BusinessDay 06 Jun 2019 by BusinessDay

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Spells tough times for Nigerian outbound travellers

i t h t h e s c a rcity of seats occasioned by the grounding of MAX 8 aircraft across the world on March 13, 2019, Nigerians travelling to L-R: Rotimi Akeredolu, governor, Ondo State; Betty Anyanwu-Akeredolu, wife of the governor; Wale Akinterinwa, Ondo State finance commissioner; Oba Aladetoyinbo Ogunlade Aladelusi (Odundun II), the Deji of Akure, and Walter Akpani, managing director/ceo, ProvidusBank, cutting the tape to commission the Akure branch of ProvidusBank.

various destinations for holiday this summer season are facing difficulty getting flight bookings. The scarcity of seats has led to a spike in fares because demand for seats now outstrips supply. This is expected to make summer vacation plans a lot more expensive. Some travel agencies

see airfares eventually rising by about 20 percent, while others think the fares may double in some routes with high impact of the suspension, especially the Americas and Asia where Max 8 had been deployed most economically by airlines. The 737 MAX, which ground-

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NGUS nov 27 2019 361.38

NGUS may 27 2020 362.28

Boeing Max 8 aircraft grounding spikes fares for summer travel OBINNA EMELIKE & IFEOMA OKEKE

fgn bonds

Treasury bills

APAPA GRIDLOCK

52 Governor Babajide Sanwo-Olu’s promise: “I will rid Apapa of gridlock in the first 60 days of my government.”

ed globally in March after an Ethiopian Airlines flight crash that killed all 157 people on board, was the most sold model with 5,011 firm orders and 375 aircraft delivered. The Ethiopian Airlines crash was model’s sec-

FG’s impending revenue challenges present opportunity to review PSCs

Continues on page 34

STEPHEN ONYEKWELU & DAVID IBIDAPO

oncerns over Nigeria’s revenue and budget implementation challenges are deepening and some analysts have said that the sale of and proceeds from the governContinues on page 34

Inside Nigeria’s low farm yields, changing climate heighten fears of food P. 2 insecurity

Thursday 06 June 2019

BUSINESS DAY

news Alleged unjustified charges on Lekki Toll-Gate e-tag raise suspicion of fraud, lack of transparency

Babajide SanwoOlu (2nd l), governor, Lagos State, in a handshake with Gbenga Olaniyan (r), CEO, Estate Links, when Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State branch, presented an award to Estate Links as Outstanding Estate Surveying & Valuation firm, in Lagos. With them are Olurogba Orimalade (l), chairman, NIESV Lagos Branch, and Emmanuel Wike, 1st vice president, NIESV.

…as LCC ignores other users to reply Kate Henshaw only Temitayo Ayetoto

lleged unjustified charges suffered by road users who prefer to use the e-tag payment option at the Lekki Toll-Gate have raised suspicion of fraud and lack of transparency on the part of Lekki Concession Company (LCC). Users recently accused the company of outrageous deductions from their accounts, particularly in periods when they didn’t use the route. Some victims, including renowned actress Kate Henshaw, who took to Twitter to protest the anomaly, said despite the LCC admitting its system experienced glitches earlier in the year, the company continued to debit their accounts without access to the e-tag section. The fallout of the problem has been unnecessary queues building up traffic and deteriorating service quality in the last two months. “I have already noticed a discrepancy on a day I was away but was debited by your company. I have just left your office where I went for clarification. Despite a deposit of N10,000 top-up, you showed me a debit balance, saying I owe you. If I do not have money and I did not pass through, how do I owe you? Also how do you account for the days I travelled and did not use the toll?” Henshaw tweeted at the official

handle of @LCCTollRoad. “With the amount of money you make, your electronic system should be top notch. You hardly display balance when one passes through. So in actual fact, I have been debited and also paid cash to pass through. My fault in this is not keeping my receipts but you will account for the days I travelled and yet was debited for passage. My passport with dates of departure and arrival will be made available to you. You have to clarify this. You need to be above board and come with clean hands,” she added. Another aggrieved victim, @ henryokoye called on the new governor to wade in, saying it was high time the state reviewed the service level agreement of the toll gate because things were worsening and causing hardship on residents. Expressing her concerns on Twitter, Sumbo Akintola asked, “LCC what is going on? Why do you take your customers for granted? Repeatedly there has been a system breakdown. I have just noted massive unjustifiable deductions of funds. I only use the Lekki toll gate at most twice a day. I need a statement of account.” But out of the pool of outbursts from numerous users, the LCC only singled out the tweet of the Nollywood actress Kate Henshaw for a response. Others were simply ignored.

•Continues online at www.businessday.ng

Dangote Refinery boosts educational development in host communities TEMITAYO AYETOTO

n a bid to bridge the gap in Nigeria’s education sector and enable it contribute effectively to economic development, Dangote Refinery and Petrochemicals has taken up a proactive measure by embarking on an integrated tripartite approach to boost quality of education in the public schools around its host communities. This approach includes a scholarship programme for students, a Train-TheTrainers Capacity Building Initiative for teachers and school infrastructure projects to improve the quality of education in the communities. To ensure students receive quality education, Dangote Refinery and Petrochemicals organised a capacity building programme for secondary school teachers and principals in Ibeju-Lekki area of Lagos, in collaboration with NurtureHouse Limited, a company founded to strengthen quality education through enhanced teaching, learning and capacity development of teachers.

The training sessions were delivered using practical, hands-on approach to learning. They provided participants with opportunities to collaborate as well as practice knowledge and skills acquired. At the end of each session, each participant was guided on reflective practices and action planning to encourage implementation of skills acquired whentheyreturntotheirschools. Teachers were exposed to 21st century best practices in “Cognitive Development and Impact on Learning” as well as “Effective Pedagogical Skills”. The personal action plans produced at the end of the twoday Professional Development Programme are expected to motivate the teachers to implement their plans. Adenike Olaoye, group social specialist, group health, safety, social and environment (HSSE), Dangote Industries Limited, said the capacity building programme underlines the huge impact the company has in ensuring quality education in the host communities.

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

Nigeria’s low farm yields, changing climate heighten fears of food insecurity JOSEPHINE OKOJIE

igeria’s population is rising rapidly, yet the country has failed to make appreciable efforts in increasing its farm yields amid intensifying effects of climate change, heightening fears of food insecurity in Africa’s most populous nation. Despite the Federal Government mouthing support for agriculture over the years, the country’s farm yield per hectare has remained poor and one of the lowest among its peers. “We currently cannot produce the food we need to feed 201 million people because our yield per hectare is still low but we are making progress,” Ibrahim Kabiru, president, All Farmers Association of Nigeria (AFAN), said. “Nigeria as a country needs to do more and farmers also have to do their part in increasing our yield per hectare.

We need to embrace biotechnology and improve methodology in planting,” Kabiru said. Biotechnology crops are safe for consumption, he said, adding there is no nexus between genetically modified crops and cancer as it has not been scientifically proven. Nigeria has the least average yield per hectare of four selected most consumed crops among its African peers such as Ghana, Kenya and South Africa, recent data from the Food and Agricultural Organisation (FAO) show. For tomatoes, the average yield per hectare in Nigeria is 7 metric tonnes (MT), Kenya’s is 20MT, Ghana’s 8MT, and South Africa’s 76MT. Similarly, for maize, which is the most consumed grain on the continent, Nigeria’s yield per hectare is 1.6 on the average despite being the second-largest grower of the crop, while Kenya and Ghana have same average yield of

2MT per hectare and South Africa has 6MT per hectare. Forpotatoes,thebestrounded and nutrient root in all of Africa,Nigeria’syieldperhectare is 3.7MT, Kenya 15.5MT, and South Africa 38.8MT. Nigeria’s average yield per hectare for rice paddy is 2MT, while Kenya, South Africa and Ghana have same average yield per hectare of 3MT. Nigeria now records huge demand-supply gaps in most of itsstaplefoodsowingtolowcrop yields, even as the population growth rate stands at 3.2 percent per annum and projected to surpass the 300 million mark by 2050, according to The World Population Prospects 2017. Nigeria is now populated by 201 million people who must be fed with rice, beans, tomatoes and potatoes, among others. “Nigeria has one of the lowest yields per hectare globally. We abandoned agriculture for a very long time when other

countries were developing theirs. It is now we are coming back to it and there is still a lot that has to be done,” Emmanuel Ijewere, vice president, Nigeria Agribusiness Group (NABG), said at a CEOs’ breakfast meeting in Lagos last year. “In tomatoes, for instance, only one percent of Nigerian farmers plant their tomatoes usinghybridseedsandseedlings.In Ghana, 40 percent of their farmers farm with hybrid seeds and in Kenya, it is 68 percent of their farmersthatuseimprovedseeds and seedlings,” Ijewere said. Apart from low yields, climate change has been altering and disrupting farming cycle in the country for the past three years. The widespread flooding in the last two years has caused crop losses and low production as farms were submerged in floods, leading to high prices of food and imports.

•Continues online at www.businessday.ng

First quarter 2019 offshore operations VAT contribution decreases by 50% …No clarity in investment environment; projects await FID STEPHEN ONYEKWELU

he value-added tax (VAT) contribution from offshore operations of Nigeria’s oil and gas industry comprising exploration and production decreased by as much as 50 percent in the first three months of 2019 compared to the same timeframe last year, showing a reduction in production activities. Offshore operations contributed N797 million in the three months to March 2018 and in the first quarter of 2019, it remitted N529 million to the Federation Account, data

published the National Bureau of Statistics (NBS) show. Three months to June 2018, the sector had contributed N547 million. In the third quarter, it contributed N549 million and in the three months to December 2018, it contributed N668 million. Experts have continuously said that uncertainty over fiscal terms in the Petroleum Industry Governance Bill and volatility in oil prices contributed to the delay in final investment decisions (FID) by investors. This delay is rearing its head in the falling VAT contribution of offshore operations to the basket. Decreasing offshore

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operations means Nigeria’s oil-driven economy is faced with a future of diminishing oil reserves and daily production. “Our oil reserves today are a 30-year reserve. So technically, unless there are new serious finds, in 30 years your oil should be dwindling. Gas is in 60 years, although luckily it’s seen as a cleaner fuel. Our issues have been our ability to harness it quickly, put infrastructure and replicate its usage,” Ibe Kachikwu, former minister of state for Petroleum Resources, said in a recent interview with journalists in Abuja. “We need to quicken our ability to produce.” @Businessdayng

Delay in reaching a final investment decision on $13.50 billionZabazabadeepwaterproject, which was supposed to have happened in December 2018, has stalled the creation of 10,000 jobs, experts have estimated. In February, Royal Dutch Shell said an outstanding tax claim of $20 billion by the Federal Government indicting some International Oil Companies operating in Nigeria (including Shell) will delay the final investment decision (FID) on developing Shell’s Bonga Southwest deepwater oil field, one of Nigeria’s largest

Continues on page 34

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news 92m Nigerians live in extreme poverty - NESG David Ibemere

he Nigerian Economic Summit Group (NESG) has revealed that 47 percent or 92 million Nigerians are living in extreme poverty. This is contained in a detailed impact evaluation report of the Think-Tank Group obtained by BusinessDay. According to the report, unless Federal Government can partner the state governments as regards scaling social investment in the economy, the number would get worst. In an interview, Senior Fellow, NESG, Tayo Aduloju, noted that scaling social investment and social protection was the way to reducing poverty but said its future should not be tied to political parties. “Considering that Nigeria has a projected GDP growth rate of under 2 percent and a rapidly growing population

at the rate of 2.6 percent, it is estimated that by 2050, the Nigerian population will reach 400 million. The government should therefore systematically scale social investment not as a party policy but as a co-national policy because of the number of poor people we have,” Aduloju said. He noted that while the government had made efforts as regards initiative aimed at reducing poverty, but there were no feasible improvements that can be measured, “but we will say social investment on its own cannot lift Nigeria out of poverty. “To lift Nigeria out of poverty, one must have a broad-based growth in non-oil sectors. China for instance lifted 600 million people out of poverty in 15 years and Indian in 10 years lifted 15 million people out of poverty. How did they do that? They did it by a combination of social investment and protection of the vulnerable, together with

massive broad-based growth.” He further revealed that about 30 million Nigerians had benefitted from the Government Enterprise Empowerment Programme (GEEP) as regards the Marketmoni, Tradermoni and FarmerMoni but noted that state governments’ partnership remained a challenge. He urged the government to create national programmes without vested interest that might overwhelm the programmes. “We need to see big moves to draw capital flows that will expand the economy, which include all sectors in the market. The pace of growth so far has been sluggish and because it is slow, the rate at which we are lifting people out of poverty is sluggish as well,” he said. “Nigeria cannot be doing 2 percent GDP growth rather 4 - 5 percent and to do that level of growth we need capital to come in,” he said.

Sanwo-Olu restates zero-tolerance for traffic offences, others … preaches peaceful co-existence in Lagos JOSHUA BASSEY

ov e r n o r o f L a g o s State, Babajide Sanwo-Olu, has restated his administration’s zerotolerance for traffic offences and indiscriminate waste disposal in the state. He also says the Lagos State Public Works Corporation (LSPWC) would soon begin fixing the potholes on major roads across the state. Sanwo-Olu stated this Wednesday while playing host to Muslims at Lagos House, Alausa, upon the successful completion of this year’s Ramadan fasting. The governor, who lauded Muslims’ self-discipline and spirit of endurance through the 30-day fasting, urged them to maintain the principles of the holy month and continue living in accordance with the teachings of Islam. “I am happy to celebrate with you after the 30-day

fasting. Although this has taken something from you by way of self-denial but we thank Allah that you successfully completed the fasting. I thank you for your huge support that brought in our administration and I must tell you that it is your government because we will not disappoint you,” he said. The governor called on residents of the state to join in the effort to move the Lagos forward. Speaking also, his wife, Ibijoke, urged the Muslim faithful to continue with the lofty virtues of Ramadan that include self-discipline, love for others, selflessness, piety and generosity, among others. She noted that those were the sterling qualities of the holy prophet for which he lived, charging all adherents to emulate them, to access the full blessings of the special season. According to her, “The

important lessons for us to learn from this special season have to do with the virtues of sacrifice, self-denial, piety, love and generosity, among others. “Through the Ramadan, we are taught to seek spiritual advancement and closeness to God, by stepping away from our comfort zone, where we indulge in various acts that please us as human beings but which are not acceptable to Allah.” She further appealed to them, to allow the great principles reflect in all their actions, public conduct and inter-personal relations with neighbours, in their offices and with people of different ethnic groups, for enduring peace and harmony in the state. In attendance at the event were the deputy-governor, Kadiri Hamzat and wife, chief Imam of Lagos Central Mosque, Sheik Sulaiman Oluwatoyin Abou-Nolla, among others.

Cormart commissions 15 metric tons new caramel plant SEYI JOHN SALAU

ormart Nigeria Limited, a chemicals and food raw materials companies in Nigeria, recently commissioned a new caramel plant at its factory in Lagos. The newly commissioned plant, which has the capacity to produce 15 metric tons of caramel per day, will supply beverage, brewery and food industries with caramel as a colorant. Martin Middernacht, the executive director of Cormart, says the company strives to increase the local production of industrial raw materials rather than solely relying on importation, saying, “This plant helps us achieve this goal. We are incredibly pleased to commission this plant.”

Olakunle Atoki, the plant manager, states that the plant will be producing a Class 3 Caramel, also known as Ammonia Caramel, as “we will be producing the caramel with three basic ingredients: dextrose, water and ammonia. It is called Class 3 or ammonia caramel.” However, as daily orders from clients intensify the company may consider expansion as indicated by the general manager, Johannes Flosbach. “We are confident in our team and we are already considering expansions to meet up with our forecasted demand. The plant has a laboratory where in-process control and finished product analysis will be conducted. This ensures that we give our customers a premium product which combines higher www.businessday.ng

quality and a lower price than most imported products,” Johannes says. Cormart Nigeria, as one of the leading chemical and food raw materials, started operations in Nigeria in 1981. The company has been on the forefront of production, importation, stocking and distribution of chemicals and other raw materials across the paint, confectionaries, cosmetics, pharmaceutical, and food and beverage industries. With cutting edge and cost effective products and solutions, Cormart represents the business interests of top multinational companies who wish to do business in Nigeria, while committing to continuous expansion of product lines to meet emerging market demands. https://www.facebook.com/businessdayng

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NEWS Nigeria, others on spotlight as global entrepreneurs canvass access to funding, innovation ODINAKA ANUDU, Hague, Netherlands

igeria and other African countries must increase their levels of innovation and funding access to start-ups and small businesses as entrepreneurs and global leaders canvass more credit access and creativity to get the majority out of poverty. “The challenge is when a business needs to move from small to medium enterprises, there is no access to capital,” Ivanka Trump, advisor to the president of the United States and entrepreneur, said on Wednesday at the Global Entrepreneurship Summit in the Hague, the Netherlands. “Investing in women too makes a lot of business sense. We have to empower women particularly and ensure there is a better environment for them to grow,” she said. Trump said 2.7 billion women did not have the same choice of jobs as men, adding that 104 countries had laws preventing women from working, thereby stifling innovation and entrepreneurship. Innovation is the process of translating an idea or invention into a good or service that creates www.businessday.ng

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value or for which customers will pay, says Business Dictionary. Entrepreneurs in the developing world, especially Nigeria, are innovating solutions to issues relating to health, energy, water, education and other vital human areas. But these entrepreneurs may be overlooking little but critical details that can redefine their future. “For instance, there is a lot of improvement to be done in our food,” said Feike Sijbesma, chief executive of the Netherlandsbased DSM, which plays in health, nutrition and materials industries. “Our food contains too much sugar, salt, fat and not enough nutrition. I do not think this is what we call innovation,” he said. “Africa must not copy everything from the West but must look for something that works locally and is sustainable,” he further said. Tequila Harris, an associate professor in Georgia W. Woodruff School of Mechanical Engineering, said entrepreneurs must not be stuck in their old ways of doing things, as doing that would put them out of business. “You need to keep learning and innovating to stay afloat. If you are stuck in the old ways, you will be left behind,” she said. @Businessdayng

Funding is a key issue inhibiting innovation and entrepreneurship in Nigeria. Data from MAN show that lending rate to the manufacturing sector averaged 22.21 percent in 2018 and 22.84 percent in 2017. But the current repo rate (central bank lending rate to commercial banks) in South Africa is 6.75 percent while the prime lending rate (lending rate to customers) is 10 percent. Similarly, Kenya Central Bank’s monetary policy committee cut the determining bank rate in late July 2018 to 9 percent, from 9.5 percent. Zambia’s benchmark lending rate is 9.75 percent as of February 2018, while Ethiopia’s is 7 percent. Nigeria’s monetary policy rate, which is the benchmark interest rate, is 13.5 percent and banks lend at 20 to 30 percent. Up to 90 million Nigerians are extremely poor, with unemployment rate sitting at 23 percent. “We must remove barriers to access t capital, especially as it concerns women,” Ajay Banga, chief executive of Mastercard. “Women have the capacity to add $4 trillion to world’s the gross domestic product and they need maximum support,” he said.

Thursday 06 June 2019

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RESEARCH&INSIGHT

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

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Insights from the sectoral distribution of value added tax (VAT) ADEMOLA ASUNLOYE

Source: NBS, BRIU

aggregated into primary sector (extraction of raw materials), secondary (concerned with producing finished goods) and the tertiary (concerned with offering intangible goods and services to consumers). VAT, the consumption tax placed on products whenever value is added at each stage of the supply chain, was down by 3.01 per cent Quarter-on-Quarter (QoQ) from N298.01 billion earned in Q4 2018 to N289.04 billion reflected in Q1 2019. On a Year-on-Year (YoY) basis, the accumulated sectoral distribution of VAT increased by 7.13 per cent from N269.79 billion generated in Q1 2018.

Of the 28 sectors covered in Q1 2019, the “Other manufacturing” generated the highest VAT which amounted to N31.42bn. Closely followed are other double digit billions: “Professional Services” generated N24.31bn; “Commercial and Trading”, N14.92bn; and “Breweries, Bottling and Beverages” which generated N10.8bn; the oil producing sector recorded N8.5bn as the 5th highest VAT accruable in the same quarter. In contrast, the mining sector generated the least amount within the quarter under review with N59.9 million VAT. Closely fol-

Source: NBS, BRIU

12734BDN

igeria’s five per cent ValueAdded Tax (VAT) rate is beyond doubt one the lowest in the world. Although, rumours have it that it might be increased, with the current rate of poverty in the country, an increase in VAT would pose a huge financial burden on average Nigerian. Hence, the way in which government raises and eventually utilises the revenue will have a substantial impact on the economic and social development of the nation. Some decades ago the VAT was rarely heard of outside of France and a few dry specialist texts. Now, it accounts for about 20 percent of the world’s tax revenue, affecting billions of people. Widely adopted in sub-Saharan Africa and elsewhere, it has been the centrepiece of tax reforms in many developing countries. By any standard, the rise of the VAT has been the most significant development in tax policy and administration of recent decades. As of 2018, about 166 of the 193 countries with full UN membership employ VAT, including all members of the Organisation for Economic Co-operation and Development (OECD) except the United States, which uses a sales tax system instead. While taxation is not the only source of government revenue, it is by and large the most important source in nearly all the aforementioned countries. A key claim made by proponents of VAT, especially for developing countries, has been that it would enhance efforts to mobilize the much needed tax revenue, not only directly but through wider improvements in tax administration and compliance. The same argument is sometimes turned around, however, by those distrustful of the uses to which government would put additional revenue. Nigeria’s Value Added Tax (VAT)—an indirect form of taxation that is based on the consumption pattern of individuals and companies on goods and services—declined in the first quarter (Q1) of 2019. It is eventually borne by the final consumer, however sometimes, multiple layers do bear part of the burden like VAT on tax on services and fixed assets. According to the Q1 2019 data released by the National Bureau of Statistics (NBS)on the sectoral distribution of VAT, it shows coverage of 28 sectors of the economy which can be

lowed is the“Pharmaceutical, Soaps & Toiletries” withcirca N202 million, “Textile and Garment Industry”, N201.58 million; “Publishing,Printing, Paper Packaging”, N365 million, while the Automobiles and Assemblies sector generated the 5th least VAT of N421 million in the same period. The low turnout in these sectors indicates that economic productivity and supply of goods and services within the sector may be relatively poor compared to other sectors, their consumer base may not be as large as other leading sectors since VAT is based on taxpayers’ consumption rather than their income or the sectors may not be large when disaggregated to sub-sectors. Disaggregating further the total VAT generated in Q1 2019, the federal government through the Federal Inland Revenue Service (FIRS) recorded N137.06 billion as local NonImport VAT; N98.97 billion was earned as foreign Non-Import VAT and N53 billion was generated from the Nigeria Customs Service (NCS) Import VAT. Between Q4 2018 and Q1 2019, records show that 8 out of the 28 sectors recorded decline in their VAT: “Commercial and Trading” with 6.84 per cent decline, “Conglomerates”, 8.28 per cent; “Gas”, 5.48 per cent; “Hotels and Catering”, 10.83 per cent; “Offshore Operation”, 20.84 per cent; “Oil Producing”, 43-03 per cent; “Petro-Chemical and Petroleum Refineries”, 17.06 per cent and the pharmaceutical, soaps and toiletries sector recorded a decline of 3.70 percent QoQ. Similarly, the analysis of the data also showed that 8 sectors recorded decreases YoY from Q1 2018 to Q1 2019: “Automobiles and Assemblies” was down by 4.58 per cent; “Banks & Financial Institutions”, 20.74 per cent; “Commercial and Trading”, 0.07 per cent; “Offshore Operations”, 33.65 per cent; “Oil Marketing”, 6.80 per cent; “Petro-Chemical and Petroleum Refineries”, 13.37 per cent; “Pharmaceutical,Soaps and Toiletries”, 17.20 per cent and the State Ministries & Parastatals sector recorded 32.25 per cent decrease YoY from Q1 2018. The chart above shows the Year-on-Year (YoY) increase in the last 6 years. The VAT continued to be on the rise YoY except for a sharp drop in Q1 2016 where it declined by 5.22 per cent from N196.7 billion in Q1 2015 while the growth rate reached its climax in Q1 2015 at 54.83 per cent from Q1 2014 and then in Q1 2018within the same period.

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news Momas Metering School tackles ‘Biggest threat to publishers not business manpower deficiencies in power sector models or big tech, but innovation’ KELECHI EWUZIE

omas Metering School has graduated 38 certified meter installers to provide a pool of well-trained professionals for the metering sub-sector of the Nigerian power industry. The graduation of the first set of the company’s course 925 meters installation is geared towards addressing the challenges confronting manpower deficiencies in the nation’s downstream electricity sector values chain. Kola Balogun, chairman, MOMAS Electricity Meters Manufacturing Company (MEMMCOL), while speaking at the maiden graduation ceremony at the school campus at the Momas Factory, Orimerunmu, Mowe, Ogun State, said the school was a reflection of global trend of metering school across the globe such as Texas School of Metering and Indian School of Metering. According to Balogun, “We make bold to say that we are the only indigenous meter manufacturing company that can boast of 100 percent local content in the design and manufacturing of our worldclass standard electricity meters of various types for the Nigerian market. The curriculum of the train-

ing is richly designed to transform the life of the students, and at the same time, provides the necessary education for consumers for the sustainability of the sector, the need for consumers not to steal or bypass electricity, providing knowledge of how electricity meters work, Balogun said. He further said Momas as a group had been a major pacesetter in the power industry, not for quest to acquire wealth but to address some of the major obstacles hindering delivery of quality electricity to Nigerians. James Momoh, chairman/ chief executive of NERC, who was represented by Shittu Shuaib, deputy general manager, consumer affairs, Nigerian Electricity Regulatory Commission (NERC), lauded the innovative and futuristic foresight of MEMMCOL in setting up the metering school. He assured that with the launched of MAPs on May 1, 2019, the metering gap of about. 5.046 million would be cleared in three years. On his part, the acting registrar of the school, Paul Akinde, admonished the graduating students to be good ambassadors of the institution by carrying out their works in the larger society with high sense of responsibility, dedication and integrity.

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FRANK ELEANYA

lthough technology and business models are both critical to running a successful newsroom in today’s world, but these are not the most important risks facing publishers. It is the reluctance to innovate that has the greater potential of shutting down many news organisations, says a study by WAN-IFRA and the CEO of New York Times. The study, which relied on 80,000 data points drawn from a survey and analysed alongside World Bank indicators, found that there is correlation between the variables that indicate the nature of the organisation’s culture and the indicators of firm performance. Firms with cultures in which innovators flourish were significantly more likely to report both increases in overall revenues and overall profits. “You don’t drive innovation; you build a culture and organisation embrace and encourage it.” Mark Thompson, CEO of New York Times, explained during the 71st World News Media Congress in Glasgow on Sunday, June 2, 2019. For him, the biggest ex-

istential challenge facing publishers is not the platforms, but getting stuck with a single demographic and growing old with them, while losing touch with future and younger audiences. The WAN-IFRA notes that the organisations with cultures where innovation thrives have clear measures of success, which can be captured on three levels: external, enterprise and personal. For instance, Globe lab director, Gordon Edall, discloses that people at Globe and Mail who want to innovate get box with coffee card and $1,000 credit card with no questions asked on how they want to spend it. Greg Barber, director of newsroom product at Washington Post, also notes that the organisation’s hybrid newsroom structure is such that stories are reported by section, with the help of collaborators and specialists, guided by operations editors; social embeds (platform-specific optimisation) and project editors for storytelling packages. “Everything still takes too long and we are too cautious when benchmarked with the best digital companies,” Thompson said.

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Modupe, TPT boss, raises the bar for PR practice Temitayo Ayetoto

hairman and lead consultant of TPT International, Adetokunbo Modupe, has expounded that disruptive innovation remains the critical life support that will define the future of Public Relations (PR) practice in Nigeria. Modupe, one of the leading lights in Nigeria’s PR practice, and a keynote speaker at the 2019 edition of Brandcommfest in Onikan-Lagos, last week explained, “The future will be service driven as no one will own anything.” In no distant future, Modupe, who spoke on Digital Disruption and the Future of Public Relations Practice, noted that material possession would have a little significance in today’s global market as realtime lending equips us with the many benefits of ownership. “Uber doesn’t own any vehicle, Airbnb doesn’t own any real estate. Facebook, as the world’s most popular social platform, almost creates no content. Ali baba, as the world’s most valuable retailer, has no inventory,” he said. Quoting Clayton Christensen who described disruptive innovation as a technology or concept whose application significantly affects traditional

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market or industry functions, he maintained that disruptive innovation was like a virus, which does not happen suddenly, but surely would change the ways things were done “An example is how the internet as a disruptive innovation has caused the remodelling of the book selling industry. All the big book selling chains market share have been swallowed by Amazon because without having to own brick and mortar stores, it can display its inventory,” he said. He also pointed out other dimensions of Disruptive innovation to include a process by which a product, service or culture takes root slowly and is sometimes ignored but relentlessly climb up to displace tradition, citing the local example of Cowbell versus Peak Milk. According to him, the future of Public Relations practice will be anchored on three C’s of Culture, Concept and Content. While emphasising that the world is now divided into two – The Physical and The Digital, Modupeexplained that culture remains the willingness to unlearned traditional ways of doing things, learning to adjust to global culture, which is driven by technology cannot be over emphasised.

Thursday 06 June 2019

BUSINESS DAY

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Nigeria has a budget crisis, but who will tell the state governors?

David Hundeyin

few days ago, Zamfara State governor, Bello Matawalle revealed that his administration will start work on a new airport in Gusau, barely a week after taking office. In an oddly-worded statement that wouldn’t have looked out of place on a North Korean propaganda pamphlet, the state government said, “This is achievement (sic) to the good people of Zamfara, Bello Matawalle will take Zamfara State to greater heights.” To put this otherwise unremarkable news story into perspective, Zamfara is by some distance Nigeria’s poorest state with the worst Human Development Index figures in the country. It is also the only state government in Nigeria that did not domesticate the N18,000 national minimum wage, citing budget constraints. Nearly two decades after becoming the first state in Nigeria to adopt Sharia law for political reasons, it remains one of the most backward places on the map of Nigeria, with a poverty rate above 90 percent and a government that does not have a functioning official website. If you are in Bello Matawalle’s shoes, there is a lot of work to do in the areas of security, access to basic education, clean water and modernizing the state’s

arcane agricultural industry. You could even push for a sort of emergency resource-control legislation to enable the state collect a percentage of revenues from licensed gold mining activities within its borders. This is after all, a desperately poor state with a 2019 budget of N135 billion for its 3.5 million inhabitants, averaging out at around N41,000 per capita per annum. What you probably would not do in his situation, is commit scarce funds to build the very whitest of porcelain elephants in the desert. For one thing, Gusau already has an airstrip to take care of the negligible aerial traffic that Zamfara receives. More importantly, there is quite literally no likely scenario where ‘Gusau Airport’ would be a viable concern that could sustain itself and not inevitably become yet another recurrent expenditure line item for this most impoverished of Nigerian states. The message is not getting through While a growing number of Nigerians in the economic and political space are becoming aware of the country’s increasingly fraught financial situation which shows no sign of letting up anytime soon, state governors have clearly not received the memo. From Zamfara to Osun via a detour in Jigawa and a stopover in Cross River, the message from state governments is “Long Live the King!” regardless of how insistent the numbers are that said king is dead. The Magic Money Tree in Abuja is expected to continue footing the bill for another 4 – 8 years of profligate spending, failing which they will just take on more debt. A state like Jigawa, which has practically no significant economic activity taking place bar low-tech agrarian pursuits, now boasts a gleaming “International Conference Centre” and

a shiny airport in Dutse (Google it!) standing proudly in the middle of a desert environment where access to water is still one of the biggest problems in life. The excuse readily given by both Zamfara and Jigawa state governments incidentally, is that “investors” will not come to these places unless they have these shiny structures to attract them, like giant desert honeytraps beckoning seductively at this undefined set of “investors.” Not to be outdone in the profligacy sweepstakes, Cross River state governor Emmanuel Ayade recently revealed that he made the decision to hire over 8,000 “special advisers” and “personal assistants” for the purpose of representing each family in the state. No, I didn’t make that up – here is an actual quote from the governor: “I committed myself by expanding government to ensure that at least a member of each family was represented in my government to earn salary.” The Kano State government also gets an honourable mention for its decision to split the Kano Emirate into four separate Emirates, each with their own civil service wage demands, official vehicles and other drains on the state government’s coffers. It is not hard to see why between 2011 and 2018, Nigeria’s sub-national debt profile ballooned a massive 316 percent from N1.2 trillion to over N3.8 trillion and counting. Dear governors: Please start panicking While the finances of some state governments are already beyond the debt-ridden, recurrence-filled point of no return, many states still have hope of regaining control over their balance sheets. Some of these states like Ogun and Oyo are now under new management, which gives them a rare window

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These governors need to be strong enough to resist the temptation of populist actions, which almost invariably involve spending money that the state does not have, or adding to its already bloated recurrent expenditure bill

of opportunity to change the trajectory of the past four to eight years. As always, the problem is that politicians with good intentions are often surrounded by pond life, hucksters, praise singers and snake oil salespeople, which can make it hard for them to maintain a sense of perspective when executing governance. The solution I propose is simple – it is time for state governors who are aware of the disastrous fiscal situation of their jurisdictions to panic. This is not the time to attempt to reward and placate supporters and hangers-on with pointless contracts, jobs-for-theboys and assorted government pork barrel practices. These governors need to be strong enough to resist the temptation of populist actions, which almost invariably involve spending money that the state does not have, or adding to its already bloated recurrent expenditure bill. There can be no promises of this stipend, that social intervention, or the other subsidy, easy as it can be to capture the hearts of poor voters with such ill-advised and ineffective programs that maintain them in poverty and waste scare funds. They must be willing to be perceived as the tight-fisted villain who refuses to open the public purse and “spread the wealth around,” even though that can be politically devastating for their reelection hopes. That is because the next four years will be a defining period for the continued existence and viability of Nigeria’s sub-national governments. It is not about politics this time, but survival. Dear sirs, it’s time to panic. David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

Dear governors, legacy is beyond infrastructure Positive Growth with Babs

Babs OlugbemI

t is common for our public office holders to refer to the word ‘legacy’ during political campaigns and whenever they are rendering the account of their stewardship to the people. The word legacy has been overused and polluted. However, every political officer holder intends to do something that will outlive him and his tenure in office. On the assumption that our elected public officers want to do things they will be remembered for and in rare case devoid of its byproducts- building political empires, amass wealth and becoming godfathers, we can take legacy as it is being used as a noble and acceptable slogan. Based on the above, I will give some perspectives on the current trends and example of leaders with evergreen legacies. Let’s look at one of the founding fathers of the independence movement in Nigeria. I cannot name the infrastructural legacy of Chief Obafemi Awolowo except for the Cocoa House, the first skyscraper building in tropical Africa. However, in my opinion, Chief Obafemi Awolowo’s legacy lives on. The peace, development and accommodating attitude of the people and residents of the South West of Nigeria is attributable to the level of the region’s edu-

cation. Education is the crucial legacy of Chief Obafemi Awolowo. His free education for the people of the South West is a legacy that lives forever. Without being sarcastic, I don’t know any part of the country where the residents are free to the extent at which a united Nigeria is demonstrated in the South West. The level of ethnic tolerance of the Yoruba nation to the extent of voting the other tribes into the public offices in Lagos are found nowhere in this country. Religious tolerance is second to none. Late Chief Obafemi Awolowo, the president Nigeria never had got it right by putting his focus on education as the bastion of his political legacy. On the basis on this, the late sage stands out and should have been honoured with the Obafemi Awolowo’s Day. No doubt, some of the value chains of his administration was his political empire but those who still referred themselves as ‘Awoist’ today are doing so because they had benefitted from his legacy of educating people free of school fees. We can trace a similar enduring legacy to Singapore under Lee Kuan Yew. His successors must have replaced all the infrastructure Yew built in Singapore. However, his legacy lives on through what he sets in motion. He set in motion the attitude of building people’s capacity and no doubt Singapore is a rare success story even in the Programme for the International Students Assessment (PISA). In Ghana, the cleansing, structural and the anti-corruption legacies of Jerry Rawlings are evergreen. Jerry set something in motion for our African sister. Rawlings’ administration showed the world that a change of paradigm is achievable with a strong political will. What Awolowo did through education was to leave something in people. What Lee Yew and Rawlings did what to set something in motion that

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shapes the political behaviour of the people of Singapore and Ghana. That is exactly what Paul Kagame is doing in Rwanda. I cannot agree less with Peter Strople for saying, ‘legacy is not leaving something for people. Legacy is leaving something in people’ In the last eight years, a state governor focused on building bridges as his significant legacy and goes everywhere, claiming he is leaving a legacy for the people of his state. His state ranked above 20th out of 36 states in the WAEC examination with similar poor ranking in the state competitive index and the Sustainable Development Goals (SDGs). Never the less, he built bridges in all the senatorial districts to be seen as fair and leaving a pyramid of unfinished capital projects for his successor. One of the bridges he built is now the habitation of the hoodlums and miscreants with fewer cars on it. The community and Nigeria will have benefitted tremendously if the cost of the bridge has been used for building twenty rural roads and helped the farmers to get their farm produce to the cities effectively. The price of food would have reduced, and the farmers would have been able to send their children to better schools. The governor has used bridges for beautification purposes instead of for developmental purposes and on the need basis. I’m not saying the governors shouldn’t build infrastructure but not at the expense of the capacity of the people who are meant to use and maintain the infrastructure. For our governors to strike a balance between creating a sustainable legacy and developing their states, they should be guided by standards. Few of the criteria that will bridge the gaps are the SDGs, WAEC Ranking, and the National Competitive Index. Any improvement done towards achieving any of these externally

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measured goals will not only develop your state but increase the capacity of the people you are leading. Your legacy, therefore, is not in creating a political empire, executing projects for your psychological egoism, or making money in the office. Your legacy is in the number of people that would be connected and impacted positively by your action. If you do this, you will fit into the definition of an excellent leader by Dolly Parton. The youth will not appreciate anything aside from the opportunity for them to improve their capacity and be the best version of themselves amid the social media distractions or opportunity. The business owners want enabling environment, and we all want a life in a secure locality without the fear of herdsmen or kidnappers. There is one thing you can do as governors to create a sustainable legacy and write your name with gold in the sand of time. It is simple. Please focus on your people. To focus on your people require you to have the right people around you. You are lions going on a mission and must have people who are lions to be on the same journey with you. The person to go with you doesn’t have to be from your state. All you need is people with the capacity to help you no matter where they are from, and I’m sure we have Nigerians who can build the bridges for you if you dare find and allow them. Conclusively, being a governor of your state is a rare privilege given to you out of the millions of qualified indigenes of the state. It is a serious business and a clarion call to work and ensure you do your best to influence people to dream more, do more and become more in life. Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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Why Nigeria remains a state without a nation Remi Adekoya

hen Nigeria became independent in 1960, it was a state without a nation, observed Toyin Falola and Matthew Heaton in “A History of Nigeria.”Fiftynine years later, this characterization still rings true. Secessionist agitations in the southeast, fears of Islamization, growing talk of Fulanization, the fact an Igbo cannot dream of becoming Governor in a Yoruba-majority state or vice-versa, the idea federal appointments must be “ethnically-balanced” and numerous more examples betray a persistent lack of meaningful national identification. Since 1960, various politicians, generals and intellectuals have tried to talk a Nigerian nationhood into existence. Why have they been so unsuccessful and what is the way forward? Most successful nation-building projects have had at least one of three factors working in their favour. The first is a common external enemy whose aggressive intentions, real or imagined, served to unite people in fear and a belief the way to survive was by sticking together. It is no coincidence some of the strongest national identities are to be found in Europe, forged by centuries of warfare

which united previously ununited groups and fostered the building of efficient state bureaucracies needed both during and between wars. Today’s richest European countryGermany - did not become a unified nation until 1871 following a victorious war in which previously-independent German-speaking states came together to fight the French. Till today, Russian national unity is often mobilized around the idea Russia has powerful external enemies, chiefly America. During the height of the 1950s Nigerian independence struggle, opposition to the enemy of British colonialism often providedpoliticians like Obafemi Awolowo and Nnamdi Azikiwe a theme around which they could unify many Nigerians, but the British factor of course largely disappeared along with their departure in 1960. A second major factor enabling nation-building is a shared cultural repertoire: a common language, common traditions and values, a general sense of cultural sameness within a population. Japan, for instance, has largely built its national identity around notions of cultural sameness. In fact, in order to maintain the cultural homogeneity of its society, in contrast to other rich countries often seeking cheap foreign labour, Japan has extremely strict immigration rules. Just 1.76% of its 127-million population is foreign-born. Compare this to the UK where 14.4% of the population is foreignborn and we see the diametrical difference in approach to national identity. Obviously, the ethnocultural sameness option is a non-starter in diverse Nigeria. The only realistic nation-building glue available to Nigeria is a collective success story. If a state is prosperous and strong, its citizens will identify with it be-

cause people like being associated with success. America is one example. Despite serious racial, political and cultural divides, even hatreds, within the population, they all still want to be Americans. Because “America” symbolizes success, power and status. What American identity offers its citizens, black, brown or white, is a sense of participation in greatness. Even an American with scant personal achievements can feel a part of this collective success story. The largest obstacle to Nigerian nation-building is not Nigeria’s diversity, but the non-success of the Nigerian state. Nigerian politicians often suggest “national unity” is a requirement for Nigeria’s success. They have it backwards. It is Nigeria’s success that is the requirement for national unity.This might sound counterintuitive, but you do not need strong national unity per se to achieve national success. What you need is a functional state that can enable wealth creation and enforce the rule of law.Not only is America arguably more divided than Nigeria is today, it would also be absurd to suggest it enjoyed “national unity” during the 1950s segregationistera or the turbulent 1960s when the country was torn apart by attitudes to the Vietnam War and a sitting president (JFK) assassinated on live television.Yet even then in the 1950s, even segregated and discriminated-against black people still wanted to be Americans. Not because they felt a “unity” with white America, but because back then too, being an American meant being part of a success story. The binding power of collective success could also be seen in the 2014 referendum when Scotland was offered the opportunity to be an independent country. Yet, a majority of Scots, clearly

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Lasting national identification is forged in the mundane everyday encounters between citizen and state

a distinct nation of their own, voted to remain part of the UK. Does anyone doubt the Scots would have chosen independence if the UK had been an unsuccessful state? But who no like beta tin? Of course, it’s also no coincidence that German and Japanese national identities are very robust, as these too are highly-successful states. Today, sub-Nigerian identities offer a more attractive sense of belonging than the Nigerian nation because the latter is equated with the state, and considering the state has so far been a general failure, why on earth would anyone expect most to meaningfully identify with its twin, the nation? Davido and Wizkid, with their global successes, have probably done more to encourage young people to identify with Nigerian-ness than the entire Nigerian state apparatus. Again, this boils down to people’s desire for association with success. The problem with relying on a few exceptional individuals to inspire national pride is that when Nigerians wake up the day after Wizkid has won a Grammy or Chimamanda a Nobel, they will still be waking up in a country with no steady electricity, no running water, no functional health system and crushing surrounding poverty. The feats of exceptional individuals can inspire euphoric moments of national pride, but that is all they are, moments. Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng/ Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs,Washington Post and Politico among others. He tweets @ RemiAdekoya1

The Imo fiasco: Time to legislate handover Steve Osuji

t is a perverse and graceless state out here in Imo State. One is not talking about the sheer dishevelment and post hurricane scenarios right from the Government Lodge down to the lost corners of the state. If a governor’s dwelling place is in a state of disgrace, there is no telling how the rest of his domain would be. No, I talk not about the bad behaviours of our immediate past governor, Owelle Rochas Okorocha; it’s about the longterm debilitating effect of bad governance and about solution. Again, this is not even about the heavy physical damage he inflicted on a once-beautiful, serene and upwardly mobile state. It is about the violence done to our psyche, our esteem and worst of all, our institutions. It can be said that where there are no institutions, there really is no life in the true sense of it because there is no human essence, no culture, no tradition and, of course, no civilization. In this new age of mankind, institution is everything. Peoples and countries that understand that institutions are sacrosanct; those who have the best institutions will always lead the world. But the Okorocha mystique was to obliterate and vanquish institutions. Thus for eight years, he waged a relentless war against all the institutions there were in Imo State. And, of course, he left no institutional edifice of his time; not a trace. He did not only crash all systems, he pulled out the memory card and yanked the hard drive. Imo today can be likened to a vacuous state; a blind blunder-head groping about in the dark. Imo is devoid of any institutional memory whatsoever.

Consider this scenario: Commissioners for Information for eight years are: 1. Obinna Duruji; 2. Chinedu Offor; 3. TOE Ekechi; 4. Chidi Ibe; 5. Orikeze Ajumbe; 6. Obinna Nshirim; 7. Nnamdi Obiaraeri; and 8. Patrick Nze. There were about five Secretaries to the State Government, about four commissioners for Land. This was the trend in his governance. Then there was balkanization of ministries and agencies, merging and de-merging including new ones like Ministry of Happiness and all that jazz. All of these were happening on the whims of Number One, as His Excellency woke up each day. Strategic appointees of state were called up and yanked off even before they were seated. In a situation like this, hardly any record is kept; there was no proper understanding of the importance of documentation and archiving, the state was run on the run, so to speak. In an environment like this, it would, of course, be difficult to have a proper report of stewardship or give account, especially if there was no intention to hand over in the first place as was the case with former Governor Okorocha. It is this manner of dilemma besetting the immediate past administration that has made it very difficult if not impossible for it to hand over its affairs of eight years. Of course, anyone who knows about the running of government would discern that a proper handover could not be achieved by the Okorocha administration. That there was no formal handover was made plain at the inauguration of the Secretary of the Imo State Government recently. During the occasion, Governor Emeka Ihedioha had called up the sitting Permanent Secretary of Government House who was the most senior personnel left to take the in-coming members of the new administration round the offices. He was asked about the status of formal handing over. The Principal Secretary had told the audience

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in the hall that no handover had been put to effect whereupon there was much angry rumbling in the audience. It must be noted that there was no formal meeting between the governor-elect and the sitting governor in Imo State since the election was won and lost. There was no cooperation in the activities leading to the inauguration. A sham joint transition committee was set up by the Okorocha administration which proposed elaborate project visit, but it was only a ruse to distract the in-coming government. There have also been photographs of the cover of a handover note flying about in the social media. Some handover note, a man with understanding would wonder. Even if we assume that some notes are contained in that cover, the natural question to ask is: is that all Owelle Okorocha has to hand over after eight years? For those who know, one consultancy and design report on one major road would be bulkier than Okorocha’s eight-year report of stewardship. Owelle Okorocha has forgotten so soon how then Governor Ikedi Ohakim handed over to him in 2011. According to officials who witnessed the ceremony held in the EXCO Chamber of Imo Government House between top government officials led by Ohakim and the then in-coming governor-elect Okorocha and his team, the atmosphere was convivial between the sitting governor and the in-coming one. Ohakim was said to have brought a truckload of documents representing his four years of stewardship which made Owelle Okorocha to joke that he wished all the documents were cash. Ohakim also handed Okorocha other paraphernalia of office as well as giving him confidential executive briefing. It was a serious and comprehensive state ceremony; it was an act of governance and statecraft. More remarkable, it was an act of grace and states-

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manship. Managing a state is not only a serious business, it is a divine trust; it is about the lives of millions of people and must be carried out with the sobriety and, indeed, solemnity that it requires. But Owelle Okorocha turned governance into a plaything, an infantile affair and for eight years, the governance of Imo State was like children playing in the sand, trying to reenact governance within the ambit of their childish estimations. The result today is pathetic to behold. It is true that there were other wayward governors who practically absconded from government house without the right and proper transition procedures. This is unacceptable and indeed a crime to the people of the states they had governed for so long and abandoned at the end stage. This piece advocates for a legislation to set the standards and procedures for ‘trasitioning’ from one government/administration to the other. This is both for the states and the Federal Government. In fact, we suggest a publication of each state’s audited accounts of an administration before a formal handover of office. The law may also stipulate that an out-going governor MUST, as a matter of duty, personally account for his stewardship at the handover ceremony. This is a challenge to both the National Assembly and the States’ Houses of Assembly. A well-made law would keep state executives on their toes as they run their states on a daily basis knowing that they would have to give a thorough account at the end of the day. This way, no in-coming governor would be left high and dry the way the Rochas Okorocha left Emeka Ihedioha. We must relentlessly interrogate the way our country is run if we want to march in stride with the rest of the world. Osuji is media aide to HE Emeka Ihedioha, governor of Imo State.

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BUSINESS DAY

Editorial Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua ASSIST. SUBSCRIPTIONS MANAGER Florence Kadiri GM, BUSINESS DEVELOPMENT (North)

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GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Apapa: A cash cow on death row

f the 20 local government areas in Lagos State, none is more strategic than Apapa in terms of location and economic importance. Apapa is a port city. It is the first of its kind in Nigeria. The port city is home to two seaports— Apapa and Tin Can Island. It is estimated that the two ports account for 75 percent of import and export activities in Nigeria. Apapa economy is estimated at N20 billion a day. Besides oil, Apapa is Nigeria’s cash cow. A substantial percentage of government’s non-oil revenue comes from this port city. Before now, Apapa was a splendour –a residential and commercial enclave where night life and other leisure activities thrived the most in Lagos. But today, Apapa is a ghost town. It is a paradise lost. Gradually, but steadily, the port city is drifting and degenerating into a wasteland. Apapa represents a city in static motion. It is a metaphor for a sleeping economy. Apapa tells the Nigeria story—a story of paradoxes and contradictions; of a country that cuts its nose in order to spite its face. For inexplicable reasons, Apapa suffers government’s

neglect reflected in its decayed infrastructure, degraded environment, decrypt, desolate and deserted homes, offices and fun parks. The port city has been invaded by desperadoes—people whose activities have put the city under siege, making it a difficult environment for business and residence. The siege by trucks and tankers have created congestion and gridlock. These have combined to make haulage costs quadruple in the last 24 months. The costs are such that it is now cheaper to bring goods from China or Europe than taking same goods from Apapa to other locations in Nigeria. To day, transp orting a 40-footer container from Lagos to Onitsha costs an importer N1.3 million, up from between N320,000 and N340,000 before the congestion in Apapa. Moving the same container from Lagos to Shagamu which before cost N120,000 to N150,000, is now N750,000 to N800,000. For an importer to move his goods from Lagos to Ilorin now costs him between N860,000 and N900,000, up from N220,000 to N260,000 he used to pay. Transporting same size container to Abuja now costs N1.3 million to N1.4 million, up from N420,000. This is a huge concern to all, especially the consumers

of the imported goods who are at the receiving end of the increased costs. Of greater concern is the parking of trucks on weak bridges. Nigerians are afraid of the grave consequences if any of those occupied bridges collapses. Bridges have collapsed before and history could repeat itself. On October 21, 1994, in Seoul, South Korea, Seongsu bridge collapsed as a result of structural failure. 32 people were feared dead and 17 injured. In March 2007, in South East Guinea, the bridge collapsed under the weight of trucks parked with passengers and merchandise, 65 lives were lost. The most recent was in Italy, the largest city in Rome, where a highway bridge, the Morandi Bridge, collapsed over Genoa, causing people, cars and huge slabs of concrete to fall hundreds of feet onto the city below. About 30 people died. Nigerians have seen one taskforce after another set up to deal with Apapa problem to no avail. The latest is the presidential taskforce which appears to be overwhelmed by the enormity of work at hand. Expectation was that the presidential task force would be a solution to the problem, more so as it has the backing of the president. The dislodging of security agencies with their checkpoints and illegal

‘toll collection’ from truck drivers also raised hope. But nothing is happening, meaning that government should be looking out for bether temporary and permanent solutions. In the immediate to short term, government should provide or cause private sector operators to provide parks for these trucks. As long term measures, government should construct rails to convey goods from the ports and dredge the eastern ports. There is also need to expand the ports to accommodate more activities as the capacity of the existing ports can no longer accommodate the influx of goods in and out the country. Fixing the ports and making it functional is in the best interest of all stakeholders. Experience from other economies may be useful here. In Rotterdam, for example, portrelated activities accounted for 74,000 direct jobs and 13 percent of total metropolitan GDP in 2007. Also in Shanghai, the number of jobs related to port activities reached 840,000 in 2012, up from 347,000 in 2002. Shanghai’s port accounted for 7.6 percent of the city’s GDP in 2012. One can only imagine what the figure could be today over 15 years after. This should be a lesson for both Lagos State and the Federal Government.

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The next four years: Applying the SDGs in the South East The Public Sphere

CHIDO NWAKANMA

ith citizen engagement, the Sustainable Development Goals can take shape and life for our communities and states. The South East can plug in, from State to Local Governments, towns unions and voluntary associations focused on the development of the region. Here are the Sustainable Development Goals. They offer SMART objectives and are scalable. They provide a comprehensive compass for states and governments intent on development. 1. End poverty and all its forms everywhere. The World Poverty Clock showed in June 2018 that 86.9m Nigerians live in extreme poverty. The South East states do well on a national comparison, but that is like saying we are the tallest men in Lilliput. Poverty incidence in the region is as follows: Abia, 21.0%; Anambra 11.2%; Ebonyi, 56.0%; Enugu, 28.8% and Imo 19.8%. We must get all the states under 10% as a minimum in four years. 2. Endhunger, achieve food security and improved nutrition and promote sustainable agriculture.SDG 2 is linked

to SDG 1 and is critical for our region. Food security comes from increased and sustainable production. Prof Chinedu Agbodike is leading a one-man campaign to involve investors and communities in cultivating all idle lands in the region. Abia State provided seedlings and oil palm for cultivation. More people need to join Agbodike to move the campaign beyond traditional farming to large scale ventures and agro-processing. State governments should incentivise agripreneurs in the region to do what the Israelis did: the application of science and technology to improve agricultural practices and output. Time to test this alleged consanguinity with Israel that is a popular belief! 3. Ensure healthy lives and promote well-being for all ages. An objective that encompasses all the others. 4. Ensure inclusive and equitable quality education and promote life-long learning opportunities for all Education should be the number one item for the region. It should be free and compulsory at primary up to junior secondary, and eliminate the reality now of schools charging various levies despite formal proclamation of free education. Many technocrats from the South East and other regions have done significant work on education reform. They include Oby Ezekwesili, ChinenyeMba-Uzoukwu, Oseghale, Emeka Okoye, Dr DipoAwojide, Nwamaka Okoye and Juliet Kego Ume-Onyido. There is also the work done by the NESG Education Team and platforms like Teach For Nigeria. As Juliet Ume-Onyido stated in discussing the matter with me, “Reforms are actually in the public domain. What is truly lacking is leadership with the Political WILL/VISION”.

On the surface, the South East states are doing well in education. They top and play in the Top Ten in WAEC results as well as Common Entrance scores. A closer look at the data shows many areas requiring focused work. For instance, in the last four years, student enrolment in private secondary schools is catching up with those in public schools. It means parents are increasingly paying for whatever qualifies as a private school essentially so their children can get proper tuition and attention. Countries with superior education systems such as Finland prioritise public school education. Strong leadership drives it as a public good. The region should focus on STEM, on linkages between home and the Diaspora and on platforms and frameworks for getting international buy-in and technical and financial support. A significant task for the Governors is a South East curriculum for primary and secondary schools. It would include STEM, digital economy, arts and humanities, values, leadership, communication and volunteer/civics programmes. They should invest in STEM and Igbo language teachers. Revive technical schools. Kudos to Imo State Governor Emeka Ihedioha for prioritising this in his inauguration speech. Governments should work with educators and planners on how to incorporate the ImuAhia scheme into an Entrepreneurship certification. The Obi of Onitsha is pushing a critical scheme of incorporating Diasporans into the education of young ones through Vacation Programmes. It should increase across the region. 5. Achieve gender equality and empower all women and girls. The experts say that in addition to a well-formed gender

‘

Education should be the number one item for the region. It should be free and compulsory at primary up to junior secondary

agenda for the region, the South East should see Gender Equity and inclusivity as a fundamental rights issue and an economic imperative for wealth creation and prosperity. Research shows that training women translates to increased benefits for society in better outcomes for the future. The benefits of progressive girl child education should translate in improved gender relations. Add the benefit of judicial pronouncements such as that by the Supreme Court allowing women the right of inheritance. Juliet Kego Ume-Onyido submits: “Revisit the ethos of gender balance and intersectionality in traditional Igbo culture; distil the positives (Umuada/ Umunna balance), women as traditional makers of laws in Alaigbo, and organizers of markets, and then improve the areas with gaps. Eliminate harmful beliefs/practices -widowhood, rape culture, domestic violence, sex slavery, inheritance laws, female genital mutilation (Ebonyi state has the second highest prevalence rates after Osun), child marriage, politics of the gender of a child (women being victimized by inlaws/spouses when they birth only girl-children), minors used as maids, barriers to political participation, lack of women representation on boards, social mobility, sexual and reproductive rights, socio-economic issues etc.” We will continue with SDGs6-17 next week.

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

Entrepreneurship in Nigeria: From the horses’ mouth!

ik MUO

t is only when the horse speaks that we hear from the horse’s mouth. Sometimes in 2015, I was moved by ‘the spirit’ to investigate what Nigerian entrepreneurs thought about entrepreneurship environment, practices and challenges. I designed an interview-based research, programming it to last for 6 months. It is one of the vagaries of research in Nigeria that what I planned to last for 6 months ended up taking 3 whole years. Probably I had underestimated the busyness of our entrepreneurs or overestimated their accessibility and willingness to participate. The entrepreneurs were expected to respond- based on their experiences- to a series of questions in writing, after which we would then discuss and clarify their responses. However, only 15% of the sample responded as expected and tracking them down for an interview, which then became more extensive than expected, became a nightmare. But that is by the way. At the end of the day, I had a comprehensive interview with 20 practicing entrepreneurs of diverse backgrounds. Some are young and some are not so young; some are educated and some are not so educated; some are doing very well and materially comfortable while some are struggling like the rest of us as well as varying ages and size of the businesses, location, area on interest, entrepreneurial motivation, the routes to entrepreneurship and differing perspectives of key entrepreneurial issues. The sample had 660 years cumulative entrepreneurial experience in the areas of commerce (electronic, medicals, chemicals, food), manufacturing (cosmetics, drinks,

vehicles), agriculture (farming and poultry), property, alternative energy( solar, generators), social entrepreneurship (education and community medicine) logistics (courier services) optical services, professional services (architecture, building, legal) and, oil and gas. They are located in Lagos, Oyo, Ogun, Rivers, Anambra, Plateau and Enugu states but with tentacles across Nigeria. So, the horses spoke to me (and it is only somebody ‘in the spirit’ that would understand the language of the horses) and I will share with you what these horses said about their experiences, the challenges and their advice to upcoming entrepreneurs. My encounter with the entrepreneur-horses evidenced the diversity of entrepreneurship. This diversity is shown in the varying ages of the entrepreneurs the sizes, locations and areas of interest, level of education, entrepreneurial motivation, the routes to entrepreneurship and differing perspectives of key entrepreneurial issues. For instance they had widely divergent views on the largely Igbo practice of apprenticeship (igba-boyi). This is a mutually beneficial arrangement in which a ‘boyi’ serves his master for a given number of years while the master in return settles him in cash and/or kind to start his own business. At times, the masters enter into partnerships with the graduate-boyis. The practice has been abused at times by the masters but mostly by the apprentices, especially given the current level of moral degeneration and greed. The level of fraud in the system is high and relation-apprentices are more difficult to deal with. Some view it as one of the most innovative and fruitful entrepreneurial practices that should be retained and even upgraded, others held that it has outlived its fruitfulness and should be scrapped while yet another group suggested that it should be modified! Most of them started out as juvenileentrepreneurs, with eyes for money-making opportunities and actually got involved in businesses at early stages of their lives. Almost all of them were assisted by other people in their entrepreneurial journey (money, advice, relevant information and useful connections) but people (as apprentices, partners, relations or employees) were also sources of problems

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for them and they advised that entrepreneurs should relate with people, learn from them, seek assistance from them, but they must be careful! Similarly, they opined that in this interdependent, interconnected and global business ecosystem, trust is imperative for business success. But people must trust carefully and take necessary precautions, so as to avoid getting their fingers burnt. Government policies have affected entrepreneurs, mostly, negatively. Policy inconsistency and infidelity, multiple taxation, and failure to carry through potentially beneficial policies have been the key experiences of the entrepreneurs. However, there are instances of favourable government policies, and the oil and gas entrepreneur was particular about the benefits of the local content policy. Paucity of fund is a serious challenge and the banks are not helping matters with their stringent conditions and shylock-level interest rates and charges. But most of the entrepreneurs believe that it is difficult to do without banks’ assistance and that with integrity, one can survive without cash, especially through trade credit, which they deem a better option than commercial loans. Diversifying into real estate is a common trend and it helped a lot of them; as security for bank facilities, or as a back-up when things go awry. In any case, some diversified and did well; some stuck to one line of business and also did well. They also shared the dangers of diversifying when one had not stabilized or handing over one arm of the business wholly to someone else, in effect, delegating to the point of dereliction. Many did not conduct feasibility/viability studies and do not engage business consultants, except lawyers and accountants, which they do reluctantly. Partnerships have not worked very well due to greed, trust-issues and personal differences. 80% of them had no concrete succession plans, 90% had no wills while many took conscious efforts to overcome their challenges (like one who started out after elementary six and is now completing his PhD programme in ). They also believed that one should at times take a plunge, leave the comfort zone, try uncharted seas but that one should be strategic about it

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Other matters: This weird world! I have usually introduced myself as somebody who mind other peoples’ businesses . Surely, I am not a busybody but I note everything and comment on everything, the serious, the funny, the strange and the unthinkable. Last week, I commented-on the ‘sideline’ of my article, about our increasing love for death through suicide or murder. This week, I wish to comment on the oddities that dot this our interesting world and I wish to start from Brazil where forty prisoners were recently strangulated to death in an inter-gang war in their prison! People who were sent to prison to be reformed, instead went there, formed gangs, had gang leaders and declared a war against themselves all in the presence of the strict prison warders. On the other side, the Nigeria Prison Service, which spends around N500 feeding a human prisoner daily, has just informed the whole world that it spent N30,000 feeding a strange suspect, a vulture, for 6 days ( N5000 daily) in Adamawa state! I don’t know what the law says about crimes and criminals but I doubt if the dictionary can name a vulture as an example of criminals! And why was the vulture arrested? It causes panic because each time a vulture appeared, the community was invaded by insurgents! Meanwhile, police investigation continues. In Kogi state, masquerades (who do not have PVCs) have endorsed the gubernatorial candidacy of Yahaya Bello while in Kaduna state, a Fulani family in Kaban village in Igabi LGA has called on the State Governor and the State Commissioner of Police to help recover 31 cows and 3 sheep that got missing while in police custody. Those who went to enquire about the cows were detained and bailed with N580,000 (but bail is free!) and so far the family has spent almost N2m to recover those animals, which had been ‘taken to Abuja’. I recommend that a combined team of ICPC, EFCC, Miyeti Allah and Veterinary Services should be empaneled to investigate this matter...fast! Ik Muo, PhD. Department of Business Administration, OOU, Ago-Iwoye, Ogun State muoigbo@ yahoo.com ;muo.ik@oouagoiwoye.edu.ng ; 08033026625

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Thursday 06 June 2019

BUSINESS DAY

cityfile Zamfara wants more troops on Gusau-Sokoto highway

Cross section of women praying at the Mambilla Barracks Eid Praying Ground during the 2019 Eid-El Fitr celebration in Abuja on Tuesday.

Abdulrazaq orders 24-hour water supply to Ilorin towns SIKIRAT SHEHU, Ilorin

ewly sworn in Kwara State governor, Abdulrahman Abdulrazaq on has directed the state ministry of water resources to ensure the supply of potable water to some specific areas of Ilorin, the state capital, within 100 days. AbdulRazaq also directed the ministry and relevant consultants to reconnect other parts of Kwara currently without water supply. He gave the directive during an unscheduled visit to Agba Dam, Asa Dam Water Works and Western Reservoir (Adewole) where he discovered that many parts do not get regular supply of water

despite the over N6 billion already sunk into water reticulation in Kwara by the previous administrations. The governor said he might wield the big stick if the ministry did not deliver on his directive. “We have a mandate to deliver water to our people and within the next 100 days. For a start, I want to see constant water supply in specific areas of Ilorin, it may be Ilorin East, South or West or anywhere these dams cover. “We want action. Our people want water. No part of Ilorin or anywhere in the state do people have water. “Raise a memo to state what the problems are and what’s required to fix them. People are tired of empty talk.

“We have to solve the problems now. Forget the big word reticulation, let’s fix the problem. We need immediate memo on what the problems are and we will give you all the support,” he said. The governor explained that his administration was determined to provide potable water to the state, even if in phases, in line with its campaign promises. “We need to think out of the box. I’m serious about having water in our homes. We have the mandate to deliver water to our people.” Yahaya Tunde, the general manager of the water corporation, however, informed that electricity supply and treatment materials were the major challenges.

He explained that all the water works were disconnected from power supply because they owed the Ibadan Electricity Distribution Company (IBEDC) about N24 million. He said the water corporation has a monthly electricity bill of N9.7 million. Apart from the ongoing strike action by staff of the water works, Tunde also said they needed modern equipment that can monitor water pressure and detect when pipes go bad. The governor had earlier visited the Kwara State Inland Revenue Service (KW-IRS) where he also directed the body to submit a memo to give a clear picture of the happenings there, including how to perform optimally.

Abia constitutes infrastructure development council UDOKA AGWU, Umuahia

bia State government has constituted an infrastructure development council, to drive the infrastructural needs of the state with the governor, Okezie Ikpeazu, as the chairman. Richard Nwala, permanent secretary, ministry of works disclosed this in Umuahia while briefing newsmen on the outcome of a meeting between Ikpeazu and

contractors handling road projects in the state. Nwala said that the incoming commissioner of works would serve as the vice chairman of council. Other agencies that made the council include Abia State Road Maintenance Agency (ABROMA), Nigerian Erosion and Watershed Management Programme (NEWMAP), Rural Access and Mobility Project,(RAMP),and the ministry of education. www.businessday.ng

Nwala said that all contractors handling roads in the state have been directed to immediate go back to sites, with a view to completing such projects as funds have been released to them. The permanent secretary said that the governor has also directed that a total of 20 roads be completed within the first 100 days of his second tenure. He listed some of the roads to include Emejiaka, Opobo/ Emelogu, Ntigha/Nbawsi,

Etche, Dan Fodio, Emmaculate, St Pauls roads in Aba as well as Aba, Umuahia and Ohafia township roads. Others are the Umuikaa/ Umuene/Umuob, Ebenma Egege, Ohokobe Afara roads in Umuahia, Ukome road, Agbama Housing Estate, Station Avenue and Udeagbala road. The ministry of works was charged to ensure the timely completion of the projects and adherence to specifications.

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overnor Bello Mohammed of Zamfara has appealed to the Nigerian Army to deploy more troops on the GusauSokoto road to check activities of bandits for socio-economic activities to thrive on the route. Mohammed made the appeal when he received the Chief of Army Staff, Lt.-Gen. Tukur Buratai, on Tuesday. Buratai was Zamfara to felicitate with troops combating the bandits. The governor observed that the menace was not tackled with the seriousness it deserved. He also blamed the banditry on lack of communication and high illiteracy particularly in the North and country at large. The governor, however, promised to assist the military with logistics to enable them flush out the criminals and make the state safe for people to go about their lawful businesses. He commended the army for its commitment to ensure security and

peace in the state and country through the deployment of troops for exercises and operations. Mohammed also lauded the army chief, who was represented by Lamidi Adeosun, army chief of training and operations, for his leadership style, noting that he was always in the field with troops to boost their morale. Buratai had told the new governor that he was in the state to felicitate with the troops combating bandits on the occasion of the Eid-el-fitr in order to boost their morale. Since assumption of office in 2015, Buratai has regularly visited and celebrated with troops during religious festivals and major events such as independent anniversary. Buratai had observed the Eid prayers with troops at the headquarters of 1 Brigade in Gusau and later paid a visit to special forces, fighting the bandits at Kaura Namoda, where he charged them to be courageous and professional, and take on the bandits head long.

Kano donates relief materials to flood victims

ano State government has presented relief materials and money worth N17.9 million to some victims of flood disaster in parts of the state. The public relations officer in the Deputy Governor’s Office, Balarabe Abdullahi stated this in a statement in Kano. He said that Gwarzo, Kabo and Rimin Gado local government areas out of the affected seven local government council areas in the state had already been presented with relief materials. Th e state g ove r n o r, Abdullahi Ganduje, presented the the relief materials to the victims of 2018 flood disaster alongside National Emergency Management Agency (NEMA) in Dambatta local government area. Ganduje represented by his deputy, Nasiru Gawuna, explained that the gesture was part of the present administration’s commitment to ease the hardship of the affected people. He said only God could fully compensate them for what they had lost. The governor added that his administration had earmarked N100 million to support victims of flood disasters across the state. “The remaining four local @Businessdayng

government areas: Wudil, Dambatta, Dawakin Tofa and Gabasawa that were affected by the flood will soon be presented with relief materials. “I want to say that the State Emergency Management Agency (SEMA) had estimated what had been lost by the affected LGAs and they will soon be presented with relief assistance. I will like to also extend our appreciation to NEMA for its prompt action when the state government approached them on this issue and the subsequent assessment that followed,” the governor said. In his remarks, the Emir of Bichi, Aminu Ado-Bayero, expressed gratitude to God for his emergence as the new Emir of Bichi. The emir described his emergence as another opportunity to serve his people and ensure peace and stability in the state and the country at large. He thanked the state government for bringing the programme to assist victims of flood disaster in the local government and made it clear that the people of the state would give their maximum cooperation to achieve the set goal. NAN

Thursday 06 June 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

Sarsoli soars with Nigerian products at plastic trade show, set for global fair in Germany

Pg. 16

Banking

Banks’ bad loans near 3-year low on stronger oil price, economic uptick ISRAEL ODUBOLA & SEGUN ADAMS

ad loans of Nigerian banks fell to its lowest level since the second quarter of 2016 when a crash in global oil prices wreaked havoc on Africa’s largest economy and sent lenders’ book bad as debtors were unable to settle their obligations. Data from the Abuja-based National Bureau of Statistics (NBS) showed that non-performing loans of the Nigerian banking industry fell for three straight quarters to bottom at 10.83 percent in the first quarter of 2019. Gbolohan Ologunro, equity analyst at Lagos-based CSL Stockbrokers cited improving economy and oil price rebound as major drivers of improved asset quality of banks which have reflected in the decline in NPL. “Since Nigeria exited the recession, the economy has recorded continued-albeit slow- growth which has enabled corporates to repay their obligations,” Ologunro told BusinessDay, adding that the recovery in oil price between 2017 and 2018 was a stronger driver of the NPL decline given lenders’

high exposure to the oil sector. “Some banks to have recorded significant pay down from their customers,” the equity analyst said. Banks’ gross loans rose marginally by 0.85 percent quarteron-quarter to N15.48 trillion in the first three months of 2019, compared with N15.35 trillion in the previous quarter, while nonperforming loans dip 6.5 percent to N1.67 trillion in the review

quarter. Analysis of the total loan portfolio of Nigerian banks in four months to April 2019 revealed that lenders have 30 percent exposure to the oil and gas sector, the highest across all sectors. Bad loans in the oil & gas sector totaled N4.7 trillion, with foreign currency accounting (N2.8trn) for 60 percent share and naira component (N1.9trn) taking the

remaining 40 percent. Banks’ have 15 percent exposure to the manufacturing sector, and 9 percent to the public sector. Total bad loans in both sectors stood at N2.2 trillion and N1.4 trillion respectively. Despite the improvement in NPL, the sluggish growth of the economy has failed to convince the banks to increase lending to boost real sector growth.

“Banks are risk averse towards the broader economy and are channelling a large chunk of consumer deposit to take advantage of attractive yields in fixed income market,’’ Fola Abimbola, equity analyst said. Big banks received deposits worth N18.7 trillion from customers in the first quarter of 2019, the highest in five years BusinessDay findings showed. However, the loan-to-deposit ratio tumbled to its lowest level in five years at 54 percent, indicative that lenders are shying away from financial intermediation. The trend prompted the Monetary Policy Committee at its last meeting in May to threaten to place a cap on banks’ investment in the fixed income securities to enhance credit flow to the real sector. Ologunro positioned that a pickup in aggregate demand driven by stronger growth and improvement in the business operating environment would encourage banks to improve lending to the real sector. “I don’t think the risk environment has improved as much as to encourage banks to increase lending,” Ologrunro said.

Contract staff hits record high across Nigerian banks …As technology drives core banking operations OLUFIKAYO OWOEYE

here has been an upsurge in the bank staff strength in the last five years and it is rising by double digits. Recent figures from Nigerian Bureau of Statistics show that Nigerian lenders now have a total of 46,235 contract staff members as at Q1 2019 which ended 30th March. This compares to 45,238 in Q4 2018 and 32,013 in the first quarter of 2018. The figures revealed that contract staff in the nation’s banks has grew 44% year on year as more lenders increasingly rely on outsourcing for core banking operations. Out of the entire banking workforce, a meagre 0.18percent are top executive staff as at Q1 2019. Total bank employees rose to 105,017 a 0.33% rise compared to the immediate last quarter. This compares to 17% year on year employee hire for the banking sector. There was

a 6.36% uptick in senior staff hires. Bayo Oshin a Lagos-based banker said banks are increas-

ingly relying on contract staff to perform daily operations. From a mere 20,237 in 2017 contract staff has more than doubled

both as a percentage of total staff and in absolute terms. “With improved technology across core banking operations,

banks will continue to increase its pool of contract staff. The implications should be positive for banks who are seeking improved profitability,” he said. According to Oshin, more fresh Nigerian graduates face a bleak future especially those seeking a future in banking. “You will need to be exceptionally good to get a noncontract job” he added. This also has negative consequences on youth migration out of Nigerian. Hundreds of thousands of Nigerians are seeking a better life in countries like Canada and the United States as quality jobs become fewer. Nigerian tax authorities should also be worried about flat tax revenues particularly from the banking sector. The banking sector represents a huge chunk of employees in states across the country. With 44% of staff being contract, tax receipts are expected to be thinner.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

Thursday 06 June 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

Sarsoli soars with Nigerian products at plastic trade show, set for global fair in Germany OBINNA EMELIKE

fter a successful exhibition of worldclass products at the 5th Plastic Print Pack Trade Show 2019 at Landmark, Lagos, recently, Sarsoli is set for this year’s edition of the global show tagged k Fair 2019. Sarsoli Industries, which started in 2011, is the first plastic master-batch manufacturing company in Nigeria based in Lagos. In 2013, Sarsoli was the first company from West Africa to exhibit at the K Fair, Dusseldorf, Germany, the largest plastic industry fair in the world. The participation was repeated in 2016 and hopefully again in October 2019 when it will be exhibiting and showcasing made-in-Nigeria products at the fair. Sarsoli exhibits made-inNigeria products in all the exhibitions throughout West Africa in joint collaboration

with NEPC. This year at K fair Dusseldorf, they will be in Hall 8A booth number B 41 talking to people from around the world and introducing them to things done in Nigeria as they place Sarsoli Industries on the global map and also strengthen their presence in Nigeria and West Africa. From their third exhibition at K, they expect and continue to look forward to the innovation the fair continues to bring as exhibiting at the fair proves that they are conscious of producing quality products and are at par with some of the leaders in the plastics industry. Also being at the K fair gives them the first-hand information on new technology introduction in the plastic and allied industries. It was after Sarsoli exhibited at K2013, that they started to export masterbatches in 2014 to neighboring countries of Nigeria in West Africa who showed interest in their products.

Sarsoli Industries have now expanded to Ghana and operates an office there. The K fair has been instrumental in helping them expand to their target demographic across West Africa and the focus within ECOWAS provides zero import duty, hence their product are cheaper compared to importing from elsewhere and also since it is within ECOWAS, supply time is fast and foreign exchange income is generated by exports. Sarsoli currently services the plastic industry, which is one of the largest industries in Nigeria, producing items like jerry cans, shopping bags, chairs, tables, buckets, sacks, mats among others. In the production of master-batches there are nearly 20 different ingredients used to get different coloured master-batches with nearly 40 percent of these ingredients imported from different parts of the world like, India, China, Egypt, Germany, US, Belgium, and Korea.

L-R: Segun Ogunsanya, CEO/MD, Airtel Nigeria, presenting a gift to Babajide Sanwo-Olu, governor, Lagos State, during a courtesy call on the governor, in Lagos.

TECH

Huawei to sell telecoms undersea cables to Hengtomg Optic-Electric JONATHAN ADEROJU

hinese smartphone top selling brand Huawei Technologies has made plans to sell her undersea telecom cable business to Hengtomg Optic-Electric (value not disclosed). The company showed the buyer’s filing to the Shanghai stock exchange (SSE) market, which did not reflect the price that the undersea cables would be bought or sold. Hengtong Optic-Electric, which is an optical telecommunication network products company based in Jiangsu province, has said in the filing to the Shanghai Stock Exchange that it signed a letter of intent with Huawei Technologies subsidiary Huawei Tech Investment on May 31 2019 to buy its 51

percent stake in Huawei Marine Systems via cash and share issuance. Also the Huawei Technologies has refused to provide any prompt remark about the deal when contacted. The potential sale has come as Huawei’s main business of making and selling telecom network equipment and smartphones is under intense global scrutiny as the United States works to persuade allies that Huawei’s products pose a security risk. Huawei has also refused to cooperate with any Chinese state requesting that they access her systems for intelligent purposes. More so, the US Commerce Department imposition of trade ban in May 2019 will further threaten to significantly disrupt its supply chain. In March, the Wall Street

Journal cited US security officials as saying they suspected security risk extended to undersea cables built by Huawei Marine. Undersea cables are the backbone of global Internet traffic. Huawei has been gaining share in the market dominated by US firm SubCom, Japan’s NEC and Europe’s Alcatel-Lucent, since Huawei Marine was established in 2008 as a joint venture with Britain’s Global Marine. Subsequently Huawei Marine has participated in 90 projects worldwide and built 50,361 kilometres (31,293 miles) of cables, as this was shown on the company’s website, the projects also includes a 6,000 km cable connecting Africa and South America for the first time completed in September 2018.

TECH

L-R: John Goldsmith, group head, marketing, SPAR; Folorunsho Suliton; Opeyemi Olagunju; Annabel Ajaegba; Oreoluwa Ayorinde; Hannah Adaja and Stanlee Ohikhuare, artistic director, RealTime Film Festival (RTF) with all shortlisted kid actors at the auditioning for Children actors, at the SPAR Children’s Day celebration in partnership with RTF at SPAR in Lagos, recently.

L-R: Trueman Goba, president, South African Academy of Engineering; Ruth David, secretary/treasurer, CAETS; Fola Lasisi, president, Nigerian Academy of Engineering, and Acad Lucio Caceres, immediate past president of CAETS/ president, National Academy of Engineering, Uruguay, at the visit of a delegation of Council of Academies of Engineering and Technological Sciences(CAETS) to the Nigerian Academy of Engineering to formalise the Academy membership with the World Academy Umbrella body in Lagos.

Swypatune digital music contest promises N10m, transparent selection process TEMITAYO AYETOTO

o solve the problem of lack of transparency associated with the organisation of many talent hunt shows in the country, a group of five auspicious founders have unveiled Swypatune digital music contest, promising the winner an ultimate prize of N10 million, a record label. Predicated on the idea of fair and equal opportunity for people to vie without requiring connection with individuals at the contest’s helms of affairs, contestants will get the chance

to participate by simply recording their songs and uploading it on the Swypatune software application from any location in the country. The founders, Peter Atorough, Effe Sacket-Barnes, Frank Fotso, Solomon Onu and Emeka Nkwogu have invested over $180,000 in the self-funded projected and are looking to garner about $300, 000 more to solidify the operation. The contest which will run for 10 weeks and free of any charges will accept initial applications numbering 10,000. It will be reviewed down to 100 by www.businessday.ng

a team of creative professionals before the songs are open to contest on the application. Audiences will be able to vote the song of artists that appeal to them simply by swiping right as like and swiping left as unlike on the app. The votes and the evaluation by judges will determine how far a contestant goes and will narrow the competing songs down to a final 10, from which the winner will emerge. For every Swiphatune series, there will be a TV season to showcase the app’s highlight every week.

L-R: Omobolanle Victor-Laniyan, head, sustainability, Access Bank Plc; Philip Ugbah, lead consultant, Black House Media, and Joshua Ajayi, publisher, Brand Communicator and Convener of Brandcom Awards, at Black House Media receiving the ‘PR Agency of the Year’ award at the recently concluded BrandCom Awards in Lagos.

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Thursday 06 June 2019

Retail &

BUSINESS DAY

consumer business Luxury

Malls

Companies

Deals

Spending Trends

COMPANY

Cadbury, OK Foods battle in court over trademark rights Stories by OLUFIKAYO OWOEYE

ast moving Consumer goods (FMCG) giants, OK Foods Limited and Cadbury UK Limited have gone to court to decide who has the rights to a trademark. OK Foods Limited, a unit of Olam Foods International and makers of a wide range of confectionary products including Top Mint Candy sweet has filed a N260 million suit in a Lagos court against Cadbury UK Limited, owners of TomTom Candy sweets over threats emanating from the use of generic trade dresses, colours and shapes in the production of Top Mint Candy sweet. Joined as co-defendants in the legal tussle are Cadbury Nigeria Plc as well as the Nigerian Registrar of Trade Marks. According to the claim filed before a Federal High Court in Lagos by Peter Shobiye, Attorney for the plaintiff OK Foods, it alleges that the plain-

tiff applied for the registration of the trademark Top Mint on the 15th of April 2005 and was issued the certificate of Trade Mark RTM 73440 by the Registrar of Trademark. And for over 13 years, Top Mint had been a popular brand with Nigerian consumers and it is strongly associated with menthols flavoured candy. The label and trade dress was also approved and registered by the National Agency for Food and Drug Administration and Control (NAFDAC). However the plaintiff claim that it has been consistently harassed, threatened and intimidated by Cadbury UK Limited through a series of letters alleging that its Top Mint shape, design, and colours are confusingly similar and infringing on its TomTom and demanded that it should immediately cease further manufacturing, promotion, marketing and offering for sale of its Top Mint menthol flavoured candy, alleging that has the same identity and confusing similarity with TomTom. The plaintiff contended

that Top Mint is not similar nor can it be confused for TomTom nor can it be deceptively regarded as the product of the respondents. The plaintiff averred that the respondents cannot claim sole ownership of the black and white combination in the candy/confectionery industry as the black and white colour is generically used color combination in the industry with many other manufacturers using the two combinations. The plaintiff avers that it has suffered huge financial losses due to the threat, intimidation, harassment caused to its business by letters from the Cadbury’s solicitors threatening its business and legitimate use of its Top Mint trademark.

However, the respondents have denied the entire allegation in their counterclaim. Consequently, OK Foods while demanding for the sum of N250 million as general damages against Cadbury (UK) limited for the undue harassment and threat caused to its business and legitimate use of its Top Mint, Trade Mark is also claiming the sum of N10 million being the cost of prosecuting this legal action. The plaintiff is also urging the court to restrain Cadbury (UK) Limited and Cadbury Nigeria Plc and their agents from harassing or preventing it from legitimate use of its Top Mint and restrain them from monopolising the use of generic trade, colours, shapes in the course of trade.

The plaintiff is also urging the court to order Cadbury (UK) limited to issue a written letter of apology to it within 7 days of the date of judgment. However, Cadbury (UK) Limited and Cadbury Nigeria Plc in their statement of defence filed before the court by Barrister Phoenix Unuigbe stated that Cadbury (UK) limited was the registered proprietor of the TomTom with t ra d e ma rk re g i s t rat i o n 248430516449327 at the Trademark registry and that Cadbury Nigeria Plc had exclusively manufactured and had been associated with TomTom brand since 1970. The defendant denied that Top Mint Candy was distinctive and not confusingly similar to any other brands of candy in the market as in September 2018, they discovered that the candy Top Mint was being sold in the market with a similar black and white stripes as its Tom Tom strong menthol candy. Consequently, they instructed their solicitors in

Nigeria to write a cease and desist letters to the plaintiff but denied that the letters amounted to harassment, threats, and intimidation. The defendants, by way of counterclaim contended that the plaintiff was trading on their goodwill of the TomTom brand by adopting black and white colour patterns of its TomTom strong Menthol Candy. He, therefore, urged the court to restrain the plaintiff from further copying the black and white colour and pattern of the TomTom which constitutes passing off. The defendant is also urging the court to order the plaintiff to pay them the sum of N5 million as general damages and interest on same from January 2019 at the rate of 21% per annum until judgment is passed and thereafter at the rate of 20% per annum and N10 million as cost of defending the suit. Justice Oluremi Oguntoyinbo of the Federal High Court, Lagos has set July 21 for hearing on the case.

deals

Competition heightens among Motorcycle hailing platforms …customers clamor for partnership between car and motorcycle hailing apps.

he number of ridehailing platforms is on the increase in Lagos, Nigeria’s commercial center. Buoyed by the growing mobile penetration in cities, ride-hailing platforms have warmed its way into the hearts of customers. Gone are the days when the only option for public transportation was either hopping on the rusty and dirty yellow buses popularly called “Danfo and Molues” or hailing taxis by the roadsides. Now when commuters scroll through their smartphones for a ride-hailing app, cars are no longer the only option that shows up, motorcycle-hailing startups also. Parked at strategic junctions in the city, their motorcycles and helmets come in different colors ranging from Orange, Green, and Yellow. The idea of an on-demand, flexible transport service to get around Lagos’ hours-long traffic jams and congestion is an appealing proposition for millions of residents, it’s also cheaper compared with established car-hailing services like

Uber and Taxify. According to TechSci Research report, South Africa, Nigeria, and Tanzania are the largest two-wheeler markets in Africa. The report also predicted that the two-wheeler market in Africa will cross US$ 9 billion by 2021. The two-wheeler market in Africa has been segmented into two categories, namely, motorcycle and scooter. Among these categories, the motorcycle segment dominated the continent’s two-wheeler market in 2015, owing to various associated advantages such as quicker acceleration, better engine capacity, large fuel tank, larger,

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and easy maintenance. Moreover, booming motorcycle taxis business in African countries is further augmenting demand for motorcycles in the continent buoyed by rapid urbanization, growing population and inadequate means of transportation, the segment is anticipated to maintain its dominance over the next five years as well. Chinyere Ezenwa a regular user of both bike and car-hailing services said most commuters start a journey with a bus or taxi, and alight to complete the journey on a bike, or I could be in a bus or taxi and if the traffic is so intense I could alight

and board a bike to my final destination, but complained about the stress of having to download several apps on his android phone. “Why should ordering a Bike be on a totally different application and ordering a car be on another different standalone application,” she queried “I don’t see any reason why bike hailing platforms can’t partner with a Gidicab/Uber/ Taxify & integrate the bike & ride-hailing service to a single application,” she added. Riding an okada could be very risky because of the recklessness associated with riders. Interestingly, the new motorcycle hailing companies are trying to position their new offering as a safer means by emphasizing features such as carrying one passenger on a trip, insist passengers wear helmets and training their riders to comply with traffic laws. The players in the motorcycle hailing market are not only winning customers also investors. Recently, Gokada raised $5.3million in a Series A round led by Rise Capital. Opera, an internet

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company known for its Opera Mini browser, launched Oride in Lagos, while SafeBoda, the East Africa player, has also announced an expansion into the Nigerian market. The bike and car-hailing platforms now have to compete for the passengers. The advantage of being more flexible and faster than cars in traffic has made motorcycles more appealing to passengers who are always in haste to reach their destinations. Femi Adu, a commuter noted that the proliferation of ride-hailing platforms is a good development for customers as they now have several platforms to select from. “The Ride hailing provider that would emerge King in this business is the one that combines these methods of road transport (Bike option, Regular Car option, Premium Car option even Keke- Tricycle option) coupled with value-adding services such as parcel and food delivery. Imagine a situation where I can be in a car and if the traffic is too intense, I would transition my journey to a @Businessdayng

bike still on that same application. I don’t need to have all of these on different applications when it’s serving one purpose - taking me to my destination,” he said. Users download an app, sign up, request rides and branded motorcycles show up on-demand. But as an added feature, users can also hail branded bikes on the street as with standard okadas. Then the passenger pairs up via the app to start a journey. The biggest down risk to motorcycle hailing platforms remains government regulations and sanctions. In 2012, the Lagos State Government imposed a ban on motorcycles from plying major roads in the state, especially motorcycle with less than 200 cylinder capacity. Gokada and Max.ng have attempted to maneuver that ban by providing their riders with motorcycles above that threshold but it has not proven enough to ensure a smooth ride: both companies had their bikes seized by the state government in March for violating state road laws.

Thursday 06 June 2019

BUSINESS DAY

Thursday 06 June 2019

BUSINESS DAY

CEOINTERVIEW

ASUE A. IGHODALO Chairman of Nigerian Economic Summit Group

Interview with Private Sector Leaders

Government policies and actions which scare investors are not very helpful – NESG Chairman ASUE A. IGHODALO, the current chairman of Nigerian Economic Summit Group, is an accomplished personality. Ighodalo, who sits on the board of public and private companies and non-governmental organizations in Nigeria, is a partner in Banwo & Ighodalo, a leading corporate and commercial law practice in Nigeria. In this interview with Danial Obi, he says the interface between NESG and the public sector has been positive but he intends to strengthen it by constant engagement. On moving the economy forward, he says Nigeria needs sustained visionary leadership and effective policies at both the federal, state and local government levels. This leadership must be able to understand the problems in their different forms and dimensions and work with credible and competent people to address these problems. He addresses other issues in the economy. Excerpts:

ongratulations on your recent appointment as the Chairman of the Nigerian Economic Summit group (NESG). Currently in its 25th year, this privatepublic partnership could be said to have stood the test of time in its role as a convergence point for ideas and thoughts that influence policy. What are the big issues you will like to see resolved during your tenure? Thank you, very much. The interface between the NESG and the public sector over the last 26 years and 25 summits has been extremely positive and contributory to the development of the Nigerian economy. Over the next few years, we will strengthen this interface by raising the level and frequency of engagement. We will improve the output of our Policy Commissions, and the rigour of our research work. We will make the NESG even more available as an economic and social sounding board able to support the Federal Government at every level and we will improve our interface with State Governments. With the tepid growth rate recorded by the Nigerian economy in 2018, analysts have predicted that the nation’s economic outlook for 2019 will also record very slim growth. What steps do we need to take as a country to begin our journey to prosperity? Nigeria’s economic growth at about 1.9% in 2018 is far below the GDP growth rate we require for sustainable growth. As a country in a hurry to develop, our GDP growth rate should not be lower than 8% considering our population growth rate. But beyond the percentages and ratios, we must ensure that Nigeria’s growth is inclusive and that the average Nigerian contributes to, and benefits from the growth process. Our policies must be targeted at ensuring that poverty and unemployment reduce significantly. We must provide support to enterprises where we have comparative advantage,

and support SMEs which are the backbone of any economy. We have to do this concurrently with increased investments in infrastructure and quality education. Every child from the age of 5 must be in school and must be able to stay in school until they attain their full potential. What in your view are the quick wins or what economic reforms do you think Nigeria needs most at this time? Unemployment and poverty have become prevalent in our economy and government must enable the private sector so it can grow and create jobs. We must ensure a favourable business environment, provide robust sector specific planning, and provide effective targeted interventions for ailing but critical industries. Also, government policies and actions which scare investors are not very helpful. Secondly, addressing the power and insecurity challenges are key to attracting investments and creating jobs. Providing adequate training and sophisticated equipment to security agencies is also pivotal. The NESG is currently involved in a deep dive into the power sector and will present a prescriptive report highlighting issues, mechanics for resolving the issues and who has responsibility for implementing same. Thirdly, the quick passage and implementation of the Federal budget is instrumental in improving the performance of the capital budget and addressing key infrastructure challenges. In addition, leveraging on private capital to fund critical infrastructure through PPPs and other tested arrangements must be considered. The government needs to take bold steps in addressing the uncertainties in the oil and gas industry. The passage of the different segments of the PIB, are critical reforms that must now be implemented. Sadly, since we started this reform process in 2001 we have not been able to complete same. What should Nigeria be doing to attract more FDIs as a tonic for employment and economic growth? www.businessday.ng

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significantly increase their costs and reduce the competitiveness of small and medium-scale businesses. The other issues that lead to high operating costs include other infrastructure deficits and high borrowing costs.

Nigeria’s economic growth at about 1.9% in 2018 is far below the GDP growth rate we require for sustainable growth. As a country in a hurry to develop, our GDP growth rate should not be lower than 8% considering our population growth rate We must always remember that there are many countries competing for FDIs. Foreign investors are not only motivated by a country’s potentials, it goes beyond that. Some fundamental concerns include a favourable business environment, security, certainty of policies and regulations that attract investments and support business growth. Exchange rate convergence and effective dispute resolution processes have always bothered investors. Also investors must be able to take their dividends and or capital out with ease. These issues are critical concerns that must be addressed. The Nigerian government, at all levels, must continue to demonstrate commitment and determination in addressing these issues. Why do you think all the talk in Nigeria over the years about diversification to stimulate the economy has not gone beyond rhetoric?

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It is increasingly becoming difficult to do business in Nigeria considering the high interest rates, staggering inflation, epileptic electricity, with the measures being put in place defying solutions, where did we get it wrong? Nigeria needs sustained visionary leadership and effective policies at both the federal, state and local government levels. This leadership must be able to understand the problems in its different forms and dimensions and work with credible and competent people to address these problems. We can work with and adapt models that have worked in recently industrialised countries. Privatisation of Nigeria’s electricity sector has not made a visible impact on the generation and distribution of electricity to Nigerians; what should have been done differently in the privatisation process? I was a key member of the power sector reform implementation committee established in 2001 to midwife the reforms of this sector. Unfortunately since 2007 the reform process has been badly implemented. The reform policies and the prescriptions in the derived law should have been faithfully implemented. First, if you look at the structure of the Nigerian economy, we have an economy that is fairly diversified in terms of output. The oil sector only accounts for 9% of total GDP, while agriculture accounts for 25%. Service has a share of 53% and manufacturing contributes 10%. The concern, therefore, is not whether the economic output is diversified but whether the economy is “rightly” diversified. We must focus on how to grow manufacturing outputs to meet local demands and exports, such that the sector accounts for over 20% of @Businessdayng

economic output. Evidence suggests that the manufacturing sector has a very strong forward and backward linkage with other sectors and its potential to create jobs is huge. We must prioritise the development of specific value-addition sub-sectors within manufacturing and provide support structures to enable this industry. Secondly, in terms of government revenue and export earnings, crude oil still accounts for the largest share. The non-oil sector (manufacturing, agriculture) has the potential to expand over time and account for an increasing share of revenue and export earnings, provided deliberate efforts

are taken to develop these sectors. SMEs are considered by many as the engine of economic growth, but they are still struggling under excruciating economic conditions with minimal government support. What policies and actions do you think will help the economy through this segment? We need to address the electricity challenges facing the country. Expenses incurred by SMEs to obtain electricity from alternative sources

tion, poor and inadequate infrastructure must be effectively tackled, with Government taking the lead in a committed and realistic manner. As I said earlier, the NESG is committed to supporting a holistic reform process. The present administration has focused on fighting corruption as a policy of economic development. What is your view on this and to what extend do you think this war has been achieved? The NESG has consistently noted that the fight against corruption requires a robust top-to-bottom institutional reform framework. We must tackle the root causes, we must make corruption unattractive and difficult having proper and effective governance processes and we must have in place effective sanctions and efficient judicial process. A lot of work needs to be done to create an appropriate and fair environment. We must overhaul governance systems and processes to eliminate opportunities for corruption by increasing compliance and due process. The functions and roles for government control and audit which seem to have completely collapsed need to be reformed to ensure that those that seek to game the system can and must be caught in the act. Our governance standards must apply to everybody, strictly without fear or favour. We need to improve the fairness, quality, transparency and effectiveness of prosecution of criminal cases and the responsiveness of the judicial system through

extensive justice reforms. Nigeria is blessed with a teeming population, mostly youth. How can the country convert this to strength for economic growth? The huge youth population ought to be a demographic dividend for Nigeria. Unfortunately, Nigeria has not been able to take advantage of this opportunity to lift growth. Unemployment among youth remains a major problem in Nigeria. Youth unemployment across the 36 states is two times higher than unemployment among the older labour force. About 64% of unemployed Nigerians are youth and 36% of the number of youth who have at least an economic activity going for them are underemployed. Youth employment constitutes only 28% of the labour force who are gainfully employed. For Nigeria to take advantage of its youthful population, we need to put more youth in stable and productive employment. The education and training of our youth must be stepped up and they must be made fit for purpose. In today’s digital world many of our youth are inadequately skilled. We must also develop a medium for job creation strategies that clearly articulate the number of youths the economy will be absorbing into productive employment on a yearly basis, with practicable projections. Government must identify, support and encourage labour-intensive subsectors that build on national endow-

What remedial steps do you recommend, knowing the importance of the power sector to the overall economy? Sadly the sector now needs further reform. We need to take a holistic review of the industry today, understand all the problems created by the defective implementation of the initial reform and resolve all of these problems with commitment and sincere will. The major problems of market illiquidity, incapacitated discos, failed electricity market, non-reflective pricings, weak and inappropriate regulawww.businessday.ng

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ments and which enjoy strong domestic demand to absorb our youths. Lastly, the private sector is essential in job creation and productive activities. An enabling investment environment must be created to encourage and support our private sector to flourish and create value enhancing jobs, and the private sector must commit itself to this process. There are a number of countries whose growth trajectory was instigated mainly by their private sector. As an informed business leader, what could you say are the economic implications of multiple exchange rates? Multiple exchange rates distort the market, encourage arbitrage and discourage investments. Although some argue that in a highly disciplined environment, multiple exchange rates policies can be utilized to support focused sector growth, I am not a fan of that argument. What is the friction between the private sector and government with regard to the approach to running the economy? I am not aware of any friction. Our goals and objectives converge but we may sometimes have different approaches to implementation. Since the first Nigerian Economic Summit in 1993, the Private Sector and the Federal Government have always agreed on the underlying economic philosophy that would be the premise of 21st Century Nigeria, these are: 1. Commitment to an inclusive, free-market economy (where no one is left behind) 2. Encouragement of private sector investment 3. Creation of an enabling environment 4. Governance in the national interest 5. Commitment to the rule of law, and 6. Establishment of a strong economic foundation for democracy. While we may disagree from time to time on processes, and implementation mechanics, we continue to foster and promote a collaborative public-private dialogue process that focuses on the co-creation of an open and globally competitive Nigerian Economy. There is still a long way to go for Nigeria to evolve into the first world, and a lot of work to be done. However I know that our Government and the private sector are committed to this.

Thursday 06 June 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Why gas supply to domestic market remains a challenge .... current price will not attract investors Stories by Olusola Bello

h e su p p l i e r o f gas in a market dominated by export is not likely to supply to a domestic market at a price less than Export Parity Price (EPP) because the marginal incremental cost of supply should not be less than the dominant portfolio price for export gas which is EPP. Prices shall not discriminate between customers with similar characteristics, such as similar size or a similar consumption profile in the same sector. Supporting this argument at the Society of Petroleum Engineers (SPE )Technical meeting recently, Timothy Okon, an assistant to the former minister of State for Petroleum, said the producer or supplier of gas is neutral to whether gas is supplied to the domestic or export market as long as it receives payment on an export parity basis. He however stated that arising from the economic principles mentioned, Nigeria can restate the aggregate price equation so that Export Parity Price (EPP) can now become preferred pricing for anchoring the sector-based

pricing framework. The State’s objective is to include the Strategic Export Sector which it intends to incentivise with lower gas prices linked to end product pricing. Investments in the export of fertilizers, petrochemicals can only be sustainable if higher pricing for the commercial sector is set through an adjustment mechanism to ensure that the EPP is the aggregate price which is guaranteed to the supplier. According to him when the adjustment factor is multiplied by the EPP it now becomes the price for the

commercial sector at specific prices. To date, Nigeria’s domestic gas prices are kept at a regulated low level, which does not cover the cost required to fully develop its gas resources. Of the 162 TCF reported gas reserves, about 75% will require the building of new infrastructure to deliver these gas resources to the domestic market. The current regulated gas price of USD 2.50/mmbtu falls short of the price required to attract investment for these new gas developments. The gas sector should transition into a liberalised market

OPEC says declining US market share trend continued in 2018, Nigeria worse hit

PEC saw its market share in North America fall last year, with shipments to the region declining by 12.6% to just over 2.813 million b/d as US shale output helped transform the world’s largest consumer of oil into the seventh biggest exporter of crude, according to a report released by the cartel. Nigeria has been worse hit by this action of United States of America as its crude import from Nigeria dropped significantly. The United States cut its imports of Nigerian crude oil by 48.87 million barrels or 43 per cent in 2018, according to the data of Energy Information Administration. The US imports of Nigerian crude fell to 64.06 million barrels last year from a five-year high of 112.92 million barrels in 2017. The EIA data showed that the country imported 75.81 million barrels of Nigerian oil Olusola Bello, Team lead,

in 2016, up from 19.85 million barrels in 2015. US imports of Nigerian crude fell from 148.48 million barrels in 2012 to 87.40 million barrels in 2013 on the back of the shale oil boom. Light sweet Nigerian crude is very similar to the light oil produced in US shale. As US shale production has grown, the appetite for Nigerian crude in the US has dropped dramatically. In 2014, when global oil prices started to fall from a peak of $115 per barrel, Nigeria saw a further drop in US imports of its crude to 21.24 million barrels. For the first time in decades, the US did not purchase any barrel of Nigerian crude in July and August 2014 and June 2015, according to the EIA data. In 2010, the US bought as much as 358.92 million barrels from Nigeria but slashed its imports to 280.08 million barrels in 2011. With the sharp increase in its production, the US oil

Graphics: Joel Samson.

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Industries, he said believes that improving the regulatory, judicial and legislative framework in line with global standards (dispute resolution, contract sanctity) would promote investor confidence and significantly improve Nigeria’s ease of doing business towards growing and diversifying the economy. According to James Okereke of Chevron Nigeria, to have a sustainable domestic gas supply in a regulated market, not purely determined by demand & supply dynamics, the following building blocks should be considered in the gas pricing framework : Stability and predictability of policies, regulations and guidelines are essential in maintaining the sanctity of long-term gas supply contracts. Payment security to ensure healthy cash flow is essential for the development of gas sector and economics to cover costs and guarantee return on investments. Robust (healthy, vigorous and continuous) engagement amongst key stakeholders is key to underpin more sustainable strategy and framework. With this and other key enablers, Nigeria should benefit from its huge gas resources to develop its economy.

Shell unveils seven year development plan

exports averaged 1.9 million bpd in 2018, about twice the amount that was exported in 2017, according to the EIA. Crude oil exports from the United States to the United Kingdom overtook supplies from other countries including Nigeria for the first time since such shipments began in 2015. According to Platts, exports to North America declined by 406,000 b/d in 2018 compared with the previous year, while the US experienced the biggest increase in crude output as production surged 17.2% over the same period to almost 11 million b/d, the 2019 OPEC Annual Statistical Bulletin showed. “Italy and the Netherlands are the main purchasers of US crude oil in Western Europe,” said OPEC in the report. “In Asia, China, India, South Korea and Taiwan account for the biggest shares. The overall consequence is that the US has become one of the largest crude oil exporting economies on a global scale.”

based on the ‘willing buyer, willing seller’ principle and ensure the existence of a competitive fiscal regime to support upstream gas development. Other key challenges to unlocking Nigeria’s gas potential across the gas value chain according to the managing director of ExxonMobil Paul McGrath such as inadequate infrastructure along the value chain; regulated low prices; legacy debt related to gas and power supply and the challenging business environment must be must be resolved . Infrastructure along the

gas and power value chain remains inadequate. Particularly, Nigeria lacks sufficient pipelines to deliver gas from the fields where it is produced to the current and potential off-takers such power plants, manufacturers. In addition, the transmission and distribution systems lack the capacity to deliver the generated electricity to businesses and other consumers. Building infrastructure requires a sustained joint effort of the stakeholders led by government. Active government support will help enable a stable investment climate, acceptable commercial terms and contractual risks. The above elements will help in attracting the required private investments which would strengthen existing off-takers and ultimately lead to emergence of new buyers and suppliers. A conducive business environment is essential towards achieving a diversified economy he said. Critical elements of a conducive business environment include: security of life and property, improved efficiency of regulatory bodies and stability of laws and policies. The Oil Producing Trade Section( OPTS) of the Lagos Chambers of Commerce and

oyal Dutch Shell plc (Shell) this week updated investors on the company’s strategy, setting out a compelling financial outlook to 2025 and building on a strong foundation that will enable it to thrive through the transition to a lower-carbon energy system. The management of the company said it has reshaped it with a focus on value and have demonstrated a clear track record of delivering on its ambitious promises made at the Management Day in November 2017. Ben van Beurden, chief executive officer of the company said it is the success of their strategy and strength of its delivery today that gives them the confidence for the future. Van Beurden summed up the key points of the company’s update: “Increased organic free cash flow outlook, greater potential distributions to shareholders and confidence in our world class investment case given our high-margin portfolio, improving returns and a globally

recognised brand.” Shell highlighted its delivery on commitments since the last Management Day in 2017: achieved $10 billion additional cash flow from operations from new projects started up since 2014; demonstrated capital discipline within committed capital range; delivered $30 billion of divestments from 2016-2018; cancelled the scrip dividend; and started the $25 billion share buyback programme. By the end of next year, Shell plans to complete its $25 billion share buyback programme (subject to further progress with debt reduction and oil price conditions) in combination with reaching a gearing level of 25% (20% pre-IFRS16) and delivering $28-33 billion of organic free cash flow ($25-30 billion preIFRS16) at $60 per barrel (real terms, 2016). Looking further ahead to 2025, van Beurden set out a robust financial outlook that included the potential to make distributions to shareholders of $125 billion or more

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in the form of dividends and share buybacks in the period of 2021-2025. This is in comparison to around $52 billion in shareholder distributions in the period of 2011-2015 and expected shareholder distributions of around $90 billion in the period of 2016-2020. Shell expects to increase the dividend per share when there is line of sight to the completion of the $25 billion share buyback programme. Shell also plans to:fully sustain the Upstream business through the next decades, and grow the company’s market-facing businesses; increase organic free cash flow to around $35 billion in 2025 at $60 per barrel (real terms, 2016); achieve a return on average capital employed of more than 12% in 2025; maintain gearing of 15-25% through the cycle; and invest, on average, $30 billion of cash capex a year over 2021-2025 (excluding major inorganic opportunities, but including minor acquisition spend of up to $1 billion), with a ceiling of $32 billion a year.

Thursday 06 June 2019

BUSINESS DAY

ENERGYREPORT WED 2019: How Chevron shows commitment to safe environment Olusola Bello

he World Environment Day (WED), which takes place annually on June 5 is the biggest event to celebrate and promote environmental awareness and sustainability across the globe.Established by the United Nations General Assembly in 1972, WED aims to raise global awareness and mobilize people to take positive environmental action to protect nature and the planet Earth. This global event has since become the principal vehicle through which the United Nations stimulates worldwide awareness about the environment. It also gives a human perspective to environmental issues, empowers people to become active agents of sustainable development and advocates multi-stakeholder partnerships in support of the environment. From 1973, when the first WED was held, the event has always been marked with different campaign themes and discussions focusing on environmental stewardship. “Air Pollution,” the theme for World Environment Day 2019, is a potential environmental risk that can impact people as well as the environment. Available statistics show that air pollution is the fourth-largest threat

to human health, behind high blood pressure, dietary risks and smoking.The World Health Organization (WHO) data shows that there were an estimated 6.5 million deaths worldwide from air pollutionrelated diseases in 2012. Chevron Nigeria Limited (CNL), the operator of the joint venture between the Nigerian National Petroleum Corporation (NNPC) and CNL (NNPC/CNL JV) conducts its business in a socially and environmentally responsible manner in compliance with regulatory requirements, best practices and has made environmental stewardship part of our social investment programs. For over 50 years,

CNL has remained an active agent of sustainable development and strong advocate of partnerships in support of the environment. Explaining CNL’s commitment to the environment, Jeff Ewing, the Chairman/ Managing Director, noted that CNL is happy to be part of the solution to global environmental issues wherever the company operates through its sound environmental management policy that supports environmental stewardship and sustainable development. According to Ewing, “CNL has in place a companywide operational excellence management system that

delivers industry-leading performance in process safety, personal safety and health, environment, reliability and efficiency. CNL has a record of responsible environmental stewardship everywhere it operates and has also established enduring partnerships with governments, non–governmental organizations, business organizations and communities. CNL has been supporting and sponsoring various programs aimed at preserving the environment. These partnerships and efforts have been recognized and applaudedwithin and outside Nigeria.” In protecting the environment and helping to man-

ageair emissions, CNL has invested extensively in projects aimed at eliminating routine flares from its operations and establishing a profitable gas business through a range of domestic, regional and export supply projects. These projects helpfulfill NNPC/CNL JV’s Domestic Gas Supply Obligation and support the Nigerian Gas Master Plan. These projects include the Escravos Gas Plant, the Escravos Gas-to-Liquids plant, Sonam Gas Development and the Abiteye and Makaraba NonAssociated Gas Development. Through investments in gathering and processing associated gas, routine flaring has been reduced by over 90% from 2008 to date in CNL’s operations. CNL’s environmental stewardship process lays the foundation for sound environmental management. The identification, assessm e nt a n d ma nag e m e nt of environmental risks is capturedthrough the entire project cycle from inception to operations to decommissioning. CNL recognizes the importance of minimizing our environmental footprint and preserving biodiversity and the NNPC/CNL JVstrives continually to achieve world class environmental excellence by assessing and reducing potential impacts on the environment arising from its operations. CNL continues to con-

duct Environmental Impact Assessments and Environmental Evaluation studies of its Joint Venture and Deepwater operations to ensure potential environmental impacts are identified and mitigated in accordance with environmental performance standards and industry best practices. We continue to invest in available technology for tracking and managing of our ecological footprint in our areas of operation. CNL’s commitment to preserving the environment has left enduring landmarks in the landscape. In 1992, CNL established the Lekki Conservation Centre - a center of excellence in environmental research and education, reserved as a sanctuary for the rich flora and fauna of the Lekki Peninsula. The 78-hectare facility was set up by CNL in partnership with the Nigerian Conservation Foundation (NCF). NCF is Nigeria’s foremost non-governmental organization dedicated to environmental conservation and an affiliate of the WorldWide Fund for Nature. In 2005, CNL and its affiliatesbegan to support a yearly postgraduate research scholarship for doctorate students in environment and conservation, instituted by the NCF. In addition, CNL hosts the annual S. L. Edu Memorial Lecture to promote environmental management awareness.

Understanding electricity distribution franchising in Nigeria

Ibadan Disco to commence rehabilitation of facilities in Ilesha

he Nigerian Electricity Regulatory Commission (“NERC” or the “Commission”) is created by the Electric Power Sector Reform Act (the “EPSRA” or the “Act”) to, among other things, license and regulate legal persons engaged in the generation, transmission, system operation, distribution, and trading of electricity. In giving effect to the provisions of section 32, 62, and 67 of the EPSRA, the Commission licensed Eleven (11) Distribution Companies (herein called the “DisCos”) to undertake, but not limited, to the following regulated activities: 1. Connection of customers for the purpose of provision of electricity supply; 2. Installation, maintenance and reading of meters, billing and collection; and 3. Wide ranging functions contained in the electricity distribution license terms and conditions issued to the 11 DisCos. The provision of these services by DisCos on a non-discriminatory basis is a fundamental requirement arising from the natural monopoly they enjoy as distribution network service providers. The

badan Electricity Distribution Company (IBEDC) says the disco has ordered for equipment required for the rehabilitation of the Oke-Omiru Injection Substation in Ilesha. Consequently administrative and technical team would visit the substation to begin clean-up, system replacement, among others, John Ayodele, Chief Operating Officer has said It would be recalled that in April John Donnachie, the Chief Executive Officer of lBEDC), hinted that due to the extensive damage done to IBEDC distribution network infrastructure, specifically the Oke-Omiru injection substation and the accompanying district facilities, power cannot be restored now as hundreds of millions of naira will be required to revamp and rehabilitate the infrastructure. According to john Ayodele, the company has ordered the equipment required to rehabilitate the Oke -Omiru Injection substation that was damaged during the massive destruction and carnage that occurred at Ilesha”. The administrative and technical team he said will arrive Ilesha next week to begin

sustainability of this traditional regulatory framework is increasingly becoming difficult due to continued technological improvements and advancement in the capabilities of Distributed Energy Resources (DER). Additionally, since the commencement of the power sector reforms in 2005, the DisCos in Nigeria are unable to satisfactorily meet stakeholders’ expectations in the provision of access to safe and reliable electricity services to all customers within their franchise territories,especially those areas that are not considered to be economically viable. Accordingly, introducing sub-franchising of DisCos’ operations and coverage areas is expected to improve quality of supply of electricity to customers through investment in metering, billing, collection and network rehabilitation and expansion. Sub-franchising (referred to as Distribution Franchising for this purpose) means the business model applied by a DisCo to authorise a third party to provide electric distribution utility services on its behalf in a particular area within the DisCo’s area of supply. Proposals for the franchising www.businessday.ng

arrangement can either be initiated by DisCos or customer groups (community) within a specified geographic boundary. The community, through a registered association, may formally approach the DisCo to declare its interest and initiate franchising arrangements in the areas of supply, metering, billing and collection including additional investment in the distribution networks where appropriate. Additionally, any unserved or underserved community have the option of exploring the provisions of NERC’s Regulation on Independent Electricity Distribution Network (IEDN) in finding solutions to their supply challenges as may be applicable Consultation Paper on Distribution Franchising in Nigeria This document sets out for consultation, the Commission’s proposal to introduce a regulation to guide sub-franchising activities in DisCos’ operations and coverage areas in order to take advantage of evolving technologies and adopt new business models in overcoming the challenges inhibiting DisCos from providing access to adequate, safe and reliable services efficiently.

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initial rehabilitation and renovation works like clean -up of the damaged offices. Furniture and systems replacement and other critical infrastructure necessary for staff and service to resume would be put in place as all the offices that service Ilesha were destroyed during the illfated protest. On the technical end, he stated that while the company awaits delivery of the equipment needed to rehabilitate the Oke -Omiru Injection substation it will simultaneously explore restoring power temporarily to some parts of Ilesha through one of the neighboring substations, which has been ascertained is in good condition, namely Imo or Ilerin Injection substations. The IBEDC boss said that the power restoration will be in phases as our technical team progress with the palliative works. Responding to news making the rounds that IBEDC is deliberating refusing to restore power to Ilesha and threats from some advocacy groups, he stated that it is understandable that stories and so called threats would be peddled from uninformed people to stir rancour. @Businessdayng

He added that because the Governor and leadership of the Ilesha people that have been interfacing with IBEDC are aware of all the efforts to restore power. He said: “That is why we always counsel and appeal to communities never to resort to violence, vandalism and destruction of power infrastructures and installations during protests. The sad occurrence at Ilesha the company said resulted in destruction of infrastructure worth over N200 million adding that with the already limited financial resources available and other considerations it will never be easy to restore power when unfortunate incidents like this occur, as the funding availability to all Discos are very limited. He, However, appeal to customers in Ilesha to reciprocate the gestures by paying their bills as and when due. He also advised that efforts should be made to also pay all outstandings due to enable IBEDC to remain floating. It will also recalled that Donnachie told the media on the reasons why supply to the affected communities will not be achieved soonest.

Thursday 06 June 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

N11.721 trillion

Week open 24 – 05–19

31,924.51 30,881.29

N13.602trillion

2,439.57

Week close (31 – 05–19)

30,881.29

N13.685trillion

2,440.10

Year Open

2,241.37

The NSE-Main Board

1,456.29 1,249.53 1,267.54

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

805.27

1,265.61 1,286.68

347.85

116.01

622.76

257.07

2,083.00

1,118.71

1,046.31

361.57

119.81

630.93

262.58

2,103.92

1,133.27

1,066.11

805.27

Percentage change (WoW)

0.61

0.02

1.44

0.00

Percentage change (YTD)

-1.15

11.16

-11.96

1.44

1.66

3.94 -9.21

-9.37

3.28 -5.27

1.31 -15.74

2.14 -13.12

1.00 -5.82

1.30

1.89

-8.45

-11.71

Analysts’ sentiments favour the bears Iheanyi Nwachukwu

he possibility of witnessing meaningful gains in the remaining trading days of this week looks slim going by some of research analysts’ views x-rayed in this report by INVESTOR. Taking a look at the stock market performance, sentiment in the first half of May 2019 was bearish, but trading took a bullish path after the listing by introduction of MTN Nigeria Communications Plc (MTNN) on May 16. The analysts’ views on the Nigerian stock market this week seem to hold waters following the absence of positive catalysts in the market that can trigger buy decisions. This is even as sentiment concerning the biggest catalyst this year (MTNN) continues to wane. On Monday June 3, being the first trading day in this new month, the stock market opened for trade on a negative note. The Nigerian Stock Exchange (NSE) All Share Index (ASI) recorded loss of 0.45percent while the year-to-date (ytd) return furthered into the negative zone at -1.59percent. In the preceding trading week to May 31, The All-Share Index and Market Capitalisation appreciated by 0.61percent to close the week at 31,069.37 points and N13.685 trillion respectively.

“In the absence of positive catalyst, we guide investors to trade cautiously in the short term. However, stable macroeconomic fundamentals remain supportive of recovery in the mid-to- long term”, said Cordros research analysts in their June 3 note. The analysts had reiterated their view that the blend of a compelling valuation story, together with positive macroeconomic picture leaves scope for market recovery in the medium term. In their Market Wrap for June 3, FBNQuest research analysts expect

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the market to trade sideways post the holidays. The equities market had resumed the new month on a quiet note as weak investor sentiments lingered. In the review week to May 31, thirty-five (35) equities appreciated in price, higher than thirty (30) in the preceding week. Twenty-four (24) equities depreciated in price, lower than forty (40) equities in the preceding week, while 109 equities remained unchanged, higher than 98 equities recorded in the preceding week. “ F o l l o w i n g l a s t w e e k ’s

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performance and improved investor sentiment, we anticipate a bearish performance this week in the absence of any major market catalyst”, also said Afrinvest Research in their June 3 note. In their investment views, United Capital research analysts said “Ex-MTNN, the rally observed in the prior week seemed driven by a pre-inauguration euphoria which vanished in the trading days after May 29th.” Accordingly, they expect the market to close sideways this week. “If the bearish start to the new

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month is any indication of how the first half (H1) of the year is going to end, we may see the All Share Index (ASI) dipping below the 30,000 point mark, however, prices on select names - particularly bellwethers - remain attractive and provide a strong entry point for investors”, Vetiva Securities also said in their June 3 daily equity market report. In the absence of any market catalysts, Vetiva expects a session of mixed to negative trading when trading resumes today Thursday after the Eid-el-Fitri Muslim Festivals.

Thursday 06 June 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

United Capital Investment Views

Investor’s Square

NSE-ASI higher, banking stocks up 3.9% week-on-week

he equity market drew the curtain for the week ended May 31 and indeed for the month of May on a bullish note, marking its 3rd consecutive week-on-week (w/w) uptrend. Performance was driven by bargain hunting in select Banking Stocks. Overall, the All Share Index rose 0.6percent w/w and 5.4percent for the month of May, to close at 31,069.7 points. Market capitalisation added N82.8billionn to end at N13.8trillion. As such, YTD return moderated to -1.1percent. Activity level for the week was underwhelming as both value and volume of stocks traded declined by -60.9percent and -20.4percent to finish at N11.6billion and 339.8million units respectively. Performance across sectors was bullish for the week, as all sectors under our coverage close in the green territory. The Banking (+3.9percent)

index led the gainers buoyed by interest in GUARANTY ( + 1 . 6 p e rc e n t ) , A C C E S S (+5.2percent) and ZENITH (+5.8percent). The Insurance (+3.3percent), Oil & Gas (+2.1percent), Consumer Goods (+1.3percent), and Industrial Goods (+1.3percent) indices also trended northward as price appreciation in WAPIC (+2.5percent), MANSARD ( + 1 0 p e r c e n t ) , S E P L AT ( + 5 . 8 p e rc e n t ) , N E S T L E (+3.6percent), and CCNN (+7.1percent) buoyed the indices. Meanwhile, the Agric index remained flat for the week. Elsewhere, MTN Communication Plc (MTNN) published its FY-18 financial report, indicating that total revenue grew by 17.1percent to N1trillion while Profit after tax also rose by 79.7percent to N145.7billion. This spurred

buying interest on the stock on Friday. However, this could not offset the losses recorded earlier in the week, as MTNN (-2.5percent) closed lower w/w. Investors’ sentiment as gauged by market breadth was upbeat at 1.4x, only 23 stocks declined against 33 advancers. E x- M T N N , t h e r a l l y observed in the prior week seemed driven by a preinauguration euphoria which vanished in the trading days after May 29th. Accordingly, we expect the market to close sideways this week. Money Market: Liquidity level higher, CBN stays clear of OMO sales System liquidity improved significantly in the prior week as N154.5billion worth of OMO maturities, Primary Market Auctions (PMA) and Joint venture cash payments kept the market awash with liquidity. System liquidity rose from an opening balance of N113.8billion on Monday to N326.9billion on Friday.

Thus, OBB and O/N rate moderated 7percent apiece to 4.1percent and 4.9percent. In the same vein, interbank activities at CBN’s SLF/SDF window widened, SDF rose to N134.3billion (vs. SLF at N42.2billion) as players continued to deposit excess fund with the CBN in the absence of OMO auction. The CBN hold-off OMO sales but sold a total of N67.4bn at the bi-weekly Treasury Bill (NTB) Auction on Thursday. Save for the 91-day which firmed at 10percent, average stop rates at the auction cleared significantly lower when compared to previous levels [182-day (11.95percent versus 12.30percent at the last auction) and 364-day (12.20percent versus 12.35percent at the last auction). Interest remained strongest on the 182-Day and 364-Day bills with a Bid-to-

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Allotment ratio of 2x and 6x respectively. Activities at the secondary segment of the NTB market were broadly bullish, thanks to massive system liquidity. Accordingly, average yields fell 20bps w/w to close at 11.9percent. This week, except for NTB maturities expected to hit the system by Thursday, no additional maturities are expected. In the absence of significant outflows, we expect the Apex Bank to sell OMO in a bid to check liquidity. Bond Market: Access Bank to redeem $400mn note early Activities in the local bond market were broadly quiet in the prior week. No primary auctions were offered during the week. At the secondary market segment, average yield closed rather flattish settling at 14.4percent. Performance dampened by FX whole auction on Monday which initially strained liquidity, but this was worsened by investors apathy, ahead of an NTB auction on Wednesday. Interest for FGN Sovereign Eurobonds worsened as President Trump shifted his attention on Mexico as his next target for tariffs while spat with China persists. Accordingly, oil prices fell by 6.1percent during the week. This worsened sentiments for FGN’s Sovereign Eurobond as average yields rose 21bps w/w to close at c. 7.25percent. At the Corporate Eurobond space, Access Bank announced its intention to redeem the $400million subordinated unsecured notes, which is due in 2021 at a fixed rate of 9.25percent, early. According to the Bank, being a callable Eurobond, the Note will be recalled on June 24th, 2019 with accrued interest. Apart from Access Bank 2021, First Bank’s Jul 2021 ($450million at 8 percent) and Ecobank (Nig)’s Aug 2021 ($250million at 8.75percent) are also callable in July and August 2019 respectively. This implies that the corporate Eurobond space is thinning out. Only 5 Banks will be left with an outstanding Eurobonds of circa $2.2billion if the Callable Notes are called, especially in the absence of new issuances. Accordingly, yields on corporate Eurobonds fell by 144bps to 6.23percent, majorly driven Access 2021.

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

IOSCO examines regulatorydriven market fragmentation …considers how to enhance cross-border cooperation Iheanyi Nwachukwu

h e B o a rd o f t h e International Organisation of Securities Commissions (IOSCO) on Tuesday published a report that examines instances of regulatory-driven fragmentation in wholesale securities and derivatives markets and considers what actions regulators can take to minimise its adverse effects. The report, titled Market Fragmentation and Crossborder Regulation, focuses on market fragmentation that arises as an unintended consequence of financial re g u l a t i o n . It p rov i d e s examples of market fragmentation that IOSCO members consider to be significant and potentially harmful to the oversight and supervision of financial markets. The report also examines the progress made by IOSCO members in using deference, and the regulatory mechanisms and tools associated with this concept (e x a m p l e p a s s p o r t i n g , substituted compliance, recognition/equivalence). In doing so, the report follows up on a 2015 IOSCO report on cross-border regulation and seeks to identify remaining challenges that can restrict cross-border activities. Regulators have

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become increasingly aware of the risks associated with unintended market f r a g m e n t a t i o n a n d a re cooperating more among themselves to mitigate its effects through deference and its associated tools. Bilateral arrangements in the form of MoUs continue to be a common tool used by regulators, particularly with respect to information exchanges. Regulators also have developed novel processes to work multilaterally to the benefit of the markets they oversee. Nevertheless, several c ha l l e n g e s re ma i n a n d strengthening cooperation between authorities could further assist in addressing adverse effects on the financial system stemming from market fragmentation. IOSCO’s concerns about the risks of fragmentation are shared by other international organizations and policy makers. These include the G20, which has made market fragmentation a top priority, and the Financial Stability Board, which also published today a paper on market fragmentation. Th e re p o r t p ro p o s e s potential measures that IOSCO and relevant national authorities could explore to mitigate the risk, and potential adverse effects, of fragmentation on global securities markets. These measures include ways to foster further @Businessdayng

mutual understanding of one another’s legislative frameworks, deepen existing regulatory and supervisory cooperation and consider whether there are any good or sound practices that can be identified regarding deference tools. The IOSCO Board will decide on its approach to these next steps in the second half of this year. J. Christopher Giancarlo, Chairman of the US Commodity Futures Trading Commission, co-chair of the IOSCO work on market fragmentation said: “The use of deference can be a powerful way to mitigate the risks arising from fragmentation in cross-border trading markets. While its use has increased, the report highlights areas where further improvements could be sought while allowing members to continue choosing their own underlying tools to achieve it.” Jun Mizuguchi, Deputy Commissioner for International Affairs at the Japan Financial Services Ag enc y , a l s o a n I O S CO co-chair on this work said: “Since the financial crisis, well-intentioned regulatory implementation has sometimes led to unintended fragmentation of markets. In the spirit of the G-20 leaders in Pittsburgh, this report welcomes the advances made by regulators in deferring to one another but encourages us towards further, smoother, cross-border collaboration.”

Thursday 06 June 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

‘Leveraging on technology for more retail participation is of utmost importance’ Bawo Oritsejafor, acting Managing Director/CEO United Capital Securities Limited speaks in this interview with Iheanyi Nwachukwu. Excerpts What can be done to encourage retail participation in the Nigerian capital market? or a country reputed to be the most populous in Africa, the level of retail investor participation in the capital market remains very low. On the positive side, the implication is that there is ample room for growth. Firstly, the need for a stable macroeconomic environment cannot be overemphasised here. Government needs to address security challenges and economic instability in the country in order to create an enabling environment to promote investment inflow and new business that is needed to deepen the capital market. Although the Securities and Exchange commission (SEC) and Nigerian Stock Exchange (NSE) have done a lot and progress has been made, much still needs to be done in the area of awareness and capital market literacy. There is need to continue to build retail investors’ confidence and encourage their participation in the capital market through increased awareness campaigns regarding importance and benefit of investing in the capital market. Digitalisation has had a significant impact on the growth and development of capital market worldwide. There is need for all market operators to continue to embrace digitalization especially with the over concentration of network of most stockbroking firms and other capital market operators in Lagos and a few other major cities leaving investors residing in rural areas at a disadvantage with respect to access to capital market products and services, which is required for their economic wellbeing. Leveraging on technology for more retail participation is of utmost importance. In our view, mobile trading apps have immense growth potential. With financial services firms upgrading their systems to provide mobile trading facility, smart phones becoming increasingly affordable and a 4G network capability, the vast pool of mobile users in the country can be tapped. Such leveraging of technology will lead to a widening of the investor base in a cost-efficient manner. Finally, there is the need to embark on a nationwide campaign to create awareness about the opportunities of investing in the Capital Market by all stakeholders. How positioned is United Capital Securities to drive increased participation in the market. United Capital Securities is committed to changing the narrative of the financial services in Nigeria and Africa by contributing our quota in ensuring that financial services are available

Bawo Oritsejafor

to all and sundry in an accessible and simplified manner. We will stay in touch with market regulators, stakeholders and other private entities to achieve the required market buy in. We will continue to invest in our people and technology in order to provide our clients with top-notch advice and execution excellence. We will focus on products that will improve financial inclusion and increase market participation. United Capital recently upgraded the Investnow portal/App. Kindly tell us more about this and its impact so far on your business? The new upgraded (InvestNow.ng/App) is a more ROBUST trading platform that not only offers our clients Direct Market Access to the Nigerian Stock Exchange but also a whole lot of other product offerings that gives them the opportunity to have a more diversified portfolio. With Investnow.ng/App., our clients can now open a brokerage account online, fund the account through the portal (one-off or Recurrent funding), execute trades with access to live stock recommendations and monitor the performance of the account all in real time without human intervention. The big selling

point for us is that everything can be done on a single platform/App. The platform simply allows our clients to invest the simple way. The impact has been tremendous for our retail and digital business drive. We are always thinking of how to make the customer experience better and they in turn have really been appreciative with the adoption rate of the platform. What is your outlook for the market in 2019 and what should the investing community expect from United Capital Securities Limited? Thankfully, election risk is out of the way and economic activities have resumed fully. Broadly, economic outcomes in Nigeria are showing signs of improvement. Momentum at the investors’ and exporters’ window segment of the currency market has remained strong in the wake of President Buhari’s Re-election. Oil prices have sustained uptrend in the global market, up 26.5percent in Q1-2019 amid supply shortages spurred by the crisis in Venezuela and the OPEC+1 accord. As such, outlook is positive for the market, we maintain our view that the market should end the year positive, albeit modest. The current downturn is clearly unsustainable, especially

with developments in the global space becoming increasingly positive for frontier markets so far in 2019. Notably, Central Banks in the advanced markets such as the US Fed, ECB, and the BOJ are sounding more dovish, holding off rates hike and contemplating further stimulus. A rebound can be spurred by catalysts, some of the near-term triggers such as the CBN governor’s renewed tenor, the listing of MTN; and the sustained uptick in oil price as well as a possible stronger-than-expected performance of the local economy as the year progresses. At United Capital Securities, we are committed to consistently creating value for our stakeholders and be at the forefront of the drive to ensuring more financial inclusion in the country. Kindly give us an overview of the Nigerian Capital Market in 2019? 2019, so far, has been a bearish tale for Nigerian equities despite the better balance of risk in both the global and domestic market. The Nigerian All-Share Index closed the quarter lower by 1.2percent despite the massive turnover of $7.8billion recorded at the Investors and Exporters FX window. What was even more surprising was the fact that the conclusion of the presidential elections, following which the candidate of the incumbent party was declared the winner, did not spur any substantial rally in the market as players had anticipated. Equities also did not give much credence to the Full Year 2018 earnings season despite some impressive financial performances recorded by different companies. Before the conclusion of the 2019 General Elections, market analysts predicted that there will be a rally after the election. What factors are responsible for the persisting sell pressure? Investors may be taking a hard look at the Nigerian economy, which according to global institutions such as the IMF and World bank, growth is projected to stay muted at 2-3percent over the next three years. Again, despite moderation in yield on fixed income instruments, returns on investment in government Bills & Bonds remains quite attractive -thus, the risk-off sentiment for equities. Nevertheless, the market remains attractively priced especially since two of the biggest risks (US Fed rate hikes and election uncertainties) - which predicated 2018’s bearish outing – appear to have dissipated. We are of the opinion that even though the market remains technically and fundamentally underpriced, a rebound would only be spurred by catalysts that can galvanize equity investors.

London Stock Exchange Group acquires Beyond Ratings

ondon Stock Exchange Group (LSEG) has acquired Beyond Ratings as part of its continued investment in its Information Services business, including FTSE Russell. Beyond Ratings is a highly regarded provider of Environmental, Social and Governance (ESG) data for fixed income. The acquisition will be funded from existing facilities. The terms of the transaction have not been disclosed. The acquisition of Beyond Ratings is highly complementary to FTSE Russell’s existing ESG index and data offering as well as the analytics

tools provided through The Yield Book. LSEG’s Information Services business is responding to the rapidly growing demand among asset owners to integrate sustainability and ESG considerations, based on innovative research, into their equity and fixed income investment strategies. The acquisition offers a significant opportunity for LSEG’s Information Services business to enhance its multi-asset data and analytics capabilities and to further commercialise Beyond Ratings’ existing datasets globally. FTSE Russell will also look to further

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develop its multi-asset index solutions, utilising Beyond Ratings’ sustainability data, smart risk models and ESG research expertise. Beyond Ratings’ highly respected analytics suite offers customers the ability to systematically and transparently incorporate ESG criteria into their credit risk analysis. Founded in 2014 and based in Paris, France, the company provides innovative services to assist the financial sector in the transition towards a sustainable economy. Beyond Ratings delivers standard research and tailored services, leveraging in-house expertise, advanced quantitative analytics and risk scoring

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for over 175 countries and 10,000 companies. Waqas Samad, Group Director of Information Services, LSEG said, “The acquisition of Beyond Ratings will accelerate LSEG’s ability to deliver research-driven multi-asset solutions in sustainable finance investing to our global client base. Beyond Ratings has a number of highly-regarded ESG data models developed by a strong team of ESG specialists. We very much look forward to working with the team at Beyond Ratings to deliver exciting and differentiated solutions for our clients over the coming months.”

@Businessdayng

Thursday 06 June 2019

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Ikpala of NBA Abuja branch emerges winner of SBL GIE Challenge

mazing Ikpala of the Nigerian Bar Association (NBA), Abuja branch, has emerged winner of the GIE (Growth Investment & Employment) Challenge - #MYSBLGIECHALLENGE, organised by the NBA Section on Business Law (SBL) to select 100 young lawyers (0-7 years post call) who will be sponsored to its 2019 conference. According to the organisers, the test was to challenge young lawyers to interrogate issues around the theme of the 13th annual business law conference, that is: ‘Growth Investment & Employment: Beyond Rhetoric’ thereby preparing them for effective engagements and conversations at the conference, set to take place in Lagos from June 26-28, 2019. Announcing the winners on Tuesday, the Chairman of the conference planning committee, Dr Adeoye Adefulu, disclosed details about the challenge and how the winner emerged. He said, “Applicants/participants were required to create a one-minute video stating what the theme of the conference meant to them. This video was to be uploaded

side Lagos); and free transfers from conference hotel(s) to the conference venue. While the winner, Amazing Ikpala

will in addition to the package, sit on one of the panel sessions at the conference,” Dr. Adefulu disclosed.

NBA-AGC 2019: TCCP inspects conference facilty …Assures delegates of comfort and security

Dr Adeoye Adufulu, Chairman, 2019 Conference Planning Committee

on Facebook, Instagram and Twitter using the hashtags #MySBLGIEChallenge and @#NBASBL2019. “As part of the requirements, applicants were also expected to be legal practitioners (between 0-7 years post call); and also financial members of the NBA-SBL. “ He stated further, that several entries poured in from young lawyers across the three

zones of the Nigerian Bar Association (i.e. North, East and West). These were screened by members of a sub-committee, after which, a winner emerged alongside two runners-up. “All shortlisted participants in the challenge will receive a sponsorship package that covers, cost of registration for the Conference; cost of accommodation for the conference (only available to lawyers out-

s preparations for the Nigerian Bar Association (NBA) 2019 Annual General Conference gather momentum, members of the Technical Committee on Conference Planning (TCCP) led by the Co-Chairman, Olumide Akpata on Saturday June 1st, 2019 had an inspection tour of the facility to be used during the conference, that is Eko Hotels & Suites in Victoria Island, The TCCP members on this visit were taken round the hotel facility, which included the expo centre and meeting rooms to be used for plenary and breakout sessions during the conference. The Management of the Hotels assured TCCP that the Hotel was fully prepared for the NBA Conference and would partner with the NBA to showcase the conference to the international community. TCCP members also inspected the Harbour Point facility which is to be used as

a registration point, friendship centre and will host some sessions of the conference. The TCCP members were thrilled with the ambience and expanse of the Harbour Point, particularly the opportunity it presents to host many events of the NBA in one place. Recall that the NBA President, Paul Usoro, SAN had promised that the 2019 Annual General Conference would be the best for a long time and in fulfillment thereof set up the TCCP to put this promise into realisable actions. The TCCP has since started work by ensuring that the difficulties encountered by delegates in previous conferences are fully addressed. The TCCP has announced that it would be issuing clear guides on transportation, hotel accommodation, parking lots and security measures put in place to ensure that delegates have an enjoyable Conference, come August.

Falz leads father’s law firm to victory at 2019 BOA football tournament …As Falana & Falana Chambers emerge winners

awyer, rapper, songwriter and actor, Folarin Falana also known as Falz the Bahd Guy on Sunday, led a team of players from his father’s law firm, Falana & Falana to victory at the 2019 Bankole Olumide Aluko (BOA) football tournament. The Falana team defeated the duo of African Law Practice (ALP) and SPA Ajibade as a paired team. This is the law firm’s second win at the BOA Memorial 5-A-Side football tournament which started 17 years ago in memory of the late Bankole Olumide Aluko, a founding partner of the firm, Aluko & Oyebode, who passed on 17 years ago. The 2019 tournament, which

is in its 17th edition, had 22 participating teams with seven (7) mergers. Group A had Africa Law Practice/SPA Ajibade, Aelex, Perchstone & Graeys LP, www.businessday.ng

George Etomi/FRA Williams, and Aluko & Oyebode, while Group B featured Falana & Falana, Udo Udoma BeloOsagie (UUBO)/ Adepetun, Caxton-Martins, Agbor & Se-

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gun (ACAS) Law, Lagos State Ministry Of Justice (LSMJ), Wole Olanipekun/Dele Adesina Group C held Templars, Sofunde Osakwe, Ogundipe & @Businessdayng

Belgore (SOOB)/Niccom LLP, Olaniwun Ajayi, Olisa Agbakoba Legal (OAL), Pinheiro LP, while Group D features, Duale Ovia & Alex-Adedipe (DOA)/ Grey Chapel Legal, Banwo & Ighodalo (B&I), Advocaat, Punuka Attorney, and BA Law LLP/Probitas Partners LLP. The tournament kicked off on Sunday March 17, 2019 with the law firm, Aluko & Oyebode playing the opening match against ǼLEX Legal Practitioners & Arbitrators. Other opening games played, were: Perchstone & Graeys LP vs. George Etomi & Partners/ FRA Williams; Falana & Falana vs. Wole Olanipekun/Dele Adeshina; UUBO/ACAS Law vs. LSMJ; and SOOB/NICCOM LLP vs. Pinheiro LP.

Thursday 06 June 2019

BUSINESS DAY

GREYMATTER

LegalBusiness

New Minimum Capital Requirement for Nigerian Insurance Companies: What you should know

n exercise of its statutory powers and regulatory functions, the National Insurance Commission (“NAICOM”), recently reviewed the minimum paid-up share capital requirement for all classes of insurers (i.e. insurance and reinsurance companies, with the exception of Takaful operators and Micro-insurance companies) doing business in Nigeria. The reviewed minimum capital requirement, shown in the table below (the “New Minimum Capital Requirement”), was communicated via a circular dated May 20, 2019, titled: Minimum Paid-up Share Capital Policy for Insurance and Reinsurance Companies in Nigeria and referenced: NAICOM/DPR/ CIR/25/2019 (“the Circular”). As stated in the Circular, the new paid-up share capital requirement takes immediate effect for new applications made to NAICOM by companies seeking to carry on insurance business in Nigeria. However, existing insurance and reinsurance companies are required to fully comply with the New Minimum Capital Requirement by no later than June 30, 2020. The Circular further stipulates that consequent changes in the sums statutorily required to be deposited by Nigerian insurance companies with the Central Bank of Nigeria (the “Statutory Deposit”), are to take effect from the commencement of the Circular. Legal framework By the combined provisions of sections 6, 7 and 64 of the National Insurance Commission Act, 1997 and sections 86 and 101 of the Insurance Act, 2003, NAICOM, as the principal regulator of the Nigerian insurance industry, is empowered to administer, supervise, regulate and control the business of insurance in the country. Specifically, with respect to the powers to review the minimum paid-up share capital of Nigerian insurance companies, section 9(4) of the Insurance Act, 2003 empowers NAICOM to increase, from time to time, the amount of minimum paid-up share capital statutorily prescribed for Nigerian insurers. Brief analysis Following the enactment of the In-

surance Act in 2003, the first review of the capital base of insurers took place in 2005. The review followed hot on the heels of the banking industry consolidation and was kick-started by an announcement by the Federal Government through the Honourable Minister of Finance, mandating the insurance industry to increase their capital base. Further to this, a Guideline was issued by NAICOM in September 2005; establishing the existing minimum paid-up share capital requirement for various categories of insurance operations and setting a period of eighteen (18) months between September 5, 2005 and February 28, 2007 for full compliance by all insurers. The exercise eventually led to the consolidation of the entire industry. Consequently, the number of operators, post-consolidation, reduced significantly from 104 to 49 insurance companies and 4 to 2

following protests by some stakeholders and an order of the Federal High Court restraining the TBSC Policy from being enforced. With this new Circular, many insurance companies now need to raise additional capital to comply with the New Minimum Share Capital Requirement. Further, from the commencement of the Circular, any new application to NAICOM for the registration of insurance business must be accompanied by evidence of the Statutory Deposit i.e., an amount equivalent to 50% of the New Minimum Capital Requirement for the particular class of insurance business – Pursuant to Section 10(2) of the Insurance Act 2003, upon registration as an insurer, not later than sixty (60) days after registration, the CBN is required to return to the insurer, eighty percent (80%) of the deposit with interest calculated at the CBN’s

reinsurance companies; which were stronger and better positioned to do business. Another attempt by NAICOM at raising the capital base across the industry last year, through a risk-based capitalization scheme, communicated via a circular dated August 27, 2018 and titled: “Tier Based Solvency Capital Policy for Insurance Companies in Nigeria” (“TBSC Policy”), was subsequently withdrawn on November 23, 2018,

lending rate – Similarly, existing insurance and reinsurance companies are now required to increase their Statutory Deposit with the CBN, to an amount equivalent to 10% of the New Minimum Capital Requirement for their respective classes of insurance operations. Consequently, in order to remain in business, existing insurers have only thirteen (13) months from the commencement date of May 20, 2019 (till June 30, 2020) to shore up

their respective capital base from the existing minimum paid-up share capital to the New Minimum Capital Requirement, as set out in the Circular. Industry Outlook There is no doubt that the New Minimum Capital Requirement will have a significant impact on the Nigerian insurance industry. Given Nigeria’s untapped vast potential in the global insurance market place, a well-capitalized industry with insurers who have deep pockets and excellent local capacity (other than Takaful and Micro-insurance companies specially established to respectively cater to the insurance needs of Sharia-compliant and lowincome segments of the market), is desirable and will contribute to improving the Nigerian economy. According to a report by credit rating agency, Agusto & Co (2019 Insurance Industry Report), the penetration rate (measured as a percentage of GDP) of the Nigerian insurance industry stood at 0.3 percent in 2018; compared with 14.7 percent in South Africa; 2.8 percent in Kenya; 1.1 percent in Ghana; 0.6 percent in Angola and 0.6 percent in Egypt. Also, the density of the Nigerian insurance sector (i.e. a measure of industry gross premium per capita) is currently at $6.2 and lags behind its African counterparts: South Africa ($762.5); Egypt ($22.8); Kenya ($40.5) and Angola ($30.5). We also gather from Agusto & Co’s report that the asset base of the Nigerian insurance industry was at N1.3 trillion as at December 31, 2018, indicating a compounded annual growth rate of 17 percent over the last three years while Gross Premium Income (GPI) generated

was estimated at N448.6 billion, reflecting a 12 percent growth yearon-year. Whilst these data portend vast growth potential for the Nigerian insurance industry, many licensed insurers are still largely undercapitalized, thus limiting their ability to take on big ticket in-country risks, as may be seen in the oil & gas, marine and aviation sectors of the economy. Also, Nigerian insurers need more capital to facilitate the acquisition of modern digital and technology-driven infrastructure necessary to aid their efforts at deepening insurance penetration through InsurTech. With this New Minimum Capital Requirement, a further consolidation of the Nigerian insurance sector is imminent, as some insurers may seek to merge or be acquired by bigger firms, in a bid to comply with the Circular. As insurance and reinsurance companies begin the necessary move towards shoring up their capital base (during the 13-month grace period granted to existing operators to fully comply with the Circular), it is expected that the market will gear up for new private equity and M&A deals in the coming months. With this impending recapitalization and consolidation exercise, it is hoped that the “surviving” Nigerian insurers will be stronger and deeper in their capacity to take on profitable high risks, so as to enable the Nigerian insurance industry function well and fit into an integrated global financial market place, as envisioned in the Nigeria’s Financial System Strategy (FSS) 2020 and the Vision 2020 development plans.

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

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Anthony Idigbe, SAN, Senior Partner, Punuka Attorneys, presenting an award at the Capital Market Solicitors Association (CMSA) Business Luncheon recently. www.businessday.ng

Aluko & Oyebode Partner, Oghogho Makinde (left) with Mrs. Audrey Joe-Ezigbo, President of the Nigerian Gas Association (NGA) at the NGA Business Forum and 20th Annual General Meeting held in Lagos recently.

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Thursday 06 June 2019

BUSINESS DAY

SECTOR INSIGHT

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Essentials of attracting private equity funding ADEKUNLE SOYIBO

(earnings before tax, depreciation, interest, depreciation and amortisation) will be an attraction for the business considering that this will be a boost to the company’s enterprise value.

ccessing adequate capital to scale up a business can be a daunting task. Great ideas, innovation and market opportunity would waste in the absence of capital. Such Ideas, innovation and opportunity would migrate to firms with adequate capital or the capacity to attract it. Suffice to say that underpinned in most business failures is the lack of adequate funding. The entrepreneur as the driver of business must be able to anticipate funding requirements for the respective stages of the business as well as grow the business to attract the needed capital throughout its life. The early and growth stages of the business being the most critical to put the business on firm footing. Most entrepreneurs are able to raise the needed capital to kick start their business but would usually face challenges raising capital to scale up. The question is usually whether the business will be able to “attract” the required funding for expansion. The key word, therefore, is “attract”. In other words, the business must be interesting enough to catch the attention of would-be investors with the financial war chest to take a bet and risk their funds on the business. This is typically the case with most institutional investors including private equity funds. Today, private equity funds are a good source of funding for firms that are seeking to grow and expand their business. Nigeria and other Africa countries have been beneficiaries of private equity investments. A good number of the private equity funds that are being raised on the continent are also seeking viable investment opportunities in Nigeria and across the African continent. On this note, it would be important to share with entrepreneurs seeking to grow and expand their business in Nigeria, across West Africa and indeed the continent some of the essentials of attracting private equity funding. How Private Equity Investment Works Private equity funds, like any other financial investor, will apart from providing capital, also have the goal of making reasonable returns on the investment. These funds will seek out to invest in businesses with capacity to grow and return money in multiples of capital invested over a period of time; the businesses with the potential of making higher returns on investment within a short payback period will be the most attractive. The ability of the business to scale up within the short to medium term is therefore

6. Clear Exit Strategy Private equity funds will invest for a couples of years and would expect to exit their investment. It is therefore important to understand the fund’s approach to exit and have the sponsor and management team buy-in to this objective to ensure an exit route for the fund. Since the return on investment to the fund depends on the ability of the business to growth and expand over the investment period, it is important for the sponsor and management team to demonstrate their ability to deliver on this goal from the outset.

essential. The sweet spot for the investment horizon is about three to five years by which time the business should have expanded and returned on the investment. In any case, where it is justifiable, private equity investors are willing to wait for longer periods of time to actualise the investment. In making the investment, the private equity investor may (a.) take up shares, debt or a mix of equity and debt for the investment ; (b.) have management oversight of the business through the board, board committees and/ or executive committees; (c.) insist on appointing key management personnel of the business. The rationale is to have some level of oversight and/or control on the management of the business to ensure that the business is being steered in the direction of growth and profitability. What Private Equity Investors Look For 1. Entrepreneurial Spirit and Strong Management Team The private equity fund will not be involved in the daily management of the business and therefore will seek out for sponsors and management teams that are eager to advance the course of the business, are hands-on, resilient, embracing innovation and new way of thinking, ability to attract talents as well as other traits that distinguish entrepreneurs. The management team’s track record will be subjected to scrutiny to affirm the strength and resilience of the team at delivering growth and profitability. The experience of the management team and the ability to

deliver the future of the business is also critical. The investor will want to be comfortable with the management team’s ability to craft and execute on the strategy of the business, leverage on relationships and alliances, enhancing efficiency by leveraging on technology as well the motivation and cohesion within the management team. 2. Good Corporate Governance Transparency of management and the governance structure of the business is crucial to private equity investors. Sponsors and management team must put in place internal control measures that ensure adequate oversight of the financial and operational elements of the business. The internal control policy of the business should also provide avenues for escalation of risks to the attention of management and board for necessary and timely action. Dominance of management over the board will be a turn-off. It is therefore important to have in place an active board whose members (particularly the nonexecutive members) bring value to the business in terms of industry experience, network and ability to provide leadership and oversight for management team and to the business. 3. Alignment Alignment of interests is important to ensure that the business achieves its growth potential and realisation of the investment. This means that the private equity fund and the sponsors of the business must swim or sink together. Private equity firms will not support a business or corporate structure

that allows the sponsors to benefit from the business at the expense of the private equity fund. Therefore, it is typical to see the private equity fund and the sponsor hold interests in the same type of instruments in the business so that both parties will share the same benefit and risks of the business. In no circumstance will the sponsors hold any interests in the business or enjoy any benefit that will give the sponsors an advantage over the private equity fund. 4. Ability to Scale Up Rapidly Private equity firms are looking for significant returns. Therefore, the ability of the business to grow rapidly over of the short to medium term is critical. This is will involve determining the market share of the business relative to the size of the industry and whether the business is well positioned to grow its share of the market by leveraging on its strategy, technology and relationship. The sponsors may also to show that the business has gained significant traction in an untapped market of potential customers and would require additional capital to consolidate on its effort within the industry to service these customers. 5. Ambitious Business Plan and Sustainable Cash Flow The business plan must communicate the growth potential of the business. It must be realistic and supported with facts outlining the market needs, competition, review the business’ strengths and weaknesses, identifying critical factors and what must be done to scale up the business. The company’s track record and ability to generate considerable cash on a sustainable basis, that is, an attractive EBITDA

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7. Synergy with Existing Portfolio Companies Private equity funds are also attracted to businesses that are able to provide synergies with other companies in their portfolio. It is important to understand the objectives of your would-be private equity investor and their investment strategy. This could be useful in identifying synergies that can be created from investment by the private equity fund. The synergies will useful in delivering operational efficiency and reduction in the cost of business. 8. Conclusion Finally, it is important note that partnering with a private equity fund will involve a high degree of openness as the private equity fund will seek to know everything about the business relating to the past, present and future plans for the business. At times, the private equity investment process may involve an extended period of due diligence and agreeing on the appropriate valuation of the business may also involve long-drawn negotiations between the fund and the sponsors. However, the investment is usually a rewarding experience for the sponsors and management team. Businesses with private equity investment become more efficient, better run and attractive for further funding. It is important that portfolio companies understand their would-be private equity investor and its investment strategy. The sponsor and management team of the portfolio company should understand the implications of the investment agreements to be signed with the private equity fund. This will necessitate seeking legal advice by sponsors and management team of the portfolio company in order to maximise the benefit of the investment by the private equity fund.

Thursday 06 June 2019

BUSINESS DAY

BUSINESS TRAVEL Dana Air deepens competition in airline market with new outlets, set for further expansion …records over 10,000 mobile app download Stories by IFEOMA OKEKE

igerian carrier, Dana Air has opened more sales and ticketing outlets in Abuja and Uyo to provide more convenient booking options for its guests. The airline in a statement by Kingsley Ezenwa, its Media and Communications Manager, said the outlets which will be officially opened on the 2nd of June 2019, is to meet with growing requests by its guests to have more outlets outside the airport. “We are pleased to announce that on the 2nd of June 2019, we shall be opening more outlets in Abuja and Uyo in fulfillment of the

L-R: Goodfaith Etuemena, chairman of Heartland FC of Owerri; Emmanuel Godwin, Heartland FC player and Kingsley Ezenwa, Media and Communications manager of Dana Air during the presentation of the Dana Air player of the month award to the player in Owerri recently.

requests of our guests for us to have more outlets outside the airport for booking, reservations and other ticketing and sales activities. “Opening the outlets is the precursor and having reached the peak of our plans for further strategic expansion, we felt the need to open more outlets to provide more options and convenience for our teeming guests. “The new outlets in Abuja are located at Silverbird entertainment center, central area Abuja, Transcorp Hilton Hotel, Maitama Abuja, and KIA Plaza Utako, Abuja and in Uyo, the new outlet is located at number 81 Oron road, with more to come in the next quarter. “We wish to also thank our guests for massively downloading our user –friendly

mobile app and for taking advantage of all convenient check-in and booking ideas that we make available like the smart booking on WhatsApp, self-service kiosk located at departure hall of mma2 and the Dana Air mobile app available for download on Play store and Apple store and our guests can perform any flight related activity on the go. “At the moment we have over 10k downloads and we can only appreciate our guests for choosing the smartest ways to book.’’ Dana Air is one of Nigeria’s leading airlines with daily flights from Lagos to Abuja, Port Harcourt, Uyo and Owerri. The airline is reputed for its unrivalled on-time performance, innovative online products and superior in-flight service.

Demuren to lead speakers at LAAC’s 23rd Annual Conference

ormer Director-General of the Nigerian Civil Aviation Authority (NCAA), Harold Demuren is to function as the Lead Speaker at the forthcoming Conference and Awards of the League of Airport and Aviation Correspondents (LAAC). Speaking recently with the Conference and Award Committee at LAAC Secretariat at the Murtala Muhammed Airport (MMA), Lagos, Demuren commended the league for the impact it has made on the industry over the years through its annual conferences and seminars. “I can never forget LAAC, for the role you have been playing putting us, stakeholders on our toes to do the right thing that will help the industry,” he said. Demuren will be sharing his wealth of experience after

years of serving in both public and private sectors of the aviation industry, as he speaks on the conference theme: ‘Boosting Aviation Investment through Policy.’ Apart from Demuren, other Chief Executive Officers (CEOs) in the aviation agencies would also be part of the panel of discussants where issues relating to the industry would be discussed. Muneer Bankole, CEO of Med-View Airline is the Chairman of the occasion, while major stakeholders especially in the airline sub-sector would also play key roles. The conference is scheduled to hold on July 17, 2019 at the Raddison Blu Hotel, Ikeja, Lagos. At least, 250 participants from airlines, government agencies, ground handling companies, financial sector,

aviation support service and other major stakeholders within and outside the country are expected at the 2019 edition of the conference. Key stakeholders made up of individuals and corporate organisations who had distinguished themselves in the industry would also be honoured with various awards at the event. The Minister of State for Aviation is to function as special guest of honour, while Chief Executive Officers of aviation agencies in the country as well as private service providers would equally play major roles. Other expected dignitaries include: Allen Onyema, Chairman, Air Peace Limited; Roy Ilegbodu, managing director, Arik Air; Hamisu Yadudu, Chief Executive Officer, Federal Airports Au-

thority of Nigeria (FAAN); Akin Olateru, Commissioner, Accident Investigation Bureau; Usman Muhtar, Director General, NCAA, Roland Iyayi, TopBrass Aviation, Gbenga Olowo, President, Aviation Safety Round Table Initiative, amongst other stakeholders. Demuren is an aeronautical engineer with over four decades of experience in the aviation industry. As Director General of NCAA, he was significantly instrumental to reforms in the Nigerian aviation sector, attaining United States (US) Federal Aviation Administration (FAA) Category One Certification for airports and introducing safety reforms to enhance professionalism and transparency in both operations and aviation business in the country.

Lufthansa German Airlines relocates, hosts clients, partners at new office

n continuation of efforts to offer clients and partners excellent service and maximum satisfaction, Lufthansa German Airlines has relocated its Nigerian head office in Lagos from Victoria Island to Ikoyi. The German Airline which was formerly located at Plot PC 30, Churchgate Street, 2nd Floor, Churchgate Towers, Victoria Island, is now at the modern stateof-the-art British American Tobacco Building on Olumegbon Road, Off Alfred Rewane Road in Ikoyi poised to offer

unrivalled customer experience while providing better proximity to customers. Speaking on the development during a special event hosting top clients and partners at the new office on Friday, May 31, 2019, Adenike Macaulay, Lufthansa Group General Manager Sales, Nigeria and Equatorial Guinea, reiterated the airline’s commitment to quality and efficient service. “We have been operating in Nigeria since 1962 and have become renowned for our quality and efficient services which our www.businessday.ng

customers have come to expect. I am assuring our clients and partners that we will continue to uphold that fine tradition here at our new office which is open to all,” she said. Macaulay said the event was an opportunity for the airline to bond and interact with its clients and partners, as well as foster networking opportunities amongst those present. She expressed pride at the cordial relationship between the airline and its stakeholders, particularly its trade partners, since its debut in the

country, and noted that such support has helped the airline to deliver an excellent level of service to her customers. Bismarck Rewane MD/CEO Financial Derivatives Company Limited, one of the airline’s long-standing passengers and corporate clients, commended the airline for its diligence, and efficiency: “I have been flying Lufthansa for over 20 years and my experience has been pleasant and delightful. It is a pleasure to visit Lufthansa in the new ambience and modern office in the up-market Ikoyi location.

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Arik Air wins Century Group’s courage and safety award

rik Air, one of Nigeria’s leading carrier, was celebrated by oil and gas giant, Century Group last week when the airline and its crew were presented with the award of courage and safety at the group’s corporate head office in Lagos. The award according to Alaba Owoyemi, the Group Executive Director (GED) of Century Group, was geared towards the promotion and reward of outstanding health, safety and environment practices and culture within Nigeria. Owoyemi recalled the experience on-board Arik Air flight W3 745 of October 28, 2018 in which the Captain and crew demonstrated courage, professionalism and empathy in safely conveying the passengers from Port Harcourt to Lagos despite the unusual turbulence. “One of our very own, Ere Ebikekeme (Technical Director, Global Performance Index) was onboard that flight and we have a first-hand report of the great team work of the crew,” Owoyemi stressed. The GED stated that the award given to Arik Air crew @Businessdayng

was geared towards celebrating the successful landing of the plane and to encourage other industry players to take safety seriously through the appreciation of stakeholders that have been exceptional. Abdullahi Mahmood , Arik Air’s Chief Pilot, received the airline’s award on behalf of the management. Speaking on the award, Roy Ilegbodu, Arik Air’s Chief Executive Officer, thanked the management of Century Group for their gesture and for emphasizing the need to imbibe international safety practices and standards as a culture. He reiterated Arik Air’s commitment to international safety standards and on time performance while also commending the award winning crew for their exemplary courage and for bringing honour to the airline. “We place a lot of emphasis on training and re-training and this is why our crew members and other categories of staff excel in their duties”, Ilegbodu stated. The crew members rewarded for their courage were Grant Onokah, Ijeoma Onah, Jacob Eneojo and Fadekemi Afolabi.

Thursday 06 June 2019

BUSINESS DAY

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Thursday 06 June 2019

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

“Free money has no value”, takeaways from Millennial Hangout on tech

orientation. “As a matter of fact, we have quotas for women,” she disclosed. “We try to encourage women to join.” The company has even had an all-women cycle which was dedicated to encourage women to come in as software developers. Within the learning cycle Andela is constantly looking for women who show keen interest and are ready to put in the work. We have a distributed customer service system” Chinedu Obidiegwu said that Luno which boast of nearly 3 million customers have to adopt an approach that ensures that each of them is not alienated and

their experiences are personalised. The distributed customer service strategy ensures that customer needs are addressed round the clock. “We have always wanted to build a new financial system,” he said. “When you have that kind of project you start thinking of how you will get a billion customers and still be able to show each of them love that they deserve. The culture that drives everyone is that we love our customers.” “Deliver what your market wants” Before going into any business, you have to know your market wants. I started logistic business, doing it the manual way. I started because I had a bad delivery and I am one person that likes to fix things, so I thought I could do better. So I asked why it is so difficult to do? I identified the market immediately. I just wanted to provide an excellent service. “I had no prior experience, but I had a problem I needed a solution to it and the only solution was tech which I adopted,” she said. “So far value and the vision is always greater than the challenge. That’s what keeps us going.” “The manager creates the environment for millennials to thrive” Uchechi Nwaukwa who leads a team of about 70 talented millennials at Signal Alliance said that it is the

manager’s responsibility to know what drives the team. “They love to play, to have fun, so you have to find the culture that encourages fun,” he said. For instance the millennials like sporty dressing. You can be responsible for sporty at the same time.” He also recommended building the future of the millennials into the future of the company. “There is something that Microsoft does where they tell you that you will be incentivised by milestone. They give you a visual letter that shows what you have earned per milestone. That is one of the things that I introduced; they could actually go to the portal and see exactly what they have achieved and what that is worth as incentive in their salary.” “It’s best to be involved as much as you can” Morenike Da-Silva said that in dealing with millennials she has learnt to listen and get involved as much as possible. However, it is also important to set the boundaries between fun and work. Hence they have to get the message that there is no free money to collect and that free money has no value. “Trying to bend them beyond who they are will make them become who they are not supposed to be,” she cautioned. She also noted that respecting their decisions when they want to leave is very important.

to a place where you know internet service may be poor, or quite expensive if it’s abroad, then downloading a map of the place being visited can be done in advance. So, whether you’re camping in the wilderness or travelling abroad, you can download a map of an area so you can see directions and use turn by turn navigation even when you can’t get online. The maps are also not large. The entire map of Lagos is about 40mb while Abuja is 25mb; at least on this reporter’s device. Wait time estimates and popular times: Using Google Maps, one can find out what the estimated wait times and popular times are at your favourite businesses so you can beat the crowds and save time. Remember where you parked: Is it impossible to park your car and not know

where you parked after completing your visit? Maybe, maybe not, but you may need someone to get something from your car. It is not necessary to have them looking for a blue Toyota corolla out of dozens, making it a ‘Gulder Ultimate Search’. After navigating somewhere, you can use Google Maps to save your parking location. Voice commands: Keep your focus on the road by using voice commands on Google Maps. Just say “OK Google, find gas stations” or “Show alternate routes” to get the information you need, hands free. We use filling stations or petrol stations colloquially in Nigeria, but if Google does not respond to that, simply use Gas station to save yourself the stress. You can also create lists in order to keep track of favourite places and share them

with friends. Recommendations and reviews go a long way in aiding decision making so that we can get the best value for money and time. With Google Maps, you can also find things to do and places to eat based on your unique interests and preferences. To sum it up (as we should know now), with Google maps, you can navigate anywhere, fast. Quickly add destinations based on recent searches without having to manually type in the location. Search for places, get alternative routes, real time information about traffic jams and delays, and an up to date ETA so you know exactly when you will be at your destination. Feel free to share your experiences with us on TechTalk on how well or not Google Maps lives up to your expectations.

FRANK ELEANYA

illennials form the largest pool of talent that are currently powering Nigeria and the world’s tech ecosystems. In fact, as at 2015 they became the world’s largest generation workforce, according to a Gallop report. They are expected to account for 75 per cent of total workforce in the near future. On the customer side, millennials’ expectations are reshaping the discussion around product design and experience. Neil Howe and William Strauss, authors of the 1991 book Generations: The History of America’s Future, 1584 to 2069, define the millennial generation as consisting of individuals born between 1982 and 2004. Due to their high talent quotient and big appetite for innovative products, millennials are forcing many companies, particularly those leveraging technology to serve their customers, to adapt workplace culture to accommodate the progressive, tech-driven approach of millennials. It has become the new normal in the tech industry to recreate systems and in doing that; many companies are struggling to know where to apply the brakes and how to manage the insatiable expectations of this generation.

L-R: Morenike Da-Silva, managing director, Cordros Asset Management Limited; Chinedu Obidiegwu, marketing and community lead, Luno Nigeria; Frank Eleanya, senior tech analyst, BusinessDay; Uchechi Nwaukwa, CTO, Signal Alliance; and Nana Annah, CEO, Nester Global Solution Service at the Millennial Hangout Tech edition which held on 31 May, 2019.

On Friday, 31 May, experts and professionals across companies leveraging technology to reinvent their services came together to address the challenges businesses face. The Millennial Hangout which is a quarterly event organised by BusinessDay with the goal of creating a platform for millennials and businesses to interact, was hosting the first tech edition in collaboration with Luno, Cordros Asset Management and Lasena. The experts include Chinedu Obidiegwu, marketing and community lead at Luno, Morenike Da-Silva, managing director, Cordros Asset Management, Olawunmi Onawunmi, Andela’s direc-

tor, Partner Engineering, Uchechi Nwaukwa, chief of technology, Signal Alliance, and Nana Annah, CEO Nester Solution Service. Some of the takeaways from the session include: Andela provides equal opportunity Olawunmi Onawunmi a non-software developer and whose function as director, partner engineering makes her responsible for over 500 engineers in Nigeria and Ghana, said during a fireside chat that Andela is an equal opportunity working environment. The company which probably has the most millennials workforce in Nigeria said during selection it does not prioritise gender or

Bank IT Security

Getting the best out of Google maps CALEB OJEWALE

ore than any o t h e r g ro u p, Uber, Taxify and drivers on cabhailing platforms are known to frequently use Google maps, which is understandable considering the nature of their job. Unlike the conventional taxi drivers with ‘ancient knowledge’ of all the nooks and crannies of cities such as Lagos, a leveller is needed to find one’s way around. Having access to the map is perhaps such a good idea when one considers that the longer the trip, which may have been avoidable, the more one will have to pay. For the average commuter in Lagos, using the map is not so much about finding a place, but avoiding traffic and getting there in record time.

However, in between using it to get to a place, there is so much one can do on Google maps. It could also be the perfect adventure/vacation companion, a topic to be discussed in a subsequent article. The question then is; what else is there to do on Google Maps besides moving straight from point A to B. Add detours to your route: On your way to that job interview or important business meeting, it turns out you forgot to make copies of a piece of document and turning back is not quite an option. While in navigation mode, you can search for business centres along your route, so you can find the nearest place and get back on the road as quickly as possible. The same applies to finding ATMs along your route, or even locating gift stores when on your way to a

birthday party, but turns out you have forgotten to buy a gift. Panicking is not necessary as Google maps can help one get whatever is needed and continue the journey; picking out fastest routes and shortest times. Wheelchair accessible routes: Not many people pay attention to this, but wheelchair accessible transit routes is a big deal, as it makes getting around easier for those with mobility needs. Imagine picking out a restaurant to have lunch or dinner, arriving at the venue only to find out there is no provision for one of the guests with limited mobility to enter the facility. Using Google Maps, you can specifically find venues with wheelchair accessible transit routes, so that any awkward experience is avoided. Offline maps: Before embarking on a trip out of town,

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

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Thursday 06 June 2019

BUSINESS DAY

news IGP calls for tougher legislation as police arrest 2,175 suspects for kidnapping, armed robbery, others Innocent Odoh, Abuja

nspector General of Police (IGP) Mohammed Adamu has called for tougher legislations against kidnapping and banditry including possible state seizure of assets linked to illicit proceeds from kidnapping and other heinous crimes. This, the IGP believes, will act as a strong disincentive to potential kidnappers and other violent criminals. According to a statement issued on Wednesday by Force Public Relations Officer, Frank Mba, the IGP made this call on Wednesday while addressing a delegation of the Association of Local Governments of Nigeria (ALGON), Nasarawa State chapter, led by Aminu Muazu Maifata, who paid him the traditional Salah visit in his official quarters in Abuja. He noted that the call had become necessary against the increasingly daring resort to these forms of crimes by criminal elements in the society. The IGP also used the opportunity of the visit to apprise the visitors on the successes recorded by “Operation Puff Adder” in the ongoing fight against criminal elements across the country. He stated that since the launch of Operation Puff Adder on April 5, 2019, till date, 63 kidnapped

victims were rescued unhurt by Police Operatives. In a similar vein, 2,175 suspects were arrested for the following offences: Kidnapping – 852, Armed Rubbery – 865, Murder – 359 and Cultism – 99. With respect to arms recovery, the IGP noted that 834 Arms, including two rocket launchers, 19,009 live ammunitions were recovered with Oyo State, recording the highest number of 9,500 live ammunitions. The IGP stated that the Police are rejigging their strategies to ensure proactive interception of illicit weapons destined to our country and at the same time mop up un- authorised weapons in circulation. According to the IGP, while a good number of the cases are already being prosecuted in courts across the country, many of the cases are still under active investigation owing largely to the complexity of investigating and managing organized crimes. While commending his men for a good job, the IGP stated that the mind-boggling size of the arrests and arms recovered so far is a testament to the efficacy of Operation Puff Adder and more importantly to the unalloyed and unwavering support of the public to the Nigeria Police and other Security agencies, the statement added.

Air pollution can cause permanent damage to child’s brain, UN warns ANTHONIA OBOKOH

ccording to a new United Nations Children’s Fund (UNICEF) report released to commemorate the 2019 World Environment Day celebrated Wednesday, June 5, for babies and young children, breathing particulate air pollution is extremely harmful to their health and development, as it can cause permanent damage to brain tissue and lungs. UNICEF warns that since air pollution is not monitored in Africa to the same extent as other parts of the world, we are not only potentially underestimating the severity of the impact – we might also be underestimating its scope. The report notes that air pollution is a growing challenge for Africa. Air pollution also impacts ecosystems – vital to livelihoods and health – as well as food crops. A recent study noted in the report estimates the economic cost of premature deaths from outdoor air pollution across Africa to be $215 billion. “Air pollution is a silent killer of children. And in Africa especially, we know the problem is severe, we just don’t know how

severe,” said UNICEF executive director, Henrietta Fore. “Reducing children’s exposure to pollutants – and therefore reducing the damage to children’s health and early brain development – begins with a reliable understanding of the quality of air they are breathing in the first place.” Deaths from outdoor air pollution in Africa have increased 57 percent over nearly three decades, from 164,000 in 1990 to 258,000 in 2017. Without groundlevel monitoring stations that reliably measure air quality, Africa’s children are increasingly at risk of unwittingly breathing air that is toxic for their health and brain development, and the ability to devise effective responses is greatly compromised. Ultrafine pollution particles are so small they can enter the blood stream, travel to the brain, and damage the blood-brain barrier, which can cause neuroinflammation. Other types of pollution particles, such as polycyclic aromatic hydrocarbons, can damage areas in the brain that are critical in helping neurons communicate, the foundation for children’s learning and development.

Environment Day: Edo sues for multistakeholder approach to actualise goals

do State governor, Godwin Obaseki, has sued for collaboration among stakeholders; individuals, governments, civil society, organised private sector, donor agencies and trade groups, to cut back on environmental degradation and its associated threats. Obaseki, who made the call in commemoration of the World Environment Day marked on June 5 each year by the United Nations and its partners, explained that “all hands must be on the plough in the effort to safeguard the environment.” The governor noted that environmental challenges such as air and water pollution, flooding, acid rain, affect everyone including the unborn generation. While commending the pockets of efforts that have been made by stakeholders in the environment sector in the past, the governor however stressed that “working together as a group will produce better results.” He added: “Multi-stakeholder approach to problem brings all stakeholders together to participate in proffering solutions, after which superior ideas are aggregated.” On the theme for this year’s celebration: “Beat Air Pollution,” he assured that his ad-

ministration would continue to prioritise the protection of the environment through policies and programmes. In his message, Antonio Guterres, secretary general of the global body, said: “It is time to act decisively. My message to governments is clear; tax pollution, end fossil fuel subsidies and stop building new coal plants. We need a green economy, not a grey economy.” According to the United Nations, “The celebration of this day provides us with an opportunity to broaden the basis for an enlightened opinion and responsible conduct by individuals, enterprises and communities in preserving and enhancing the environment.” It noted that the theme, “Beat Air Pollution,” is a call to action to combat this global crisis. Chosen by this year’s host, China, this year’s topic invites us all to consider how we can change our everyday lives to reduce the amount of air pollution we produce, and thwart its contribution to global warming and its effects on our own health.” The global body added, “Since the celebration began in 1974, it has grown to become a global platform for public outreach that is widely celebrated in more than 100 countries.”

Gianni Infantino re-elected as FIFA President until 2023 Anthony Nlebem

IFA president, Gianni Infantino, has been re-elected as president of football’s world governing body for a second term at FIFA’s 69th Congress held Wednesday in Paris, France. Infantino succeeded Sepp Blatter in 2016 and has increased the number of teams at the 2026 World Cup and proposed key changes to the Club World Cup. Ex-president Blatter was in charge for 17 years until he was banned amid a corruption scandal in 2015. In his speech at the congress, Infantino focussed on the relative calm of his first term in charge compared with the situation he inherited. “Nobody talks about crisis at Fifa any more or rebuilding it

from scratch,” he said. “Nobody talks about scandals or corruption, we talk about football. We can say that we have turned the situation around. “This organisation has gone from being toxic, almost criminal, to being what it should be - an organisation that develops football and is now synonymous with transparency, integrity.” Infantino was behind the expansion of the World Cup from 32 teams to 48 for the 2026 tournament, which will be held in the United States, Canada and Mexico. Wednesday’s Congress had in attendance NFF president, Amaju Pinnick, and general secretary, Mohammed Sanusi, approved FIFA’s detailed budget for next year, which includes $810 million to be invested in the game worldwide.

GenCos release 3,919mw of electricity on June 3 — report

lectricity Generating Companies (GenCos) comprising gas-fired and hydro stations released an average of 3,919 megawatts (mw) of power into the national grid on Monday, a daily energy report says. The report, which was compiled by the Advisory Power Team, Office of the Vice President, was made available to the News Agency of Nigeria on Tuesday in Abuja. It said the energy released by the companies was up by 139.64mw from the figure delivered on Sunday, and 1,808mw was not generated due to una-

vailability of gas. Similarly, it said 728mw was not generated due to high frequency resulting from unavailability of distribution infrastructures, saying 289mw was recorded as losses due to water management procedures. The report revealed that the power sector lost an estimated N1.3 billion on Monday to the factors of insufficient gas supply, distribution and transmission infrastructure. On sector reform and activities, it said that the dominant constraint for Monday’s generation was unavailability of gas. www.businessday.ng

Gianni Infantino, FIFA president (2nd l); Ahmad Ahmad, CAF president (l); Amaju Pinnick, CAF 1st vice-president/NFF president (2nd r), and Omari Constant Selemani (r), CAF 2nd vice-president, at FIFA Congress in Paris, yesterday.

Wellhead fire: Our people are dying, Delta community cries out Francis Sadhere, Warri

eople of Polobubo (Tsekelewu) community in Warri North council area of Delta State have cried out to the World Health Organisation, the Federal Government, Chevron Nigeria Limited, and the Delta State government over the health hazards they are exposed to due a wellhead fire belonging to Chevron that has been raging for almost two months now. The community made the call following the reported escalation of the wellhead fire, which started April 18, 2019. They therefore asked the WHO and the Federal Government to prevail on Chevron Nigeria to save them from certain health risks, saying the

thick black smoke emanating from the fire had become a major source of worry to the community. Some members of the community as well as their leaders who spoke with BusinessDay described the situation they were faced with since the smoke increased on Monday, as hazardous A boat trip to the community by our correspondent saw huge black smoke rising sky-high, subjecting the surrounding area to a heavy dark cloud and the water covered by a thin film and some floating dead fishes. President of Polobubo (Tsekelewu) National Council, Ebilate Mac-Yoroki, in a telephone interview said, “I was just informed that Chevron engineers cut open the head of the burning well-head and that this caused the fire to be oozing

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horizontally, with a bigger smoke. All the smoke is heading into my community, endangering the lives of my people, their crops and animals and Chevron still maintains this has nothing to do with Polobubo. “Our appeal is to the Federal Government, our governor, Dr Okowa and the WHO, they should rally round and save us from this plot targeted at exterminating Polobubo people. I don’t think we have been wrong for being peaceful and accommodating host community. For close to two months this fire has been on and now it is getting bigger.” Narrating the outbreak of the smoke and how the community reacted to it, the chairman of Polobubo Oil and gas Committee, Deacon Ologun Azikboro said the sudden dark cloud and the black particles @Businessdayng

it rained on the community caused an initial panic among the people. “On Monday evening, that was about 4:30pm to 5:00pm, we started seeing some dark particles coming down from the sky, settling on everything; the roofs, the ground and everything outside, including those of us doing one thing or the other outside. This made everybody to start panicking and running to hide. “It was later we realized that the sky above us had been taken over by a strange smoke, which we later learned was coming from the wellhead fire. Everything was covered in black after some time, except whatever was inside the house. Then when it later rained on Tuesday, the rain water was black because it washed the black particle on the roofs down,” Azikboro explained.

Thursday 06 June 2019

BUSINESS DAY

NEWS Analysts explain why real estate always moves behind economy CHUKA UROKO

saneconomicindicator,real estate is regarded as a laggard. This is because when an economy is going into recession, real estate will be among the last to enter into recession and if the economy is exiting recession, real estate will also be among the last to come out. This was amply reflected in the 15-month economic recession in Nigeriaofbetween2016andearlypartof 2017.Ofallthesectorsoftheeconomy, real estate was the last to start feeling the impact of the recession. In the

same vein, when the economy exited recession in the second quarter of 2017, real estate remained in negative growth territory till the first quarter of 2019. The 0.93 percent growth that pulled the sector out of recession after 12 straight quarters has been attributed to a number of factors including seeming clarity in investment climate aftertheMarch2019generalelections as well as increase in oil price. Analysts explain that real estate is always trailing the economy in either boomorrecession,becauseasasector it requires two factors of production that are hard to come by and these

are capital and human resources, otherwise known as labour. “If you are allocating resources, especially capital, you do so to an area that will give you immediate or quick return,whichrealestatedoesnotgive,” Femi Akintunde, CEO, Alpha Mead Group, explains to BusinessDay in an interview. Looking at the enterprise management system requires to drive real estate industry, it will be discovered that it is intense and a bit complicated in the midst of other factors, meaning that as a country, Nigeria has to look at how well it has fared in developing thoseresourcesenoughtosupportthe

real estate industry. Akintunde is of the view that what has helped to bring the real estate sector out of recession was the little respite the economy got in terms of increase in oil price, which has contributed to the recovery and growth of the economy. The economy grew by 2.01percentinthefirstquarterof2019. But there is a challenge here; 2.01 percenteconomicgrowthinacountry wherepopulationisprojectedtogrow at 2.5 percent per annum means that the country has an unproductive population and therefore consuming more than it is producing. That growth, according to Akintunde, is

not sustainable. Realestatealsotrailstheeconomy in boom or recession because it is not a trade. Paul Onwuanibe, CEO, Landmark Group, explains that real estate “is a long-term game and when you are in it you have to look at cycles rather than any moment in time. “When you are planning any real estate development, you have to do so in seven to 10-year cycle. Usually, whenthedemandsideisstrong,thatis when the supply side is weak and vice versa.Whenyouplan,youcannotput boththedemandandsupplysideinto your cycle,” he says. Building or developing real estate

I will give dynamic representation as UNGA president - Bande Innocent Odoh, Abuja

igeria’s Tijjani Muhammad Bande, who emerged as the President of the 74th Session of the United Nations General Assembly (UNGA) has assured of a dynamic representation at the UN, which will promote Nigerian, African and the interests of the rest of the world at the UN. A close aide to Bande told BusinessDay on Wednesday that the Nigerian permanent representative to the UN said this immediately after he was elected by acclamation on Tuesday at the UN headquarters in New York. The new President was quoted as saying that the world body will “see a positive representation” that will be more integrative particularly on issues that will project Africa, Nigeria and the rest of the world in line with the principles and conventions enunciated by the UN. UN Secretary General Antonio Guterres, while congratulating Bande, noted that he understands the challenges facing Africa and the rest of the world, saying, “as a Nigerian and African, you have invaluable insights into the continent’s challenges- such as the Sahel and Lake Chad Basin and - and more broadly into the challenges our world faces across the three pillars of our work, peace, sustainable development and human rights.” The Ministry of Foreign Affairs had expressed delight that Bande was elected by acclamation as the President of the 74th Session of the United Nations General Assembly. A statement issued by the acting spokesman of the Ministry, Friday Akpan, noted, “The election is a positive development and demonstrates the confidence in Nigeria’s ability to pilot the affairs of the revered global institution. “ Professor Tijjani Bande is the second Nigerian to occupy the position. Major General Joseph Garba (rtd) was the President of the 44th session of the United Nations General Assembly in 1989. Bande was born in 1957 and possesses chains of degrees from Nigerian institutions and from abroad. He will be in office as the UN gears up to commemorate her 75th anniversary, which is hoped to strengthen international cooperation and development. www.businessday.ng

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does not come out easy or cheap. When a developer conceives an idea to develop a project, it probably takes one whole year for him to go to the drawing board. From the drawing board to the regulatory environment will take another one year. By the time the developer goes into the supply chain and to build, it takes about two years, making it four years down the line, and by the time he delivers the project, it will be about five to six years. This is why the developer does not have to wait for when thereisaneconomicboomforhimto build and deliver to the marketplace.

Thursday 06 June 2019

BUSINESS DAY

news Akwa Ibom not opposed to LG autonomy ANIEFIOK UDONQUAK, Uyo

mmediate past Attorney General and commissioner forjusticeinAkwaIbomState, Uwemedimoh Nwoko, says the state government is not challenging the proposed local government autonomy or opposed to it. He says the power to superintend over the affairs of local government areas lies solely with the legislature and not the Nigerian Financial Intelligence Unit (NFIU). Nwokomadethedisclosurein Uyo at during an interaction with newsmen. He says he has filed a case against the agency in suit number (FHC/UY/CS/88/2019) in a Federal High court in Uyo, the Akwa Ibom State capital. He says the decision of his client to challenge NFIU guideline, which is seeking to take over the control of local government areas, is borne out of constitutional concerns and its implication.

According to Nwoko, “What we are pursuing has nothing to do with the financial autonomy of localgovernment;it’sanissuethat willberesolvedinatotallydifferent perspective. All we are saying is that the NFIU lacks the power, be it in statute, constitutional or conventional in a Federal structure to come to seek, by mere guidelines, to take over control and regulate the affairs of LGAs, particularly in terms of finance.” He maintains that local government was created for people in local communities, stating that the attempt by the NFIU to place a limit on amount withdrawn by local government in a day amounts to impeding the growth of local government areas. “Now, local government caters for village heads, market women, town criers and those who need direct impact from the local government. 99.9% of these people don’t have bank accounts. So, when you now tell the local governmentthatyoucannotwithdrawmorethanN500,000inaday,

what you have done is that you have tied down the growth of the local government area,” he noted. He condemns the move by NFIU to control finances of local government areas, adding, “If we allow this inordinate ambition of NFIU to stand, there is a security angle that is very frightening and we’ve put this in our affidavit in court.” He questions the rationale behindmovesbyNFIUtoassume controloflocalgovernmentfunds, noting that such move, if it makes headway, will not be healthy for governance at the local level given what he said is the peculiar nature ofrunninglocalgovernmentareas in the country. Speakingfurther,hesaid:“Let’s assume that something happens now and the local government needs to immediately raise an alarm across, say 70 – 80 villages and it needs to call a meeting of thevillageheadsimmediatelyand the village head needs to mobilise their town criers to raise alarm, and the village head needs to be

mobilised with N3,000 each so that they can give their town crier N2,000 to fuel their motorcycle andmovearound,soyouwillnow have to ask village heads to bring theiraccountnumberssothatyou can transfer money to them, then they will now ask their town criers tobringtheiraccountnumbersso that money can be forwarded to their account; what if there is no bank in that local government?” He describes the action of NFIU as unconstitutional, noting that they are only interested in having certain powers and create territories that have no backing in law. “I believe this is an attempt to tactically push us to the situation of Zamfara and Katsina. I think what the NFIU is trying to do is the scramble for Nigeria; they want to create territories and control so that people can start visiting their office. Their action is unconstitutional, it does not have any backing of the law and that is the simple argument that we are putting up in court,” he maintains.

Godwin Obaseki (l), governor, Edo State, with Ifeanyi Okowa, governor, Delta State, during Governor Obaseki’s courtesy visit to Okowa in Government House, Asaba, Delta State,yesterday.

Edo, Delta meet on Bendel Development Commission

do State governor, Godwin Obaseki, and his Delta State counterpart, Ifeanyi Okowa, are putting finishing touches to the establishment of Bendel Development Commission, a joint body to aggregate and drive economic development efforts in the two states that formed the old Bendel State. The two governors met on Wednesday to deliberate on the modalities for the establishment of the Commission at the Government House, Asaba, the Delta State capital. Governor Obaseki said Edo State was strengthening ties with her sister state to deepen cooperation around developing an economic zone using the potential of the two states in oil and gas, human capital, agriculture and unique location. Some of the efforts to be looked into include how the two states can work together

... security, economic cooperation top talks to improve the impact of the Niger Delta Development Commission (NDDC) in the two states, he said. He called for the inauguration of the advisory committee of governors for the Niger Delta Development Commission (NDDC) to improve the commission’s governance structure to enable it perform its duties better. Edo and Delta states share the longest border and would both seek ways to improve security along the border communities, he said, and urged the Deputy Governors of the two states to fast-track resolution of border disputes. He said Edo, Delta, Ondo and Ekiti states, the four shareholder states in Benin Electricity Distribution Company (BEDC), intend to adopt a proactive approach to strengthen BEDC so the company could discharge www.businessday.ng

its responsibility efficiently. “The governments of the states under BEDC coverage area will be reviewing a proposal to see how we can jointly work together with the management of BEDC and all our shareholders to restructure the company to discharge its responsibility of providing power to the people of the states,” he said. The two states would also work towards engaging the BEDC towards the restructuring of the company to provide more electricity for the people of both states towards enhanced economic fortunes, he said. Noting that they will also work together to deal with security threats in the two states, the Edo governor said efforts would be strengthened towards tackling issues of kidnappings and banditry perpetrated with the cover of the forests in the two states.

Governor Okowa, who expressed delight at the visit, said the bond between the two states, which was broken from the old Bendel State, was stronger than the difference as a result of political leanings. “Edo and Delta states are from Bendel State and the Bendel tie is a stronger bond than the political parties we belong. We want to build on this tie and leverage on it to address greater economic issues, which will be of great benefit to the people,” Okowa said. The Edo State governor was accompanied by the Secretary to State Government, Osarodion Ogie, Solicitor General of the state, Oluwole Iyamu, Commissioner for Communication and Orientation, Paul Ohonbamu, executive chairman, Edo Development and Property Agency, Isoken Omo, special advisers and other aides.

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Oxford, Cambridge Universities’ alumni set agenda for Buhari … point economy, security, anti-corruption as priority OBINNA EMELIKE

anellists at a colloquium organised by Oxford and Cambridge Universities Alumni Network of Nigeria have offered ideas of what President Mohammadu Buhari should do in his second term. They want President Buhari to take bold steps that would provide direction for economic recovery, a departure from his first tenure that was characterised by poor performance, judging by economic indications. The panellists, drawn from diverse professional backgrounds in law, economics, business, and bureaucracy include Adeyemi Candide-Johnson, a senior advocate of Nigeria; Rume Aggreh, a lawyer; Ayo Teriba, renowned economist/ former adviser to Yemi Osinbanjo, vice president, Diekola Onoalapo, an engineer and Collins Onuegbu, executive chairman, Signal Alliance. Opening the floor, Adeyemi Dipeolu, a retired civil servant and an alumnus of Oxford University, London, approached the topic from a different perspective. “The issue should not be what President Mohammadu Buhari should be doing differently in the next four years. I think the real issue is what we, as a nation should be doing differently to develop the economy,” he said. Dipeolu noted that the task of rebuilding Nigeria called for a responsibility on the part of everybody, saying further that the 2019 budget of N8.9 trillion in an economy of about N120 trillion, which is just 7.5 percent, called for all stakeholders to contribute positively towards the development of the economy. For Rume Aggreh, a lawyer, the judicial arm of government must be independent to allow for checks and balances between the legislature and the executive. Rume said the weak state of the Nigerian judiciary was

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responsible for anarchy because when court orders are not obeyed by the government in power it creates a sense of anarchy and lack of trust in government on the part the people. The lawyer recommended merit as the criteria for appointments to the bench, while respect for the rule of law should be a sacred practice by the three tiers of government. On the economy, Aggreh wanted President Buhari’s government to present a clear direction and policy of where the country ought to be in the next four years. Ayo Teriba x-rayed the macro economics of the nation pointing out that Nigeria went into recession because of the shortfall in its foreign reserves. Teriba said the expectations from President Buhari’s first tenure were low because the government met a huge deficit in infrastructure and financing. Speaking on corruption, Adeyemi Candide-Johnson said leadership in governance had failed in the country because it was not organised on a progressive society. He noted that nation’s elites that should be the high priests of the society had become vacuous and absent in leadership. For Johnson, corruption appeared to be the national religion of the country because it seemed everybody was involved. To deal with the menace he said judges should be time conscious in dispensing their duties to make the judicial system efficient. Collins Onuegbu, executive chairman, Signal Alliance, Lagos, dwelt on economy. He noted that the when the President Buhari’s administration came on board in 2015, it inherited revenue shortfall. The oil money dwindled and affected the country’s foreign reserves; the financial system became very shallow, so the stimulus package that should have provided a hedge for the recession was a challenge.

Thursday 06 June 2019

BUSINESS DAY

news Boeing Max 8 aircraft grounding... Continued from page 1

ond deadly crash in five

months. The development has since seen airlines reschedule their flights as passengers who booked tickets months back are experiencing delays and cancellations of flights, with airlines unable to keep up with planned schedules. But the situation is getting worse as summer bookings improve across the world, said Olanma Ojukwu, chief executive officer, GOTA Travels. The US carriers’ trade group, Airlines for America, estimates that a record 257.4 million people will fly from June 1 through the end of August 2019, the tenth consecutive summer increase. Those throngs – totaling on average 2.8 million people each day – will confront two unique challenges: the possible reassignment of hundreds of aviation security personnel to the Mexican border, and the continued worldwide grounding of Boeing’s 737 Max, the

trade group said. Passengers should, therefore, expect their summer vacation plans to get a lot more expensive, Ojukwu said. BusinessDay’s checks show that even though the aircraft type was not operating in Nigeria prior to its grounding, passengers travelling from Nigeria and connecting flights in other countries are also affected by the development. “We started experiencing tougher times in our travel plans this past April,” Ojukwu said. “The preferred airline for my clients who go for the annual pilgrimage in Israel gave us options of two days earlier arrival or two days later arrival and it spoilt all our plans because our clients were faced with additional payments for two days hotel accommodations. Some could not get permission to travel later or earlier than scheduled all because of the scarcity of seats.” Ikechi Uko, Nigerian travel business consultant, told BusinessDay that the grounding of

theBoeingMAXwoulddefinitely affect the summer holidays. “You cannot pull out 375 aircraft with no replacement and expect nothing to happen. 210 seats multiplied by 375 is a large number of seats. The aircraft were profit makers for regional airlines and routes,” Uko said. Although some industry watchers say they do not expect the scarcity of seats to affect trips across most of Africa this summer, Mitchell Ojewale, a travel agent, explained that some trips within Africa which were done with the Max 8 are now transferred to other aircraft types that are fuel-guzzling, resulting in higher fares on such trips. “Ethiopian Airlines is no longer flying the Max 8 on its medium range routes, especially within East Africa, but Nigerian travellers who are visiting Nairobi, Dar es Salam, Kigali, among others are already paying more on same routes with other aircraft types provided by Ethiopian Airlines on the same routes and others for precaution

sake,” Ojewale said. Airlines are expected to be robustly profitable during the summer season, a period when heavy demand keeps fares higher and planes fuller than during other times of the year. But this year, all bets are off. Regulators are still investigating the safety of the 737 Max following two crashes within five months that killed a total of 346 people. Three of the four largest US carriers are grappling with how to cover their busy summer schedules with the loss of six dozen Boeing Co. 737 Max aircraft. The lack of those planes which many airlines purchased to be their new workhorse of the skies adds further pressure to carriers and customers at a time when the air travel system traditionally operates at full throttle. American Airlines Group Inc., Southwest Airlines Co. and United Continental Holdings Inc. have removed the Max from their schedules through August, leaving thousands of passenger flights to be covered at a time of year when virtually no seats fly

empty. Canada’s two largest airlines also have 37 Max aircraft between them. Last week, United said it would cancel 2,410 flights in June and July due to the grounding as it extended its Max-free schedule to August 3. Southwest, the largest Max operator with 34, has put August 5 on its schedule as a placeholder for the Max’s return to the fleet; American has set August 19, the date that carrier sets as the unofficial close of its peak season. American said the Max grounding is causing 115 daily flight cancellations; Southwest has about 4,000 daily flights but hasn’t detailed how many daily cancellations it sees this summer due to the troubled plane. If the regulators approve the corrections done by Boeing, Uko said, then American Airlines would start by August, but other countries may approve and join later. “Knowing what I know of Donald Trump’s America, once American Airlines start flying the Max, all other countries in Europe will join except China and Africa,” he added.

To cushion the effect of the pullout of these aircraft, he said some airlines are partnering to ensure most of their scheduled flights operate. Bernard Bankole, president, National Association of Nigerian Travel Agents (NANTA), however, said Nigerians are already facing difficulty going to the United States with visa constraints and flight cancellations and are making alternative plans to visit other destinations for summer. “No doubt, Nigerians often go to the US for summer but that narrative is changing this year. People are now moving to Dubai, Middle East and Canada for summer, while US is gradually losing out,” Bankole said. “We are still having good sales for summer. You cannot stop people from moving. People are beginning to move elsewhere aside from the US as a result of the visa constraints. In the long run, this development will affect US GDP, especially at a time when every country is promoting their destination,” he said.

FG’s impending revenue challenges... Continued from page 1

ment’s Joint Venture (JV)

assets with the International Oil Companies (IOCs) cannot clear the country’s long-term revenue challenges. The major short-term source of Nigeria’s revenue shocks is the fall in Brent crude, international benchmark for the oil price, which fell to its lowest level in three months on Wednesday to $60.43 (as at 12:41 pm) as gathered from the Bloomberg terminal. The oil market has maintained a downward trend. It has plunged by 13.8 percent from $70.11 as at May 28, 2019. Nigeria can hedge against volatility in oil prices, which has a direct impact on its revenue streams, by reviewing its production sharing contracts (PSCs) with IOCs. With falling crude oil prices narrowing and approaching the Nigerian Federal Government crude oil benchmark of $60 in the 2019 budget, Nigeria’s budget assumptions of an average price of $60 may be unrealistic and could threaten revenue projections. Review of Nigeria’s Production Sharing Contracts (PSC) with IOCs has been seen as a way to shore up revenue. Africa’s biggest crude oil producer first adopted the PSC model in 1973. It was reviewed in 1999 but backdated to apply to oil prospecting licences (OPLs) of 1993. Since then, the PSCs were amended in 1986, 1993, 2000 and 2005.

Another round of amendment is due, experts have said, if Nigeria is to shore up revenue accruing from upstream oil and gas activities. “We are a mature field and the certainty of striking oil is high. With this, we can get tougher in our contractual arrangements, unlike countries just starting out,” Ibe Kachikwu, former minister of state for Petroleum Resources, said in a recent interview with BusinessDay and other journalists. A study conducted by the Nigeria Extractive Industries Transparency Initiative (NEITI) in March 2019 showed that Nigeria has lost at least $16 billion (N2.87 trillion at an average exchange rate of N179.65/$1 during the period) in 10 years due to nonreview of the 1993 Production Sharing Contracts that still apply to some upstream oil projects. The losses were recorded between 2008 and 2017. “It would be difficult to recoup what has been described as lost by NEITI. The focus has to be on achieving a fair balance going forward,” Adeoye Adefulu, energy partner, Odujinrin & Adefulu, told BusinessDay. NEITI’s report stated that total production by PSC projects was below 100 million barrels per year between 1998 and 2005, while JV projects produced over 650 million barrels per year. However, the total production by PSC projects increased

First quarter 2019 offshore operations VAT... Continued from page 2

with production expected to reach 180,000 barrels per day. “It is something that has gone through the courts in Nigeria which relates to an original clause within the original PSCs (production sharing contracts),”

Andy Brown, who steps down this year as head of Shell Upstream, had told Reuters. “We will have to take it seriously but we think it has no merits.” First quarter gross domestic product report had presented evidence that Nigeria’s www.businessday.ng

President Muhammadu Buhari (r) receiving Report of the 2018 Presidential Panel on Reform of the Special Anti Robbery Squad (SARS) from Tony Ojukwu, chairman of the panel, at the Presidential Villa in Abuja.

to 305.8 million barrels in 2017, representing 44.32 percent of total production and JV projects production stood at 212.85 million barrels, representing 30.84 percent. To review the PSCs should see the Federal Government accumulate more revenue from deep-waters crude production and exploration. “A number of 1993 PSCs are already coming to the end of their term and, therefore, present the government a golden opportunity to renegotiate the terms of the PSCs,” Adefulu said. “I believe the government can both sell off its JV assets and also review the PSCs with IOCs,” he added. While the JV remained

the principal contract model introduced in 1986, which typically govern onshore/ shallow water projects for the purpose of exploration and production of resources, the inability of the Nigerian National Petroleum Corporation (NNPC) to fund its equity participation in the JV led the arrangement to be increasingly unmanageable. This, however, gave birth to the PSCs introduced in 1993 to address some of the issues faced by the Joint Operating Agreement (JOA) and also to provide a suitable agreement structure for encouraging foreign investment in the offshore domain. The Nigerian Federal Government recently announced

a move to reduce stakes in JV oil assets to 40 percent agreements with IOCs, which is thought to be the best hope to shore up revenue. Udo Udoma, minister of Budget and National Planning, last week unveiled details of efforts to boost the nation’s revenue while giving a breakdown of the 2019 budget. He said the president had also directed the Ministry of Finance to liaise with relevant authorities to liquidate all recovered ‘unencumbered’ assets. The NNPC, which manages Nigeria’s oil sector, owns a 55 percent interest in its joint venture with Royal Dutch Shell and 60 percent stakes in IOC-operated projects including Chevron and ExxonMobil.

However, analysts are of the opinion that this move by the government is a one-off strategy which may leave the country with the challenge of shoring up revenue going forward. Oil price fell as an economic slowdown started to dent energy demand, according to a report by Reuters, but markets won some support after Saudi Arabia said a consensus was emerging with other producers about extending supply cuts. Amid growing concerns about the outlook for the world economy in the throes of the trade war between the United States and China, financial traders sold out energy markets.

oil sector is contracting and experts have blamed this on lack of new investments and capital inflows to the sector. Slower growth challenges some assumptions underlying the country’s 2019 budget, such as daily oil production of 2.3 million barrels a day. Average daily production has

hovered around 1.70 million barrels of oil a day. Nigeria statistical agency’s report showed that in the three months ending March 2019, real GDP growth in the oil sector contracted by -2.40 percent (year-on-year) indicating a decrease by 16.43 percent points relative to the

rate recorded in the corresponding quarter of 2018. “An uncertain investment environment is a recipe for anarchy. The reason you find some countries doing very well is that they are predictable and things seem to happen fast. There are no political interferences as we have in

Nigeria,” Kachikwu said. If a new upstream project is not quickly approved after the completion of the Egina Floating Production Storage Offloading (FPSO) vessel, ship repair and fabrication yards worth over $1.3 billion may remain idle, with about 20,000 workers risking job loss.

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Thursday 06 June 2019

BUSINESS DAY

MADE in aba

Reviving Aba leather industry GODFREY OFURUM

nadequate power and lack of patronage are hurting shoemakers in Aba, but, perhaps, it is influx of lowpriced, low-quality Chinese shoes that is hitting players in the finished leather industry hard. The Aba shoe industry produced millionaires in the early 1980s and up to the 90’s when the industry boomed. Brand names such as Jo h n Wa x , Vi rg y Sh o e s, Anzy, Ncol Shoes and later Aris Ken were household names from Aba shoe cluster that made millions from shoe production. H o w e v e r, t h i n g s started dwindling in the e a r l y 2 0 0 0 s, l e a d i n g t o divestment by the popular brands. Thes e manufacturers divested from the business due to high cost of production, occasioned by lack of power, government’s insensitivity to local manufacturing, influx of Chinese products, lack of machinery and patronage by government and Nigerians. Okechukwu Williams, president, Leather Products Manufacturers Association of Abia State (LEPMASS), explained that the Aba shoe cluster has produced so many millionaires. “I know that this cluster has produced millionaires. Pe o p l e l i ke A n z y Sh o e s s t a r t e d h e re , b u t h e i s now into food processing, oil and gas, among other businesses” he said. Kenneth Oforha, a one-time chairman of Umuehilegbu Industrial Market, also started as a shoemaker. He, however, stated that

John Wax is the only firm that is still in production, noting that they produce for schools in Ghana and FAMAD in Nigeria. According to him, some of these names mentioned made their money in the early 80s and mid 90s. He attributed the dwindling fortunes in the sector to lack of patronage and influx of low priced, low quality foreign made shoes, especially products from China, a development he stressed affected the

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Nigerian finished leather industry negatively. In his words, “Manufacturers in Aba were devastated by the influx of Chinese products and we couldn’t do anything because that was what people wanted--cheap products-- not durable and less quality products. “It is obvious, everybody k n ow s w hat cau s e d t h e dwindling fortunes in the shoe sector. In those days, we were following Italian designs and quality

and there was so much demand. We had patrons from within and outside, but all of a sudden, Chinese products came in and affected our market system”. H e , h o w e v e r, s t a t e d that the trend is gradually changing with the emphasis on made-inNigeria products, which he said is impacting positively on local shoe manufacturers and their products. Williams revealed that

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the market share of the Aba shoe cluster has gained five percent and now stands at 25 percent in the country. For Chinatu Nwagbara, m a n a g i n g d i r e c t o r, Chinatex Shoes, the annual made-in-Aba trade fair, sponsored by Enyinnaya Abaribe, senator representing Aba South senatorial zone, and the recent campaign pioneered by Governor Okezie Ikpeazu of Abia State are impacting positively on the sector. “These initiatives have changed my life for the better and my business is growing. The involvement of governor Ikpeazu in the campaign has brought more life into it and we are happy. “I was not proud to be identified as a shoemaker, but now, anywhere I go, I will like to be identified as a shoe manufacturer from Aba and people are identifying with us now”. To revive the s e ctor, Francis Chukwu of Frantonia Industries Limited, urged the federal and state governments to improve infrastr ucture, implement cluster concept a n d p rov i d e i n c e nt i ve s to local manufacturers, especially small and medium manufacturers. He buttressed that lack of patronage and incentives from the Federal Government made the big players in the shoe sector to @Businessdayng

close shop. According to him, t h e re wa s n o i n c e nt i ve from the State and Federal Governments as they paid lip service to locally made goods, they don’t even use it themselves. He implored Nigerian leaders to live by example, by using locally made goods, noting that they would serve as role models, when they star t using home made products. He attributed the boom currently witnessed in the sector to the high cost of foreign made goods. “We are experiencing boom in the industry, because of the state of the economy. People can no l o ng e r a f f o rd i mp o r t e d goods. The declining naira has made it difficult for people to import, “People have now settled for improved locally made products. We need improved infrastructure to expand and improve quality of our products. We don’t have access to machines and quality materials, like leather, adhesives and soles are not made in the country. Leather produced in Nigeria are shipped out and then exported to us. “If we are quartered in a nice place, catered for and encourag e d by the Government, we would do well. But for now, we are individually improving on our own, “Chukwu stated.

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Thursday 06 June 2019

RESEARCH&INSIGHT

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

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Insights from the sectoral distribution of value added tax (VAT) ADEMOLA ASUNLOYE

Source: NBS, BRIU

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WIDE OPEN MINDED RMB Nigeria. Solutionist Thinking.

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BUSINESS DAY

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

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How deposit money banks performed in first quarter 2019 ISAAC ESOWE

nvestors are beginning to make decisions on the likely status of companies listed on the Nigerian Stock Exchange (NSE) as more firms release their unaudited financial statements for the period ended March 31 2019. In line with this, BusinessDay Research and Intelligence Unit (BRIU) collated the Q1 2019 results of some banks with a view to evaluating their performances at the end of the first quarter of this year. BRIU selected nine banks which are Access Bank, Ecobank Transnational Incorporated (ETI), Fidelity Bank, Guaranty Trust Bank (GTB), Sterling Bank, Union Bank of Nigeria (UBN), WEMA Bank, United Bank for Africa (UBA) and Zenith Bank. The financial statements of the aforementioned banks were prepared in line with the standards set out by the International Financial Reporting Standards’ (IFRS) relevant accounting policies and principles. Collectively, the interest income of the coverage banks under review rose by just 1 per cent from N614.6 in Q1’18 million to N618 million in Q2’2019. From this, Access Bank had 15 per cent share of the total interest income; Ecobank, 19 per cent; Fidelity Bank, 6 per cent; GTB, 12 per cent; Sterling Bank, 5 per cent; UBN, 4 per cent; WEMA Bank, 3 per cent; UBA, 16 per cent, and Zenith Bank had 20 per cent of the industry interest income. Interest expenses of the banks under review reduced by 1 per cent from N269.3 million in Q1’18 to N265.4 million Q1’19. Access Bank and Ecobank had 20 per cent share each of the total interest expenses respectively; Fidelity Bank, 9 per cent; GTB, Sterling Bank and UBN had 6 per cent each; WEMA Bank, 3 per cent; UBA,

Sources: NSE, BRIU

15 per cent and Zenith Bank had 14 per cent of the industry total. The total net interest income of the aforementioned banks under review increased by 4.37 per cent from N354.5 million in Q1’18 to N370 million in Q1’19. Access Bank had 15 per cent share of the total net interest income; Ecobank, 17 per cent; Fidelity Bank, 4 per cent; GTB, 16 per cent; Sterling Bank, 4 per cent; UBN, 3 per cent; WEMA Bank, 2 per cent; UBA, 16 per cent while Zenith Bank had 23 per cent of the industry total in Q1’19. Personnel expenses of the banks under review rose by 9 per cent from N111.7 million in Q1’18 to N121.6 million in Q1’19. Access Bank had 11 per cent share of the industry personnel expenses. Ecobank, 34 per cent; Fidelity Bank, 5 per cent; GTB, 8 per cent; Sterling Bank, 3 per cent; UBN, 7 per cent; WEMA Bank, 3 per cent; UBA and Zenith had 23 per cent each of the industry total. Furthermore, there seems to be a similar pattern in the trend exhib-

ited by the financials of the coverage banks. For instance, Access Bank recorded an increase in interest income by 9 per cent from N87.2 million in Quarter 1, 2018 (Q1’18) to N95.1 million in Quarter 1, 2019. (Q1’19). Interest expense was up by 6 per cent from N50.94 million to N53.93 million while net interest income for the quarter under review was up by 27 per cent from N45 million to N57 million. Additionally, personnel expenses increased by 4 per cent from N12.3 million to N12.8 million; income tax was down by 26 per cent from N5.3 million to N3.9 million; profit before tax (PBT) was up by 64 per cent from N27.4 million in Q1’18 to N45.1 million and profit after tax (PAT) increased by 86 per cent from N22.1 million to N41.1 million during the period. No significant changes were noticed in other banks as ETI’s interest income declined by 8 per cent from N126.6 million in Q1’18 to N116.7 million in Q1’19. Interest expense

(the amount of interest paid on customers’ deposits) was up by 7 per cent from N50.7 million to N53.9 million; net interest income (NII) declined by 18 per cent from N75.8 million to N62.4 million and this decline was attributed to decrease in loans and advances from customers which fell by 7 per cent from N3.3 billion in December 2018 to N3.0 billion as at 31st March 2o19. Similarly, customers’ deposits fell by 6 per cent from N5.8 billion in Dec. 2018 to N5.5 billion 31 March 2019. The group personnel expenses rose by 12 per cent from N37.9 million to N42.4 million; income tax increased by 21 per cent from N6.1 million to N7.4 million while PBT increased by 9 per cent from N33.9 million to N37.1 million. In contrast, PAT declined by 26 per cent from N27.9 million to N20.6 million within the reference period. Fidelity Bank recorded an increase in its interest income by 3 per cent from N37.7 million in Q1’18 to N38.7 million in Quarter 1, 2019. Interest expense was up by 7 per cent from N21.5 million to N22.9 million; net interest income for the quarter under review was down by 3 per cent from N16.1 million to N15.7 million; personnel expense increased by 5 per cent from N5.0 million to N5.3 million; PBT rose by 34 per cent from N4.9 million in Q1’18 to N6.7 million just as PAT increased by 28 per cent from N4.6 million to N5.9 million. GTB witnessed a decline in its interest income by 9 per cent from N79.9 million to N72.9 million; interest expense declined by 23 per cent from N21.0 million to N16.3 million; net interest income also witnessed a decline by 2 per cent from N59.7 million to N58.2 million; personnel expense was down by 4 per cent from N9.5 million to N9.1 million, and following the same trend, income tax declined by 3 per cent from N7.9 million to N7.6 million. On the other hand, PBT increased by 8 per cent from N52.6 million to N56.9 million just as PAT also increased by 10 per cent to N49.3 million from N44.7 million in corresponding period.

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Sterling Bank’s interest income decreased by 3 per cent from N31.8 million in Q1’18 to N30.8 million Q1’19 as well as the interest expense which declined by 18 per cent from N19.4 million to N15.9 million. Net interest income was up by 21 per cent from N12.3 million to N14.9 million; personnel expense was up by 13 per cent from N3.1 million to N3.5 million; income tax declined to N33 million; PBT increased by 3 per cent from N3.17 million to N3.27 million, and also PAT was up by 5 per cent from N3.120 million to N3.24 million. Union Bank of Nigeria’s (UBN) interest income decreased by 15 per cent from N31.7 million in Q1’18 to N26.9 million Q1’19; interest expense increased by 7 per cent from N13.8 million to N14.8 million, net interest income declined by 32 per cent from N17.8 million to N12 million; personnel expenses were up by 11 per cent from N7.9 million to N8.7 million; income tax rose from N11.9 million to N164 million while PBT increased by 2 per cent from N5.10 million to N5.20 million. PAT recorded a marginal 1 per cent increase from N5.438 billion to N5.41 billion. WEMA Bank’s interest income posted 27 per cent increase from N12.6 million in Q1’18 to N16 million Q1’19. Interest expense was up by 18 per cent from N8.3 million to N10.5 million; net interest income rose by 29 per cent from N4.33 million to N5.6 million; personnel expenses increased by 16 per cent from N2.8 million to N3.3 million; income tax surged while PBT increased by 51 per cent from N884.0 million to N1.33 billion. PAT for the period rose by 50 per cent from N764.7 million to N1.14 billion. The interest income of the United Bank for Africa (UBA) group increased by 9 per cent from N90.3 million in Q1’18 to N98.6 million Q1’19; interest expenses were up by 10 per cent from N36.8 million to N40.5 million; net interest income rose by 8 per cent from N53.6 million to N58.0 million; personnel expenses trended upward by 3 per cent from N17.5 million to N18 million while income tax declined by 47 percent from N2.8 million to N1.5 million. For the period, PBT increased by 14 per cent from N26.6 million to N30.2 million while PAT rose by 21 per cent from N23.7 million to N28.7 million. Zenith Bank exhibited similar trend during the period as its interest income increased by 19 per cent from N116.7 million in Q1’18 to N122.5 million in Q1’19. Interest expense was down by 22 per cent from N46.72 million to N36.34 million; net interest income rose by 20 per cent from N69.9 million to N86.13 million; personnel expenses were up by 17 per cent from N15.56 million to N18.28 million; income tax rose up by 2 percent from N6.92 million to N7.05 million; PBT increased by 6 per cent from N54 million to N57.29 million while PAT increased by 7 per cent from N47.07 million to N50.23 million during the reference period.

Thursday 06 June 2019

BUSINESS DAY

POLITICS & POLICY

Udom thanks assembly for restoring peace in A/Ibom

…Swears in new HoS, three perm secs ANIEFIOK UDONQUAK, Uyo

overnor Udom Emmanuel of Akwa Ibom has lauded the outgoing leadership of the state assembly for restoring peace in the state. The governor said his numerous achievements during his first term in office would not have been possible without a committed legislature. Addressing a valedictory thanksgiving service of the 6th Assembly at the Assembly Chapel in Uyo, Udom said the support and inputs he enjoyed from the legislature made his job easier and developing the state faster. Represented by the Deputy Governor, Moses Ekpo, he urged the incoming members to follow the footsteps of the sixth assembly and collaborate with government to continue to move Akwa Ibom State to greater heights. “The achievements we recorded as a government would not have been im-

possible if we did not have a legislature that stood by us to make our job much easier. I want to also urge the incoming members to follow the footsteps of the sixth assembly and collaborate with government so that Akwa Ibom State can continue to be taken to higher heights,” he said. In his remarks, the Speaker, of the assembly, Onofiok Luke listed his achievements during his tenure despite challenging moments, adding that “those severe cases of tribulation” did not push him to abandon God. He described his colleagues as vessels of honour and thanked God for using them to achieve his dreams for the state as Speaker. “I thank God because I finished as a Christian, because trials and tribulations of the world did not push me to seek other gods. I thank God because I finished this office with my marriage intact, that the challenges of public office did not tear us apart. It’s not easy to give yourself out to serve a people.

Udom Emmanuel

“I thank God that we finished with all 26 members alive, I thank Akwa Ibom people for the confidence reposed in us, and the body of Christ for their prayers,” he said. Recalling the crisis which hit the sixth assembly when sacked members invaded the chambers with thugs and held the legislature captive for weeks, the Speaker said: “The very first bat-

June 12: Activists march for Kudirat Abiola, urge government to end poverty, insecurity in Nigeria Iniobong Iwok

head of the June 12 democracy day celebration, civil organisations and prodemocracy activists, Tuesday, in Lagos urged the Federal Government to immortalise the late Kudirat Abiola. They also want government to stamp out poverty and insecurity in Nigeria. Kudirat was killed 23 years ago in the struggle to actualise the June 12, 1993 election presumably won by her husband, Moshood Abiola. The election was annulled by the then military head of state, Ibrahim Babangida. The activists, who gathered at the Ikeja home of Abiola to lay wreath and offer prayers to the fallen amazon, demanded for speedy conclusion of the case of those standing trail for the murder of Kudirat. Speaking at the occasion,

chairman of National Democratic Coalition (NADECO) Ndubuisi Kanu, said Kudirat Abiola sacrificed her life to make Nigeria better. He urged Nigerians not to allow the sacrifice by Abiola to be in vain, calling on all lovers of freedom and democracy to live by the ideas she died for. According to him, “The most important thing now is keep her ideas alive. We call on the relevant authorities to ensure poverty is banished, security must be provided and others. “Kudirat virtue has been extolled on many occasions, but I must say there was June 12 before June 4. Again June 4 came about because of June 12. We must not allow her to die in vain,” Kanu said. Speaking rights activist, Femi Aborishade, said government must end poverty to make the honour bestowed on M.K.O Abiola realistic. He said government pronouncement

on June 12 as democracy day fell short of expectations when the people have nothing to eat or shelter over their heads. According to him, “know of certain that the poor are united in this country, but the power that or the politicians have been working hard to keep us divided. They kill Kudirat because they believed she would preserve the unity of the downtrodden. “They killed her because they don’t her to provide the example for others to learn from, that you can actually confront them and demand for your rights,” Aborishade said. President of Women Arise, Joe Odumakin, said government should immortalize Kudirat by naming a national monument after her. She added that the slain activist should recognised as official first lady, noting that all insignia of office be given her posthumously.

tle ground to test Warsaw was the House of Assembly. When our colleagues took a political position and decided to defect to other political parties, we all agreed not to declare their seats vacant. But when we fixed a sitting to honour the former Governor Attah, though they were officially invited as members, they decided to invade the house in the manner they did. I thank God that He did

not allow any blood to be spilled or any of us to die”. He donated 100 sets of executive chairs to the House of Assembly chapel and urged the incoming leadership of the house to continue to use the chapel for prayers. He urged the seventh assembly to strive towards perfection as represented by the number seven Meanwhile, the governor has sworn into office a new Head of the Service and three permanent secretaries, warning stakeholders against lobbying for political appointments. He said though there were vacancies for 45 permanent secretaries, the state government could only appoint three for now, adding that some local government areas did not have qualified personnel for appointment as permanent secretaries and urged stakeholders to address such issues. “Don’t come and tell me that this person didn’t work during the election and should be dropped, because everybody worked and they all supported me.”

“If you attempt to blackmail anybody, that will even spur me to reappoint that person.” T h e g o v e r n o r, w h o charged the newly sworn-in Head of the Civil Service, Effiong Edem Essien and Permanent Secretaries, to raise the bar of excellence in the discharge of their responsibilities, also announced that more permanent secretaries would soon be appointed. “Like I always say, nobody should send me short message service (SMS) to lobby for any candidate because that is the surest route to the disqualification of such a person,” he said, adding: “Once I receive a name of any director from a stakeholder, it means the person is not qualified and lacks self confidence.” He expressed his desire to spread the appointments across the local government areas of the state, but decried the absence of qualified personnel from some local governments areas, an issue he said should be of serious concern to stakeholders in such areas.

Only God will decide who will be Nigeria’s president in 2023 - Salvador oshood Salvador, chieftain of the All Progressives Congress (APC), has urged Ayo Adebanjo, a leader of Afenifere and Bode George, former deputy national chairman of People’s Democratic Party (PDP) to leave who becomes the president of the country in 2023 to God. The former chairman of PDP in Lagos State gave the advice at a press conference, warning against verbal attack on, Bola Tinubu, national leader of the APC. Salvador frowned at statements credited to the duo where, he claimed they attacked Tinubu, for allegedly aspiring to become Nigeria’s president in 2023, and had said it was the turn of the South-East to produce the president in 2023. He said that their statements were personal and that they were not speaking on behalf of the Yoruba nation.

He wondered why the elders who should be there to guide as was customary of Yoruba race, should constitute themselves into running down their own son. The APC chieftain said it was abnormal for any Yoruba elder to be seen going against the aspiration of any Yoruba person becoming president in 2023. He maintained that they should leave the issue of 2023 presidency to God and Nigerians to decide, stressing that it was Almighty Allah that would give and take power. According to him “Have you ever heard of any derogatory statement from a Northern leader against aspiration of a Northerner in favour of any other aspirant from another region? “Have you ever heard Ohanaeze leaders condemning or speaking against the aspiration of another Igbo man? “Have you ever heard Edwin Clark or any of the South-South leaders speaking against the

aspiration of their son? “It is only these Yoruba Afenifere leaders that believe that Yoruba does not deserve good things, claiming to be nationalists. Remember the statement of Baba Abraham Adesanya, ‘I am from Adesanya family before I became an Ijebu man. I am an Ijebu man before a Yoruba man. I am a Yoruba man before, a Nigerian and I am a Nigerian before I can be called an African’” he said. Alluding to the duo, Salvador added that in 2015, the same set of Yoruba elders said that Yemi Osinbajo would not be vice president, but when God decided, nobody could stop it. He said that in 2019, Ayo Adebanjo, an Ijebu man from South-West and others were busy campaigning for Peter Obi against their son, Osinbajo. He pointed out that if it was the wish of Almighty Allah that a Yoruba man would be president in 2023, nobody would stop it, not even the Afenifere elders.

performed convincingly and marvelously well does not mean everybody are pleased with him, but if you have to gauge the tempo within the state many People are happy with him”, the party chieftain said. Kabir Umar, who is the chairman Arewa Consultative

Forum (ACF), Kaduna State, explained that the governor has done well in the areas of road construction and maintenance, rehabilitation of schools and hospitals compared to the past administration before him. According to him, the ingredients of good governance are

what the governor has provided for the people of the state to enjoy in the last four years of his stewardship. While speaking on the internal crisis rocking APC in Zamfara state, the ACF chairman said Oshiomhole has failed to reconcile the party members in the state.

Iniobong Iwok

El-rufai can’t be 100% perfect, says APC chieftain Abdulwaheed Olayinka Adubi, Kaduna

ohammed Kabir Umar, a chieftain of the All Progressives Congress (APC), has described human as imperfect being, saying that the governor of

Kaduna State, Nasir El-rufai is not an exception to such in the handling of the state affairs. He said the governor cannot be 100 percent be perfect in the discharge of his duty as the number one citizen of the state. While commending the efforts of the governor in his quest to transform the state, Kabir www.businessday.ng

Umar added that the governor in the last political dispensation has been able to provide good governance to the people of Kaduna State within the shortest period of time. He said this during an interview with our reporter in Kaduna at the weekend. “For me to say that he has

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Thursday 06 June 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

TOM WILSON

rime Minister Abiy Ahmed has broken with tradition in Ethiopia by appointing you ng t e c h n o c rat s with international experience to important economic jobs as he seeks to turn the country’s tightly controlled, state-led economy into a competitive free market powered by private capital. The officials, including Eyob Tolina at the finance ministry, Abebe Abebayehu at the investment commission and Mamo Mihretu in the prime minister’s office, are leading the most ambitious aspects of Mr Abiy’s promised reforms, investors said. Since taking office a year ago, the reformist leader has promised to overhaul the Ethiopian economy and open previously blocked sectors, such as telecoms and energy, to foreign investment. To succeed, his youthful appointees must push through reforms to Ethiopia’s sprawling bureaucracy and navigate conservative political officials in the ruling coalition, many of whom remain suspicious of relinquishing too much control of the economy after 28 years of state-led growth. For Mr Eyob, a former private equity executive and now state minister at the ministry of finance, the ruling party has no choice but to evolve. “We had public-led economic

Ethiopia looks to young technocrats to lead ambitious reform drive

New generation with international experience appointed to turn around tightly controlled, state-led economy

growth and it did run its course, it was obvious,” Mr Eyob told the Financial Times in an interview in Addis Ababa. “If you didn’t make some pragmatic decisions and shift the course, it would have been a full-blown crisis so you needed to avert that.” In 2016 and 2017, thousands of Ethiopians poured on to the streets, many of them frustrated by the lack of employment g e n e ra t e d b y a n e c o n o m i c policy that had favoured infrastructure over job creation. At the same time, Ethiopia was facing a fast-approaching debt crunch. Much of the economy’s double-digit growth in the past decade was driven by borrowing — largely from C h i na. A l t h ou g h Et h i o p i a’s debt was low as a percentage o f g ro s s d o m e s t i c p ro d u c t, compared with regional averages, its ability to service that debt with export revenue had become precarious, the IMF said in December. In response Mr Abiy halted all non-concessional borrowing. “There was a need to pause, to finish what we already had, not to jump into new projects,” Mr Eyob

US private sector hiring grinds to near-halt in May Construction sector particularly hard hit as private sector added fewest jobs in nine years PAN KWAN YUK AND ADAM SAMSON

he US labour market unexpectedly ground to a near-halt in May, as data showed the private sector had added the fewest jobs in more than nine years. Non-farm private employers added just 27,000 jobs last month, according to a report from payroll processor ADP on Wednesday. The figure, which followed a strong April, badly missed expectations for a gain of 185,000 and marks the weakest monthly gain since March 2010. “Job growth is moderating. Labour shortages are impeding job growth, particularly at small companies, and lay-offs at brick-andmortar retailers are hurting,” said Mark Zandi, chief economist of Moody’s Analytics. Goods-producing industries shed 43,000 jobs, with the bulk of this — 36,000 — coming from construction, while the service sector added 71,000. The labour market has been one of the consistent bright spots for the US economy, which has seen a mixed batch of data in recent weeks. The data are likely to cast a pall over Friday’s closely watched monthly jobs report from the US labour department. Economists are predicting the US to have added 183,000 jobs in May, compared to an increase of 263,000 in April. “In general, while ADP has an inconsistent record of accuracy

versus the initially-published government data, it often provides a useful guideline to the official report,” said Joshua Shapiro, chief US economist at MFR. “The ADP results will no doubt cause many analysts to shave their estimates.” A slowdown of the labour market could also heighten pressure on the Federal Reserve to cut interest rates this year. Federal funds futures data suggests the odds of at least three quarter-point reductions in the Fed’s benchmark rate this year are now around 63 per cent, from 53 per cent on Tuesday. Just a month ago, the implied probability of such a scenario was effectively nil. The two-year Treasury note yield, which is seen as particularly sensitive to expectations for monetary policy, tumbled nearly 10 basis points to a low of 1.773 per cent after the data came out. The fall brings the yield to its lowest level since 2017, more than offsetting a rise in the previous session. Further down the curve, the 10year yield fell 3.8 bps to 2.08 per cent. Yields fall when prices rise. The US dollar was also lower, with an index tracking the currency against six peers recently down 0.31 per cent. Markets have already ramped up bets that the Fed would move to lower its benchmark rates after President Donald Trump last month opened up new fronts in the China-focused trade war, with plans to increase tariffs on Mexican imports and terminate dutyfree imports from India on roughly 2,000 products. www.businessday.ng

Reformist prime minister Abiy Ahmed has promised to open previously blocked sectors, such as telecommunications and energy, to foreign investment © AFP

explained. Having stemmed the bleeding, the focus in the next fiscal year would shift to attracting investment and boosting revenues, he said. The first step is a privatisation programme, headed by Mr Eyob, which will include the sale of what is likely to be a large minority stake in Ethio Telecom, the state-owned mobile operator. Mooted ever since Mr Abiy took office, Mr Eyob rejected

suggestions the telecoms sale was already behind schedule. The government had undertaken a detailed market study, including researching regulators in 25 countries to understand the best model for Ethiopia, he said. The “fully-fledged process” would start in no more than a month, he said. Mr Abebe, commissioner at the Ethiopian investment agency, said the prime minister had

commissioned similar studies for the energy, rail, industrial parks and logistics sectors to identify how best to sustain growth, boost export revenues and create jobs. “[Mr Abiy] is extremely interested to see a strong private sector that can generate jobs for the millions of youths that are currently unemployed,” said Mr Abebe, 38, who worked at the World Bank before Mr Abiy asked him to join the commission.

China sows discord in the ‘special relationship’ American and British interests diverge on the largest question of the century JANAN GANESH

populist is someone who abhors the metropolis and demands its respect. According to the cultural right, big cities are teetering Babels, lawless and ghettoised, but also wealth-hoarding success stories that look down at the conservative provinces. “You crammed and besieged losers,” this Tom Wolfe-ish attitude to urbanites seems to say, “we are just as good as you.” All of which helps to explain why some British populists back a foreign president over the mayor of their own liberal capital. The running tiff between Donald Trump and Sadiq Khan is modern politics — closed versus open — in miniature. But there is more behind the courtship of the visiting president than that. There is foreign policy at work. The British right sees the US as a natural companion in a postBrexit world. If a no-deal Brexit puts the UK out in the European cold, it hopes to warm its hands on the fire of a fast-growing America. That hope should be checked. British conservatives have been misreading American ones since Dwight Eisenhower declined to look away as the Suez Canal was summarily invaded. Yes, there is a promising bonhomie between Mr Trump and Boris Johnson, the former UK foreign

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secretary. And the US right cherishes the nation state, not the EU, as the last word in human organisation. Both countries also talk an excellent game about a bilateral trade deal. They just happen to have divergent interests on the largest question of the century, that’s all. Even before Brexit, the UK viewed China as a commercial opportunity. Its disposition will have to become even warmer once it loses full membership of its own continental trading bloc. It is not in a position to pick and choose its economic friends. All the while, the US is moving in the opposite direction twice as fast. It is actually more suspicious of China than it was when it began its tariff campaign a year ago. What could then have been explained away as one quixotic president’s attempt to secure better trading terms has become a wider confrontation. Mr Trump’s views have caught on in formerly laissez-faire boardrooms and in once-orthodox Washington symposia. To call it a consensus is a leap. Some eminent Americans hope to rattle China a bit and leave it at that. Others aspire to nothing less than the eventual decoupling of the two economies. But the general direction of US thought, and its incompatibility with the UK’s Chinese interests, is unmistakable. And possibly intractable. If this seems a more theoretical @Businessdayng

than actual problem, then look to the recent past for a case study. In 2015, when London signed up to the Beijing-led Asian Infrastructure Investment Bank, Washington chafed at this “constant accommodation” of China. And that was under the Barack Obama administration. Imagine a replay under Mr Trump or another populist. Because Britain has long been out of the superpower business, the rise of China has no implications for its own status. Its economic interests and its foreign policy can be almost the same thing. The US is in a very different predicament. It is a ruling power facing demotion by (in its mind) a revisionist one. Its foreign policy has to go beyond entrepreneurial nimbleness. No doubt, close partners can bicker over one thing while remaining in broad concert. But it is an odd partnership that contains such opposing views on quite so important a third party. As time wears on, this strategic tension cannot be glossed over with the usual grammar of UKUS meetings: the one-sided flattery, the talk of “cousins” that belies the non-British ancestry of even most white Americans. This state visit had its stresses. The question of the tech giant Huawei, which the two countries view with differing levels of suspicion, came up. Such wedge questions are likelier to multiply than to recede over the years.

40 BUSINESS DAY

Thursday 06 June 2019

NATIONAL NEWS

Venezuela’s opposition ambassador stuck in London limbo

Vanessa Neumann tries to maintain diplomatic normality despite having no MICHAEL STOTT AND ANDRES SCHIPANI

anessa Neumann is London’s most unconventional diplomat. An ambassador without an embassy, she nonetheless performs most of the functions normally associated with the role: meeting the host government, liaising with the leader back home, attending diplomatic receptions and dealing with consular queries. The main complication is another Venezuelan holds the same job and uses the official embassy building. Opposition leader Juan Guaidó has been recognised this year by more than 50 nations — including the UK, the US and most of the EU — as Venezuela’s rightful interim president. But leftist president Nicolás Maduro has refused to cede power in Caracas since winning another six-year term in what were widely seen as rigged elections last year. This has left Mr Guaidó, and his 26-strong diplomatic team around the world, in a legal limbo as they try to operate a makeshift parallel government. “There is no rule of law in Venezuela,” said Dr Neumann over

breakfast in a fashionable London café. “The regime, the dictatorship is going all out against the democratic forces and the role of the international community is pivotal. So those of us who take these roles as ambassadors, each of us has to be ready to fight. It’s a very uneven battle.” Dr Neumann, a well-connected academic, consultant and author, says she was asked to take on the UK envoy role two months ago. She got the call from Venezuelan opposition figure Leopoldo López, an old family friend, with Mr Guaidó’s blessing. “Everyone who has taken one of these postings is making some kind of sacrifice,” said Dr Neumann. “I stopped working, shuttered my [security consultancy] business in Washington and moved here. “The Venezuelan diaspora are very happy I’m here. They didn’t feel that the people who were occupying the embassy building were representing them.” For now, Rocío del Valle Maneiro, the Maduro government’s ambassador to the UK, appears to hold the cards. She occupies the official Venezuelan residence in London’s Holland Park and directs the staff of the embassy building in South Kensington and a third building, Bolívar Hall.

Investors face $647bn China banking blind spot Delays by rural and city banks in reporting results signal potential bad-debt build-up DON WEINLAND AND ARCHIE ZHANG $647bn blind spot in financial reporting by China’s city and rural commercial banks is fuelling investor concerns that more of the country’s lenders face government intervention or collapse in the wake of the state takeover of Baoshang Bank. Baoshang was one of 19 banks with a combined Rmb4.47tn ($647bn) in assets that have yet to publish 2018 financial results, according to a list compiled by Barclays. The delays are a potential sign of a build-up in non-performing loans and leave investors blind to how many of those assets may have turned into bad debt, as was the case with Baoshang, analysts said. Inner Mongolia-based Baoshang Bank published its most recent annual report in mid-2017. Citing “severe credit risks”, the government took over the institution late last month, the first such intervention in 18 years and a sign that some banks in the country are experiencing a severe deterioration in asset quality. Investors and market watchers are now questioning whether more banks that have yet to disclose their latest financials could be facing similar problems. “This does have some impact on investors’ confidence in the market,” Dong Ximiao, vice head of Renmin University’s Chongyang Financial Institute, said of the banks that have delayed their financial reports. He added that it was important to know why the banks have not released their annual reports. But some of the explanations have not filled investors with confidence. Hong Kong-listed Bank of Jinzhou, which has not published 2018 annual results, said last week that its auditor

Ernst & Young Hua Ming resigned after it found that the some of the bank’s loans to institutional clients were not used for their stated purpose. The Bank of Jinzhou statement said EY requested evidence of “the customers’ ability to service the loans, particularly the collateral that could be enforced” — a sign the auditor was concerned about the bank’s credit quality. EY resigned when Jinzhou could not provide the evidence. Bank of Jinzhou lent $440m to once high-flying Chinese solar group Hanergy, which experienced a collapse in its share price in 2015. A series of investigations by the Financial Times that year into the company’s business model highlighted suspicions because of its revenue coming almost entirely from sales to its parent. Shandong-based Hengfeng Bank, with Rmb1.42tn in assets — by far the largest Chinese lender yet to disclose 2018 earnings — has been facing funding difficulties for several years. The bank was flagged in UBS research last year for its heavy reliance on funding from negotiable certificates of deposit and the interbank market, which makes it more susceptible to liquidity shocks. Barclays analysts said they expected more fallout: “We expect more ‘exits’ of smaller banks or non-bank financial institutions (likely through takeover or M&A with bigger parties), most likely with some regional significance.” The banks that have postponed their financial reporting represent a fraction of China’s banking system. But the crisis at Baoshang, which had just Rmb576bn in assets as of mid-2017, shows how troubles at a small bank can send a shock through the interbank market. The People’s Bank of China was forced to release Rmb430bn in short-term liquidity in the week following the takeover. www.businessday.ng

Italian deputy prime minister Matteo Salvini addresses a rally in Ascoli Piceno on Wednesday. He has said only tax cuts will help Italy to deal with its debt by kick-starting growth © AP

Brussels warns Italy it is in breach of EU budget rules Censure from European Commission risks sparking fresh row with anti-establishment government JIM BRUNSDEN AND DAVIDE GHIGLIONE

r u ss el s a nd Rome have clashed over Italy’s economic policies, reigniting an argument over EU budget rules in a process that could lead to financial sanctions against Giuseppe Conte’s anti-establishment government The European Commission said on Wednesday that Italy had failed to meet agreed targets for reining in spending and cutting public debt, the second highest in the eurozone at 132 per cent of gross domestic product in 2018. Valdis Dombrovskis, the European Commission vice-president responsible for the euro, warned that Rome’s policy choices were damaging the Italian economy. “We know there is a path to recovery and growth to Italy,” Mr Dombrovskis said. “This path follows a renewed reform effort, not spending more where there is no fiscal space to do so.” But Matteo Salvini, Italy’s powerful deputy prime minister, immediately hit back at Brussels, saying only tax cuts would help Italy to deal with its debt by kick-starting growth. “With cuts, sanctions and austerity, we have seen an increase in debt, poverty, insecurity and unemployment. We must do the opposite,” said Mr Salvini. The commission’s report on Wednesday is the first step in a

process that by July could lead to a formal sanctions procedure against Italy, requiring the country to come back into line with the rules or face financial penalties. Brussels also warned that Rome was on course in 2020 to breach the EU’s core fiscal rule — that a national government’s annual budget deficit should be no greater than 3 per cent of GDP. The commission’s announcement marks a resumption of hostilities with the Italian government, which is made up of Mr Salvini’s anti-immigration League and the Five Star Movement. The parties came to power last year pledging to rip up the EU’s fiscal rule book. Rome and Brussels were at loggerheads last year over the country’s 2019 budget plans, before brokering an uneasy compromise in December. But the public debt has continued to rise, prompting Brussels to act. The warning comes at a moment of fragility within the coalition, exacerbated by the League’s success in last month’s European elections and disagreements over tax and spending. The League and Five Star have each made extensive, but different, promises to the voters, including more generous rules on early retirement and the introduction of a citizens’ basic income. They now face the difficult question of how to press ahead in a worsening economic environment. Mr Salvini is pushing for a 15

per cent flat income tax rate, arguing that the country needs a “fiscal shock”. According to the latest EU economic forecasts, Italy’s debt will rise to 135 per cent of GDP by 2020. Its deficit will increase from 2.5 per cent in 2019 to 3.5 per cent in 2020, with economic growth projected at just 0.1 per cent this year. Giovanni Tria, Italy’s economy minister, has sought to avert a stand-off with Brussels, saying that the poor numbers are linked to a slowing economy, and pledging a comprehensive spending review. Mr Conte, the country’s prime minister, was also conciliatory on Wednesday, telling journalists: “I would do anything to avoid an infringement procedure.” Brussels said Italy had failed to adhere to an agreed “adjustment path” for mending its public finances in 2018 and was “at risk of non-compliance” this year. The commission also warned that the government’s economic reform plan “contains only piecemeal measures”. The commission’s report will now be analysed by national officials, before Brussels decides whether to propose a so-called excessive deficit procedure, or EDP, against Italy. The bloc’s finance ministers would then have until July to decide whether to adopt the EDP. If they do, the next stage would be for the commission to decide on whether to proceed with sanctions such as financial penalties.

Glencore’s new guard puts accent on managing, not trading, assets The exit of the head of oil underlines how mining, not trading, has become the core business NEIL HUME AND DAVID SHEPPARD

he departure of Glencore’s top oil executive is not simply about a generational shift, but points to a bigger transformation at the company from swashbuckling trader to more prosaic miner. Alex Beard’s retirement later this month comes as the company struggles to extract itself from a US regulatory probe. His exit adds to a string of recent departures from the upper echelons of Glencore, including its copper kingpin Telis Mistakidis, Stuart Cutler, the head of ferroalloys trading and Chris Mahoney, the former Olympic rower who ran its agricultural business. Only four of the senior executives who oversaw Glencore’s $60bn blockbuster initial public offering in 2011 will still be at the company at the end of the month.

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They are still led by chief executive Ivan Glasenberg, who has said he plans to retire within five years and pass on the baton to the next generation. The break-up of the so-called billionaires boys’ club, which has run the company since a management buyout in 1993, comes as Glencore faces a US Department of Justice investigation into possible corruption and bribery. The probe has hung over the company’s shares, which are down 10 per cent this year and lagging behind those of major rivals. As the full extent of the DoJ investigation has never been revealed, investors remain nervous. Glencore disclosed the investigation last July. The US probe into Glencore’s activities in the Democratic Republic of Congo, Nigeria and Venezuela centre on the copper and oil businesses once run by Mr Beard and Mr Mistakidis. Some view their departures as paving the way for @Businessdayng

an eventual deal with US regulators, while others say Mr Beard decided to move on after being overlooked as a possible successor to Mr Glasenberg. Natasha Landell-Mills, head of stewardship at Sarasin & Partners, who sold their stake in Glencore last year because of regulatory worries, said the departure of some top executives was just an initial step to reassure investors. “While the removal of key personnel from areas of the company allegedly connected to these investigations is a start, we really want to see much more,” she said, arguing at a minimum Glencore needed to launch an independent investigation of its internal controls. “The situation at Glencore does seem to be slowly changing, but they have a lot more to do to regain investors’ trust,” Ms Landell-Mills said, urging greater transparency from the company “over how value is being created”.

Thursday 06 June 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

A bigger role for green bonds IFC and HSBC launch first climate capital fund for ‘real economy’ issuers

PHILIPPE LE HOUEROU

ew countries understand the dangers of climate change better than Thailand. Temperatures have been rising for decades, rainfall is increasing and extreme weather events such as monsoons, floods and droughts are frequent. Without urgent action, climate change could devastate Thailand’s lucrative rice crop and eventually submerge Bangkok. Achieving Thailand’s ambitious goal of reducing greenhouse gas emissions by 20 per cent over the next decade will take innovation, investment and commitment. Institutions such as local bank TMB are moving in the right direction, by providing new sources of finance for climate-smart projects. TMB was a pioneer last year when it became the first Thai commercial bank to issue a green bond. Others need to follow TMB’s lead, not just in Thailand but across the globe. The world needs $90tn in climate investment by 2030, and green bonds can play a vital role. A decade ago, green bonds were virtually non-existent. Today, they are a rapidly growing asset class, bringing much-needed new capital not just to the clean energy sector but to energy-efficient buildings, sustainable land use, waste, water and transport. According to the Climate Bonds Initiative, global green finance needs to reach $1tn by the end of 2020 and continue to grow each year thereafter. That’s a daunting sum, far beyond the reach of governments alone. However, it is also a vast opportunity for sustainable global development, with investment potential in the trillions of dollars and the ability to drive innovation and create green industries and new jobs. Green bonds can and should play a greater role in mobilising a good portion of that funding. The good news is that development institutions, banks, investors and corporations are working together to create innovative investment structures, attract more investors and encourage a diverse new class of borrowers, and to set standards that promote integrity and transparency for green capital markets issuances. In little more than a decade, annual green bond issuance has grown from zero to nearly $170bn. In 2019, global issuance is expected to reach a record $200bn. That growth is impressive — and a measure of investors’ eagerness to address the greatest development challenge of our time. Yet green bonds remain a small sliver of the $100tn global bond market. What’s needed to enlarge that sliver and bring green bonds further into the mainstream? First, we need new tools that make it easier and more attractive for investors to get involved and for borrowers to access climate finance. This week, IFC and HSBC Global Asset Management

launched one such tool — the first green bond fund targeting non-financial, or “real economy”, issuers in emerging markets. The fund is expected to catalyse at least $500m to $700m in private capital to support a diversified portfolio of climate-smart investments, largely through a mix of bonds from manufacturing, agribusiness, services, infrastructure and subsovereign issuers, in addition to a smaller allocation of financial-institution bonds. Non-financial borrowers are an untapped opportunity in the green bond market. Last year, they accounted for just 18 per cent of total global green bond volume. The new fund, known as the Real Economy Green Investment Opportunity Fund (REGIO), will provide an additional source of finance for these borrowers. This effor t complements the pioneering Amundi Planet Emerging Green One (EGO) fund, in which IFC is a cornerstone investor. The Amundi fund focuses on financial-sector bonds and recently celebrated its first anniversary. Of course, supporting the supply side of the green bond market and implementing strong market standards are key to bolstering the market. At IFC, we help borrowers issue their own green bonds by providing investment capital for specific green bond issues and technical assistance. Frequently, such borrowers are first-time issuers and the bonds are in diverse currencies. The REGIO initiative with include a technical support programme designed to help potential issuers. Along with other capital market participants, we have worked to develop guidelines and procedures for the green bond market as a member of the Green Bond Principles Executive Committee. The Green Bond Principles were established in 2014 to promote market discipline, transparency and to avoid “greenwashing”. At the World Bank Group, we have committed to investing and mobilising $200bn over five years to support climate business and pledged to increase climate finance to an average of 35 per cent of our direct annual financing commitments. If the world doesn’t act quickly, 100m people could be pushed into poverty over the next decade as a result of climate change. Green bonds offer an opportunity to investors, countries and companies working to battle the impact of the warming planet. They are the definition of impact investing — using investment dollars not just for financial return but also to achieve social good. As a new generation of investors becomes more socially aware and eager to make a difference in the world, green bonds have the potential to become the investment vehicle of choice. Working together, we can make sure that the financing needed for a lowcarbon, resilient future is within reach. www.businessday.ng

A flood at Don Mueang airport in Bangkok in 2011. Encouraging ‘real world’ borrowers to issue green bonds should increase the funding available to fight climate change © EPA

UK regulator examines Woodford fund strategy FCA says it may open an investigation where circumstances suggest serious misconduct

CAROLINE BINHAM

he UK’s financial watchdog is examining the approach of Neil Woodford’s flagship fund, which blocked investor withdrawals on Monday, and its stance on European rules that cap investments in unlisted assets, according to a person familiar with the matter. In an escalation of what it has publicly said on the matter to date, the Financial Conduct Authority warned in a statement on Wednesday that “where the FCA believes there are circumstances suggesting serious misconduct or non-compliance with the rules it may open an investigation.” The FCA declined to comment on whether it has opened any formal investigation into the events that led up to the fund’s decision to freeze investor redemptions. The regulator instead confirmed that it has been in discussions with the fund. A call to the investment man-

ager’s spokesman was not immediately returned. T h e F C A’s s t at e m e nt o n Wednesday revealed that the regulator was also in discussions with Link Funds, the fund’s corporate director whose ultimate decision it was to freeze redemptions, and The International Stock Exchange in Guernsey, TISE, where several of the funds assets were listed. This ultimately allowed Mr Woodford’s Equity Income Fund to go over the cap of 10 per cent that is imposed by European Union rules known as UCITS for unlisted securities that a fund can hold. The FCA is scrutinising this element of Mr Woodford’s strategy, a person familiar with the matter told the Financial Times. “The FCA has been in discussions with Link Funds and TISE regarding the circumstances around the listing of certain of the fund’s assets on that exchange,” the FCA statement said. The FCA confirmed on Wednesday it was previously unaware of

the fund’s decision to list some of its assets on TISE but added that it would not expect notice of that decision. “The FCA expects any decision to list a fund’s assets to be in compliance with the relevant rules required by the UCITS Directive to ensure the fund’s assets remain sufficiently liquid and diversified,” the FCA statement read. “Under EU rules a UCITS fund is allowed up to 10% of the portfolio to be invested in transferable securities which are not dealt in an ‘eligible market’.” It also noted that suspending redemptions was not necessarily negative if it prevented a fire-sale of assets. “We expect all firms involved to uphold their obligations to act in the best interests of all investors and to ensure the fund’s assets are sold in an orderly manner. A suspension should last no longer than necessary to allow the fund to build up sufficient liquidity to meet redemptions again.”

St James’s Place drops Woodford in devastating blow Wealth management group terminates £3.5bn mandate in latest setback KATE BEIOLEY AND OWEN WALKER

ealth manager St James’s Place has terminated its £3.5bn relationship with Neil Woodford in a devastating blow to the veteran investor following the suspension of his UK Equity Income fund on Monday. The announcement caps a disastrous week for Mr Woodford, who was already reeling from the decision by Kent County Council to take back a £266m investment mandate and by Hargreaves Lansdown to drop the investor’s funds from its best buy list. Mr Woodford had taken the contentious decision to block investors pulling funds out of his flagship fund, Equity Income. St James’s Place, a FTSE 100 wealth manager and Mr Woodford’s most important commercial relationship, said on Wednesday it had appointed Columbia Threadneedle Asset Management and RWC Partners to manage the three funds formerly managed by Mr Woodford.

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Mr Woodford was responsible for the UK High Income Unit Trust, UK Equity, Income Distribution and SJPI UK High Income funds for St James’s Place, accounting for a total £3.5bn — around a third of his total assets under management in May. “While the St. James’s Place funds managed by WIM were separate mandates and not part of the Equity Income Fund suspended earlier this week, the St. James’s Place Investment Committee believes these changes will ensure its clients’ investments continue to be managed effectively,” said the company. The company had grown increasingly nervous about Mr Woodford’s performance last month and had stepped up scrutiny of his funds amid customer requests for redemptions. Richard Colwell of Columbia Threadneedle and Nick Purves of RWC — St James’s Place’s most longstanding fund manager — will be jointly responsible for the mandate. Nick Purves co-manages the Equity Income Fund. Richard Colwell has managed money for St. James’s Place clients since 2014 as lead man@Businessdayng

ager of the Strategic Managed fund. Separately, Mr Woodford’s second open-ended fund has shrunk to its lowest level since launching, after investor flight picked up pace at Britain’s best-known portfolio manager. Income Focus, which Mr Woodford launched to great fanfare with £500m of investor capital in 2017, has fallen to £473m this week on the back of investor redemptions and poor performance. It has shrunk 14 per cent since the start of May. Investor attention has moved to Income Focus after Mr Woodford froze investor withdrawals at Equity Income, his company’s flagship £3.7bn vehicle. In a video posted on Tuesday night, Mr Woodford appealed to investors not to abandon the Income Focus fund. “It doesn’t have any exposure to illiquid or unquoted securities and consequently isn’t exposed to the same issues that the Woodford Equity Income fund is,” he said. “And it’s positioned, I believe, for the economic and market environment that we’re likely to see over the medium and long term.”

Thursday 06 June 2019

BUSINESS DAY

ANALYSIS

Global regulators’ net tightens around big tech As US watchdogs join investigations, here are the issues already under the microscope RICHARD WATERS, SHANNON BOND AND HANNAH MURPHY

S competition regulators have carved up responsibility for investigations into the power of the four biggest American technology companies, in a move that heralds significant new scrutiny of their business practices. While it remains unclear what issues the Department of Justice and Federal Trade Commission plan to examine, or even whether they will launch formal probes, the development is a decisive shift for the tech sector. For many years, the primary antitrust risk for Google, Facebook, Amazon and Apple had emanated from the EU. Perhaps no longer. Here are some of the complaints that have been examined so far. Google The EU has led the antitrust challenge to Google for almost a

antitrust watchdog ruled that the social network needed consent from users before pooling its data with personal information from other subsidiaries such as Instagram, as well as third-party apps. The country’s Federal Cartel Office argued that Facebook had abused its dominant market position in its data collection practices and enforced inappropriate terms on its users. Australia’s competition authority found that the dominant market positions of Facebook and Google in news and advertising demanded greater monitoring and potential remedies such as unbundling products and enforcing new privacy rules. In the US there have been no actions launched. But David Cicilline, chair of the House of Representatives’ antitrust subcommittee, has urged the FTC to investigate Facebook’s acquisitions of

decade. Though it has levied three big fines, Brussels has done little to loosen the company’s grip on web search, smartphone software and online advertising. S e a rc h : G o o g l e w a s f i n e d €2.4bn in 2017 for using its search engine to steer traffic to its inhouse shopping service, a case that dated back to 2010. Rival comparison shopping sites claim that changes made to appease the regulators have done nothing to send search traffic back their way. Android: A €4.3bn fine in 2018 over Google’s use of the Android mobile operating system to promote its in-house services set a new record in the antitrust world. To resolve the complaint, Google offered to sell a version of Android (which was previously free) that was not tied to its services. Handset makers have yet to take it up on the offer. Advertising: The EU completed its remaining investigation of Google in 2019 with a €1.5bn fine over a complaint that it barred websites that used its AdSense advertising service from taking adverts from rivals. The US Federal Trade Commission held a two-year investigation into Google’s search engine but dropped the case in 2013, even though a staff report at the agency concluded the company was acting in anti-competitive ways. Facebook Facebook has attracted attention from campaigners and antitrust regulators over its dominance of the digital advertising market, perceived monopoly on internet users’ personal data and treatment of third parties. Earlier this year Germany’s

rivals Instagram and WhatsApp in 2012 and 2014, respectively. He has als o calle d on the watchdog to look into whether the company sought to stifle competitors, after revelations that it purposefully restricted the services and data it made available to Vine, a video app launched by Twitter that has since been shut down. Amazon Amazon is under s cr utiny for its perceived dominance in ecommerce. Its dual role as a retailer and a marketplace for other sellers has raised questions over whether it uses its clout and vast amount of sales data to benefit itself and disadvantage the thirdparty sellers, who make up more than half of items sold. The EU competition commissioner Margrethe Vestager last year launched a preliminary inquiry into how Amazon uses data about its merchants to develop its own private-label products and make other decisions. Separately, competition authorities in Germany, Austria and Italy are examining whether the company’s contracts with the sellers who use its platform are an abuse of its market power. Earlier this year India took aim at Amazon’s dual role, rolling out new ecommerce regulations prohibiting foreign-owned marketplaces from selling goods sold by businesses in which they hold equity stakes of more than 25 per cent. Amazon pulled products from its Indian website when the rule went into effect on February 1, although they later returned once the company cut its stake in some sellers. www.businessday.ng

Russian technology: can the Kremlin control the internet? Moscow is developing a ‘sovereign’ web that critics say will enhance official power to silence dissent MAX SEDDON AND HENRY FOY

housands of protesters had gathered outside government headquarters in Magas, the capital of the heavily Muslim republic of Ingushetia in Russia’s north Caucasus. They were there to oppose concessions in a years’-long bitter border dispute with neighbouring Chechnya, but when they tried to share information about the protest on WhatsApp they found the internet was down on all three major Russian mobile providers across Ingushetia. The October outage began late at night before the protest was scheduled to start, and lasted until it died down more than two weeks later. When protests sparked up again, the internet suddenly went out of action once more. It amounted to a virtual blackout: locals’ fondness for voice messages has made WhatsApp the main form of communication in the north Caucasus. No official explanation was given until spring, when the FSB security service — the successor to the KGB — admitted in court that it had shut down the internet because of “terrorist threats”. All but one of the supposed threats coincided with the dates of the protests, says Andrei Sabinin, who filed a lawsuit against the FSB and the interior ministry over the outages. “They want to take down platforms for spreading information online,” the human rights lawyer says. “No WhatsApp means no communication in the Caucasus. As soon as you go into Ingushetia, it’s a black hole.” Activists fear Ingushetia’s blackouts could be repeated across Russia thanks to a law signed by President Vladimir Putin in May. The measure ostensibly aims to create a “sovereign internet” — effectively a parallel web run entirely on Russian servers — that would allow Moscow to keep the internet operating in the event of a foreign cyber attack aimed at disabling it. To do so, internet providers will be required to install equipment which Russia could use to separate itself from the worldwide web at the flick of a “kill” switch. The technology is meant to reroute all external traffic through Russiancontrolled nodes while creating a back-up domain name system to help the country’s internet function independently. Russia’s dependence on foreign systems would be vastly reduced, hastening a global Balkanisation of the internet where the west’s influence is fragmented. It also uses a technique known as deep packet

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inspection, or DPI, to centralise filtration powers in the hands of Russian censors, who have previously relied on internet providers to block access to banned content. “It’s framed as a precaution, but it’s actually a means of control,” says Sergey Sanovich, a political scientist at Stanford University who specialises in Russian online censorship. “For the most part this is about making sure the Russian government can, when necessary, have more direct access to control of information space.” Russia let its internet grow largely untrammeled until 2012, when Mr Putin’s return to the presidency met with mass street protests organised via social media. The Kremlin responded with an aggressive crackdown on online dissent: opposition pages were put on a list of banned websites, dozens of people went to prison for “liking” and reposting material, and independent news websites were brought to heel. But this ad hoc system was seen as inefficient. In 2014, Mr Putin declared the internet a “CIA project” able to weaken Russia’s sovereignty. Officials blamed the US for using it to start the Arab spring and Ukraine’s Maidan revolution in 2013-14. Some pro-Kremlin figures spoke of emulating China’s Great Firewall — a mix of technologies and laws designed to regulate the internet domestically, whose architects were invited to Moscow to share advice. The crackdown intensified after 2017, when opposition leader Alexei Navalny aired a video of an anti-corruption investigation — which racked up more than 20m views on YouTube — to help spark the largest nationwide protests since the Soviet Union collapsed. In 2018, Russia restricted access to almost 650,000 websites— a nearly fivefold increase on the year before, according to human rights group Agora. Yet Russia’s late start meant it lacked both the infrastructure and the human resources to control the internet as effectively as Beijing. China boasts its own hugely popular messaging services, such as WeChat, and has a reported 2m people who police public opinion online. By contrast, Roskomnadzor — the communications ministry’s watchdog — has just over 3,000 employees. “The Chinese have been blocking things since day one,” says a person close to Russia’s communications ministry. “We can’t do that.” Roskomnadzor made its most ambitious effort to ban Telegram, the messaging service, last year, accusing it of failing to comply with FSB requests to share user data. The attempt to block the app was a disastrous failure. Pavel Durov, Telegram’s Russian founder, @Businessdayng

rerouted its traffic through cloud hosting services, forcing censors into a game of whack-a-mole that saw them temporarily take down more than 16m IP addresses, including their own website, while having little effect on Telegram. The ban became a running joke among officials. At a ministry party last year, Roskomnadzor chief Alexander Zharov was taking photographs of a picturesque sunset on his phone when guests joked that he should share them on the app, prompting a foul-mouthed tirade, according to one guest. “He’s a hostage to the situation,” says the person close to the ministry. “He knows you can’t block it. We have no control over the process. The guys with epaulettes [in the FSB] bring bills to [lawmakers] and we have to implement them, [but] we look like idiots.” Part of the problem, experts say, is that Russia’s security bureaucracy rarely takes its own technical limitations into account. “Attempts to implement Russia’s notion of information security on the internet have been distinguished by mishaps because they don’t really understand how the internet works,” says Keir Giles, a senior fellow of the Russia and Eurasia programme at Chatham House. “If you prevent free flow of information across national borders you’ll break the internet.” Advocates for greater controls frame it as a way to ensure Russia’s independence from hostile powers. “A great deal of sectors of the real economy — power stations, transport infrastructure — depend very closely on the internet. It’s an issue of state security,” says Andrei Klishas, a member of the upper house of parliament, who co-authored the law. Mr Klishas cites the latest US cyber security strategy, with its emphasis on making countries like Russia pay “costs likely to deter future cyber aggression,” as the impetus for Moscow to act. President Donald Trump added to those fears last month, when he admitted that the US carried out a cyber attack against a Kremlinbacked “troll farm” in St Petersburg during the 2018 US midterm elections in apparent retaliation for Russia’s online meddling in the 2016 presidential campaign. Experts say Russia’s justifications for shutting the country off from the global internet are too vague to support such sweeping action. These scenarios include: a threat to network “integrity” that would prevent it from securing user communications; anything that would affect its ability to function such as a natural disaster; and “deliberate destabilising informational pressure from outside or within”.

Thursday 06 June 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Monday 03 June 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 222,157.66 6.25 2.46 114 2,774,459 UNITED BANK FOR AFRICA PLC 217,166.33 6.35 1.60 155 4,706,370 ZENITH BANK PLC 635,779.00 20.25 0.75 257 8,843,607 526 16,324,436 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 249,472.28 6.95 -1.42 96 4,112,582 96 4,112,582 622 20,437,018 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,780,426.48 136.60 0.07 198 1,465,587 198 1,465,587 198 1,465,587 BUILDING MATERIALS DANGOTE CEMENT PLC 3,404,693.38 199.80 0.15 149 1,283,534 LAFARGE AFRICA PLC. 161,077.95 10.00 -0.99 74 2,208,246 223 3,491,780 223 3,491,780 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 294,222.28 500.00 -9.07 25 113,403 25 113,403 25 113,403 1,068 25,507,788 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 1 95 1 95 1 95 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 95 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 2 4,423 OKOMU OIL PALM PLC. 70,589.34 74.00 - 6 3,300 PRESCO PLC 58,000.00 58.00 - 1 45,000 9 52,723 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,770.00 0.59 - 7 185,838 7 185,838 16 238,561 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 3 30,446 JOHN HOLT PLC. 182.90 0.47 - 1 755 S C O A NIG. PLC. 1,903.99 2.93 - 1 308 TRANSNATIONAL CORPORATION OF NIGERIA PLC 46,745.19 1.15 -0.86 49 3,766,474 U A C N PLC. 18,008.10 6.25 -8.09 138 24,334,114 192 28,132,097 192 28,132,097 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 26,004.00 19.70 -9.84 17 119,869 ROADS NIG PLC. 165.00 6.60 - 0 0 17 119,869 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 10 144,100 10 144,100 27 263,969 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 8,690.74 1.11 9.90 9 259,500 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 106,233.57 48.50 - 11 2,826 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 33 33,045 NIGERIAN BREW. PLC. 463,820.32 58.00 - 59 2,710,740 112 3,006,111 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 83,000.00 16.60 -1.48 61 711,697 DANGOTE SUGAR REFINERY PLC 144,000.00 12.00 -0.83 69 597,750 FLOUR MILLS NIG. PLC. 57,405.31 14.00 2.94 93 1,440,333 HONEYWELL FLOUR MILL PLC 8,643.92 1.09 -0.91 36 1,244,623 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 39,079.22 14.75 -9.23 42 628,873 UNION DICON SALT PLC. 3,321.07 12.15 - 1 100 302 4,623,376 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,566.31 10.95 - 16 34,200 NESTLE NIGERIA PLC. 1,157,278.13 1,460.00 0.69 25 102,616 41 136,816 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,815.75 3.85 -9.41 17 635,475 17 635,475 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 32,359.39 8.15 0.62 25 458,197 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 64 1,389,022 89 1,847,219 561 10,248,997 BANKING ECOBANK TRANSNATIONAL INCORPORATED 184,412.99 10.05 -9.87 41 1,385,988 FIDELITY BANK PLC 49,257.15 1.70 1.19 58 2,837,760 GUARANTY TRUST BANK PLC. 921,195.91 31.30 -0.95 183 33,986,838 JAIZ BANK PLC 14,142.84 0.48 4.35 51 5,356,630 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 69,097.00 2.40 4.35 559 3,610,689 UNION BANK NIG.PLC. 203,845.27 7.00 2.19 55 1,717,827 UNITY BANK PLC 8,182.54 0.70 -1.41 10 225,000 WEMA BANK PLC. 23,916.17 0.62 -3.12 29 2,278,443 986 51,399,175 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,573.93 0.66 - 7 54,848 AXAMANSARD INSURANCE PLC 20,790.00 1.98 - 8 170,457 CONSOLIDATED HALLMARK INSURANCE PLC 1,707.30 0.21 -8.70 21 3,498,715 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 2,945.90 0.20 - 2 2,825 CORNERSTONE INSURANCE PLC GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 5 138,418 LAW UNION AND ROCK INS. PLC. 1,976.31 0.46 - 2 100 LINKAGE ASSURANCE PLC 4,000.00 0.50 - 1 25 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 -9.09 7 525,292 NEM INSURANCE PLC 11,775.52 2.23 - 12 151,450 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 3 105,650 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 - 7 794,873 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 100 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 6 281,980 WAPIC INSURANCE PLC 5,353.10 0.40 - 29 1,806,209 111 7,530,942

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 3,086.96 1.35 - 6 126,000 NPF MICROFINANCE BANK PLC 6 126,000 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 1 70 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,796.93 1.39 - 2 23,911 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 3 23,981 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,000.00 3.50 -3.58 39 1,345,912 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 - 1 100 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 31,684.34 1.60 -0.62 78 70,558,374 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 2 17,500 430,103.22 42.00 - 14 1,056,230 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 12,780.00 2.13 -5.33 81 4,933,759 215 77,911,875 1,321 136,991,973 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 4 596,500 4 596,500 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 2 527 2 527 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,575.00 5.05 - 1 500 9,148.46 7.65 -10.00 33 2,179,933 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,933.54 2.28 - 15 533,875 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 15 129,168 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 1 25 65 2,843,501 71 3,440,528 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 852.48 0.24 -8.33 21 5,441,365 21 5,441,365 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 20 648.00 6.00 - 0 0 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 1 20 PROCESSING SYSTEMS CHAMS PLC 1,643.62 0.35 -7.89 22 1,489,815 9,996.00 2.38 - 0 0 E-TRANZACT INTERNATIONAL PLC 22 1,489,815 44 6,931,200 BUILDING MATERIALS BERGER PAINTS PLC 1,912.83 6.60 -0.75 30 676,007 21,770.00 31.10 - 4 4,918 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 197,152.51 15.00 - 34 271,416 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 1,156.20 9.40 - 0 0 PREMIER PAINTS PLC. 68 952,341 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,730.05 1.55 -3.12 29 1,883,696 29 1,883,696 PACKAGING/CONTAINERS BETA GLASS PLC. 37,497.90 75.00 - 6 2,635 GREIF NIGERIA PLC 388.02 9.10 - 0 0 6 2,635 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 103 2,838,672 CHEMICALS B.O.C. GASES PLC. 1,565.08 3.76 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 1 65 1 65 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 88.00 0.40 - 3 99,455 3 99,455 4 99,520 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,628.30 0.26 -7.14 24 1,273,449 24 1,273,449 INTEGRATED OIL AND GAS SERVICES OANDO PLC 47,239.37 3.80 -9.52 250 27,145,333 250 27,145,333 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,104.17 175.00 - 3 1,517 CONOIL PLC 15,266.95 22.00 - 26 44,062 ETERNA PLC. 4,760.13 3.65 - 9 34,995 FORTE OIL PLC. 35,036.74 26.90 -2.18 63 849,509 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 2 200 TOTAL NIGERIA PLC. 55,002.54 162.00 - 8 11,769 111 942,052 385 29,360,834 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 2 59,350 TRANS-NATIONWIDE EXPRESS PLC. 342.26 0.73 - 1 110 3 59,460 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 3,014.25 1.45 - 1 500 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 1 500 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 163.30 0.27 8.00 1 100,000 LEARN AFRICA PLC 1,033.74 1.34 - 5 32,630 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 849.88 1.97 9.44 8 1,307,753 14 1,440,383 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 464.16 0.28 - 3 68,650

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Thursday 06 June 2019

BUSINESS DAY

GARDEN CITYBUSINESS DIGEST

Polaris Bank joins war against fake news

.... says fake news will soon consume people and organizations ...unleashes Taiwo Obe on PH media men IGNATIUS CHUKWU

olaris Bank, a new entrant in Nigeria’s banking space that took over Skye Bank a couple of years ago, has warned that fake news may soon consume individuals and organizations. The bank has thus joined efforts to sanitise the news space by launching a war against fake news syndrome. The bank took the campaign via a training programme for journalists to Port Harcourt on Monday, June 3, 2019, at the Jevenik Place in the GRA 2 area of the Garden City. Explaining the reason behind the drive, the Head, Strategic Brand Management, Nduneche Ezurike, said journalism truly is endangered truly. He feared there could be bigger problem is this threat is ignored. He said journalism is truly endangered. Showering appreciation to a media guru and now online media consultant, Taiwo Obe, who has put over 40 years experience in his belt, the head of brand management said it is wrong to

L-R: Rasheed Bolarinwa (Head, Corporate Communication, Polaris Bank); Taiwo Obe (Resource person); George Gabriel-Whyte (Business Development Manager), Nduneche Ezurike (Head Strategic Brand Management)

accept that anything goes. He said pointed at gains of true journalism such as grants, fellowships, awards, and other opportunities. He talked about the need to verify information to stay credible, but noted that banks have realized that most inquiries from media people lack foundation in the first place, something he said would have been avoided through simple background checks instead of going forward to present such

PORT HARCOURT BY BOAT

IGNATIUS CHUKWU

ig Info in Port Harcourt, (frequency modulated) is a very strong radio station almost controlling the audio news flow in the Garden City and beyond. It seems to drag leadership status with Rhythm which stole it from Radio Rivers FM, the rave in eastern Nigeria decades ago. Leadership truly changes hands. Last week, media gurus were brought into a mini-conference hall at the corporate headquarters of Nig Info 92.3 AIM Plaza, KM 16 East-West Road (Chioba) to unveil the audiovisual studio from where voice and vision broadcasting will beam to the south-south and east daily. Apart from Nig Info, the plaza houses Cool FM, Wazobia and the cable television station. The Head of Station, the easy-going but strictly focused Blessing Olomu took the crowded audience through a verbal journey to the new feat and later took them on a physical but brief tour of the new studio. She has one word for the dazzling colours of the studio, ‘splendid’. So it was. This may not be new in the western world or even in Lagos but it sure is the first in the south-south and east of Nigeria. Many guests continually used the word, innovative. The technology deployed for the rollout allows listeners view the station while also hearing.

inquiries that may belittle the reporter. He said; “We thus urge you to try and engage in basic screening of information and ask. Is this possible? Do this before going to the affected institution”. He went on: “Look, fake news will consume people and organizations. Journalists must be ahead of others in the media space with credible news that would shame fakes. There is nothing local or global anymore

because everything now is local. The boundaries are broken. The objective of this training is to update our key stakeholders and media is one. This is also part of our Corporate Social Responsibility (CSR) aimed at impacting on the society. Banks are a fragile institution. Please help promote responsible journalism and fight against fake news syndrome.” Earlier in his opening remarks, the Business Develop-

ment Manager, George Gabriel-Whyte, who stood in for the Regional Head, Raphael Abiaziem, said training was one core values of Polaris. He said the bank cared because responsible journalism is key to every sector and that the media offers great support to the Polaris brand. Responding, the chairman of the Correspondents Chapel of the Nigeria Union of Journalists (NUJ) in chairman Rivers State, Ernest Chinwo, enjoined Polaris Bank to keep this kind of innovation going, saying the training was purely an eyeopener. “We have learnt a lot about social media and we now want to own it and lead it. This is important to us.” Dazzling the journalists on the topic: ‘Online Journalism in Fake News Era’, Obe gave appetisers with how to float an online newspaper, how to search for free title, registration made easy, and other steps. He took the training to higher pitch when he lectured on how to verify authenticity of photographs and news alerts on social media with specifics

on labnol.ng, Google Earth, and other tools. He harped: “Today’s journalism: Major tool is Eternal Vigilance; treat everyday as ‘April De Fool’ by suspecting everything, questioning everything”. Delving into the main topic, Obe, also known as TO, said: “Consider cost of fake news; wars, conflict, loss of jobs, etc. Consider speed of fake news; one click away from damage.” He said we are in a sharing world and defined fake news as made up stuff. He said Whatsapp seems to be major platform for fake news especially photographs because of end-to-end encryption. He urged all journalists to embrace the twitter handle system, saying it is good for every journalist and that it is where conversations start. “If you are not there, you are simply missing in action. The key is in providing the evidence; It beats fake news. Social media is conversation in the social milieu. We professionals have left it to charlatans. Journalism is about taking information from suspicion through verification

Nig Info, audio visual studio, and reality of media convergence Listeners would have the pleasure to watch their favourite presenters such as everybody’s lover Kofi Bartels, robust Dayo Ekusakin, peaceful Joy Eberebe, sure voice Enoh Ogbevire, Sam Chinedu, Gabriella, Jude Omamegbe, bold voice Eric Boroni, and Denise Dennis. The ‘Sports Gang’ members including Chuma, Ngozi Ezeuduma, and Carl Orakwe who thrill football lovers every match day would now be seen haggling and fighting to be heard as sports always is. Some have left but listeners would have seen the likes of Yop Wrang Pam, Daniel Braide, Milliscent Nwoka (nee Maduagu), Maryann OKon, Adoara Okoli, and Terdo Agbenyi and former newscasters such as the late Jude Ikegwuonu, Sheriff Quadri, and stable voice Ima Akpabio. That Nig Info 92.3 became the first to launch this innovation in the oil region was pointed out as evidence of leadership drive of the station that pioneered interactive broadcasting which allowed callers to be part of broadcast schedules. A city editor present remarked that

this helped to tone down tension in the region as citizens found space to air their minds and grievances. Some said it also helped to make government accountable to the ordinary people as officials daily listen to the citizens uncensored. At elections, balance played useful roles. It helps much in the feedback mechanism in the communication loop. Audio-visual studios allow listeners to view what goes on in the studio, live, and it allows audio adverts to run. It allows for cut-line or bar messages that can scroll along. It helps the listener to understand the news flow better. Yours sincerely however pointed out that while slay queen AOPs will gloat over the visual concert and enhance their slaying personifications and external worth, those regarded as ‘wowo’ presenters may have a setback. This could mean that those presenters that are not presentable but who have great voice without great looks may not be considered for employment when studios go visual; except balance is introduced.

‘‘

Some said it also helped to make government accountable to the ordinary people as officials daily listen to the citizens uncensored

L-R: Blesing Olomu (Head of Stations); Ebenezer Umor (Rivers State University); Kofi Bartel (ace AOP) www.businessday.ng

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Also, AOPs may no longer speak with robust vehemence because their cover is blown. They may begin to mellow down for fear of mob action on the streets and in dark alleys. What however seemed to concern academics in the audience such as Ebenezer Umor of RSU who stood in for his HOD, Richard Amadi PhD, is what he called the reality of media convergence. In print, as pointed out by this writer, there is the tabloid and there is the broadsheet, but a mix later occurred as some newspapers combine both features to run as hybrid. This convergence affected style and tone. Now, such convergence is coming to the electronic media; radio and TV coming together. This may affect tone, too. Television writers write less because camera would tell more. Will radio follow suit? Umor said his department has developed the syllabus for electronic broadcast journalism to be a separate course of study outside the main body, Mass Communication, as recently approved by the NUC. So, innovation is here with us. Revenue wise, Olomu (HOS) said more is expected; from more listening audience, adverts from audio ads, streaming revenue, etc. We hope the increase justifies the investment. The technology is facebookenabled for now. Data will burn faster but usefully, we gathered. Will others copy? Of course! Some GMs present indicated interest to study and review. What seems important, according to Olalekan Ige of Independent Monitor, is the readiness to innovate all the time and move on as competitors come into the room. Such is the media world, because it’s a showbiz and naked dance where nothing is hidden. Competitors and copy-cats would hardly wait to barge in.

Thursday 06 June 2019

BUSINESS DAY

Investing in Rivers State Inauguration address & the Rivers economy:

Wike lays second term projection on Marshal Plan, Green Revolution with School-to-Land scheme Ignatius Chukwu

he plan for the Rivers State economy in the next four years may be clear to those who followed the 124-point inaugural address presented by the governor, Nyesom Wike. The governor who was sworn in for another term on May 29, 2019, seems to respond to wide spreading criticisms hinging on alleged lethargic economic policies. He did this by announcing what he called a ‘Marshal Plan’ and a ‘Green Revolution’ that may involve resurrecting the Fidelis Oyakhilome’s School-toLand agric scheme. to transform the economy of the state. In the long address that showed experience, Wike said his last term would focus on various aspects of the economy to hinge on agriculture from job creation, more road constructions, flyovers, loans to entrepreneurs, to a cassava revolution. He said: “We will therefore adopt a holistic approach to development by partnering with relevant national and international agencies and expertise to initiate and implement a 25-year ‘Marshall Plan’ for economic transformation and development to guide and accelerate the future development of our State. “We are already doing great to close the existing deficit in infrastructure but the need to deliver more roads, bridges and modern jetties to connect our cities and communities, improve our economy, accelerate our development and improve the general wellbeing of our people. This we will do with greater vigour and commitment.” He said agriculture would play a huge role in the coming plans as if in response to many advisers who have appealed to him to look into agriculture. He said; “For us therefore, it is about time we embraced the green revolution as a strategic measure for achieving economic diversification, job creation and food security for the State and our people, and we are just ready to do that. “Our role in this regard will span from granting interest free loans to providing training, land preparation and logistical support to our willing youths to invest in commercial agriculture and allied businesses. We will also establish regional agricultural development belts in partnership with private firms to advance commercial farming in cash and other crops and invest in the establishment of agroallied industries and processing plants across these belts. “We will complete and privatize the multi-million-naira cassava processing plant at Afam, sell off all State-owned farms and agricultural companies, including the Okomoko Rubber plantation and company, and release all idle State farmlands to private sector investors for commercial cultivation.

“We will revive the school-to-land programme and leverage on the incentives from the Federal Government and the Central Bank to promote and sustain the development of agriculture across the value chain by our youths so that they can proudly earn their living, be employers of labour and contribute to the development of the State.” On achievements of the first four years, the governor mentioned huge investments in the judiciary that birthed the rule of law, closing the deficits in the finances of the state, boost in IGR thus making Rivers one of the fastest growing state economies by IGR, better tax environment, roads, education, and establishment of a teaching hospital as well as college of health sciences in the state university. He said security would take huge attention, the youth would be focused, and the controversial Rivers State Neighbourhood Security Watch Scheme would go operational. Achievements: He said: “We promised to take on the challenges that we faced and optimize our resources to advance the potential and prospects of our State.. We said we would reverse the years of economic decline, put the improvements to work and deliver a new foundation of hope for our State and our children.” He thus mentioned the poster-boy of his first four years, the judiciary, saying it is now truly independent. “We gave true meaning and expression to the rule of law, separation of powers and judicial independence in ways never experienced in our history. Today, our judiciary is the envy of other States: independent, strong, well motivated, effective and efficient with the most modern judicial infrastructure “We also intervened in the conditions of federal courts and built the most modern courthouses for the Port Harcourt Divisions of the Federal www.businessday.ng

High Court, the National Industrial Court and the Court of Appeal, which are now providing effective judicial services to our people. “In the next couple of weeks we will commission the first phase of the luxury estate we have built to accommodate our judges for life as part of our commitment to strengthen the independence of our judiciary.” On the economy, he said; “We have in the last four years tackled our fiscal challenges, improved on revenue mobilization, eliminated the souring deficit and put our economy on the path to progressive recovery and growth. Today, our economy is widely acclaimed as the fastest growing in the country with internally generated revenues projections and fiscal responsibility attaining record levels. “We’ve eased the tax burden on investors; our economy is on upward spiral, creating jobs and attracting new investments from within and outside the State, pushing up property rates and creating new opportunities for existing and budding entrepreneurs.” On infrastructure, he mentioned hundreds of roads constructed and other facilities like houses and public buildings. He mentioned schools renovated. More, he mentioned establishment of a medical science school in the Rivers State University, building of a teaching hospital, restoration of general hospitals, five regional referral hospital ongoing; 200 medical students out of promised 500 resume at PAMO University, etc. He described the state as one of safest states in Nigeria; “We are also made significant progress in our plan to train 500 indigenous medical students on full scholarship at the Pamo University of Medical Sciences with 200 students already enrolled and progressing with their studies in the last two years alone.” Future The future of Rivers State would

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be hinged on a strong economy to be developed through a Marshal Plan and a Green Revolution. He talked about creating a state where everyone will have and have some to spare; to move people higher in scale of living; good education, good health, skills, and good life for pensioners. On economy, he said focus would be on a broader tax base, attract investors to create jobs; to partner with national and international agencies for development (maybe reason for calling for peace and reconciliation). He said a mono-product economy is never good and planned a rapid agric scheme to be hinged on a Green Revolution, loans to youths for farming, logistics for land preparation, skills development, creation of regional agric belts, to complete and privatize Cassava Processing Project in Afam and sell off all government farms as well as revive School-To-Land programme There is plan for more roads, jetties, bridges (some have talked about three specific flyovers in the city especially at Garrison Roundabout, Artillery Junction and Rumuokoro Roundabout. Youths would get more attention specially in education, training, loans, farming, sports (Real Madrid Academy), foreign football career opportunities, etc. In health, the state would expect more diagnostic and curative centres for cancer in particular to reduce need for foreign medical screening and treatment. This was the dream of the state many years back when the Clinotech Tower was planned. Red eyes The governor seemed to show red eyes in some areas. Many still have not clearly understood what he said he would do in sanitation and environment. Some said it meant he was not satisfied with the performance of the state PDP chairman, Felix Obuah, who is the sole administrator of the @Businessdayng

state’s sanitation agency (RIWAMA). The administrator who met a troubled agency four years ago has continued to battle with refuse contractors, firing and re-firing them regularly. State of emergency: From the address, there is nowhere that the governor seemed to be directing anger at Obuah. Experts rather say they see a strengthening of his hands, thus; “Therefore, I wish to emphasize that we will no longer tolerate those who continue to degrade and undermine our rights to live in a clean, healthy and safe environment. We are therefore minded to declare a state of emergency on the environment and tackle all forms of degradation, nuisance and irresponsible behaviour occasioned by individuals, companies and other agencies, both public and private.” He seemed to charge at oil companies: “We will not fold our arms anymore while oil and gas companies continue to the environmental rights of our people with be reckless and unaccountable to our environment. In the same vein we will no longer tolerate the indiscriminate dumping of household and industrial refuse on unauthorized sites, including open lands, road/street corners, medians and drains. We equally expect all residents to regularly clean their contiguous surroundings and drains; clear the grasses and plant trees in deserving places to beautify and preserve their immediate environment.” Burden was placed on landlords to enforce sanitation around their buildings or face sanctions but shared cost seems to be the new policy in sanitation. The roads and street trading are a new focus. He said: “Enough of the lawlessness and indiscipline on our roads by traders, motorists and developers.” Action seems to have started already. More: “In the same vein, I hereby order the immediate closure, arrest and prosecution of any person, company or agency that continues to operate illegal motor parks, taxi ranks and loading points along street corners, road shoulders and other unauthorized spaces in the interest of public safety, public order and public security. Security Hope rose on the possibility of getting the much-expected Rivers State Neighbourhood Watch Corps operational, hoping they can help the security agencies to fight cultism, kidnapping and rapes in the towns and villages. Conclusion: The governor seems to bend toward blueprint system of governance and economic drive to make Rivers State a contending economic force going forward. If security is seriously tackled especially through the Neighbourhood Watch scheme and political tension is toned down through his peace and reconciliation moves, these dreams may begin to come true. Investors must be keenly watching Wike’s moves, and opportunities truly abound.

Thursday 06 June 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

iCreate skills fest just rolled out of Kaduna ONUWA LUCKY JOSEPH

ext stop is Enugu. And you can be sure the young men and women of the old Eastern Region are going to come out in their numbers to dazzle with their formidable array of skills. However, let’s talk Kaduna and how it went down. It was a festival and showcase of skills as the young men and women (ages 18-28) put their talents on display April 19th to 20th, 2019. Don’t forget that iCreate is really about giving young folks vocational options which can be deployed as and when needed for financial remuneration or pro bono. Long gone are the days when the critical skills of carpentry, plumbing, bricklaying, sewing, barbing, painting, make-up as well as technical skills of car and engine repairs, etc. are frowned at as below par for the aspiring upwardly mobile. Well packaged, these skills can set a man/woman up for life. Plus, its availability means the community can count on its deployment as the needs arise. The categories for this year’s competition are: Construction and Building Technology; Creative Art & Fashion (inclusive of Garment Making, Jewelry Design, Leather Works, Make-Up Art, Hairdressing and Art); Information and Communication Technology (Which include Coding, App Development, Drone Technology, etc.); Agriculture; Hospitality & Social Services; Transportation and

Logistics. All were well represented at the Kaduna leg of the Skills Fest. And it was in an atmosphere of camaraderie and bonhomie that the competition took place, with

the cheers going up as competitors matched each other skill for skill, craft for craft. Special attraction was the lady mechanics and technicians who dazzled with their mastery of complicated engines.

If competitions such as iCreate are sustained, Nigeria will, in quick time, be the repository of qualified hands whose combined effort will play a big role in helping move Nigeria forward.

For all those companies eager to showcase their CSR bona fides, it’s time they got on the iCreate train. Young Nigerians will have them to thank. Coal City, are you ready?!

Marylove Edwards is Coming To Town, Courtesy of Zenith Bank ONUWA LUCKY JOSEPH

hen the Zenith Bank Next Generation Masters takes off at the National Stadium Surulere, Lagos from Monday June 10 to Saturday June 15, one of the major attractions will be Marylove Edwards, the former CBN Champion currently honing her skills at the Nick Bollettieri IMG Academy in Florida, USA. Marylove Edward is on record as saying she wants to be the first Nigerian, male or female, to win a grand slam. That’s a tall order, but not out of reach for this lawn tennis prodigy who has been showing her mettle despite her tender years. At just 14, she has shown so much promise and become a standout at the IMG Academy, a place that has produced former champions including Jim Courier, Andre Agassi, Monica Seles, Mary Pierce and numerous others. The self-assured and highly articulate youngster does not want to be known as the Nigerian Serena. No! She wants to be simply Marylove

Edwards, the one with the rare skill of playing both forehand and backhand double-handed. It gives her shots strokes a lot more power, enabling the youngster to project her future with the utmost confidence. The Zenith Next Gen Masters is for the most talented eight boys and girls within the age range of 16-21. They will play in two round robin groups from where two will proceed from each group to the semifinals. This won’t be the first time prodigies are emerging in Nigerian tennis. At least one still remembers Clara Udofa in the 90s who after dazzling in the local circuit, failed to make the big league. It requires nurturwww.businessday.ng

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ing and a great deal of exposure to tournaments to help our young athletes hit and stay at the top. It is for this reason that CSI appreciates the effort that Zenith Bank puts into the development of sports in Nigeria. It is known more for Basketball. But beginning last year, became a force to reckon with in tennis with the Next Gen Masters. It has also done its bit in wrestling and we can only hope that it keeps throwing its considerable might behind our sportsmen and women who can do with all the support they can get.. The boys confirmed to slug it out at this year’s event are Musa Mohammed, Philip Abayomi, Godgift Timibra, Michael Osewa, Sanni Musa and Tochukwu Ezeh. Michael Ayoola, Mathew Abamu and Wilson Igbinovia will contest in a playoff for the last two spots. The girls’ category will feature Marylove Edwards, Omolayo Bamidele, Rebecca Ekpeyong, Omolade Aderemi, Favour Moses, Chidinma Ezeh, Iye Onoja and Oiza Yakubu. Toyosi Adeusi amd Jumai Mohammed will be alternates.

Thursday 06 June 2019

BUSINESS DAY

Corporate Social Impact

Is corporate social responsibility enough?

We live in troubled times, but with many organisations falling back on corporate social responsibility as a byword for having played their part, how impactful is it in addressing our social and environmental issues? LAUREN COULMAN

s humans, we’re living through troubled times. Increasingly turbulent weather patterns, rapid growth in species extinction and hundreds upon thousands of people — including children — raising their voices in panic at the lack of action we’re collectively taking against climate change as a planet. Ever widening rifts between the rich and poor. Poverty is now endemic, most visibly seen in the rough sleepers making homes of our city’s doorways. Increasing dissatisfaction with discrimination has seen identity politics is at its most vocal in decades. #metoo, #blacklivesmatter and the fight for trans rights now challenge inequality across every section of society. The changing societal status quo and breakneck pace at which we’re globalising thanks to technology have created fear, and massive backlash against issues like immigration, marriage equality and abortion rights. Political divisions are deeply embedded, and the rifts in society — demarked by privilege and power — seem like they’ll never end. So, what to do? People are already mobilising. Aided by social media, the organising potential and platforms provided to otherwise unheard voices can quickly gain traction. Greta Thunburg’s school strike started with a solo sit out yet sparked a global movement which helped influence the U.K. to declare a climate emergency, with Ireland most recently following suit. Yet, while people are increasingly claiming their power to address their concerns for humanity, the biggest potential to influence mass change lies where? Governments, ideally. Though as made evident by the backtracking (yes, you Donald Trump) on environmental action, the political party game-playing (hello BREXIT) we’re all mired in and painstakingly slow response to the wild west that is the tech industry, there are few too little green shoots on which to place our hope as yet. Which bring us to business. Or, businesses. Those organisations in the economic driving seat. Influencers of culture and behaviour through their products and marketing. Employers of the masses. As the most powerful members of the establishment, currently, with platforms, skills and resources with the potential to dictate lives, where’s the action? Honestly, it’s limited, though we are seeing some action. While purpose marketing might take flack for its seemingly

opportunistic use of younger generations conscientiousness to sell products, Greggs managed to generate more positive PR for veganism than a whole decade of grassroots campaigning, all through a vegan sausage roll. Diversity and inclusion too elicit eyerolls. Seen as the latest righteous trend in business practice, Yet, the stats don’t lie. For those businesses which push to ensure equal representation of women at leadership level, they find themselves outperforming the norm in profitability and innovation. Just look at Whitney Wolfe Herd and Bumble’s female-led business model laying waste to the dating market. Business models are going through a shakeup too. Businesses like Innocent and Green and Black’s, where social and environmental concerns were central to their ethos, have long since been snapped up by major corporates, such is their consumer appeal. Now Lush, Giff Gaff and Ugly Drinks are embedding activism, collective action and inherent action into their brands, and to great effect all around. In light the win-win potential of taking a stance, addressing inequality internally and enabling people to do the good thing — socially and environmentally speaking — businesses are still reluctant at best (and loathe at its worst) to progress. In the face of the increasingly global concerns and the loud demand from consumers and employees for businesses to do better, our current practises deserve scrutiny. With many organisations falling back on corporate social responsibility (CSR) as a byword for having played their part, how impactful is it in addressing our social and environmental issues? Why are organisations treating responsibility as a business project instead of business behaviour? What opportunities are there

across the organisation to influence internal and external change? Plenty, as those organisations like Nike, Gillette and Dove are trying (and sometimes failing) have demonstrated. Nike’s stand for gender equality may have soured in light of their maternity discrimination revelations, but brands like Nationwide are doing the graft internally, and including working mothers in their quest to create a fairer workplace those usually cast aside. After the initial response around Gillette’s efforts to address toxic masculinity, its recent trans positive ad is helping both the brand and the issue make strides. This in addition to the $1 million fund they have set up, to be distributed over the next three years to organisations helping men be the best they can be, enabling those already working at the coal face make a significant impact. Leveraging skills is another way to add value. Recognising housing and poor living conditions play a major part in the rise in homelessness, British Gas have funded Shelter advisors and awarded grants to the charity’s clients struggling to pay their bills. That, and campaigned to make carbon monoxide alarms mandatory in rented homes and lobbied the government to address retaliatory evictions. With so much CSR seeing sponsorship of issue-focused events over internal action, fundraising spread over several organisations in short yearly stints, and people’s talents used sparingly (or not at all) in one-off volunteering days that often short change the charities through additional admin, we have to ask… are we really doing enough?

Lauren Coulman is a social entrepreneur and impact consultant, writing about cross-sector efforts and issues-led social change.

People are willing to pay a fortune to have lunch with Warren Buffett (for charity) In 2000, a charity lunch with the billionaire went for $25,000. This year, it will be more than $3.5 million.

wenty years ago, business and philanthropy icon Warren Buffett began a unique charitable tradition by allowing people to bid for the chance to “power lunch” with him. The first winner was an entrepreneur named Pete Budlong who paid $25,000 in 2000. Then in 2003, the fundraiser switched from a live event to an eBay auction. In 2018, the most recent winner was anonymous and spent just over $3.3 million. All told, the Oracle of Omaha’s power-lunch promotion has raised more than $30 million, making it probably one of the best appreciating assets in the charity world. The money goes to the San Franciscobased nonprofit GLIDE, which works to battle poverty, homelessness, and marginalization through social justice and spiritual community work. That total will go up again substantially when bidding for the 2019 event wraps at 10:30 p.m. ET on Friday, on May 31. With 12 hours to

tending their community-building events. “She came up with the idea of auctioning off a lunch with Warren Buffett and offering it during a GLIDE fundraising event in San Francisco called Soul of The City,” the company says in a statement. “The top bid for those lunches were $25,000. In 2003, Mr. Buffett suggested that eBay host the auction, which then grew tenfold to $250,000. By 2008, the auction had a $2 million-bidder for lunch with Warren.” One of the benefits of eBay is that bidding is now global. Several recent winners have remained anonymous, but the list includes people from China, Singapore, and Canada. The last identified winner was Zhu Ye, chief executive at a Dalian Zeus Entertainment, a gaming company in China. In 2015, Ye paid $2,345,678 and gained a ton of exposure. Philanthropic auctions are just one part of eBay’s nonprofit eBay for Charity efforts. Its platform allows everyday sellers to share some or all of their proceeds with specific chari-

go, the auction had already set a new record-breaking total by cresting the $3.5 million mark. eBay declined to release the total number of bidders participating, but some parts of the process are publicly visible. The auction started at $25,000 and reached $3.5 million after just 13 bids. (There’s also a prequalification process to participate, guaranteeing those bidding can actually shell out the contribution.) This year’s winner can join Buffett alongside seven of their friends at his classic spot, New York steakhouse Smith & Wollensky. “I like backing the right people,” Buffett added in a press release, about why he continues to do this. “There’s nothing like backing winners and helping people become winners.” The initial concept was dreamed up by Susan Buffett, Warren’s late wife, who was a director at Berkshire Hathaway and the former president of the Buffett Foundation. In 2000, she was living in San Francisco and volunteering for GLIDE while at-

ties. Buyers can also add in their own donations for various groups as they check out. More than 66,000 charities now participate with the combined efforts, raising $912 million overall since 2003. Buffett’s lunch auction is the biggest single fundraiser by far on the platform. In 2018, the runner-up was George Clooney’s Harley Davidson, which sold for nearly $50,000 to support the veteran’s assistance organization Homes For Our Troops. A two-person “pitch lunch” with Dallas Mavericks owner Mark Cuban came in third. It raised just over $40,000 as part of an eBay partnership with ESPN to support the V Foundation against cancer. “With the power of the eBay for Charity platform, we’ve been able to reach millions of people,” the company adds in a statement. “And each year, not only are we seeing repeat bidders, but we’re also attracting new bidders each auction who are looking to receive timeless advice from Mr. Buffett.”

BEN PAYNTER

Ten powerful quotes on CSR from the Responsible Business Summit 2013

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usinesses cannot be successful when the society around them fails.” “We need to give leaders the time, space and resources to think if we want business to drive sustainability transformation.” “Challenge for big businesses is

ensuring HR communicates with centres of talent discovery, such as universities, so needs are aligned.” “Gap between consumers’ values and their actions cannot be closed by focusing on their motivations.” “Business has come to believe the solution to problems lie within www.businessday.ng

their own resources rather than in collaboration.” “When we inspire people by explaining why the destination is important, they develop the motivation to see the race through.” “CSR can be very hard for employees to relate to if we don’t make it tan-

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gible to their everyday working lives.” “CSR isn’t a particular programme, it’s what we do every day, maximising positive impact and minimising negative impact.” “Loyalty is to the values of the company, not to the company. If there are no values, there is no loyalty.” @Businessdayng

“When the wind blows there are those that build walls and then there are those that build windmills.”

(By Jamie Lawrence, HRZone) (For feedback, contact us at csrmomentum@gmail.com/ 08023314782)

industry Insight

BUSINESS DAY Thursday 06 June 2019 www.businessday.ng

Why Nigerian manufacturers are not competitive JOSEPH MAURICE OGU & GBEMI FAMINU

igerian manufacturers are battling with various challenges which ultimately affect their productivity, capacity utilisation and especially competitiveness. The Manufacturers CEOs Confidence Index (MCCI) survey conducted by the Manufacturers Association of Nigeria (MAN) in the first quarter of 2019 showed various issues hurting Nigeria’s productive sector. According to the MCCI, CEOs confidence stood at 51.3 points in the first quarter of the year, slightly above the 50 points benchmark of a good performance. Issues around foreign exchange, bank lending rate, government capital implementation, multiple taxes, overregulation and raw materials were identified by chief executives of Nigerian firms as some of the challenges dragging the growth of the sector backwards. The effect of these recurrent challenges can be felt in the sector’s level of production, global and local performance as well as its contribution to the country’s real gross domestic product (GDP). In the fourth quarter of 2018, the manufacturing sector’s contribution to the country’s GDP remained stagnant at its 2017 level of 8.86 percent, according to the National Bureau of Statistics (NBS) figures. The NBS data also showed that Nigeria’s total non-oil export in 2018 were worth $3.3 billion (N1.19 trillion), which is just a fraction of Bangladesh’s $33 billion earnings from ready-made garment (RMG) sector in 2018. Access to funds Data from MAN show that lending rate to the manufacturing sector averaged 22.21 percent in 2018 and 22.84 percent in 2017. However, the current repo rate (central bank lending rate to commercial banks) in South Africa is 6.75 percent while the prime lending rate (lending rate to customers) is 10 percent. Similarly, Kenya Central Bank’s monetary policy committee cut the determining bank rate in late July 2018 to 9 percent, from 9.5 percent. Zambia’s benchmark lending rate is 9.75 percent as of February 2018, while Ethiopia’s is 7 percent. Nigeria’s monetary policy rate, which is the benchmark interest rate, is 13.5 percent and banks lend at 20 to 30 percent. With this, local manufacturers’ products

Source: World Economic Forum 2018, BusinessDay are often too expensive in the local and global markets compared with those of Asian countries borrowing at single-digit rates. Smuggling The country’s porous borders are also a contributory factor to manufacturers’ woes as products flood into the country illegally from Benin Republic and Togo, among others. A case study is palm oil from Malaysia smuggled into Nigeria every day, hurting local investors that have pumped in billions to develop the industry. Apapa gridlock Exporters lose thousands of dollars annually to delays at Apapa and Tin Can ports that provide over N5 billion each day to Nigeria. Imported raw materials take ample time to reach factories, slowing down the production process. During a recent conference, the Ogun State chapter of Manufacturers Association of Nigerian (MAN) concluded that the gridlock in Apapa had raised production cost, as members often paid unnecessary demurrages due to delays of getting containers out and in of Apapa. “If Nigeria does not want to collapse its economy, then the Apapa gridlock has to be solved urgently,” the association said. According to Raymond Amah, chief executive of Amah Company Limited, an Owerri, Imo State-based businessman who imports from China, the cost of transporting goods from Lagos ports to Owerri is far higher than the cost of bringing such from China to Lagos.

Electricity supply to manufacturers Manufacturers rely on gas, diesel and other alternative sources as power distribution companies’ failures mount. According to a survey conducted by MAN, expenditure on alternative energy sources totalled N93.1 billion in 2018. In fact, manufacturers have set up a power company with a view to seeking ways of getting steady energy supply at reasonable costs. What should be done Funding One manufacturing company has the capacity to create the equal number of jobs of all the banks. Hence Nigerian manufacturers need single digit lending funds to survive in a harsh environment. The Bank of Industry (BOI) has done so well in funding a number of firms, but analysts say it should be recapitalised to make more funding available for the productive sector. Same with the Bank of Agriculture, which has now been overshadowed by the Central Bank of Nigeria that funds the Anchor Borrowers Scheme. Level of local patronage One of the things India has successfully accomplished was to sensitise its citizens to always buy locally produced products. This can happen in Nigeria. But first, government and its agencies must patronise local products and implement executive orders to this effect. “If government should start patronising Innoson Vehicles, buy military and

paramilitary clothes from textile companies, do you know what it means for our economy?,” Babatunde Ruwase, president of the Lagos Chamber of Commerce and Industry (LCCI) asked passionately. Tax issues Nigeria ranked 146 among 190 economies in World Bank Doing Business survey. One of the factors responsible for this downfall is multiple and illegal taxes manufactures would have to pay different agencies for doing business in Nigeria. There is a need to harmonise all the taxes and digitise tax collection to remove touts in the system. The fact is that states and local governments are now revenue drivers and see manufacturers as oil pipelines. This is one major reason why decent direct investors take their time before putting money into the Nigerian economy. In many other parts of the world, there is certainty of taxes to be paid and firms comply without being prodded. Why must things—all things— be different in Nigeria? Technology Across the world, manufacturing is changing. Robotics, artificial intelligence and other forms of advanced manufacturing techniques are already used. These are expensive to deploy, but they achieve efficiency in production and reduce costs. Nigerian manufacturers must begin to think of changing their processes and embracing technologies that will achieve speed and efficiency.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.