while the retirement

CHANGE OF NAME

I, formerly known and addressed as NWAOGU CHINEDU MICHAEL now wish to be known and addressed as NWAOGU CHINEDU OGBONNAAll Former documents remain valid. General public please take note. www.businessday.ng

support fund is targeted at the healthcare sector to aid working capital and support research.

The health & pharmaceuticals sector remains at the forefront of the Federal Government efforts in the fight against Covid-19 pandemic. Since the stimulus announcement, it has spurred interest in healthcare and pharmaceutical stocks listed on the Nigerian Bourse.

“Lockdown measures put in place to curb the spread of the coronavirus put the telecoms sector as the biggest beneficiary of the pandemic. Most formal businesses have now moved to working from home, which requires increased data consumption on the part of employees.

“Also, we note that with individuals sitting at home all day, social media activities have received a significant boost while visits to streaming platforms have become a norm in a bid to provide some sort of entertainment”, said FSDH research analysts.

https://www.facebook.com/businessdayng

@Businessdayng

of the immediate past COO, Corporate Services, Farouk Garba Said, also received the approval of the President, who thanked the two former COOs for their meritorious service to the corporation.

Monday 06 July 2020

BUSINESS DAY

Why Nigerians are yet to feel impact of expansion of 1000mw Okpai Power Plant Olusola Bello

T

he multi billion naira Okpai Power Plant is yet to realise its full potentials even after upgrading its capacity from 480 megawatts (mw) to 1000mw. But the effect of this upgrade is yet to be felt

by Nigerians that are daily yearnings for improvement in electricity supply.

This is because the plant, jointly owned by Nigerian National Petroleum Corporation (NNPC) and Nigerian Agip Nigeria Oil Company (NAOC), has been unable to sign any power purchase agreement (PPA) with Nigerian Electricity Bulk Trader (NBET), which would have been able to encourage the evacuation of the power through the Transmission Company of Nigeria (TCN) to distribution companies.

Other reasons the operators of the plant may not be pushing aggressively for the PPA, an industry says, may be because of grid inadequacies and the fear that distribution companies are rejecting power.

However, some industry

analysts believe that generation capacity is more than sufficient.

According to them, there are up to 6000mw capacity from plants constructed by international oil companies ( IOCs) that are locked down and unable to be generated, sadly because of inadequacy of the grid system and lack of buyers.

The nation has 13,000mw installed generating capacity, with capacity for transmission of 7000mw, but currently distributes only 3000mw.

To support the provision of power supply in the country, the Independent Power Plant (IPP) Okpai Phase II project was initiated by the Nigerian Agip Oil Company (NAOC) to increase the plant’s existing power generating capacity of 480mw by a further 450mw to provide a total 930mw output into the Nigerian power supply grid.

The additional power generation is provided by means of a combined cycle gas turbine plant with two gas turbine generators and one steam turbine generator located 60km Southwest from Onitsha in Anambra State, close to the River Niger.

27

News These 14 NSE stocks yielded positive returns in excess of +10 as at half-year Iheanyi Nwachukwu

Y

ear 2020 no doubt is a dismal year for most Nigerian companies and their shareholders, but there are stocks whose shareholders are seemingly prospering in this coronavirus (COVID-19) pandemic era.

Despite the early optimism in the first month of 2020, a sharp decline in crude oil prices driven by the coronavirus pandemic led to a now nearly bearish stock market.

BusinessDay has identified 14 stocks on the Nigerian Stock Exchange (NSE) that yielded positive returns in excess of +10 percent as at half-year (H1) to June 30, which outperformed the NSE All Share Index (ASI) with record negative return of circa -9 percent.

Two of these stocks that put smiles on investors face

are in healthcare sector; two are in telecoms sector; three are in industrial goods sector; one is in consumer goods sector; two are in oil and gas sector; two are in agricultural sector, and two are in insurance sector.

In the healthcare sector, Neimeth shares rose by +166.1 percent in the H1 to June 30, while May & Baker advanced by +48.7 percent.

For the Telcos, MTNN shares increased by +11.9 percent in H1 while that of Airtel Africa rose by +10 percent. The insurance sector saw stocks like Law Union increase by +106.0 percent in H1, while AIICO advanced by +27.8 percent same period.

Looking at the performance of equities in the Agric sector, Livestock Feeds went up by +24 percent in H1 while Okomu Oil advanced by +39.2 percent.

The two companies in oil and gas sector that their shareholders made money

in this pandemic are Mobil (+30.2%) and Conoil (+13.5%).

Beta Glass (+27%) led industrial good sector rally, Cutix (+20.3%) and BUA Cement (+10.6%). Vitafoam shareholders saw their shares rise by 27 percent in the firsthalf of 2020.

Meristem Securities in their June 29 note recommended most of these stocks for investors to “Buy” “Hold” or “Sell”. MTNN and Airtel, Conoil, and Okomu Oil are on their “buy” list, while Vitafoam is on their “hold” list.

For those on Meristem Securities analysts “Buy” list, it is because their Target Price (TP) is above the current market price by at least 10 percent, while for those in the analysts “hold” list, it is because their TP ranges between -10 percent and 10 percent from the current market price.

Stocks in the Health and Pharmaceuticals sector and

that of Telecoms have been on the rally radar. For the Health and Pharmaceuticals sector, the reason being the significant stimulus plan put together by the Central Bank of Nigeria (CBN) to support operations in the health and pharmaceutical industry.

Also, the N100 billion credit support fund is targeted at the healthcare sector to aid working capital and support research. The Health and Pharmaceuticals sector remains at the forefront of the Federal Government efforts in the fight against Covid-19 pandemic. Since the stimulus announcement, it has spurred interest in healthcare and pharmaceutical stocks listed on the Nigerian bourse.

“Lockdown measures put in place to curb the spread of the Coronavirus put the telecoms sector as the biggest beneficiary of the pandemic.

Most formal businesses have

Continues on page 28

Apapa: NRC opens discussion with Dangote, ENL Consortium to begin new service lines

… sets to restore long haul cargo evacuation to Kaduna AMAKA ANAGOR-EWUZIE

D

eter mine d to ameliorate the plight of port users due to persistent traffic jam on roads going into and out of Apapa and Tin-Can Island Ports in Lagos State, the Nigerian Railway Corporation (NRC) says it has opened discussions with Greenview Development Nigeria Limited (GDNL), the port arm of Dangote Group, through a third party arrangement, to begin a new service line that would involve cargo evacuation from its terminal.

In the same line, the NRC is also discussing with the management of ENL Consortium Limited to begin evacuation of cargoes from the terminal that handles mostly bulk cargoes.

“We just did a letter to ENL and we would follow up with visit. We have rail track to ENL. We have written ENL to say that we want to take possession of our track and that we are also ready to service them and NRC has done things with them in the past,” Jerry Oche, Railway District Manager Lagos, discloses.

Oche, who spoke in an interview with BusinessDay his Lagos office, says the NRC is also in discus-

sion with GDNL terminal through a third party to start up something big with Dangote port operations.

Oche, who refused to give details of the discussion, states it is still about trying to serve them through a third party, and that is going to be a very innovative thing that has not been done before, when it commences.

According to Oche, the cargo evacuation arrangement with Dangote would bring relief to port users because hundreds of Dangote trucks ply Apapa roads on daily basis, but with train service, a lot of trucks would be removed from the road leading to Apapa. “This service opening would impact positively on Apapa traffic.”

He however states that the NRC has track that passes through Flour Mill but right now the corporation is not doing anything with Flour Mill.

On long hauling of cargoes to Northern part of Nigeria, he says the corporation is considering resuming Kano and Kaduna rail freight in no distance time, since the Federal Government has relaxed interstate travel ban.

Hehoweverstatesthatpassenger service would not be resumed any moment owing to the safety issues around the dreaded Covid-19 pandemic. www.businessday.ng

L-R: Umaru Kwairanga, member, Capital Market Support Committee on Covid-19; Isyaku Tilde, acting executive commissioner, operations, Securities and Exchange Commission (SEC); Mary Uduk, acting director-general, SEC; Reginald Karawusa, acting executive commissioner, legal and enforcement, SEC, and Ramatu Tijjani Aliyu, minister of state for FCT, during the donation of an ambulance to FCT minister on COVID-19 by Capital Market Support Committee on COVID-19 in Abuja. Pic by Tunde Adeniyi

Tariff hike could tip manufacturers over the cliff BALA AUGIE

A

100 percent increase in electricity tariff by regulator will tip manufacturers over the cliff, balloon cost of production, and compound the woes of companies who are reeling from the wrought caused by the coronavirus pandemic.

Companies are spending more on input cost to produce each unit of product -as material and overhead cost continue to spike, which is quite difficult for a lot of them to breakeven or retain enough cash in the business to fund future expansion plans.

Industry players have warned that an increase in

the tariff will make goods produced locally less competitive in terms of price compared to foreign products that are produced at a much lower cost.

Out of the N1.29 trillion generated in revenue by the largest manufacturers quoted on the Nigerian Stock Market, N907.18 billion was spent on input cost, otherwise known as cost of sales, leaving very little to cover other operating expenses.

Additionally, total production, administrative and distribution expenses amounted to N1.08 trillion as at March 2020, which is huge when compared to revenue of N1.29 trillion.

“The cost of power in our total cost of production is 40 percent, and when tariff increases

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then the price of product will go up and consumer will bear the brunt as such higher cost that will be passed over to them,” says Ambrose Oruche, acting director-general,Manufacturing Association of Nigeria (MAN).

A spike in production cost due to spiralling utility will make our product uncompetitive because most foreign made goods are produced at lower cost, putting local producers in a disadvantaged position.

Manufacturers spent N24.28 billion less on alternative energy sources in 2018, according to the MAN. Oruche warns that the regulator is being wicked and inconsiderably insensitive by contemplating a hike when @Businessdayng

companies have not been in real business over the past few months due to the lockdown imposed by government to curb the spread the of the coronavirus pandemic.

However, the National Assembly and stakeholders have halted the planned electricity tariff hike that was supposed to take effect July 1 and rescheduled it for the first quarter of 2021.

“They have to pass the cost in form of higher pricing to the consumers. They are already reeling from high distribution cost,” notes Gbolahan Ologundro, industry analyst at CSL Stockbrokers Limited.

Continues on page 28

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Monday 06 July 2020

BUSINESS DAY

news These 14 NSE stocks yielded positive...

Continued from page 27

now moved to working from home, which requires increased data consumption on the part of employees.

“Also, we note that with individuals sitting at home all day, social media activities have received a significant boost while visits to streaming platforms have become a norm in a bid to provide some sort of entertainment,” say FSDH research analysts.

Though many listed companies first-quarter (Q1) results were not utterly negative, but were obviously affected by the pandemic and the lockdown across states.

Analysts expect the secondquarter (Q2) results to more precisely echo the impact of COVID-19 driven decline in economic activity.

FSDH notes, “A significant number of sectors will be severely negatively affected by COVID-19 and its associated impact. For the Crude oil sector, lower oil prices and demand will slow investments into different segments of the sector as well as raise nonperforming loans.

“The movement restrictions and lockdown of economic activities will have tremendous negative impacts on sectors such as Transport, Education, Trade and Entertainment. Construction sector will suffer from lower government revenues.

“Higher demand for ICT and Health care services will lead to expansion of both

sectors. Agriculture has remained resilient during and post 2016 recession. Constant demand for agriculture output for both consumption and as intermediate input will sustain the sector.”

Also, equity analysts at Lagos-based Vetiva say early optimism about economic growth and strong earnings at the start of the year have all but gone.

“In the Banking sector, we expect a decrease in Interest Income, caused by lower repayment rates and an increase in loan deferrals and extensions. Furthermore, we expect the Consumer and Industrial Goods companies to report lower revenues, due to the weak economic activity and diminished,” Vetiva notes in its half-year outlook.

“While we expected a more attractive market for investors in 2020, the poor macro environment, currency devaluation and general uncertainty over crude prices have dampened investors’ view of the Nigerian market. In the second half of the year, we expect the recovery in equity prices seen in second-quarter (Q2) to continue -albeit at a slower pace with local investors continuing to drive majority of the activity on the bourse,” the analysts further note.

The Q1 GDP data show very high concentration of economic activities in few sectors – 5 sectors (Agriculture, Crude Oil, Manufacturing, Trade and Telecommunications).

L-R: Basheer Mohammed, federal commissioner of the National Commission for Refugees, Migrants and Internally Displaced Persons; Orji Kalu, Senate chief whip; Ahmad Lawan, Senate president and Yahaya Abdullahi, Senate leader, during the commissioner’s visit to National Assembly to discuss Internally Displaced Persons (IDPs) resettlement project and future plans of the Commission in Abuja.

CBN’s snail-paced exchange rate unification...

Continued from page 1

able to inspire significant

confidence is to speedily collapse all the rates into one,” the investor says.

The CBN has now devalued the naira on two separate occasions this year amid lower oil prices, a slowdown in foreign portfolio inflows and a fast rising foreign exchange (FX) backlog.

First, it moved the official rate from N306 to N360, and has now followed it up by moving the rate at the Special Market Intervention Sales (SMIS) to N380 per US dollar from N360.

The CBN governor, Godwin Emefiele, told investors

Signature 50 ranking unveils Nigeria’s biggest corporations

F

or the second year running, Signature 50 has unveiled Nigerians biggest corporations.

The ranking, based on market capitalisation, is exclusive to companies listed on the Nigerian Stock Exchange (NSE), Nigeria’s foremost multi-asset securities exchange offering equities, fixed income and Exchange Traded Funds.

The 2020 ranking concluded in January shows Dangote Group is the most capitalised company on the NSE with a valuation of $9.6 billion, followed by MTN Nigeria at number two spot with a valuation of $7.7 billion while BUA Cement plc occupies third position with a valuation of $4.5 billion.

Other companies in the top 10 band include Nestle Nigeria plc (4th), Airtel Africa (5th), Guaranty Trust Bank plc (6th), Zenith Bank (7th), Nigerian Breweries plc (8th), Stanbic IBTC Holdings plc (9th) and Access Bank plc (10th) According to Samson Davies, publisher of Signature 50, “For decades corporations with global dominance have belonged only to the exclusive club of countries like the Group of Seven (G-7), or at best the Group of 20 (G-20).

Nigeria’s ascension to the podium of world’s 30 largest economies was underpinned by the rise of corporate Nigeria. The Signature 50 ranking was fashion after the S&P 500 and Fortune 500. The major entry criterion is a minimum capitalisation of $50 million.”

He said, “This ranking has further revealed that Nigerian companies are actually stronger their most of their counterparts. Dangote’s valuation of $9.6 billion is equal to the valuation of Emaar Properties, owners of Burj Kahlifa while larger than the largest cement company in Mexico – Cemex at $5.6billion to mention a few. Zenith Bank’s valuation at $2.2billion is almost three times the valuation of Banc of California at $865million, and higher than the National Bank of Greece at $2 billion market valuation.”

The publication also feature interviews with business leaders and was headlined by the His Excellency, President Muhammad Buhari. The Signature 50 2020 edition was titled Nigeria at 60: heralding the nation’s 50 Biggest Corporations to commemorate Nigeria’s 60-independence anniversary celebration. In addition, www.businessday.ng

this year, The Nigerian Stock Exchange will commemorate its 60 years of providing investors and businesses a reliable, efficient and an adaptable exchange hub in Africa, to save and to access capital.

President Buhari in his interview, exclusively seen

by BusinessDay, stated, “We have been rated as Africa’s largest economy by different verifiable indices. How does that make one feel as President of Nigeria? Of course, one feels good. But that is not enough. I will feel a lot better when we go beyond just rating and statistics, and the majority of Nigerians begin to feel the impact of that rating.

“When Nigerians prosper, when the quality of their lives improves dramatically, when our status as the largest economy reflects in their pockets, then I will a lot better. That is where we are headed, and that is where we will get to, by the grace of God”.

The publication, which will be exclusively distributed to business leaders, also features interviews with the CEO of NSE, Oscar Onyema, Babatunde Raji Fashola, minister of works and housing, and other eminent business leaders.

rate, one analyst argues.

“Let all companies previously bidding in the SMIS window just go and bid at the I&E window and the CBN can supply that market,” the analyst says.

“That will do a whole lot more for confidence than just adjusting the rate at the SMIS window,” he adds.

A senior official of the CBN confirms that the aim of declaring the SMIS rate is towards a full unification with the I&E rate.

“Yes, it is aimed at moving the rate closer to that of the Investors and Exporters (I&E) window, which traded at N386/$1 yesterday.

“From time to time, adjustment would continue to happen, either upward or downward in line with market fundamentals. Certainly, no single rate can be achieved, but we would keep moving towards I&E rate,” he states.

Towards a full unification of multiple rates There has been a strong clamour for adopting a more market-friendly approach to managing Nigeria’s FX market, and the latest development comes 10 days after the CBN governor told some foreign investors that the desire of the central bank “is to achieve exchange rate unification” around the Nigerian Autonomous Foreign Exchange Market (NAFEX)/ I&E rate.

Emefiele had explained: “What we mean by exchange rate unification is moving towards the NAFEX. NAFEX

is our dominant market for the purchase and sale of forex and it is a free market where everybody is free to sell their dollars and those who want to buy are free to buy dollars.

“That means that whether you are a businessman, a bank, CBN, and you have dollars, you can bring it to the market to sell and if you want to buy dollars, you can come to the market.

“Like some of you must have seen, three years before 2019, we saw a relatively stable forex market because the NAFEX rate and even the rate at which the central bank transacts business outside the NAFEX were substantially close to each other. So, the CBN will continue to pursue unification around the NAFEX.” In a nine-page document released Friday, Lagos-based economist, Bismarck Rewane, who put the purchasing power parity of the national currency at N400.87 to the dollar, said he did not believe adjusting the official rate as the apex bank had done would lead to the crash of the naira.

The World Bank has long encouraged Nigeria to manage its currency rate better to remove the irritation to investors who complained against the multiple rates and the administrative adjustment of the currency by the apex bank.

The International Monetary Fund has also long called for Nigeria to merge its multiple exchange rates, saying the absence of a single rate creates confusion and deters foreign investment.

Tariff hike could tip manufacturers over the...

Demand contraction rather than closure of suppliers or disruption to logistics are the main threat to companies.

While the hike in key consumer utilities is a welcome development to keep both sectors in tune with market realities and drive efficiency, these hikes will put further strain on already pressured consumer income.

The COVID-19 has forced many companies to slashed salaries and cut workforce so as to stay afloat.

that he planned to merge the multiple rates around the Investors and Exporters window, where the naira is slightly weaker at around N386 per dollar.

“The movement in the SMIS rate is consistent with the CBN’s plan to ensure a convergence of the rates at the I&E window,” notes Tajudeen Ibrahim, head of investment research at Lagos-based Chapel Hill Denham.

“The gap between the I&E rate and the SMIS rate is now negligible, this move however does not solve the CBN’s headache completely,” Ibrahim says.

By its latest naira devaluation, the CBN is also trying to meet the World Bank’s requirement for the disbursement of a $1.5 billion loan that is partly dependent on Nigeria collapsing its multiple rates.

“Clearly, the CBN moving the rate is in reaction to the World Bank’s threat not to disburse funds to Nigeria unless there is a unification,” a senior banker tells BusinessDay. “The market expected a circular (devaluing the naira at the SMIS window) but it is unlikely to see that because it would mean Nigeria is being put under pressure,” the source states.

A better move would have been to simply collapse the rate at the SMIS window, which is meant to provide dollars to local firms who the CBN considers critical sectors of the economy, with the I&E

Continued from page 27

The cumulative average total cost as a percent of sales for the largest manufacturers increased to 93.44 percent in March 2020 from 87.11 percent the previous year. What this means is that a manufacturer spent N93.44 to generate every N100 in revenue.

Aside difficulty in sourcing raw materials, experts have also linked the exorbitant cost

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of movement of good at the port to the factory to huge cost of sales among companies.

They add that the high cost impact negatively on the prices of goods and services, leading to inflation.

The lockdown policy imposed by government across the country following the outbreak of the virus was felt by businesses at the lower end of the curve, as it disrupted the demand and supply chain. @Businessdayng

Monday 06 July 2020

BUSINESS DAY

29

News Broken health centres, roads...

Continued from page 1

say they rely more on informal drug stores, popularly known as ‘chemists,’ than the dysfunctional health centre that looks more like a morgue. More than six persons in Obitti tell BusinessDay that they have lived their last five to 10 years relying on chemist stores.

Charles Okoronkwo, 61, a native of Obitti, says he prescribes drugs for himself when ill.

“I cannot afford bills in private clinics here,” he says. “Our community health centre has been abandoned for years now.

No drugs, no medics. I am afraid of going close to it because it looks like just a

tre, there are two rusty iron beds not occupied by any mortal. Beside them is a heap of cartons overfilled by already dispended drugs. The floor is dusty and looks like it has not been cleaned for ages.

The windows are shut and no nurse or doctor can occupy the place in 10 minutes without gasping for breath.

“Only spirits occupy places like this,” Charles Ugwu, a middle-aged villager, who walks in while this writer is having a look at the health centre, quips.

People outside Ohaji/ Egbema and Oguta often assume that the oil-producing parts of Imo State have streets paved with

Source: NBS, BusinessDay

is located close to Ohaji District Local Government headquarters, yet it looks more like a bush.

The once virile hospital is now overgrown with grass and taken over by reptiles. Because the abandoned hospital has no security official manning it, critical parts of

Abandoned Ohaji General Hospital taken over by reptiles. It was built by Ibrahim Babangida

mortuary,” he further says.

Private clinics in Obitti charge N3,000 to N5,000 to treat common illnesses such as typhoid, malaria and flu. But the villagers say more than 60 percent of them cannot afford that.

Charles Ugwu, a member of the community, says a few middle-class natives travel 20 kilometres to Owerri to visit public or private hospitals.

Health centres or morgues?

The picture of Obitti Medical Centre is pathetic.

The compound looks well swept. But a popular adage says “you do not judge a book by its cover.” Inside the one-room health cen-

gold. But the reality is that natives and residents of the communities cannot even go to good hospitals.

“Anybody who hears of oil-producing communities in Imo State may think we live in paradise.

But you can now go as our witness,” Mike Ezenwere, president-general of Obitti community, says.

If anyone thinks that Obitti Health Centre is bad enough, maybe they can take a 25-minute ride to Ohaji General Hospital, located in Umokanne community. It was built in late 1980s by General Ibrahim Babangida, Nigeria’s self-acclaimed civilian president. The hospital

Inside view of Obitti Health Centre www.businessday.ng

the hospital building are being stolen each day, one villager says. Community leaders say the immediate past government of Rochas Okorocha left the abandoned hospital and built another one at a closer village known as Amafor, but the newly-built hospital rarely has drugs.

In Abacheke, a community, where oil spillage has done more harm than good, the Niger Delta Development Commission (NDDC) has constructed a health centre close to the community secondary school. But like others, the health centre has no drugs, no doctor or nurse and is under lock and key.

The poor state of schools Apart from the fact that part of Obitti Primary School has leaky roofs, a proposed secondary school in the community has remained an empty piece of land for over 10 years. In a neighbouring community, Awara, there is no secondary school.

Parents send their children to other communities, Umuapu and Umuokanne, an hour’s walk, for their secondary education.

Others enrol their wards in Owerri, the Imo State capital. A middle-class native of Obitti, Paul Ogaji, laments that it costs him N1, 500 ($3.3) every day to send his daughter to a secondary school in Owerri.

Dilapidated roads Roads leading to autonomous communities in Agwa, Oguta local government, are bad and get worse in rainy season. At Ohaji/Egbema, the major road to oil-producing community is broken from Umuokanne. Access to oil-producing communities is difficult, though oil and gas companies still ply their trade and move their vehicles through the road.

The environmental impact Oil communities, whether in Imo State or other oil-producing states, suffer from environmental degradation. In Imo State, the impact is getting minimal, residents say.

However, oil spillage has become common in Abacheke community in Ohaji/Egbema. In 2010, Agip, which has now exited Nigeria, was accused of spilling oil in the community. The same allegation was repeated in 2014. A resident takes this reporter to a site in Abacheke where Agip oil spillage occurred in 2014 and 2019.

T h e re s i d e n t , w h o pleads anonymity, says nothing grows there again, yet the family has not received any form of compensation. However, one youth in the community confides in BusinessDay that Abacheke youths, out of anger for lack of development, break pipelines

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and steal oil.

No prominent member of the community agrees to confirm this.

Neglect by companies The people of Mgbirichi in Ohaji/Egbema accuse Shell Petroleum Development Company of Nigeria (SPDC) of sending a contractor three years ago to the community, who destroyed their farms while prospecting for gas, without compensating them.

Uchenna Akagha, a native of Mgbirichi, says this has been the hallmark of the oil and gas giant.

But Bamidele Odugbesan, media relations manager, Shell Nigeria, dismisses that as untrue, saying, “SPDC has no oil prospecting operation in Mgbirichi community and has not received any complaint from the community.

“The Assa North Gas Development project currently being executed by SPDC on behalf of the SPDC JV in Ohaji/Egbema

LGA of Imo state.

“Land for the project site was lawfully acquired from the Assa North communities and the landowners paid,” he says.

In February 2019, the oil and gas company agreed to release N1 billion to develop 11 oil communities in Imo State. BusinessDay asks Odugbesan whether the fund has been released or not.

He replies that the oil and gas company has committed to funding the community development programmes over five years at N200 million per year.

“SPDC has released the 2019 funds and is in the process of disbursing the 2020 tranche payment to the development clusters,” he says. He explains that the projects are as determined by the communities, and are not determined or executed by SPDC. Similarly, Waltersmith is accused by Obitti and

Part of Obitti Primary School

LGA is not in Mgbirichi, hence no land was acquired for oil prospecting or project development in Mgbirichi as claimed.”

He further says that the company has a gas project in Assa North hosted by Assa, Ochia, Awarra and Obile autonomous communities in Ohaji/Egbema

Awara people of not impacting lives in Ohaji/ Egbema apart from the electrification project that has not materialised.

But Eriye Onagoruwa, external affairs and government relations manager, says the allegation is untrue, noting, “Waltersmith has its areas of op-

A scene of Agip oil spillage in Abacheke, Ohaji/Egbema in 2019 @Businessdayng

30

Monday 06 July 2020

BUSINESS DAY

In Association With

America’s presidency

AABalkan harbourbetrayal no more

Why Joe Biden’s instinctive caution makes real change possible

China’s draconian security law for Hong Kong buries one country, two systems

How a retro can be radical

W

HEN THE history of the Trump presidency is written, a photoop in Lafayette Square at the beginning of June might just mark the turning-point.

Since he announced his run for the White House in 2015, Donald Trump’s political method has been to maximise at all times the amount of attention directed at him. The Lafayette Square escapade offended Christians, because the president waved a Bible around like a prop. It embarrassed the country’s most senior military commander, who later apologised for joining a political show that involved the tear-gassing of peaceful protesters. More important, it did not work. Rather than being in command, Mr Trump seemed desperate. When power is based on appearances it can slip away suddenly.

Before covid-19 hit America, Mr Trump looked likelier than not to be re-elected, thanks to a relentlessly growing economy.

Incumbent presidents almost always win in such circumstances.

Our election model made him a narrow favourite, even though he was a few points down in national polls with his rival, Joe Biden.

However, the president is now in a deep hole. Mr Biden is up by nine points—more in some polls.

He is doing well in battleground states like Florida, Michigan and Wisconsin, and he has strong support among older voters and is doing surprisingly well among white voters who did not go to college. Our model now gives Mr Trump only a roughly 10% chance of winning. The virus has demonstrated something definitively to a large number of persuadable voters: that Mr Trump is just not that good at being a president.

There is a long time until November. Anyone who has lived through the past decade knows that low-probability events need to be taken seriously. If the virus recedes and the economy rebounds Mr Trump’s chances may improve over the coming

months. If the virus is still rampant and states have not organised themselves for voting by mail, the contest could be an unpredictable, low-turnout affair. Either way, he will try to exploit the same divisions that have worked in his favour in the past.

For all that, Mr Biden finds himself in landslide territory without having had to do very much to get there (see article). Mr Trump’s flailing has made a Democratic Senate majority possible. That opens up the chances of a highly productive presidency which once seemed inconceivable. Before covid-19 and widespread social unrest, Mr Biden’s candidacy was about restoration—the idea that he could return America and the world to the prelapsarian days of 2016. It transpires that he could have the opportunity to do something big instead.

Mr Trump is already painting this as a threat. He wants to scare voters with warnings that his opponent is a doddering fool who will be taken hostage by dangerous radicals seeking to defund the police and confiscate everybody’s guns. Some Democrats have the opposite fear, of an old patriarch stuck in his centrist ways. And indeed when Mr Biden was first elected to Washington, Elvis Presley was playing in Hawaii and Leonid Brezhnev was general secretary of the Soviet Communist Party. He has survived by adjusting his views on race, sex, religion and other cultural signifiers as

the Democratic Party has shifted.

How, hot-headed Democrats say, can a man who has followed rather than led be trusted to fix America’s ills?

In fact, both points of view could turn out to be wrong. The dominant theory, on the right and the left, is that change in America is made by the extremes. On the right that has meant Goldwaterism, the Tea Party and Mr Trump.

On the left it has meant the antiVietnam movement, social-justice campaigns and Bernie Sanders.

There is something to this idea: without these forces dragging him, Mr Biden might not have moved.

But to make lasting change through the federal government you need to win the Senate. And that cannot be done with a candidate at the top of the ticket who frightens the voters. That is the paradox of Mr Biden’s candidacy.

Because he has flip-flopped on abortion rights and school desegregation by busing, because he comes across as the grandfather he is, he is viewed with suspicion on the left. Yet that is precisely what makes him reassuring, or at least unfrightening, to voters in states like Montana and Georgia where Democrats must win to gain a majority in the Senate. It is Mr Biden’s caution that opens up the possibility of more change than a real radical would.

That may be even more true in 2020 than in the past. Though Mr Trump’s victory in 2016 was presented, not least by him, as

the triumph of the enraged and downtrodden against a broken system, it came after 20 consecutive quarters of falling unemployment, when there were few threats from terrorism at home. This time is different. With 128,000 Americans dead from covid-19 and with unemployment rife, the centrist virtues of decency, experience and a willingness to act on advice from competent people could well seem more alluring.

For a sense of what that means in practice, consider Mr Biden’s platform. His campaign website is a smorgasbord of policy plans, most of which would never happen even if he were to win. But two of them conceivably could.

The first is a public option in health care, allowing Americans to buy health insurance from the government. America has been inching its way towards universal health care, a move that Mr Trump has been unable to reverse. Under a Biden presidency it could come within touching distance.

The second policy is a significant reduction in greenhouse-gas emissions. Mr Biden wants to pass legislation to bind America to reaching net-zero emissions by 2050. Add to this Mr Biden’s return to multilateral engagement in foreign policy—which America’s allies would wholeheartedly endorse, and which could begin to steady a chaotic world. Even if Mr Biden accomplished only part of this agenda, the criticisms from the Democratic left would seem churlish.

Some consequential presidents have been accidental radicals.

Think of Lyndon Johnson, who took office after JFK’s assassination and passed the Civil Rights Act, or George W. Bush, transformed by 9/11 from a compassionate conservative into a neocon who started two of his country’s longest wars. To have a hope of a transformative presidency, Mr Biden must not misread the paradox on which his future depends.

It is by cleaving to the centre that he can best lead America in a new direction.

The regime in Beijing would rather be feared than admired

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HE CHINESE government is spreading fear in Hong Kong.

The first shock came in May, when it announced plans to impose a sweeping national-security law on the territory, without the say-so of its legislature. Then it drafted the bill behind closed doors, keeping details secret even from Hong Kong’s administration. After the law was passed on June 30th by China’s rubber-stamp parliament, hours passed before it was published at close to midnight.

The 18-page bill, which took effect that day, was harsher than the gloomiest analysts had predicted. It is one of the biggest assaults on a liberal society since the second world war

(see article).

Chinese officials argue that they are doing nothing wrong: nationalsecurity laws are common around the world, even in democracies. But that is disingenuous. This one allows China’s Communist Party to rip up its promise of one country, two systems and send its secret agents into Hong Kong to impose order as it pleases. Its spooks will not be subject to local law.

Most national-security cases, supposedly, will be tried in Hong Kong’s own courts. But the judges will be government-appointed. They will be allowed to dispense with juries and try cases in secret. Most worrying is that “complex” or “serious” crimes may be tried on the mainland. The past year of unrest in Hong Kong was sparked by fears of just such a possibility—that a now-shelved extradition law might let dissidents be whisked away to face the mainland’s brutal justice. That is what the new law allows. Officials do not rule out that those convicted by Continues on page 31

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Showdown on the Nile

The bitter dispute over Africa’s largest dam

Egypt, Ethiopia and Sudan are struggling to share water

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OR BIRUK NEGAFH, as for millions of Ethiopians, the summer rains may bring the climax of a decade’s work. As a high-school student in 2011 he bought 100-birr bonds (then worth $6 each) to help finance the Grand Ethiopian Renaissance Dam, a giant edifice that would span the Blue Nile, the main tributary of the Nile river (see map). At university he donated to fundraisers for the project. Now, like almost all Ethiopians, he eagerly awaits the day—perhaps weeks away—when Ethiopia begins to fill the reservoir.

“It’s a national victory,” he says.

Half a century in the making, the hydro-electric dam is Africa’s largest, with a reservoir able to hold 74bn cubic metres of water, more than the volume of the entire Blue Nile. Once filled it should produce 6,000 megawatts of electricity, double Ethiopia’s current power supply. Millions of people could be connected to the grid for the first time. More than an engineering project, it is a source of national pride.

For Egypt, however, it seems a source of national danger. Over 90% of the country’s 100m people live along the Nile or in its vast delta. The river, long seen as an Egyptian birthright, supplies most of their water. They fear the dam will choke it off. Pro-regime pundits, not known for their subtlety, have urged the army to blow it up.

Both sides have tried diplomacy, but years of talks failed to produce a deal on how Ethiopia would fill and operate the dam. The African Union tried to mediate, as did America earlier this year. Now a deadline looms: Ethiopia wants to start filling the reservoir during this summer’s rainy season. On June 26th, after another round of talks, Egypt, Ethiopia and Sudan pledged to reach a deal within two weeks. Ethiopia agreed not to start filling the dam during that period.

Diplomats say most of the issues are resolved. But the outstanding one is big: how to handle a drought. Egypt wants Ethiopia to promise to release certain amounts of water to top up the Nile. But Ethiopia is loth to “owe” water to downstream countries or to drain the reservoir so much that electric output suffers. It wants a broader deal between all riparian states, including those on the White Nile, which flows out of Lake Victoria down through Uganda and Sudan.

Even if talks fail and Ethiopia starts filling without a deal, Egyptians will not find their taps dry. There is enough water in the reservoir behind Egypt’s Aswan High Dam to make up for any shortfall this year. But the mood in both countries is toxic. Egyptians have cast Ethiopia as a thief

bent on drying up their country.

In Ethiopia, meanwhile, Egypt is portrayed as a neocolonial power trampling on national sovereignty.

The outcome of the talks will have political consequences in both countries, and perhaps push them to the brink of conflict—at a time when Egypt is already contemplating involvement in a war in Libya.

Mooted first by Emperor Haile Selassie in the 1960s, Ethiopia’s grand dam became a reality and a national obsession under Meles Zenawi, the longtime prime minister who ruled until 2012. His political masterstroke was asking Ethiopians to finance it through donations and the purchase of low-denomination bonds. (The World Bank and private investors were unwilling to put up the cash.)

Almost every Ethiopian became a stakeholder. Most contributed voluntarily, but there was always an element of coercion. Civil servants had to donate a month’s salary at the start. Local banks and other businesses were expected to buy bonds worth millions of birr.

When he took office in 2018, Abiy Ahmed, Ethiopia’s current prime minister, criticised the dam as a project “used for political expediency” and warned it could take another decade to finish, statements seen as an attack on his predecessors. Some questioned his commitment. The cloud grew heavier after the death in 2018, officially by suicide, of the project’s chief engineer. At a meeting with Abdel-Fattah al-Sisi in Cairo, Abiy reportedly shocked advisers by discarding a planned speech and telling the Egyptian president: “I swear to God, we will never harm you.”

Two years on, Egyptians complain that Abiy has reverted to type. He is “inflexible”, says an Egyptian diplomat. Ethiopia is gripped by jingoism over perhaps the only issue that unites citizens

of all ethnicities. On state TV broadcasters compare the dam to the battle of Adwa in 1896, when Ethiopians came together to defeat the Italians. Teddy Afro, perhaps the country’s most famous pop singer, released a song about the Nile on June 29th. Delaying filling would be politically risky for Abiy.

Nor does Mr Sisi have much room to compromise. Egypt is already short of water. The UN sets the threshold for scarcity at an annual 1,000 cubic metres per person. In 2018 Egyptians had just 570 cubic metres; even without the dam, that could drop to 500 cubic metres within five years. Ethiopia has blocked proper studies of how the dam will affect downstream countries.

The shortage is partly Egypt’s own fault. It uses almost 80% of its water, which it subsidises, for agriculture. (In Jordan and Israel, two nearby countries with limited freshwater resources, the figure is closer to 50%.) Irrigation canals, most of them decades old, are notoriously ill maintained and leaky.

Farmers grow thirsty crops like bananas, rice and sugar cane, despite government plans meant to deter the practice. All this for a limited pay-off: Egypt still imports half its food. Supplies are further pinched by farm projects in Sudan, where Gulf states have bought large tracts of arable land to help feed their own people.

For years Egyptian officials failed to take the dam seriously.

Now they face a deadline—and a pile of other problems. Egypt’s covid-19 outbreak started slowly, but the daily death toll peaked on June 15th and remains at a high plateau.

Economic damage is mounting, too. On June 26th the IMF approved a loan of $5.2bn to Egypt.

Mr Sisi is also nervous about developments on his western border. Khalifa Haftar, the Egyptian-

backed Libyan warlord who last year vowed to capture Tripoli, beat an ignominious retreat this spring.

He was pushed back after Turkey sent armed drones and Syrian militiamen to support the UNrecognised government in Tripoli.

Egypt sees a Turkish presence next door as a threat. Relations have grown steadily worse since 2013, when Mr Sisi overthrew Muhammad Morsi, an Islamist, like Turkey’s president, Recep Tayyip Erdogan. Last month Mr Sisi said his country had a right to intervene in Libya. He warned the Turkishbacked forces not to advance past Sirte, a strategic coastal city that sits near Libya’s main oil-export terminals.

Egypt’s army is wary of foreign wars, a caution that dates back to its ill-fated intervention in Yemen in the 1960s, which cost tens of thousands of lives (and left it unprepared to fend off Israel in 1967).

Since then it has largely avoided overseas adventures, save for an unimpressive cameo in the Gulf war in 1991. Instead it has fought jihadists on the Sinai peninsula, overthrown a president and built an economic empire that stretches from luxury hotels to cement. Now Mr Sisi finds himself uncomfortably surveying crises on two fronts.

Abiy’s position in Ethiopia is hardly more comfortable. Rivals at home have seized on his perceived weakness. One opposition leader accuses him of offering the dam as a “sacrificial lamb” to foreign powers. “If he fails to start filling in July, he is in trouble,” says Jawar Mohammed, an influential activist, who was arrested last month. On June 30th protests erupted after a popular musician from the Oromo ethnic group was killed, a reminder of how thin the veneer of national unity is. The technical details of a deal can be worked out, but neither leader has a deep reservoir of political capital to make it a reality.

China’s draconian security law for Hong Kong buries...

Continued from page 30

mainland courts could be executed.

But wait, surely this law is about crimes that threaten China’s security?

Lambasting its authoritarian politics or quixotically suggesting that Hong Kong should be independent would hardly cause the ground to shake in Beijing. The party, however, takes a different view. The bill’s definitions of sedition, subversion, terrorism and collusion with foreign powers could be applied even to petty, non-violent activity. The first arrest under the new law, on July 1st, was of a man who was merely carrying a banner calling for an independent Hong Kong. The bill could be invoked to arrest someone who uses “unlawful means” to undermine China’s communist system.

Could that include taking part in a banned rally commemorating the Tiananmen Square protests of 1989?

The party will be the judge. It errs on the side of severity.

The law also applies to activities abroad, by anyone. The wording of the bill suggests that a foreign firm which co-operated with, say, the American government in applying sanctions on China would have no defence if the party moved against it.

The world is entitled to be shocked by these developments, but not surprised. The crushing of the Tiananmen protests showed the party’s ruthless determination to destroy opposition no matter what the cost to its global reputation. The world’s horror at that bloodshed, and the sanctions the West imposed on China in 1989, did not change the party’s views. And China was a minnow back then, its economy smaller than Spain’s. It is even less likely to pay heed to foreign critics today.

But the West must respond. Britain was right to say on July 1st that it would make it easier for about 3m holders of “British national overseas” passports in Hong Kong to settle in Britain and eventually qualify for citizenship (see article). America should impose sanctions on Chinese officials who violate human rights in Hong Kong. It would be more effective if it abandoned its go-it-alone approach to foreign affairs and worked with other democracies to resist China’s efforts to subvert global human rights (see article).

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news Governing council expands NCDMB content intervention fund to $350m HARRISON EDEH, Abuja

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he governing council of the Nigerian Content Development and Monitoring Board (NCDMB) has approved the expansion of the Nigerian Content Intervention Fund from $200 million to $350 million.

Timipre Sylva, the minister of State for Petroleum Resources, who heads the council, noted in a statement on Sunday that the enlargement of the Fund by $150 million was part of the decisions taken at the recent NCDMB governing council meeting, which held virtually on June 16, 2020.

Thecouncil,hestated,approved that$100millionfromtheadditional fundwouldbedeployedtoboostthe fiveexistingloanproductsoftheNCI Fund, which include Manufacturing, Asset Acquisition, Contract Finance, Loan Refinancing and Community Contractor Financing.

The council also approved that $20 million and $30 million respectively to be deployed to two newly developed loan product types - the Intervention Fund for Women in Oil & Gas and PETAN Products, which include Working Capital Loans and Capacity Building Loans for PETAN member companies.

The NCI Fund was instituted in 2017 as a $200 million fund managed by the Bank of Industry (BoI) engaged to facilitate on-lending to qualified stakeholders in the Nigerian oil and gas industry on five loan product types.

The NCI Fund is a portion of

the Nigerian Content Development Fund (NCDF), aggregated from the one percent deduction from the value of contracts executed in the upstream sector of the oil and gas industry. About 94 percent of the NCI Fund has been disbursed to 27 beneficiaries as at May 2020.

NCDMB has received new applications from 100 companies for nearly triple the size of the original fund.

Also, guidelines for the NCI Fund provide that beneficiaries of the manufacturing loan and asset acquisition loan can access a maximum of $10million respectively.

Also, beneficiaries of contract finance loan can access $5 million while beneficiaries of the loan re-financing package can access $10million, with beneficiaries of the community contractor finance scheme limited to N20 million.

Sylva in the statement explained that the maximum tenure for all loan types is five years and applicants cannot have two different loans running simultaneously At the onset of the fund, he noted that the applicable interest rate for the various loan types was pegged at 8 percent, except the community contractor finance scheme, which was 5 percent.

However, in April 2020 as part of NCDMB’s response to mitigate economic impact of the coronavirus pandemic, council approved reduction of the interest rate from eight to six percent per annum for all four of the loan products. The board also extended the moratorium for all loan products. www.businessday.ng

COVID-19: Reopening schools now is premature - Anap

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he Anap Foundation COVID-19 Think Tank (the Anap Think Tank) has viewed with great concern the proposal to re-open schools for graduating students, noting that science and data reveal that the pandemic is currently at the community transmission phase and still approaching its peak.

According to a press release Sunday, by Abubakar Siddique Mohammed, vice-chairman, and Atedo Peterside, chairman, of the Foundation, “Having school children from different homes gather in enclosed classrooms and interacting closely for long hours at this stage of our epidemic will, in our opinion, portend great danger for the pupils, their

teachers and their immediate families.”

However, the Anap Think Tank commends with interest the recent approval by the Federal Government, through the Presidential Task Force on COVID-19 (PTF), of new guidelines to fight the spread of the pandemic while easing up some sectors in order to gradually resume socio-economic activities in the country.

It praises the government for lifting the ban on interstate travel, which had been observed more in its breach, giving way to preferential treatment of travellers and a high level of malpractice in its enforcement. “We also welcome the proposed resumption of air travel as this will be

based on well-established international protocols, which make air travel relatively safe,” it says.

According to the Foundation, though the PTF has specified appropriate protocols as safeguards, we are aware that most schools, especially the public ones, will not have the required resources to put these in place, nor the wherewithal to moderate children’s behaviour.

“We therefore appeal to the government and all stakeholders involved, to exercise caution and follow the science of the disease as established, to avoid exposing the population to large-scale Covid-19 infections; let us not find ourselves in the situation of countries like Israel

and South Africa that have had to reverse their premature school reopening, due to severe spikes in infection among the pupils, staff and their families.

“We urge that opening of schools be delayed for a few more weeks to see our Covid-19 epidemic peak and begin to reverse, before embarking on any school reopening plans, even for graduating classes. This is current global best practice.

“It is our belief that graduating students can still get back on track with their future careers by taking their examinations just ahead of general school reopening, when the epidemic curve might have flattened, and it is much safer to resume classes,” it notes.

Ibom Air returns to the skies July 8 ANIEFIOK UDONQUAK, Uyo

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he management of Ibom Air has announced July 8 as the resumption date of its flight operations beginning with Lagos to Abuja return route.

On its website, the airline operated by the Akwa Ibom government said its services between Uyo and Lagos and Uyo and Abuja would start a week later.

“With great relief and much

excitement, we announce the imminent return of your favorite airline to the skies,” it stated.

The airline stated that “it has been busy modifying and redesigning the airline’s products and services not just to meet the new requirement but to ensure that we meet them while enhancing your safety, comfort and well-being.”

It maintained that its aircraft has been “thoroughly disinfected and sanitised prior to your board-

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ing it, including the stairs and arm rails on the staircase, the carpet, your seats, your seat armrests, the foldable tables, seat pockets and back of the seat in front of you, the walls, the windows and the overhead baggage bins.”

It further assured its passengers of “the best quality of cabin air possible on a domestic flight”, but however, expressed regret that its in-flightrefreshmentserviceswould not be offered until further notice. @Businessdayng

It added that passengers would be given ‘hip bags’ of goodies after disembarking.

“You will be required to wear a facemask in order to gain access into the airport terminal and to board your flight.

“Upon boarding, you will be required to keep your facemask on for the duration of your flight. This is for your safety and well-being on the flight, so that you and those around you protect one another.”

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FINANCIAL TIMES

World Business Newspaper

World Bank ditches second round of pandemic bonds Critics say ‘convoluted’ scheme favoured investors and was too slow to pay out to victims CAMILLA HODGSON

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he World Bank has shelved plans for a second sale of pandemic bonds after the first drew criticism for being too slow to pay out aid to poor nations suffering from the coronavirus outbreak.

The supranational agency issued the bonds three years ago, in a $320m deal intended to help developing countries tackle a serious outbreak of infectious disease. In mid-April, weeks after the virus had started spreading around the globe, the conditions to pay out nearly $200m were finally met — though critics said this was too little, too late.

A second iteration of the “pandemic emergency financing facility”, or PEF, was expected to be launched this year, after the World Bank said in early 2019 that it was making tweaks to the structure before marketing the new product in or around May 2020.

But a spokesperson has told the FT that there are now “no plans for a PEF 2.0”.

Clare Wenham, assistant professor in global health policy at the London School of Economics, said the bonds had been “an awful scheme” that the World Bank should “draw a line under”.

“In the wake of this coronavirus outbreak we need to rethink financing pandemics,” she added. “We need to somehow

An ‘end racism’ banner is displayed on the World Bank Building in Washington, DC. A bank spokesperson has told the FT that there are now ‘no plans for a PEF 2.0’ © AFP via Getty Images

engage with private money because public money isn’t enough or isn’t fast enough.”

The World Bank launched its pandemic bond scheme following the 2014 Ebola outbreak in west Africa, with the aim of finding a way to funnel private-sector money quickly to poor countries faced with a large-scale, crossborder outbreak.

Investors were paid doubledigit interest rates, funded by donor nations Japan, Australia and Germany, until a set of criteria — including at least 2,500 deaths — were met. Some inves-

tors would then recoup a portion of their investment, while the remainder went towards tackling the health crisis.

Having to wait for an outbreak to be widespread is “counterproductive to global health security”, said Ms Wenham. “The sooner you can get in and intervene, the smaller it will be.”

In a paper published in the British Medical Journal last year, she said the scheme “seems to favour private sector investors over global health security”.

The programme first drew fire when the bonds’ criteria were

not met after an Ebola crisis broke out in 2018 in the Democratic Republic of Congo.

In April 2019 the agency said it was reviewing the structure of the bonds — which were due to mature in July this year — and advertised for a risk modelling company to work on PEF 2.0 and improve the programme “where necessary”.

We desperately need there to be grant funds available to help countries in the early stages of pandemics Tim Jones, head of policy at advocacy group Jubilee Debt

Campaign After Covid-19 triggered the payout this year, the World Bank announced it had allocated $195.8m — which included the bonds and related swaps — to 64 eligible countries. Allocations were based on population size, reported cases and whether nations were deemed to be particularly fragile or conflictaffected. The highest available sum, of $15m, went to Nigeria and Pakistan.

Meanwhile, investors holding the bonds — including Baillie Gifford, Amundi and Stone Ridge Asset Management — had received interest payments that totalled almost $100m by the end of February.

“We desperately need there to be grant funds available to help countries in the early stages of pandemics,” said Tim Jones, head of policy at advocacy group Jubilee Debt Campaign, rather than “these convoluted schemes which just seem to be set up to make money for the private sector”.

Olga Jonas, a senior fellow at Harvard’s Global Health Institute who worked at the World Bank for 33 years, said the agency “knows that [the scheme] is an embarrassment so are being quiet about wrapping it up”.

The bank’s independent evaluation group should assess “how it was possible that this happened and why did it go wrong”, she added.

Fed stress tests predict European banks’ high rate of loan losses Forecast adds more pressure on region’s financial institutions to reduce US presence LAURA NOONAN, STEPHEN MORRIS, OWEN WALKER AND NICHOLAS MEGAW

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he Federal Reserve expects European banks to post the sharpest losses in key sectors hit by the pandemic, adding further pressure on their US operations which already have mixed shareholder support.

The latest round of the Fed’s annual stress tests predict that HSBC and Santander will have the biggest loss rates of any large bank in the US market across credit cards and consumer lending.

Credit Suisse and Barclays post the highest loan loss rates in two other categories: commercial real estate and commercial loans. The impact was less material for them due to the small loan books in those areas, but the result still highlights the Fed’s view on their lending risk.

The tests also show that Deutsche Bank is still expected to burn through capital faster than any of the other 32 financial institutions

whose performance the Fed modelled in a fictional crash from the start of the year to the first quarter of 2022.

European banks have long had a troubled history in the US, growing aggressively from the late 1990s before pulling back after sizeable losses. HSBC is considering even sharper cuts than the 30 per cent reduction announced earlier this year.

Deutsche says it remains committed to a US business which does not yet earn its cost of capital, but shareholders and analysts remain sceptical. Credit Suisse’s US business has already shrunk significantly, while Santander has been trying to revive performance at what was for years its worstperforming unit.

“The problem is that the US banks are stronger and know their home market better,” said David Herro, vice-chairman of Harris Associates, which has $76bn of assets under management and owns significant stakes in European lenders including Credit Suisse and www.businessday.ng

BNP Paribas.

“You should be more involved in areas when you have history and expertise. Any European banks still running operations where they don’t have a strong advantage, that is a business they shouldn’t be in,” he said.

In the latest review, the Fed said HSBC’s US credit card business would suffer losses of 26.4 per cent of its total loan balance in the crisis, the highest loss rate of the 33 banks analysed. The bank said in value terms it was only $400m and declined to comment further. HSBC’s total loan losses in the modelled crash came out at $3.9bn.

The potential hit to Santander’s consumer loan book was estimated at 17.3 per cent of the portfolio — the highest in that category — or $6.5bn. Loan losses across Santander’s entire US book came in at $8.6bn.

An S&P report singled out Santander and HSBC as two of the European banks where the loan loss assumptions were most

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damaging.

Stuart Plesser, banks analyst at S&P, said Santander’s performance likely reflected the fact that it tended to lend to borrowers with lower credit scores.

Deutsche is predicted to burn through 780 basis points of high quality equity during the Fed’s simulated crisis, 140bp more than the second most affected bank, Goldman Sachs.

Ana Arsov, banks analyst at Moody’s, said that while there was “no common theme in some of the foreign banks apparent under performance in select asset categories” the outcome would lead to them retaining “their high capital buffers in the US rather than returning capital to parents”.

Deutsche had high quality equity totalling 26.2 per cent of its risk weighed assets at its US entity by the end of 2019. Credit Suisse had a common equity tier one ratio of 24.7 per cent. HSBC and Santander were closer to the US norms, with 13 per cent and 14.6 per cent re@Businessdayng

spectively.

Deutsche, Barclays and HSBC all declined to comment on their performance in the exercise. Santander said most of its consumer losses were from its subprime car finance business, and that the stress tests proved its US division was “extremely well capitalised” with capital ratios in the top quartile. Santander’s US pre-tax profit jumped 46 per cent in the first quarter, the bank added.

Credit Suisse said its overall loan loss rate, of 0.9 per cent, was the best of the banks and that the impact of its 20.9 per cent loss rate in commercial real estate was “marginal” since that loan book is small.

HSBC North America’s total loan book, on a risk weighted basis, was almost $129bn at the beginning of the stress tests, while Santander USA’s was almost $119bn. Barclays US was $89bn, Credit Suisse was $62bn and Deutsche was under $37bn. All are far smaller than the US banks — Bank of America and JPMorgan’s assets, as weighted by risk, were around $1.5tn.

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Will EU talks improve the pound’s prospects?

Market Questions is the FT’s guide to the week ahead FT REPORTERS

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ill EU talks improve the pound’s prospects?

Sterling will be back in investors’ sights on Monday, when UK and EU negotiators are scheduled to meet in London to hammer out an arrangement on their post-Brexit relations by the end of the month.

After four days of talks last week, Michel Barnier, the EU’s chief negotiator, raised the prospect of a deal, and the pound responded. Having started July on a lacklustre note, it gained 1 per cent over the week, trading at $1.24 on Friday from an intraday low of $1.22 on Monday.

Unless the UK meets its selfimposed end-July deadline for a trade deal with the EU, it will drop out of the EU’s single market and customs union at the end of this year, having left the bloc in January.

Preparations for a no-deal outcome are still under way. German Chancellor Angela Merkel said on Thursday that the bloc had to prepare for a worst-case scenario. This has kept some strategists on edge.

“We think that the headwinds to sterling are mounting and are likely to intensify in the second half of the year,” Bank of America analysts said in a note.

But some strategists say recent developments offer hope that sterling could shift higher.

Derek Halpenny, an analyst at MUFG Bank, said the more positive note struck by the EU late last week suggested a deal was now “more credible”.

“We have been very dubious of the UK deadline of a deal being

Hints at a deal by Michel Barnier helped sterling rise; a new security law raised tensions in Hong Kong; and gold is at a nine-year high © FT montage; Getty Images; Bloomberg

outlined by the end of July. So if that assumption proves wrong, we would certainly see grounds for sterling’s outperformance,” Mr Halpenny said. Eva Szalay Will gold continue its ascent?

As the price of an ounce of gold hovers close to $1,800 for the first time in nine years, analysts and investors are asking whether the precious metal’s rise will continue — or if profit-taking will drag it back down, after a nearly 16 per cent gain this year.

Joni Teves, analyst at UBS, believes the latter is more probable.

She says this is likely to be the case even though gold’s big disadvantage as a financial asset — that it provides no income — has become

increasingly irrelevant with safe instruments such as US government bonds effectively paying investors a negative return if held to maturity.

“Real rates are already around the lowest levels in seven years.

This raises the risk that any bounce from recent lows takes a bit of shine off gold, triggering some unwinding at least in the near term,” she said.

After Thursday’s strong jobs report, US government debt came under modest selling pressure, pushing the benchmark 10-year Treasury yield up 0.03 percentage points to 0.7 per cent. Gold, meanwhile, fell back to $1,768 an ounce, down from $1,788 earlier in the

week. By Friday afternoon, it was trading at around $1,782.

Set against that is evidence of strong demand for gold, along with gold-related equities, from a growing pool of investors worried about the inflationary impact of unprecedented central bank stimulus.

Recent share sales by Harmony Gold and Polyus Gold were met with strong interest, while demand from gold-backed exchange traded funds — which purchased a record 625 tonnes of bullion in the first half of the year — remains elevated. Citi reckons ETF purchases could total 900-1,000 tonnes by the end of the year and that jewellery demand in Asia could also start to pick up from low levels. Neil Hume

Where next for Hong Kong’s stock market?

Hong Kong’s stocks have faced a series of challenges over the past 12 months, including anti-government protests and coronavirus. Now they face a new threat — Beijing’s imposition last week of a controversial national security law.

Traders have so far shrugged off the latest political drama, which has sparked international condemnation and fears that Hong Kong’s days as a global financial hub are numbered. The benchmark Hang Seng index gained 2.7 per cent the day after police arrested hundreds for protesting against the legislation, which gives China sweeping powers to target acts it deems seditious.

Some investors are bullish. Credit Suisse expects Hong Kong stocks to outperform many other developed markets this year. The bank points to inexpensive valuations, a healthy dividend yield and an improving economic picture in China, which appears to have Covid-19 largely under control.

Hong Kong’s market has also benefited from rising tensions between the US and China. The Trump administration’s moves to apply pressure on Chinese companies listed in New York have coincided with a flurry of big-ticket secondary offerings in Hong Kong, including internet groups NetEase and JD.com.

Some analysts think more international investors could be drawn to the market as it pivots away from banking and property stocks towards areas such as online shopping. As that happens, “Covid-19 will be less of a drag and more of a boost for Hong Kong,” said Andrew Sullivan, a stock broker in the city.

Libya oil chief says foreign powers hampering efforts to end embargo Chairman of North African state group says talks to lift six-month blockade are being hindered ANDREW ENGLAND AND DAVID SHEPPARD

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he head of Libya’s state oil company has blamed foreign powers backing renegade general Khalifa Haftar for hindering talks intended to enable the north Africa state to end a sixmonth oil blockade and resume crude exports.

Mustafa Sanalla, chairman of the National Oil Company, told the Financial Times that “some regional countries are complicating the negotiations while enjoying the absence of Libyan oil from the market”.

Mr Sanalla, who is spearheading an initiative to lift the embargo imposed by forces loyal to Gen Haftar in January, declined to name the countries. But he appeared to be referring to the United Arab Emirates and Saudi Arabia, both supporters of the renegade commander.

“It’s very clear who is controlling Libya now. It is from outside and this decision about oil is about who is controlling [the country],

not the Libyan side,” Mr Sanalla said.

The embargo has caused Libya’s crude output to collapse from about 1.2m barrels per day to less than 100,000 bpd at a time when Opec members, led by Saudi Arabia, and Russia — another backer of Gen Haftar — have slashed production to stabilise plunging oil prices.

Even if the initiative to resume production succeeds, Mr Sanalla said it would take months and hundreds of millions of dollars for Libya, an Opec member, to get back to full production because of the damage done to oil facilities.

“We have a disaster — technical problems everywhere, the collapse of oil tanks. Yesterday we had a big leak in an offshore exploration line,” he said. “We can’t tell the size of the disaster until our staff can make a full inspection.”

The oil facilities have long been vulnerable to attack and used as pawns, as rival Libyan factions have divided the country into fiefdoms — the embargo has cost the country more than $6.4bn in lost www.businessday.ng

revenue, according to the NOC. Efforts to resume production come during a period of relative calm after Gen Haftar, who controls eastern Libya from his headquarters in Benghazi, suffered a string of military defeats by forces loyal to the UN-recognised government in Tripoli, which have been boosted this year by increased military support from Turkey.

Libya has been enduring a civil conflict, which has morphed into a proxy war awash with foreign mercenaries, since Gen Haftar launched an offensive on the capital last year.

Under Mr Sanalla’s initiative, the Libyan parties and their foreign backers would agree that oil revenue would be frozen for a set period in the NOC’s account rather than transferred to the Libyan central bank. The bank has faced mounting criticisms from all factions over a lack of transparency, concerns about corruption and the inequitable use of petrodollars.

The US and the UN would then oversee negotiations between the rival Libyan groups and their for-

https://www.facebook.com/businessdayng

eign backers to negotiate a “very transparent financial arrangement including how the money is spent,” as well as reforming the more than 20,000-strong Petroleum Facilities Guard, which is made up of militiamen and tribal fighters.

“The PFG has been a disaster for Libya . . . it has become an enemy within, holding our oil production to ransom repeatedly since 2013,” Mr Sanalla said.

Talks on the initiative are being overseen by the US and the UN, and involve the UN-backed government, Gen Haftar’s representatives, France — which has been a supporter of the commander — the UAE and Egypt, which also backs the Libyan strongman.

Despite relative calm in recent weeks, diplomats fear all sides are mobilising for the next phase of the conflict and Mr Sanalla is desperate that oil facilities, particularly in the east, do not become targets.

“The longer the delay the more time this gives for warring sides to prepare for a new battle. We have to do what we can to avoid a new battle on our facilities,” he said. @Businessdayng

“Our sole aim is to resume production as soon as possible — it’s our duty to safeguard the wealth of Libyan people.”

The NOC, one of the few state institutions deemed to be above factionalism, has said Russian mercenaries with the Wagner Group, a private security firm, as well as Sudanese fighters, have moved to the Sharara oilfield — the country’s largest — in southern Libya.

Sharara is operated by a consortium of the NOC and four European energy companies, including France’s Total, Spain’s Repsol, Norway’s Equinor and Austria’s OMV. “This is a very serious threat that our international partners operating in the field and us take very seriously,” Mr Sanalla said.

His fear is that if the initiative to resume the output fails, the crisis will deepen.

“The situation will be very dangerous, the war will be there . . . we have very limited time and we have to utilise this window to get rid of this threat on our facilities,” he said.

“If we lose this opportunity it will be a disaster for all.”

Company IN FOCUS

BUSINESS DAY Monday 06 July 2020 www.businessday.ng

Nigerian Bottling Company: Providing relief in trying times TEMITAYO AYETOTO

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n December 2019 when reports of a strange ailment killing people began emerging from Wuhan, China, no one expected that it would lead to a pandemic that has so far infected over 10 million people and claimed more than 500,000 lives, according to data from the World Health Organisation (WHO).

By the time WHO declared the novel Coronavirus (COVID-19) a global pandemic on March 11, 2020, it had left sorrows and tears in its wake across different countries, exacting a heavy toll on the economies of nations.

The consequences have been felt in almost every facet of human existence, with governments evolving creative means to minimise the deadly scourge.

Nigeria has been proactively managing the pandemic from February 27 when the country recorded her index case. In collaboration with states, the Federal Government devised various ways to contain the disease.

One of the measures was the hard choice of a total lockdown on Sunday, March 29 in three of the then ‘hardest-hit states’ of Lagos, Ogun and the Federal Capital Territory, Abuja while intensifying nationwide sensitisation with the Nigeria Centre for Disease Control (NCDC) at the forefront of the campaign.

Isolation centres for those who had contracted the disease were established with the NCDC and the COVID-19 Presidential Tax Force overseeing efforts to stop its spread.

But the battle was not left for the government alone. The private sector, significant enablers in the country’s socio-economic life, also got involved in efforts to fend off the deadly invisible enemy. One of the most prominent private sector players is the Coalition Against COVID-19 (CA-COVID) which has written its name in gold with its tireless efforts. It has aided efforts to combat the pandemic by building isolation centres across the country and buying Personal Protective Equipment (PPEs) for medical personnel.

But apart from CA-COVID, other big private sector players including the Nigerian Bottling Company (NBC) have also rallied to offer assistance to Nigerians and the government. The Company’s first intervention was for those on the frontlines; patients who had already con-

tracted the disease and healthcare workers.

NBC and its sister company, Coca-Cola Nigeria, donated over 13 million centilitres of its beverages, including Eva premium table water and other soft drinks to provide hydration and nourishment for patients and healthcare workers at isolation and treatment centres across different states in the country.

In Lagos, the Onikan Centre, Gbagada Centre, Lagos University Teaching Hospital, Federal Medical Centre, Ebute-Metta, and the Lagos Waste Management Authority (LAWMA) whose street sweepers and medical waste workers actively worked, and are still working during the pandemic, were among the beneficiaries of the Company’s initial donations.

Other states including FCT, Edo, Ogun, Oyo, Osun, Ondo, Rivers, Cross River, Akwa Ibom, Imo, Kaduna, Kano, Niger, Lagos, Anambra, Delta and Ekiti later took delivery of their do-

nations.

Matthieu Seguin, managing director of NBC, explaining the company’s interventions, said the efforts were implemented in tandem with the global standard of lending support to communities during emergencies.

Seguin, who praised the Federal and Lagos State governments for their efforts at curtailing the spread of the virus, said “we appreciate the measures deployed so far to curtail the spread of the virus and the medical care currently provided for confirmed cases in the State. We fully support these commendable measures and will continue to work hard to meet the hydration needs of Nigerians, which is critical at this stage of the crisis.”

NBC’s multi-pronged interventions didn’t neglect vulnerable Nigerians in its immediate communities. Well aware of the hardships that most Nigerians are facing, the Company shifted attention to vulnerable households across the country.

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NBC’s multi-pronged interventions didn’t neglect vulnerable Nigerians in its immediate communities. Well aware of the hardships that most Nigerians are facing, the Company shifted attention to vulnerable households across the country

The National Bureau of Statistics had in its 2019 Poverty and Inequality in Nigeria Report, found that 40.1 per cent of Nigerians live below the poverty index. For a state like Lagos, an estimated six million out of its about 20 million population work in the informal sector. The implication was that a lockdown devoid of adequate provision for the vulnerable was going to leave some people dying from hunger than from the virus.

To help people cope with the lockdown which had by then extended beyond Lagos, Ogun and the FCT, NBC decided to expand its relief efforts. The assistance was in the form of distributing food items to thousands of households across the country to help them mitigate the impact of the pandemic. The first phase of the NBC Food Relief Intervention saw over 2,300 homes in 14 locations across the country receive essential food items, including rice, noodles and cooking oil amongst others.

The intervention, which commenced in Ota, Ogun State and Asejire, Oyo State, saw 300 households receive foodstuff.

At the same time, an additional 150 households benefitted in Abuja, Port Harcourt, Maiduguri, Makurdi, Warri, Enugu and Minna. Two hundred families each also got relief packages in Benin City, Owerri, Challawa and Ikeja.

Receiving some of the household supplies on behalf of 150 families in Ota, Ogun State, Eric Gbibgi-Jackson, chairman of Nice Estate Community Development Association commended the gesture by NBC. “We are using this medium

to appreciate Nigerian Bottling Company Limited. For these food items that you have given us, we remain deeply grateful and pray that your Company will continue to grow from strength to strength,” he said.

Commenting on the intervention, Ekuma Eze, director, Public Affairs and Communications, NBC said the exercise was part of NBC’s commitment to supporting its host communities across the country.

“The impact of the COVID-19 pandemic has been quite unbearable for many families. As a socially responsible organisation, we believe there is no better time to identify with these people across our communities than now,” he said.

NBC’s COVID-19 interventions also extended to the provision of personal protective gear to its customers and business partners. For example, the company provided over 484 litres of bulk sanitizers, sanitizer dispensers and face masks to its trade partners. The company also provided hand sanitizer to 2,649 third-party drivers and truck assistants, as well as masks for their use on a daily basis.

The company repurposed some of its supply chain technology and assets to produce hand sanitizers while leveraging its 3D Printer to produce protective face shields. 118 beneficiary organizations ranging from healthcare facilities, government agencies, regulatory bodies, private sector groups, industry associations, customers as well as security agencies benefited from donations of these items.

Focusing the strength of its business partnerships to support the fight against Covid-19, NBC joined forces with some of its Key Account partners to further support local government teams & health workers with free meals and Coca-Cola beverages.

Through a grant from the Coca‑Cola Foundation, the Coca‑Cola System in Nigeria has donated N170 million to the International Federation of Red Cross and Red Crescent Societies (IFRC) to support COVID-19 relief efforts in Nigeria. As the country continues to record more cases, the Company has also not relented in its interventions to families and frontline workers. When the pandemic is eventually contained, and the story of how the country fared during the period is documented, the NBC will feature prominently.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.