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New oil scramble set to begin for domestic players As IOCs move to fully divest onshore assets 20 assets up for grabs

DIPO OLADEHINDE

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iger ian investors and industry players will be keeping an eagle eye on a current wave of investment opportunities about to open up for local companies as International Oil Companies (IOCs) move to fully divest from onshore assets.

According to sources, oil majors in Nigeria are expected to be selling off their onshore assets while focusing on offshore oil blocks.

This is due mainly to a Continues on page 46

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

Spot ($/N)

3M

360.65 306.95

0.77 11.39

NGUS jul 24 2019 361.06

g

6M

0.08

10 Y -0.04

20 Y 0.03

14.45

14.46

14.57

5Y

-0.27 13.18

NGUS oct 30 2019 361.51

NGUS apr 29 2020 362.41

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Fraudsters shift focus to mobile attacks ... target banks, OFIs, digital wallets, remittance players . . CBN to introduce payment valve, police desk in e-banking ecosystem hope moses-ashike raudsters in Nigeria are shifting focus to mobile attacks as mobile channels recorded the highest number of frauds in 2018, scoring 28.21 percent on the Fraud Interest Index (Flt), according to the country’s Inter-Bank Settlement System (NIBSS) fraud report for 2018.

“This could be an early warning sign that fraud-

F L-R: Adesola Adeduntan, chief executive officer, FirstBank; UK Eke, group managing director; Oba Otudeko, group chairman, and Oluseye Kosoko, company secretary, all of FBN Holdings plc, at the 7th annual general meeting of the company in Lagos, at the weekend. Pic by Pius Okeosisi

fgn bonds

Treasury bills

sters are shifting focus to mobile attacks and testing the waters in different Continues on page 46

Inside My plan is to create a platform that helps the financially disenfranchised segment of the population

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news 37m SMEs on target as FG, Procter & Gamble sign MoU on academy HARRISON EDEH, Abuja

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ver 37 million Small and Medium Enterprises (SMEs) in the country are on target for business support services as the Federal Government on Friday signed a Memorandum of Understanding (MoU) with Procter & Gamble to build a SME Academy.

The MoU was signed in Abuja between the Federal Ministry of Industry, Trade and Investment, representing the Federal Government, and Procter & Gamble.

Aisha Abubakar, minister of state for Industry, Trade and Investment and the supervising Minister of Women Affairs, signed on behalf of the Federal Government, while

President Muhammadu Buhari (r) in a warm handshake with Femi Adesina, special adviser on media and publicity to the president, at the president’s arrival, yesterday, after a 10-day private visit to the United Kingdom. With them is Mohammed Adamu (2nd l), acting inspector general of police, and Tukur Buratai, chief of army staff.

Temitope Iluyemi, director of government relations, Africa, signed on behalf of Procter & Gamble.

Speaking at the ceremony, Abubakar said the Federal Government was committed to ensuring consistent business support services for SMES in the country. ”Today is important for SMES in the country. Procter & Gamble has been in Nigeria for about 20 years now and is giving back to the society where necessary in lending support to micro, small and medium enterprises in the country,” Abubakar said.

Giving further insight into the role of the government in the MoU, she noted that the Federal Government as part of its commitments is

Money awaits investors as NERC Falling skills level lessens benefits moves to split DisCos’ franchise areas Continues on page 46

from Africa’s youth bulge STEPHEN ONYEKWELU & MICHAEL ANI

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frica’s youthful population has maintained a steady g row t h b u t t h e world’s second most populated continent is failing to equip its young people with skills needed to compete in a knowledgebased, borderless, global labour market.

“The average match between education and the skills needed by businesses is worse in Africa than in the rest of world. Almost 16 million young Africans are currently facing unemployment,” Mo Ibrahim Foundation,anon-governmental agency that focuses on the criticalimportanceofleadership and governance in Africa, said in a 2019 report titled ‘Africa’s Youth: Jobs or Migration’.

“Furthermore, there is a weak link between higher education levels and better job prospects,” the report said.

It added that only about half of those who would qualify for lower secondary education in sub-SaharanAfricaareenrolled.

Youths account for 60 percent of all African unemployed, according to the World Bank. In North Africa, the youth unemployment rate is 30 percent. It is even worse in Botswana, the Republic of the Congo, Senegal, South Africa and several other countries.

Young women feel the sting of unemployment even more sharply. The African Development Bank (AfDB) found that in most countries in sub-Saharan Africa and all of those in North Africa, it is easier for men to get jobs than it is for women, even if they have equivalent skills and experience.

With 200 million people aged between 15 and 24 (the youth bracket), Africa has the youngest population in the world. The current trend indicates that this figure will double by 2045, according to the 2012 African Economic Outlook report prepared by experts from the African Development Bank (AfDB), the UN Development Programme (UNDP), the UN Economic Commission for Africa (ECA) and the Organisation for Economic Cooperation and Development (OECD), among others.

According to the UN demographic projections, by 2100 the continent’s populace between ages 15 and 34 will more than triple by 181.4 percent to 1.3 billion people, from 447.1 million in 2019.

As a result, Africa’s youth population will be twice the expected total population of Europe, 653.30 million, with almost half or 46.30 percent of the world’s youth expected to be from the continent.

While a rising population has been projected by the UN to rock the African continent, Europe and Asia’s populations have been projected to shrink by 21.4 percent and 27.7 percent, respectively.

“Africa’s youth are better educated, healthier and more connected than previous generations, but are still lagging far behind other regions,” said the Mo Ibrahim Foundation report.

Amid a deteriorating educational sector alongside failing health system, Africans have resorted to leaving their home countries in search of greener pasture with only a few migrating because of insecurity issue.

Analysis

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

… Community groups, others can band together to form mini DisCos … Regulator to announce sub-franchising rules after Monday ISAAC ANYAOGU

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he Nigerian Electricity Regulatory Commission (NERC) will soon put into force new rules that will allow third party investors to provide electricity within a franchise area earlier ceded to an electricity distribution company (DisCo) which exercises a natural monopoly over the area.

Industry analysts say the new rules hold much promise for investors, thanks to DisCos’ poor service.

NERC, which regulates the

electricity sector in Nigeria, has since the past two weeks called for comments from the general public on a consultation paper to elicit comments from stakeholders in the Nigerian Electricity Supply Industry. The call expires Monday and stakeholders say there is a strong indication that the Commission will enforce the regulation as the sector is excited about it.

According to NERC, proposals for the franchising arrangement can either be initiated by DisCos or customer groups (community) within a specified geographical boundary and franchisee selected through a competi-

tive procurement process.

“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,” NERC said.

Additionally, any unserved or underserved community has the option of exploring the provisions of NERC’s Regulation on Independent Electricity Distribution Network (IEDN) in ending its supply challenges as may be applicable, NERC said.

The Multi-Year Tariff Order (MYTO) will govern contracts but where a franchisee makes capital investments in order to provide additional power at a premium cost, he is allowed a return on such investment, through the provision of a surchargepayabletothefranchisee.

“By this regulation, NERC is opening the power sector for investments as customers in any community can decide to form their own DisCo, provide their own meters and invest to improvetheirownnetwork,”said Chuks Nwani, an energy lawyer.

•Continues online at www.businessday.ng

$1.5bn Lekki seaport: Analysts proffer measures to avert repeat of Apapa scenario AMAKA ANAGOR-EWUZIE

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s Nigerian businesses anticipate the completion and take-off of the much-awaited $1.5 billion Lekki Deep Seaport, the consensus opinion among experts is that the promoters of the port project must do everything possible to avert a repeat of the Apapa conundrum.

Apapa, which plays host to Nigeria’s two busiest ports – Apapa and Tin-Can Island – that together control 75 percent of import and export activities, has for too long been bedevilled by persistent gridlock occasioned by unwholesome activities of truckers. This situation, apart from its effect on daily movement of motorists, residents and com-

muters in and out of Apapa, has crippled businesses in the port city, crashed property value in this prime location, and left over 40 percent of the buildings in Apapa GRA currently empty.

It is this situation that the analysts say the Lekki Deep Seaport axis may eventually face unless the promoters of the port project push for the expansion of the Lekki-Epe Expressway, Epe-Shagamu Road as well as the development of functional rail line to ensure smooth movement of cargoes in and out of the port.

Iheanacho Ebubeogu, general manager, security, Nigerian Ports Authority (NPA), said Nigeria needs a deep seaport as soon as possible to allow for berthing of bigger ships and achieve economy

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of scale. He added, however, that there was need to expand the roads leading to the Lekki Deep Seaport to eight lanes to avert the reoccurrence of the Apapa problem.

“To avert the reoccurrence of what is happening in Apapa today, government in building the new port, should ensure that between the port entrance and about 4 kilometres away, there should be only warehouses for storing cargoes and roads for movement of cargo by trucks,” said Kunle Folarin, chairman, Port Consultative Council (PCC), at a recent quarterly business roundtable organised by MMS Plus Newspapers.

Lekki Port, which is a multi-purpose seaport located at the heart of the Lagos Free Trade Zone, is expected @Businessdayng

to be one of the most modern ports in West Africa at completion. The NPA awarded 45 years concession to Lekki Port LFTZ Enterprise on a Build, Own, Operate and Transfer (BOOT) basis.

The experts say the promoters of the project also need to push for the establishment of truck and trailer transit parks within Epe axis to serve as truck holding-bays where electronic call-up system will be used to streamline the number of trucks coming to the port to pick laden containers or drop empties.

In addition, they say the Federal Government needs to limit the number of oil tank farms licensed to be situated within the Epe axis while the

Continues on page 46

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For First Bank of Nigeria, 125 years is not just a number

Bashorun J.K Randle

• Continued from last week

I

t goes without saying that the British managers of the Bank had easy access to the colonial administrators from the rank of District officers to LieutenantGovernor and Governor/GovernorGeneral. They belonged to the same exclusive social clubs e.g. Ikoyi Club (which was previously known as the European Club); and enjoyed special medical facilities e.g. “European Hospital” (now Military Hospital) while the General Hospital was for “the natives”.

All over Nigeria, the Bank worked the same hours as the colonial government officials.

Government offices and banks would open on the dot of 8 o’clock in the morning and close at 3 p.m. which left plenty of time for lunch and siesta followed by golf, tennis, squash racquets or billiards at the club.

Cocktails and dinner either at club or at each other’s homes were regular features of the day and night. At the weekends, cricket, beach parties/picnics, boating, fishing, swimming and horse-riding were generally available

for the expatriates.

As for “the natives”, they had to make do with whatever leisure activities they could rustle up by relying on their ingenuity. Entrance to the exclusive clubs and residences of the expatriates was only through the back door or the kitchens. The only leveller was the scourge of malaria and diarrhoea which ravaged West Africa with vicious frequency. It provided the colonial officers and British bank managers with a ready excuse for the consumption of large quantities of gin and tonic, with whiskey and soda as the alternative to be chased with brandy and cigars. Champagne came much later.

As if to ape their colonial masters and British bank managers, “the natives” took to smoking cigarettes and pipes stacked with imported (or local) tobacco. In addition, they made do with beer and football.

Even in the Churches, the front row was reserved for the colonial government officers and British bank managers. Right here in Lagos, the Church that was within shouting distance of King’s College was “christened” the Colonial Church (European Church) and it was exclusive for prayers to the Almighty by Europeans. Thankfully it is now known as St. Saviours Church.

It would be unfair to heap the blame on white officers of the Bank who only swam with the tide. In any case, it is too late to demand reparation.

Instead, we should focus on the three critical areas that circumscribed the matrix of the Bank and galvanized its strategic thrust into the fabric of

its society: 1. People 2. Customers and 3. Culture Rather than conclude that, that it is “The Heart of The Matter” going

by Graham Greene’s experience in Freetown, we should rely instead on Peter Drucker’s declaration: “Culture eats strategy for breakfast.”

In order to put matters in context, it is of utmost importance to appreciate that one hundred and twenty – five years is a really long stretch. In the Netherlands, any organisation that has lasted one hundred years is automatically conferred with the honorary title “Koninklijke” or “Royal” which it may apply to its name. A case in point is Royal Dutch Shell. Other examples are Feadship Royal Dutch Shipyards, Koninklijke Luchtvaart Maatschappij[KLM] or translated – Royal Dutch Airlines.

Also, we must not forget that 1894 to 2019 straddled two World Wars from 1914 to 1918 and 1939 to 1945.

It says much for the resilience of the Bank of British West Africa in war and peace, that it maintained its duty of care to its people (staff ), customers and culture. In the event of a Third World War, the Bank has its template for survival ready. There would be no need for underground bunkers or tunnels.

It is to the credit of the Bank that it kept meticulous records of its staff who perished during the wars that had little to do with banking.

Without oversimplifying matters, the temptation to shift our focus on

‘

It would be unfair to heap the blame on white officers of the Bank who only swam with the tide. In any case, it is too late to demand reparation

how the Bank survived the spate of bank failures and financial meltdown/ economic disasters is overwhelming.

Perhaps it was the formidable combination of people, customers and culture that provided the robust defence wall, safety net, survival moat and ballads.

Within the expatriate community, every now and again, there were rumours of wife swapping and husbands snatching. Sometimes, the predators were the bankers while the colonial government officials were the victims.

However, more often than not it was vice versa (the other way around).

We shall have to dig the records of the Bank in order to extract how such delicate matters were dealt with.

However, what was well known is that some of the bankers strayed into forbidden territory to sample the “local content” and ended up fathering babies. Nine months later the half – caste son and daughter would emerge leaving little doubt as to who the father was considering that there were only one or two white people in vicinity. For some reason, the “native women” of Calabar, Sapele, Warri, Jos and Kaduna who had a reputation for being sultry, seductive and willing were fair game.

However, brazen cases of financial misconduct, violent behaviour, mental instability or outright insubordination by managers of Bank of British West Africa would leave the Bank with no option other than to swiftly book a passage back to England on the next available ship for the offender.

Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

A decent case for presumptive tax

Gregory Kronsten

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uigi Einaudi was the president of the Italian republic shortly after the Second World War and a prominent economist best known for his advocacy of presumptive taxation. He argued that tax should be levied on average, and not actual incomes. One advantage of such a system would be that all taxpayers have the incentive to work hard since above-average income would be free of tax. Another would be administrative simplicity.

Presumptive income tax (PIT) is applied in different forms in many jurisdictions. The authorities could assume that individuals and companies enjoy income equivalent to a set percentage of their net worth. Alternatively, they could assess a company’s tax liability as a set proportion of its gross receipts, making adjustments for the specific industry. In developed economies, the collection agency could assess the PIT due from a large landowner on the

basis that he/she made the full productive use of the land. For other taxpayers, the agency could make a demand based upon visible signs of wealth. The permutations are numerous yet they share the advantage for the authorities that the taxpayer has to challenge the assumptions underpinning the demand.

In Nigeria the Federal Inland Revenue Service (FIRS) has expressed an interest in the principle of PIT. It is not difficult to see why. Federally collected revenue amounted to 7.4 per cent of GDP in 2018 according to provisional data from the CBN. This is less than half the rate achieved in Kenya and about one third of what is posted in South Africa. Some numbers quoted in January by Zainab Ahmed, the federal finance minister, are revealing. The gross oil revenue/oil GDP ratio stood at 39.0 per cent, and that for the non-oil economy at just 4.2 per cent. We may conclude that the oil industry in Nigeria is undertaxed relative to other jurisdictions and we can see why the FIRS, the largest collection agency in the country, will look at new ways to boost the tax take such as PIT. It would look above all at small businesses and sole traders if it was to adopt PIT. There are an estimated 77 million such businesses in Nigeria, accounting for 60 million jobs and close to 50 per cent of GDP according to the industry, trade and investment ministry. Rather than assess net worth or search for visible signs of wealth in this case, the FIRS could examine cash book www.businessday.ng

receipts, bank statements and business permits. It could set (presume) benchmarks for the profitability of types of business.

In the absence of any other data, the FIRS could make a demand upon the basis of the location of the business and staff numbers.

There is an argument, popular with the audit industry and others, that such an approach is intrusive and restricts the rights of taxpayers. Many thinkers, not to mention those with the thankless task of having to govern a country, would reply that rights cannot be separated from responsibilities.

If a business persistently ignores or underpays its tax obligations, there is a compelling case for the authorities to up their game by confiscation or the application of PIT for example. In some cases, the agency may collect more tax than is due: taxpayers who had ducked their obligations would then have to appeal.

The FGN has to take radical steps to boost its revenue generation. Its debt burden is currently sustainable in our view but will not be so in, say, five years. The only way to provide better services for its citizens is through higher tax collection. We can all pick data to highlight the pitiful state of basic services: ours are the recent finding that more Nigerians live in poverty than Indians although its population is one sixth of India’s, and that the housing deficit was 17 million units five years ago according to the Nigeria Mortgage Refinancing Company. Nigeria has a low government spending/GDP ratio because it has a low tax/GDP ratio.

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Similarly, if the FGN does not transform its tax collection, it will not have access to the funds for major infrastructure spending. Over 20 years, up to US$3trn is required to make the infrastructure fit for purpose.

Nigeria’s traditional external partners, the domestic private sector, the DFIs, the PFAs and others will play a part but the lead role belongs to the FGN. Without large-scale investment, it is very difficult to see the migration of the economy from the rentier to the productive model. Doubters are invited to pay a visit to South Korea or any of the East Asian success stories of the 1990s.

PIT could be one pillar of a broader strategy to push up tax generation sharply within a relatively short period. Others could be the doubling of the standard rate of VAT to 10 per cent; a review of the oil industry’s production sharing contracts; an increase in the staffing and remuneration of the large taxpayers’ office; an expansion of the electronic filing of tax returns; and a draconian review of tax waivers and exemptions.

The urgency of the FGN’s predicament does not allow for a dependence upon efficiency gains to deliver. The gains were impressive in the early years of democratic South Africa but were possible because a well-run revenue service with a track record already existed. This is not Nigeria’s current lot. A dramatic challenge requires a dramatic response in our view.

Gregory Kronsten is the Head, Macroeconomic & Fixed Income Research FBNQuest

@Businessdayng

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General incompetence

Patrick Atuanya

I

n 2018, President Abdel Fatah al-Sisi of Egypt arrived in the country’s New Administrative Capital to inaugurate three giant power plants built by the German company, Siemens, with a total capacity of 14,400 megawatts.

Built at a cost of 6 billion euros, or $7.2 billion, the project was completed in only 27.5 months or a little over 2 years and increased Egypt’s power generation potentials by more than 40 percent.

A similar project in Nigeria projected to cost $5.8 billion, with the potential to increase the country’s generation capacity by up to 40 percent is the Mambilla power project in Taraba State, which the Federal Government began in 1982 and remains uncompleted in 2019.

More than eight Nigerian presidents have come and gone, since the mega power project billed to generate up to 3,000 megawatts of electricity was conceptualised.

President Muhammadu Buhari was the only president among them to get two attempts to complete the project - first in 1983 as General Muhammadu Buhari and again in 2015 as a civilian President, yet it remains largely on the drawing board.

Across the country power projects remain non-operational for flimsy reasons.

Gas fired plants are built without gas pipelines to connect them to a power source, the National Independent Power Plants (NIPP) with combined 4,774 mw in capacity, long scheduled to be privatised remain in limbo.

Moving on to subsidies, Egypt recently raised the price of electricity by an average of 26 percent as part of reforms designed to overhaul the country’s economy.

In Nigeria the electricity sector is now probably bankrupt with Distribution Companies (DisCos) unable to fully pay for power they buy from Generation Companies (GenCos), due to non-cost reflective tariffs, and unwillingness of Government to raise electricity prices.

Today, the electricity sector privatised in 2013, still suffers daily blackouts as DisCos and GenCos continue to underinvest in capex, because tariffs failed to keep up with rising inflation and so called circular debt (consumers owing discos and DisCos owing GenCos, and so on) undermines the whole system.

In 2011, Iran ended decades of fuel subsidies with plans to achieve $20 billion in savings in the first year of the subsidy cuts and spend 80 percent of that money on cash grants to the poorest Iranians.

In 2015, the United Arab Emirates, the third-biggest OPEC producer, began linking gasoline and diesel prices to global oil markets in a bid to end energy subsidies.

Indonesia, another large energy producer and consumer, has also made progress in getting rid of electricity and fuel subsidies.

Nigeria for its part remains stuck on petrol subsidies.

The Federal Government probably short-changed everyone and the economy to the tune of N623 billion ($1.7 billion) in subsidising petrol last year, a dubious expense line it clearly cannot afford.

Phasing out implicit fuel subsidies while strengthening social safety nets to mitigate the impact on the most vulnerable would help reduce poverty and free up additional funding for health and education.

Nigeria fixes the price of gasoline at N145 per litre ($0.40, or $1.51 a gallon), among the 10 cheapest levels worldwide, according to GlobalPetrolPrices.com.

The subsidy expenditure is happening amid a bourgeoning debt pile and barely growing economy, recipes for a currency/ fiscal crises.

The mess in Apapa, Nigeria’s major seaport is another testament to the sheer inability to get things done by Government.

Nigeria loses $19 billion annually, or about 5 percent of gross domestic product (GDP), from the delays, traffic jams, illegal charges and insecurity that are increasingly prevalent at its ports, the Lagos Chamber of Commerce & Industry (LCCI) said in a 2018 report.

A 2018 World Bank Trading across Borders survey, which measures the time and expense involved with importing and exporting goods, ranked Nigeria 182nd out of 190 countries, below war torn Syria and Afghanistan.

In Health and Education rankings the country continues to be near the bottom of the pile.

Nigeria ranks 157 out of 189 countries in the UN Human Development

‘

The subsidy expenditure is happening amid a bourgeoning debt pile and barely growing economy, recipes for a currency/ fiscal crises

Index, which measures indicators such as health and inequality.

Life expectancy is still a mere 54 years.

The UN estimates that about 80 percent of people who earn an income in Nigeria are active in the informal sector or have “vulnerable employment,” work that lacks social security or guarantees any kind of rights.

The economic and social crises is leading to a surge in crime such as kidnappings and banditry in the North West.

Amid all these the major concern of political leaders seems to be those who will emerge as the principal officers in the next National Assembly, meanwhile President Muhammadu Buhari not to be left out, jetted out to the United Kingdom on April 25 for what the presidency described as a “private visit”, without notifying the National Assembly of his planned absence or officially handing over to Vice President Yemi Osinbajo.

Back to Egypt, during the 2018 commissioning of the 14,400 mw power plant, Siemens AG president and chief executive officer (CEO) described President Abdel Fattah El Sisi as the best negotiator he had ever met, thanking the Egyptian president for his constant support.

He pointed out that the inauguration of the plant was the culmination of the hard work of 24,000 people for the same purpose and for the same achievement.

In contrast all over Nigeria what one sees on a daily basis is General Incompetence by leadership, across all sectors.

Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Tech’s raid on the banks Digital disruption is coming to banking at last The Economist

O

ver the past two decades people across the world have seen digital services transform the economy and their lives.

Taxis, films, novels, noodles, doctors and dog-walkers can all be summoned with a tap of a screen. Giant firms in retailing, carmaking and the media have been humbled by new competitors. Yet one industry has withstood the tumult: banking. In rich countries it is perfectly normal to queue in branches, correspond with your bank by post and deposit cheques stamped with the logo of firms founded in the 19th century.

Yet, as our special report this week explains, technology is at last shaking up banking. In Asia payment apps are a way of life for over 1bn users.

In the West mobile banking is reaching critical mass—49% of Americans bank on their phones— and tech giants are muscling in. Apple unveiled a credit card with Goldman Sachs on March 25th.

Facebook is proposing a payments service to let users buy tickets and settle bills (see article).

The implications are profound because banks are not ordinary firms. It is one thing for Blockbuster Video to be wiped out by a technological shift, but quite another if the victim is Bank of America. It is not just that banks have over $100trn of assets globally. Using the difficult trick of “maturity transformation” (turning deposits that you can demand back at any time into long-term loans) they enable savers to defer consumption and investment and borrowers to bring them forward.

Banks are so vital that the economy reels when

they stumble, as the crisis of 2008-09 showed.

Bankers and politicians may thus be tempted to resist technological change. But that would be wrong because its benefits—a leaner, more userfriendly and more open financial system—easily outweigh the risks.

Banking is late to the smartphone age because entrepreneurs have been put off by regulations.

And, since the financial crisis, Western banks have been preoccupied with repairing their balancesheets and old-fashioned cost-cutting. Late is better than never, however. Several new business models are emerging. In Asia payment apps are bundled with e-commerce, chat and ride-hailing services offered by firms such as Alibaba and Tencent in China and Grab in South-East Asia. These networks link to banks but are vying to control the customer relationship. In America and Europe big banks are still more or less in control and are rushing to offer digital products—JPMorgan Chase can open a deposit account in five minutes.

But threats loom. Mobile-only “neobanks” that do not bear the cost of branches are nibbling at customer bases. Payments firms like PayPal work with Western banks but are expected to capture a greater share of profits. Lucrative niches like foreign exchange and asset management are being harried by new entrants.

The pace of change will accelerate. Younger people no longer stay with the same bank as their parents—15% of British 18- to 23-year- olds use a neobank. Tech firms that people trust, such as Apple and Amazon, are natural candidates to grow big financial arms. The biggest four American banks are spending a total of over $25bn a year on perfecting better customer applications and learning to mine data more cleverly. Venturewww.businessday.ng

capital firms invested $37bn in upstart financial firms last year.

The benefits of technological change are likely to be vast. Costs should tumble as branches are shut, creaking mainframe systems retired and bureaucracy culled. If the world’s listed banks chopped expenses by a third, the saving would be worth $80 a year for every person on Earth. In 2000 the Netherlands had more bank branches per head than America; it now has just a third as many. Rotten service will improve—it is easier to get money to a friend using a chat app than it is to ask your bank to transfer cash. The system will get better at its vital job of allocating capital.

Richer data will allow banks to take risks that currently baffle underwriters. Fraud should be easier to spot.

Lower costs and the democratising effect of social media will give more people better access to finance. And more firms with good ideas should be able to get loans faster, boosting growth.

Yet change also poses risks. Because the financial system is embedded in the economy, innovation tends to create turbulence. The credit card’s arrival in 1950 revolutionised shopping but also sparked America’s consumer-debt culture.

Securitisation lubricated capital markets in the 1980s but fuelled the subprime crisis. In addition, it is unclear who will win today’s battle. One dystopian scenario is that power becomes more concentrated, as a few big banks learn to exploit data as ruthlessly as social-media firms do. Imagine a crossbreed of Facebook and Wells Fargo that predicts and manipulates how customers behave and is able to use proprietary economic data to squeeze rivals.

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Another dystopia involves fragmentation and destabilisation. Banks could lose depositors to untested neobanks, creating a mismatch between their assets and liabilities that could lead to a credit crunch. If bank customers transact via tech or payment platforms, banks could end up with huge balance-sheets but without a direct connection to their clients. If they thus became unprofitable, they could be broken up, with the job of financing mortgages and absorbing short-term savings left entirely to capital markets, which are volatile.

To tap the benefits of technology safely, governments should give consumers control over their data, protecting privacy and preventing firms hoarding information. Innovation-friendly regulation would help; in 2017 the industry faced a regulatory alert every nine minutes (see article).

And governments should keep the system’s safety buffers at today’s overall size (global banks hold $7trn of core capital). If new entrants are properly capitalised, central banks could extend to them the lender-of-last-resort facilities that provide shelter in a storm.

Banking’s dirty secret is that it is backward, inefficient and hidebound. Banks have formidable lobbying power, however. Wary of change, customers, politicians and unions complain when branches are closed and jobs cut—witness the recent collapse of a German mega-merger that depended on both. Regulators love dealing with a few big firms.

The thing is that global growth is sluggish and productivity gains are hard to come by. A smartphone revolution in finance offers one of the best ways to boost the economy and spread the benefits.

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Monday 06 May 2019

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

Nigerians abroad: Surplus in a time of shortages

I

t’s estimated that more than 4,000 Nigerian doctors practice in the US; over 5,000 in the UK and 568 in Canada (a 200 percent increase in 10 years). Poor pay and lack of opportunities are the primary reasons doctors are leaving the country.

Who benefits or loses when Nigerian doctors emigrate? A lot is lost: the skills and knowledge, the cost of training (it costs $5,000 to $10,000 a year to train doctors in Africa, according to one estimate), lives (2,300 children and the 145 women die every day from preventable diseases and causes), savings and taxes?

There are benefits too. A 2011 survey of 1,759 African doctors based in the US and Canada found that half were trained in their countr y of origin, had worked for at least five years before emigrating and sent home on average more than $6,500 a year. These African doctors

had been in the US or Canada for an average of 21 years. In summary, the survey found that African doctors born and trained in their countr y of origin but now based in the US and Canada had each sent home roughly $130,000 (N47 million).

Do the benefits outshine the costs? According to data on remittances i.e. money Nigerians living abroad send home, has outstripped what the country earned from oil for the past four years.

According to PwC, a consultancy, the $25 billion Nigerians living overseas sent home in 2018 represents 6 percent of all the goods and services Nigeria produced that year. PwC further notes that the figure is equivalent to 83 percent of the 2018 budget and 11 times the amount foreign companies invested in the same period.

Nigeria exports human capital not oil.

For the President, his advisers and the heads of ministries, departments and agencies this is an afterthought. Nothing

is done to harness this immense gift. On the contrary, their comments, attitudes, and actions come across as a deliberate effort to frustrate Nigerians out of the country.

You’re free to go, they say. And so they leave.

Either legally; Nigerians are among the fastest-growing immigrants in the UK and do well at school. In the US, they are among the best-educated, or illegally; every year thousands risk their lives (knowingly and unknowingly) across the Mediterranean in order to work as prostitutes or at manual jobs in Europe. In 2016 and 2017, the most common nationality of people that arrived Italy by sea from Libya was Nigerian – 37,550 of them in 2016. They send money home too.

If the conditions causing Nigerians to emigrate continue, Nigeria will run out of talent to export. The state of our public schools and hospitals and roads does not suggest we intend to be the talent factory of the world, exporting brainpower wher-

ever it is needed.

I r o n i c a l ly , t h i s s u r p l u s makes up for shortages. The money sent home pays for the things government is meant to provide. Retirees battling with hypertension or cancer without any hope of receiving their pensions rely on money sent from abroad to buy their drugs. The chances of young children getting a decent education depend on the euros an aunt sends from Italy.

Over four years ago, bright young Nigerians returned either to work for multinationals or to found start-ups in the flourishing technology sector.

Their alumni network from some of the best schools in the world opened doors to foreign investors. The influx has reversed.

We ask, rewording the Pauline rhetoric: What then? Is the government to make things more difficult in order to force more bright young Nigerians abroad? By no means. At home or abroad, Nigeria’s true asset is human capital, her population.

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BUSINESS DAY

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18

Monday 06 May 2019

BUSINESS DAY

In Association With

Banking services

Too Agentmany orangechallengers

Tech’s raid on the banks

Digital disruption is coming to banking at last

O

VER THE past two decades people across the world have seen digital services transform the economy and their lives. Taxis, films, novels, noodles, doctors and dog-walkers can all be summoned with a tap of a screen. Giant firms in retailing, carmaking and the media have been humbled by new competitors.

Yet one industry has withstood the tumult: banking. In rich countries it is perfectly normal to queue in branches, correspond with your bank by post and deposit cheques stamped with the logo of firms founded in the 19th century.

Yet, as our special report this week explains, technology is at last shaking up banking. In Asia payment apps are a way of life for over 1bn users. In the West mobile banking is reaching critical mass—49% of Americans bank on their phones—and tech giants are muscling in. Apple unveiled a credit card with Goldman Sachs on March 25th. Facebook is proposing a payments service to let users buy tickets and settle bills (see article).

The implications are profound because banks are not ordinary firms. It is one thing for Blockbuster Video to be wiped out by a technological shift, but quite another if the victim is Bank of America.

It is not just that banks have over $100trn of assets globally. Using the difficult trick of “maturity transformation” (turning deposits that you can demand back at any time into long-term loans) they enable savers to defer consumption and investment and borrowers to bring them forward. Banks are so vital that the economy reels when they stumble, as the crisis of 2008-09 showed.

Bankers and politicians may thus be tempted to resist technological change. But that would be wrong because its benefits—a leaner, more user-friendly and more open financial system—easily outweigh the risks.

Banking is late to the smartphone age because entrepreneurs have been put off by regulations.

And, since the financial crisis, Western banks have been preoccupied with repairing their balance-sheets and old-fashioned cost-cutting. Late is better than never, however. Several new business models are emerging. In Asia payment apps are bundled with e-commerce, chat and ride-hailing services offered by firms such as Alibaba and Tencent in China and Grab in South-East Asia. These networks link to banks but are vying to control the customer relationship.

In America and Europe big banks are still more or less in control and are rushing to offer digital products—JPMorgan Chase can open a deposit account in five minutes.

But threats loom. Mobile-only “neobanks” that do not bear the cost of branches are nibbling at customer bases. Payments firms like PayPal work with Western banks but are expected to capture a greater share of profits. Lucrative niches like foreign exchange and asset management are being harried by new entrants.

The pace of change will accelerate. Younger people no longer stay with the same bank as their parents—15% of British 18- to 23-yearolds use a neobank. Tech firms that people trust, such as Apple and Amazon, are natural candidates to grow big financial arms. The biggest four American banks are spending a total of over $25bn a year on perfecting better customer applications and learning to mine data more cleverly. Venture-capital

firms invested $37bn in upstart financial firms last year.

The benefits of technological change are likely to be vast. Costs should tumble as branches are shut, creaking mainframe systems retired and bureaucracy culled. If the world’s listed banks chopped expenses by a third, the saving would be worth $80 a year for every person on Earth. In 2000 the Netherlands had more bank branches per head than America; it now has just a third as many.

Rotten service will improve—it is easier to get money to a friend using a chat app than it is to ask your bank to transfer cash. The system will get better at its vital job of allocating capital. Richer data will allow banks to take risks that currently baffle underwriters.

Fraud should be easier to spot.

Lower costs and the democratising effect of social media will give more people better access to finance.

And more firms with good ideas should be able to get loans faster, boosting growth.

Yet change also poses risks.

Because the financial system is embedded in the economy, innovation tends to create turbulence.

The credit card’s arrival in 1950 revolutionised shopping but also sparked America’s consumer-debt culture. Securitisation lubricated capital markets in the 1980s but fuelled the subprime crisis. In addition, it is unclear who will win today’s battle. One dystopian scenario is that power becomes more

concentrated, as a few big banks learn to exploit data as ruthlessly as social-media firms do. Imagine a crossbreed of Facebook and Wells Fargo that predicts and manipulates how customers behave and is able to use proprietary economic data to squeeze rivals.

Another dystopia involves fragmentation and destabilisation.

Banks could lose depositors to untested neobanks, creating a mismatch between their assets and liabilities that could lead to a credit crunch. If bank customers transact via tech or payment platforms, banks could end up with huge balance-sheets but without a direct connection to their clients.

If they thus became unprofitable, they could be broken up, with the job of financing mortgages and absorbing short-term savings left entirely to capital markets, which are volatile.

To tap the benefits of technology safely, governments should give consumers control over their data, protecting privacy and preventing firms hoarding information.

Innovation-friendly regulation would help; in 2017 the industry faced a regulatory alert every nine minutes (see article). And governments should keep the system’s safety buffers at today’s overall size (global banks hold $7trn of core capital). If new entrants are properly capitalised, central banks could extend to them the lender-of-last-resort facilities that provide shelter in a storm.

Banking’s dirty secret is that it is backward, inefficient and hidebound. Banks have formidable lobbying power, however. Wary of change, customers, politicians and unions complain when branches are closed and jobs cut—witness the recent collapse of a German mega-merger that depended on both. Regulators love dealing with a few big firms.

The thing is that global growth is sluggish and productivity gains are hard to come by. A smartphone revolution in finance offers one of the best ways to boost the economy and spread the benefits.

Under Narendra Modi, India’s ruling party poses a threat to democracy Voters should turf it out, or at least force it to govern in coalition

W

HEN THE Bharatiya Janata Party (BJP) won a landslide victory in India’s general election in 2014, its leader, Narendra Modi, was something of a mystery.

Would his government initiate an economic lift-off, as businessfolk hoped, or spark a sectarian conflagration, as secularists feared? In his five years as prime minister, Mr Modi has been neither as good for India as his cheerleaders foretold, nor as bad as his critics, including this newspaper, imagined. But today the risks still outweigh the rewards. Indians, who

are in the midst of voting in a fresh election (see article), would be better off with a different leader.

Mr Modi is campaigning as a strongman with the character to stand up to Pakistan for having abetted terrorism. In fact, sending warplanes to bomb India’s nuclear neighbour earlier this year was not so much an act of strength as recklessness that could have ended in disaster. Mr Modi’s tough-guy approach has indeed been a disaster in the disputed state of Jammu & Kashmir, where he has inflamed a separatist insurgency rather than quelling it, while at the same time alienating moderate Kashmiris by brutally repressing protests.

This impetuousness disguised as decisiveness has infected economic policymaking, too. In 2016 Mr Modi abruptly cancelled most Indian banknotes in an effort to thwart money-laundering. The plan failed, but not without causing huge disruption to farmers and small businesses.

He has pushed through a nationwide sales tax and an overhaul of the bankruptcy code, two much-needed reforms. But the economy has grown Continues on page 19

Monday 06 May 2019

BUSINESS DAY

19

In Association With

Tanks and utopias

Foreign policy after Donald Trump

A few Democrats see a chance for a brave new world

T

“

HIS TOO shall pass,” Joe Biden told America’s allies at the Munich Security Conference in February.

“We will be back.” The applause he received reflects a longing to return to a world order that existed before President Donald Trump started swinging his wrecking ball.

Now that Mr Biden, vice-president under Barack Obama for eight years, has entered the race to challenge Mr Trump in 2020, the contest has acquired a foreign-policy heavyweight who embodies the pre-Trump era.

But would a future Democratic administration simply turn the clock back? In the crowded field of Democratic candidates, apart from Mr Biden, only Senators Bernie Sanders and Elizabeth Warren have so far made serious forays into foreign policy. Still, those efforts, and stirrings of debate among activists, point to the potential for a future American foreign policy that could look very different not just from that of the current administration but also from the consensus that prevailed before.

On the surface the thrust of the Democrats’ approach is simple: reverse much of what Mr Trump has done. Jake Sullivan, who was an adviser to Hillary Clinton’s 2016 campaign, talks of a “back to basics” dimension to Democrats on foreign policy: value alliances, stress diplomacy. “Compared with domestic policy,” he says, “there is less focus on new ideas.”

Democrats would take America back into the Paris agreement, pressing the world for a new level of ambition in carbon-cutting. They would rejoin the nuclear deal with Iran, though some may want to set conditions for lifting sanctions. They would reassure NATO allies of their whole-hearted commitment. They would not reverse Mr Trump’s more confrontational approach to China— there is now bipartisan agreement on the need to stand up to the rising superpower—but would aim to work in a more collaborative way with allies.

Mr Biden’s candidacy will draw attention to the foreign-policy record of the Obama administration. Mr Biden did not always agree with his boss. He pressed for a more muscular pushback against Russia (including arming the Ukrainians), favoured a tougher approach to China, opposed the surge in Afghanistan and the intervention in Libya. But broadly he supported “95% of Mr Obama’s policies”, says a former foreign-policy adviser. As president, Mr Biden would be internationalist, experienced and familiar.

Yet there are rumbles of revisionism. In the party’s mainstream Mr Sullivan and Ben Rhodes, another senior adviser in the Obama administration, have launched National Security Action, a ginger group to attack the Trump administration’s “reckless policies” but also to search for fresh alternatives. A number of voices on the left are calling for a more radical rethink.

What it is ain’t exactly clear “Defending the rules of the road is fine, but it won’t mobilise anyone,” believes Kate Kizer, policy director at

Win Without War, an advocacy group.

Post-Trump, just getting back to business as usual is not good enough, she says; some on the left want to “reconceptualise how we see security”. In a paper published last month by the Centre for a New American Security, a think-tank, she argues for a new American grand strategy, driven by values rather than military muscle and involving “a reorientation of national-security spending to prioritise human needs at home and abroad.”

This fits with a broad critique of American policy after the collapse of the Soviet Union: that it overreached.

Well-intentioned moves to spread democracy became counter-productive, involving the country in “forever wars” and doing enormous collateral damage. The strategy of preserving or extending American dominance around the world is “increasingly insolvent”, concludes Peter Beinart, from City University of New York, writing in the Atlantic.

Support for greater restraint is gaining ground, according to Stephen Wertheim, a historian who teaches at Columbia University. But can the ideas of “the restrainers”, as he calls them, move from the fringe to the mainstream? Three reasons suggest this might be more than mere wishful thinking on their part.

First, there are advocates for restraint on the right as well as on the left. Take the bill passed by Congress to end America’s support for the Saudi-led war in Yemen. Mr Trump has vetoed the resolution, which was energetically championed by Democrats such as Ro Khanna in the House and Mr Sanders, along with Chris Murphy, in the Senate. But it got through the Senate because it also had support from several Republicans, including the bill’s libertarian-leaning co-sponsor, Mike Lee from Utah.

Second, opinion polls suggest there is fertile ground for restrainers’ ideas to flourish. A survey by the Eurasia Group Foundation found a big gap between the foreign-policy experts who espouse activism and the wider population favouring restraint. Polling by the Chicago

Council on Global Affairs shows that millennials, born between 1981 and 1996 and now becoming the biggest cohort of voters, take a more modest view of America’s role in the world than baby-boomers, born between 1946 and 1964. Only 26% of millennials favour increasing defence spending and 44% support maintaining superior military power worldwide; among boomers the figures are 41% and 64% respectively.

The third reason for supposing that the left’s foreign-policy ideas might penetrate the Democratic mainstream is that something similar has already happened in other areas, such as “Medicare for all”. “We need to stop siloing domestic and foreign policy,” says Matt Duss, Mr Sanders’s adviser on foreign affairs.

One promising avenue for this to happen is an attack on inequality and corruption. Both in America and abroad, Mr Sanders said in a wellcrafted speech on foreign policy last October, “the struggle for democracy is bound up with the struggle against kleptocracy and corruption.” Mrs Warren echoed the theme in an article in Foreign Affairs, urging aggressive promotion of transparency around the world.

Treating corruption as a strategic matter offers rich pickings for policy.

The effort could begin at home with legislation to make it harder to launder money through shell companies and cash property deals, and with beefing up instruments like the Foreign Corrupt Practices Act. America would then be in a strong position to lead a fight against kleptocracy around the world. Identifying tools that can interrupt the corrupt flows of money that empower oligarchs, princes and China’s state-owned enterprises could prove popular. The issue of corruption is unifying the world more than anything else, believes Tom Malinowski, a congressman who sits on the House foreign-affairs committee. Tackling it, he says, may be “one way America gets its mojo back after Trump.”

Another favourite theme of those on the left is a desire to see greater democratisation of foreign policymaking itself, a domain seen as exces-

sively controlled by an establishment clique, and above all by the president.

That means in part strengthening congressional scrutiny, something that has begun to happen with Democratic control of the House. But it also means welcoming wider participation in policy debate. Elizabeth Beavers, associate policy director for Indivisible, which cultivates anti-Trump grassroots movements, suggests that “talking about democratising foreign policy is something where Democrats have a real opportunity.”

There’s a man with a gun over there Grassroots pressure is a means towards the objective of ending wars.

Congress has put down a marker with its Yemen bill. Ms Beavers now has her sights on the Authorisation for Use of Military Force (AUMF), put in place after the attacks of 2001 and used by successive presidents to facilitate interventions around the world. As with Yemen, Democrats will find allies among “restrainers” on the libertarian right.

Rows among Democrats are likely, for example, over military spending: radicals want to cut it, mainstreamers are more cautious. Policy towards the Middle East, and Israel in particular, could also prove divisive. Democrats are vulnerable to accusations by Mr Trump that they are soft on defence and woolly on protecting American interests. Republicans stubbornly outscore Democrats when it comes to public trust to protect national security.

Yet some Democrats are keen to challenge the assumption that strength has to be demonstrated by spending more on defence and a willingness to use military force. “We have an opportunity as a party to close the national-security gap,” insists Senator Murphy. “We have to talk about our national-security vision.”

So far, most of the Democratic presidential contenders prefer to talk about their domestic vision. Yet foreign policy “will creep up on the candidates,” predicts Mr Wertheim.

A full-blown debate on what a postTrump foreign policy ought to look like would be healthy. It could also prove surprising.

Under Narendra Modi, India’s ruling...

Continued from page 14

only marginally faster during his tenure than it did over the previous ten years, when the Congress party was in government, despite receiving a big boost from low oil prices.

Unemployment has risen, breaking promises to the contrary.

Indians hear such criticisms less often because Mr Modi has cowed the press, showering bounty on flatterers while starving, controlling and bullying critics. He himself appears only at major events. He has also suborned respected government institutions, hounding the boss of the central bank from office, for example, as well as loosing tax collectors on political opponents, packing state universities with ideologues and cocking a snook at rules meant to insulate the army from politics.

Mr Modi’s biggest fault, however, is his relentless stoking of Hindu-Muslim tensions. He personally chose as chief minister of Uttar Pradesh, India’s most populous state, a fiery Hindu cleric who paints the election campaign as a battle between the two faiths. Mr Modi’s number two calls Muslim migrants from neighbouring Bangladesh “termites”, but promises a warm welcome to Bangladeshi Hindus.

One of the BJP’s candidates is on trial for helping orchestrate a bombing that killed six Muslims. And Mr Modi himself has never apologised for failing to prevent the deaths of at least 1,000 people, most of them Muslims, during sectarian riots in the state of Gujarat while he was chief minister there. The closest he has come has been to express the sort of regret you might feel “if a puppy comes under the wheel” of a car.

This is not just despicable, it is dangerous. India is too combustible a place to be put into the hands of politicians who campaign with flamethrowers. As it is, vigilantes often beat up or lynch Muslims they suspect of harming cows, a holy animal for Hindus. Kashmiris studying in other parts of India have been set upon by angry nationalist mobs.

And even if the BJP’s Muslim-baiting does not ignite any more full-scale pogroms, it still leaves 175m Indians feeling like second-class citizens.

20

Monday 06 May 2019

BUSINESS DAY

In Association With

BDS meets BDSM

When Eurovision goes to Israel Calls for a boycott of the kitschy contest have so far gone unanswered

H

“

ATRED WILL prevail!” screams the man on stage, as two leather-clad women gyrate in cages behind him. On a pedestal above, a man in a black leotard slices the air with a staff shaped like a toilet plunger. Meet Hatari (pictured), a self-described “anti-capitalist, BDSM [bondagediscipline-sadism-masochism] techno band”. They are Iceland’s entry for this year’s Eurovision song contest, best known for featuring cheesy ballads and launching the careers of ABBA and Céline Dion.

But Hatari are not in the spotlight for their bizarre appearance or performances. The band’s members have caused a stir by threatening to use their platform to criticise this year’s host, Israel, for its treatment of the Palestinians. They also challenged Binyamin Netanyahu, Israel’s prime minister, to a “friendly match of traditional Icelandic trouser grip wrestling”. (He appears to be ducking this intriguing challenge.)

It might seem odd for Israel to be hosting Eurovision, given that it is not in Europe. But its broadcasting authority is a member of the European Broadcasting Union (EBU), which runs the

event. (For the same reason, Morocco has competed in the past.) Israel’s representative, Netta Barzilai, won last year, so it gets to host this year. Hawks wanted the event to be held in the contested city of Jerusalem, which Israel calls its capital. But the state broadcasting authority and the EBU chose Tel Aviv.

The singing doesn’t begin until May 14th, but the sniping started months ago. Leaders of

the campaign for boycotts, divestment and sanctions against Israel, widely known as BDS, have called on artists and broadcasters to withdraw from the event. “Israel is using Eurovision to art-wash its egregious crimes against the Palestinian people,” says the movement. Dozens of British celebrities, such as Peter Gabriel and Roger Waters, signed a letter in January calling on the BBC to press for Eurovi-

sion to be relocated. Other artists have since come out against a boycott.

The backdrop to all of this is an increasingly complicated relationship between Europe and Israel. Many European leaders are outspoken supporters of a Palestinian state and critical of Israeli policies in the occupied territories. Despite having a trade agreement with Israel, the EU requires that products

made in Israeli settlements be labelled as such. Mr Netanyahu, for his part, talks of a “plague” of anti-Semitism in Europe. He has reached out to nationalist and far-right European politicians who are often more sympathetic to Israeli positions (though some have also used anti-Semitic rhetoric in the past).

The politicisation of Eurovision is nothing new. The victory of a bearded drag queen from Austria upset social conservatives in Belarus and Russia in 2014. Russia was also peeved about Ukraine’s win in 2016 with a song about Josef Stalin’s deportation of Crimean Tatars.

(Russia invaded and annexed Crimea in 2014.) In 2017 Ukraine banned Russia’s candidate, who had performed in Crimea; this year Ukraine’s act withdrew to avoid a ban on singing in Russia.

No one has yet pulled out of this year’s event over the host country. But some fear Israel will not allow in contestants who have voiced pro-Palestinian views. Hatari think they might be banned by Eurovision’s organisers. The rules state that “no lyrics, speeches, gestures of a political, commercial or similar nature shall be permitted during the Eurovision Song Contest.” Save them for the wrestling match.

Malicious militias

States in the Sahel have unleashed ethnic gangs with guns A cycle of tit-for-tat murder has begun

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HE FIRST sound of danger was the roar of motorbikes.

Then came the gunfire as about 20 men attacked Samani, a village in central Mali, killing three people and cutting off body parts as trophies. They took the chief’s 30-year-old son, “cut him in half, and took his heart out”, says Amadou Barry, an elder who managed to escape to Bamako, Mali’s capital.

The gunmen were from an ethnic militia, one of hundreds that have sprouted in Mali and Burkina Faso, and that have killed at least 800 people since the beginning of 2018. The militias are most active in Mali, which has battled a jihadist insurgency since 2012.

Many emerged from groups of hunters, who used to stalk game with flintlock guns. Now they are armed with assault rifles and speed about on motorbikes. They say they hunt jihadists. In reality they are targeting Fulanis, a mainly Muslim minority group. Photos on social media show Fulani villages in which families have been shot, their bodies thrown down wells or cut to pieces. “We should call it

what it is: ethnic cleansing,” says Héni Nsaibia, from the Armed Conflict Location & Event Data Project, an NGO. The army has made no serious attempt to disarm these militias, said Human Rights Watch, a watchdog, in December. Instead, the government has helped them.

Some army units patrol with them.

They have been exempted from a ban on motorbikes (supposedly the jihadists’ favourite ride) in central Mali. This allows the militias to at-

tack with ease. Emboldened by the government’s inaction, militiamen hacked and burned to death more than 170 people in Ogossagou, central Mali, in March. This favouritism plays into the hands of the jihadists, who find it easiest to recruit among oppressed minorities such as the Fulani, which are also forming their own militias. Some jihadists have urged all Fulanis to join their fight.

The situation is hardly better in Burkina Faso, where thousands of men have joined groups called

Koglweogo (guardians of the bush).

They started out as vigilante groups that beat or killed alleged criminals.

But many now demand money from villagers and torture those who do not pay.

Some estimate there are about 4,500 Koglweogo groups, most with at least 20 men, mainly from the majority Mossi ethnic group.

They are being sucked into conflict with the Fulani. In January Koglweogo fighters massacred some 210 mostly Fulani people in Yirgou in northern Burkina Faso.

Instead of arresting the attackers, the government told the victims to forgive them.

The government’s shameful reaction partly reflects its weakness.

But there may be a darker motive.

Many members of the government are Mossi, and may think it useful to have an ethnic militia on hand before elections next year.

Yet by allowing militias to arm and multiply, governments “have created a monster”, says a UN official in the Sahel. Having let this demon out of the box, they will struggle to put it back.

Monday 06 May 2019

BUSINESS DAY

COMPANIES & MARKETS

21

Snapchat records 39% increase in revenue in Q1 2019

COMPANY NEWS ANALYSIS INSIGHT

Pg. 23

BANKING

Nigeria mid-tier lenders’ grow profit to 5-year high ISRAEL ODUBOLA & SEGUN ADAMS

T

he combined after-tax profit of eight Nigeria’s mid-tier lenders rose to the highest level since 2015 in the first quarter of 2019, data from company financials of the said banks show.

EcoBank, FCMB, Fidelity Bank, Stanbic IBTC, Sterling Bank, Union Bank, Wema Bank and Unity Bank recorded the biggest combined bottom-line figure of N69.42 billion in Q1 2019, the highest Q1 figure since 2014, with Eco Bank Plc accounting for some 44 percent due to its Pan-African footprint.

The lenders collectively their bottom-line grew some 2.5 percent in first quarter of 2019, compared with 27.8 and 39.9 percent reported in comparable quarters of 2017 and 2018 respectively, although growth slowed.

“A major factor has to be yields. Yields were pretty much high in 2018 that you could about get 17-18% on 1-year treasury bills, but this was not the case in first quarter 2019.” said Gbolahan Ologunro, research analyst, CSL Stockbrokers, claiming that reduced yields lessen the momentum in their profit growth.

Analysis of the lenders’ interest income revealed that lower yields might not be the sole reason for slowed profit growth as five of them in-

cluding Stanbic IBTC, Wema Bank, FCMB, Fidelity and Unity Bank reported uptick in their interest income on earnings assets.

However, combined interest income earned on assets by the eight lenders shed N7.1 billion or 2.3 percent to N303.1 billion in the review quarter compared with N310.2 billion realized a year earlier, triggered by 15.2 percent dip in Union Bank’s interest income and 7.8 percent

cut in that of Eco Bank.

Six of the lenders reported betterment in after-tax profit in the review quarter with Wema Bank leading the pack with 49 percent, driven by 27 percent surge in interest income. The lender recorded uptick in all categories of interest income – cash & cash equivalents (397%), loans & advances (22%) and investment securities (45%).

Behind Wema Bank come FCMB with 40 percent bot-

tom-line growth, Fidelity (28%), Eco Bank (10%), Sterling (5%) and Unity Bank with 4 percent betterment in profit. Laggards are Union Bank and Stanbic IBTC. Both lenders saw their bottom-line dwindle by 0.26 percent and 16.98 percent respectively in quarter one of 2019 Despite tangible contraction in interest income of some of the lenders, they were able to grow profit given the upsurge in their non-

interest income. Eco Bank and Union Bank fell in this category.

Pan-African lender, Eco Bank saw interest income on earnings assets dip 7.8 percent to N116.7 billion in the review quarter, but the lender up its bottom-line by 9.8 percent, thanks to double-digit appreciation of 17.8 percent in its non-interest income from N66.3 billion in previous corresponding quarter to N78.1 billion in Q1 2019.

Citing low yield environment, Union Bank’s interest income slumped 15 percent to N26.9 billion in the review quarter, following 25.4 percent and 20.1 percent contraction in interest on loans & advances and investment securities. But the lender’s bottom-line was not significantly battered, owing to its 39 percent surge in non-interest income.

The earnings scorecard of Stanbic IBTC differed from the “interest-income dip & profit growth” pattern in the review quarter.

The lender lagged peers with about 17 percent decline in profit growth even though interest income on earnings assets grew 5.5 percent, owing to massive drop in net impairment write-back on financial assets, and partly by 2.2 percent cut in non-interest revenue.

“The downward revision of the wealth management fees of Stanbic IBTC, which accounts for a large share in their non-interest income.

This actually dragged its earnings” explained Ologunro.

The lenders except Stanbic IBTC (-5.1%), Eco Bank (4.7%) and FCMB (0.42%) reported appreciation in total assets.

Wema Bank led the pack with 19.5% growth in total assets to N583.9 billion in the review quarter, trailed

by Unity Bank (13.8% to N236bn), Union Bank (10.1% to N1.4trn), Fidelity (8.8% to N1.7trn) and Sterling (2.8% to N1.1trn)

DEALS

Interswitch signs N26bn deal with British firm for transportation ticketing in Nigeria JUMOKE AKIYODE-LAWANSON

I

nterswitch Group, a PanAfrican integrated digital payments and Commerce Company, has signed a £56 million (approximately N26billion) deal with Bekoz UK Ltd, a British transport ticketing company, to enhance transportation ticketing in Nigeria.

The deal will leverage technology to keep commuters in Nigeria on the move through the launch of three products developed exclusively for the Nigerian market - the BeCard, the BeVal and the BeReader, with scope to expand this offer throughout Africa.

The BeCard is a regular shaped card - like any bank card or the Oyster card in London. The BeVal is the

device that is installed on the buses where the passenger taps on - just like on the London buses, while BeReader is the mechanism that makes all these work.

Commenting on the partnership, Akeem Lawal, divisional CEO for payment processing at Interswitch highlighted the tremendous potential the partnership offers for revolutionising the transportation system with attendant impact on millions of commuters in Nigeria.

“Interswitch believes that the transport system in Nigeria, Africa’s largest consumer market, is ready for innovation. This partnership is a key and timely milestone in our industry vertical markets’ focus. It is highly compatible with our vision for Interswitch Transport Solu-

tions (Smartmove) which is essentially to progressively facilitate a multi-modal and multi-operator transportation system underpinned by best-in-class technology,” Lawal said.

“This not only optimises available infrastructural capacity, but also remarkably improves user experience for all parties in the transport and mobility ecosystem. Our partners, Bekoz, bring their expertise and experience to bear, and we are extremely optimistic about the multiplier effects that this initiative will ultimately have on economic activities across the nation,” he added.

Bekoz has co-created the technology with Interswitch and owns the intellectual property (IP) while the specifications and manu-

facturing is done by Delta Microelectronics, a global engineering company with a long and proud history of demonstrated excellence.

Speaking in Abuja, at the signing ceremony Jeremy Hunt, the British foreign secretary announced that Bekoz will be providing the contactless transit token technology and associated electronic equipment that allows people to travel around Nigeria’s large and varied transport infrastructure, similar to London’s Oyster system. However this will be tailored to Nigeria’s unique needs.

“This is a great example of British and Nigerian companies working side by side to deliver a better, more prosperous future for us all.

Africa’s success really mat-

ters to the UK, and this deal proves that we have a huge amount of expertise that we can share to contribute to that success. As we leave the European Union, now is the time to redouble our efforts, and commit to the partnerships we have with our African friends,” Hunt said.

Also commenting, Jack Dangoor, CEO of Bekoz said: “We are delighted to collaborate with Interswitch to deliver a British-made fully custom transport ticketing system for Nigeria and other parts of Africa. Our technology offers an efficient and cost-effective solution for commuters and transport operators that satisfies local needs and utilizes the existing infrastructure provided

by Interswitch. The ecosys-

tem of the Bekoz solution will provide significant retail business and job opportunities in Nigeria and beyond.”

In the UK, topping up an Oyster card is quite easy.

However, factors like limited network connectivity and little or no electricity might make topping the BeCard in Nigeria more difficult.

That is why the BeReader is solar powered and does not require network connection all the time. It is a low-cost device and can transform anyone into an entrepreneur as every BeReader creates a business opportunity for the operator.

Much of the manufacturing will be done in UK, and the deal is expected to create jobs in the Nigerian business and transportation environment.

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

22

Monday 06 May 2019

BUSINESS DAY

COMPANIES&MARKETS THE COMPANIES AND ALLIED MATTERS ACT (REPEAL AND REENACTMENT) BILL 2019 – WHAT YOU NEED TO KNOW

HAT YOU NEED TO KNOW

PART 9 – SCHEMES OF ARRANGEMENT

By Udo Udoma & Belo-Osagie BACKGROUND

The Companies and Allied Matters Act (Chapter C20) Laws of the Federation of Nigeria 2004 (CAMA) was enacted in Nigeria as a decree of the military government in 1990, and in the past 28 years, there have been no significant amendments to the CAMA. This is, however, all set to change if the Companies and Allied Matters (Repeal and Re-enactment) Bill 2019 (CAMA Bill), which was passed by the Nigerian Senate on 15th May 2018 and by the House of Representatives on 17th January 2019, is passed into law. In this series, which is scheduled to run for 12 weeks, Udo Udoma & BeloOsagie will provide insights and digestible excerpts on the effect of key changes proposed by the CAMA Bill.

SCHEME OF ARRANGEMENT – THE CONCEPT Section 537 of CAMA defines an “arrangement” to mean “any change in the rights or liabilities of members, debenture holders or creditors of a company or any class of them or in the regulation of a company, other than a change effected under any other provision of this Act or by the unanimous agreement of all parties affected thereby”. Simply put, a scheme of arrangement is an arrangement between a company and its shareholders or its creditors for the purpose of effecting a transaction which cannot be effected pursuant to any other provision of CAMA. Examples of transactions that are usually implemented using schemes of arrangement include mergers and corporate restructurings. A scheme of arrangement could also be used in the context of a share acquisition to ensure that the shares sought to be acquired by an investor are acquired from all shareholders on a uniform basis. The focus of this article is on schemes of arrangement between a company and its members.

THE CURRENT REGIME Where an arrangement is proposed between a company and its members, an application is submitted to the Federal High Court (“Court”) and, pursuant to that application, the Court will order the company to hold a meeting of its members – commonly referred to as a court-ordered meeting. The resolution required to approve a scheme of arrangement (“Scheme”) is a special resolution, that is, a minimum of 75% of the votes cast by members present and voting at the court-ordered meeting.

Under the CAMA, once the Scheme is approved by the shareholders, the Court has the power to refer the scheme to the Securities and Exchange Commission to investigate the fairness of the Scheme and, thereafter, submit a report to the Court. If the Court is satisfied as to the fairness of the Scheme, the Court will sanction the Scheme and, once this is done, the terms of the scheme become binding on all the shareholders of that company. The Scheme becomes effective when a certified true copy of the Court order is registered with the Corporate Affairs Commission.

RE-INTRODUCTION OF PROVISIONS RELATING TO MERGERS AND SHARE ACQUISITIONS The CAMA Bill re-introduces provisions prescribing the process for (i) effecting mergers and other forms of arrangements; and (b) acquiring the shares of dissenting shareholders.

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The background to this is that when the Investment and Securities Act 1999 (“ISA 1999”) was passed, it repealed Part 17 of the Companies and Allied Matters Act 1990 (“CAMA 1990”). Some of the repealed provisions included sections 591 to 593 of CAMA 1990 which dealt with schemes of arrangement. Specifically, section 591 dealt with reconstruction and merger of companies, section 592 dealt with powers to acquire shares of dissenting shareholders and section 593 dealt with the right of a dissenting shareholder to compel the acquisition of his shares. The text of these three sections were reenacted as sections 100 to 102 of ISA 1999. When the Investment and Securities Act 2007 (“ISA 2007”) repealed the ISA 1999, however, only sections 101 and 102 of the ISA 1999 made it into the ISA 2007 - as sections 129 and 130; section 100 of the ISA 1999 was not so fortunate and was omitted. The effect of this omission was that there was no longer a statutory basis for the market practice that had developed in Nigeria, in relation to the process by which schemes of mergers and other forms of reconstruction, were carried out (that is to say, the process of applying to the court for an order to convene meetings to approve the scheme and, ultimately, to sanction the scheme and make a wide range of orders relating to the transfer of rights and liabilities under the scheme).

The Federal Competition and Consumer Protection Act (“FCCPA”) was signed into law on 30th January 2019. One of its effects was the repeal of sections 118 – 128 of the ISA 2007 dealing with mergers and acquisitions. Unlike the previous repeal of Part 17 of the CAMA 1999 and the repeal and re-enactment of the ISA 1999 as the ISA 2007, the text of the repealed ISA 2007 provisions was not reproduced in the FCCPA. Fortunately, the Technical Advisory Committee on the CAMA Bill considered the effect that the FCCPA would have on schemes of arrangement (particularly in relation to mergers) if passed into law before the CAMA Bill. As a result, the CAMA Bill was drafted to re-introduce the texts of the previous sections 591 – 593 of the CAMA 1990 (which are identical to sections 100 – 103 of the ISA 1999). This re-introduction is significant for several reasons: a)

it will ensure that there is no lacuna in the process of effecting a scheme of arrangement and that the law once again sets out clearly the process by which all forms of schemes can be effected;

b)

there will once again be statutory backing of the right to invoke the Court’s jurisdiction to make orders for various matters to be dealt with in the context of a merger such as the transfer of rights, assets and liabilities from one company to another, the allotment of any shares or other interests and matters incidental or consequential to the Scheme;

c)

the process for dealing with dissenting shareholders in a scheme (i.e. sections 129 and 130 of the ISA 2007) has been reunited with the provisions that set out how to conduct a scheme (i.e. the repealed section 591 CAMA 1990 and section 100 ISA 1999); and

d)

as a consequence of the above, the CAMA Bill contains a complete set of provisions for the conduct of schemes of arrangement including schemes of mergers.

Udo Udoma & Belo-Osagie actively participated in the drafting of the CAMA Bill. Corporate Partner, Ozofu 'Latunde Ogiemudia was the chairperson of the Technical Advisory Committee set up by the office of the Senate President to advise on the CAMA Bill and the bill to amend the Investments and Securities Act 2007. Managing Associate, Christine Sijuwade was a member of that committee and led the drafting sub-committee on the CAMA Bill.

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Monday 06 May 2019

COMPANIES&MARKETS

BUSINESS DAY

23

Business Event

TECHNOLOGY

Snapchat records 39% increase in revenue in Q1 2019 JONATHAN ADEROJU

S

napchat recently reported its Q1 2019 earnings, thumping analyst estimates across the board.

According to report from CNBC, the company reported $320million(N115billion)inrevenue in Q1 2019 as against $230 million (N 83 billion) in Q1 2018, with a less per share of 10 cents.

The company also returned to growth in terms of active users.

Analysts had forecasted $307 million (N111 billion) in revenue for the quarter and a 12 cent per share loss.

Snapchat also beat in terms of average revenue per user, reporting $1.68(N608) per user, compared to analyst expectations of $1.62 (N586).

Perhaps most notably, Snapchat reported 190 mil-

lion daily active users for the quarter, up from 186 million in the quarter before. While that active user number is still down compared to the 191 million reported in the yearago quarter, it marks a notable quarter-over-quarter increase for the social network.

According to the CEO Evan Spiegel, “In the first quarter we delivered strong results across our business with growth in daily active users and revenue,” He further added “Our new Android application is available to everyone, with promising early results. This month we announced several new products that we believe will drive further engagement and monetization.”

“As we look towards the future, we see many opportunities to increase our in-

vestments, and will continue to manage our business for long-term growth.”

Snapchat is forecasting a higher loss next quarter, predicting a loss between $125 million (N45 billion) and $150 million (N54 billion). That’s slightly higher than the $123 million (N 44 billion) reported in Q1 2019. Snapchat says, however, that an increase in active users means its Amazon AWS and Google Cloud bills will also increase.

Snapchat’s strong earnings come following similar numbers from Twitter. The social network this morning reported higher revenue than expected, but with a slight decline in monthly active users. Though, the company clarified that “monetizable daily active users” were up 8 percent year-over-year.

Bashir Umar, director of centre for islamic civilisation and inter faith dialogue, BUK; Adekunle Awojobi, MD/CEO, FBNQuest Trustees Limited; Ummahani Amin, managing partner, Metropolitan Law Firm; Abimbola Ajinibi, vice president and regional head, FBNQuest Trustees Limited, and Hajiya Aisha Babangida, chairperson, Better Life for Rural Women, at the FBNQuest Trustees Islamic Estate Planning Clinic in Abuja, recently.

INSURANCE

Premium Pension pays N174bn to pensioners since inception ADEOLA AJAKAIYE, IN KANO

P

remium Pension Limited, one of Nigeria`s leading pension administrators, has paid the sum of N174 billion to retirees under it pension management since the company was established about fourteen (14) years ago.

In the same vein, the company has also disclosed that it is paying an average of N68 million monthly as pension benefits to 17,000 clients that subscribed to the various retirement products it is offering in Nigerian Pension Market.

Umar Sanda Mairami, chief executive officer of the company, made this disclosure, during a corporate event organized by the company to celebrate excellence and reward some of its outstanding clients held in the commercial city of Kano.

Umar said comparatively, the company has continue to record impressive performance within the Nigerian pension Market, polling the highest returns in value in all the categories of pension products it is offering in the market.

“We are glad to be here today

in the commercial city of Kano celebrating excellence and rewarding our clients, who we in premium Pension usually refer to as our members, because of the high value that we attached to them.

“We refer to them as members because it is through their patronage and support that we have been able to grow our Asset Under-Management (AUM) to over N630 billion marks, and we are still doing everything in place to increase it.

“We have been able to record this height as a result of the individual as well as the group contributions of all the staff, management, and members of board overseeing the operations of the company, over the years.

“It is through the commitment and contributions displayed by the Premium Pension team that the company was able to attain the status of being the first PFA win the ISO/IEC 27001, and also the ISO 9001 in Quality Management System” he stated.

The CEO assured clients that the company will continue to serve them better by safeguarding their pension contributions,

in addition to ensuring that their benefits are paid promptly, and as when due.

The highlight of the ceremony was the presentation of clients of the company drawn from the L-R; Abubakar Ahmed, business development manager, Crop Protection; Alain Pescay, commercial director, Corteva public sector (Federal and States) Agriscience, North West and Central Africa, and Badr Mohmoud, marketing manager, North West and Central Africa, at as well as the private sector, and the Seed Connect Conference and Expo, in Abuja, recently individuals that made the highest contributions, and being very loyal to the company products.

The presentations which were made by Kabir A. Tijjani, executive director of the company, went the five top organizations with the highest contributions in the public sector (Federal), which are: Nigerian Prison Service (NPS), INEC, NCDS, FRSC, and NTA. While, presentations, were also given to states with the highest contributions public sector which are: Kaduna, Zamfara, Jigawa, and Kebbi states, and awards were also presented to five companies with the highest contribution in the private sector categories, namely: Ranos Construction Company, Abuja, Gogoni Limited, Kano, Dantata and Sawoe Company Limited, Kano Electricity Distribution Company, and ASP Motors Nigeria Limited.

TECHNOLOGY

How PSBs can become Nigeria challenger banks - Experts DAVID IBIDAPO

T

he possibilities of the planned Payment Service Banks (PSBs) revolutionizing the financial services in Nigeria as they usher in a new era of change in delivering innovative payment solutions to customers is huge, experts in the financial services industry have affirmed.

Fintech experts who spoke at the just concluded Lagos Fintech Week (LFW) were also of the opinion that these new entities could become ‘challenger banks’ as they take on traditional banks in Nigeria.

The term challenger bank is used to describe any bank that is looking to challenge the big four in Britain: Barclays, Lloyds Banking Group (which includes Halifax,

Lloyds Bank and Bank of Scotland), HSBC and RBS (which includes NatWest and Ulster Bank).

According to Olusegun Zaccheaus, Senior Manager, Management Consulting, KPMG Advisory Services, the key questions to be answered are: how will the emergence of PSBs impact financial inclusion in Nigeria? What is its market potential and how will this disrupt banking in Nigeria? What kind of bank will the PSB be? How can PSB leverage Fintech partnership in order to achieve their objectives and what are the levers for success in this business?

Zaccheaus argued that PSB, if successful, has the potential to disrupt the banking market from several fronts. These include stealing of the “potential sweet spots www.businessday.ng

in the 36.6 million unbanked and under-banked space, through payments and transactions, cannibalising the 39.7 million banked customer non-interest income revenue potential and increasing bargaining power over deposits”.

On how should banks response to the PSBs possible threats, Zaccheaus identified four ways. He advised the banks to consider accelerating to scale during PSB initial phase.

“I expect banks to leverage PSB initiating phase to drive rapid penetration into potential PSB sweet spots in payments and select rural locations. Banks that are desirous of sharing in the potential sweet spots should consider entering PSB space via holding companies and affiliates.

L-R: Raj Narayan, Oluwakemi Akinyele, and Eric Uwaoma, all of Globacom, with the “Most Innovative Mobile Player of the Year” award won by the company at the Beacon of ICT Awards in Lagos. Globacom was also inducted into the ICT Hall of Fame at the event for its outstanding contributions to Nigeria’s ICT industry.

L-R: Amira Obi-Okoye, sales director, Megalectrics Limited, owners of Classic FM; Raliat Abe, winner of NEYA award, House of Tara International; Chidinma Obiejesi, group head, Human Resources, Megalectrics; and Afolabi Abiodun, chief executive officer, SB Telecoms and convener of TAMS/Nigerian Employee of the Year Award (NEYA) Summit, during a courtesy visit to Megalectrics, one of the summit partners, as part of activities leading to the 2019 TAMS/NEYA Summit.

Pic by Pius Okeosisi

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24

Monday 06 May 2019

BUSINESS DAY

Monday 06 May 2019

BUSINESS DAY

INTERVIEW

25

My plan is to create a platform that helps the financially disenfranchised segment of the population Uzoma Dozie is known as a banker, tech-savvy investor and a gender and financial inclusion advocate. With the recently concluded Diamond and Access Bank merger, many are wondering what’s next for the former Diamond Bank CEO. In this interview with LEHLE BALDE of BusinessDay, he talks about what’s next for his career.

Y

our father was fondly known as PGD recently turned 80.

Happy belated birthday to him. Can you tell us about some of the biggest business lessons you have learned from your father?

He has a few great phrases and one of them was when he started Diamond Bank. He would say, “This is not a SPRINT, this is a long RACE, so whatever we do, we are trying to make sure it’s sustainable into the future.” It wasn’t about quick profits, it was about building something that would last, so whatever we did, we knew it had to be sustainable.

The second is about contentment and not being too greedy: regardless of whatever the situation is, you should be confident and comfortable. Being comfortable and being content is a good platform for you to take the next step. There was a time we worked together in the same office, I was in financial control and he was the CEO of the company. One day I rushed up into his office and I was complaining about something; and he said to me, “sit down, Uzoma, everything you’ve told me now, I already know, if only you can help me and tell me what the problems are and offer a solution.” That was a learning point for me. Being solution-oriented is something that he really passed on to me, that’s how Diamond Bank started, looking for a solution.

Many were taken aback with the announcement of Diamond Bank and Access Bank merger. Now that the merger process has finally been completed, what are your thoughts on the process and will you be taking up any role in the newly consolidated bank?

People would be surprised because I would say we were the leading retail bank driving financial inclusion, and new innovation and technology to create a customer experience, and so, people will ask if you are making this statement, then why are you now merging with another bank, is the bank distressed? Is there a problem? I’d like to take people back. Our objective was always to go beyond banking. We are trying to create a platform for our customers to access the market,

and when you think of it, with the Diamond Bank and Access Bank merger, we are trying to create access (no pun intended), for our 17 million customers. With this merger, we are giving our customers access to the market in both a local and global sense.

Access Bank has done well in creating and setting-up a footprint in areas following the trade route, so imagine your customer accessing a much wider trade route that extends beyond Nigeria, for export, and also the import of raw materials whether it’s in London, in Asia or Dubai.

We are following our ‘beyond banking’ ethos and thinking about financial inclusion and how to bridge the gap. It creates a one-stop shop for everyone, as we are still following that same status of going beyond banking, providing access for our customers and prioritizing financial inclusion. Access Bank has existing relationships with Airtel and Diamond Bank has an existing relationship with MTN. These companies are spread across Africa and for us, the dream is being able to connect people not just from city to city but from village to village across the continent. Connecting someone from a village in Nigeria to a village in Zambia, for example. Regarding my role, once the merger was successfully completed, I stepped down from my role as CEO.

‘‘

I moved out of the iOS ecosystem so I will actually be able to build an open platform. And if it’s not an open platform, I’m not interested. So now I use the iPhone for my personal lifestyle, photography and creative because that’s what they are good at. So for me, it’s iOS for my lifestyle and google for my business

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You mentioned INNOVATION, you are obviously very passionate about TECH. You have a track record for leveraging tech to drive processes and people. Where would you say your passion for tech came from?

Tech is an enabler. Personally, tech helps me connect with people. When I was CEO of Diamond Bank, having the ability to talk to anybody in the organization empowered me; so instead of relying on people, I can actually connect directly and vice versa (people also can connect directly to me), and technology enables that opendoor policy which is required for creativity and innovation.

Why is technology important, especially in Nigeria? There is no other way to include people without technology. Without technology, there is no inclusion; no inclusion for health, social or financial benefit. Before Diamond Bank turned 25, it took us 20 years to acquire 4 million customers in 300 locations, and in the following 5 years, we tripled that number just by using technology. Nobody came in person into Diamond Bank anymore, and they opened their account online by themselves. We took banking to the marketplace, created new opportunities, and that’s the beauty of technology.

People talk about technology taking jobs, but on the contrary, we created new jobs, new opportunities, a new type of banker and we would never have been able to do so without technology. Financial inclusion is about scaling; scaling could even be cost-effective, and the only way to do that is a DIGITAL DRIVEN MOBILE strategy.

Diamond bank was a driver in the Financial Inclusion space when you were CEO, what were the biggest challenges you faced in implementing financial inclusion as a core focus?

The biggest blockage was people because you have to convince people to change and see where the future is. The mindset we adopted was that we were going to take from our existing capital and invest in financial inclusion because we needed to invest in the future, which is the excluded populations. We came up with a

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an environment in which they can choose and decide whether they want to pursue a career only or pursue a career and a family, then there is longevity for them in that organization and it also leads to greater participation from women in the workplace.

Beta proposition which targeted excluded populations and linked opening accounts and financial literacy for them. We opened about five hundred thousand accounts and we discovered that being financially excluded doesn’t mean you are poor, it just means that institutions have not provided an enabling ecosystem for them to be comfortable, to trust, to be convenient.

The second is REGULATION, the regulatory system has actually come a long way from the mindset of 5 years ago and we realized that without social inclusion, there is no economic prosperity because you are going to have bottlenecks. We need a new breed of people who will shift the paradigm from leadership to see that we have to take this risk, and the risk isn’t as precarious as it seems if you consider that the banking industry, as we know it, is long gone and it’s highly concentrated in terms of exposure. Less than 500 businesses count for over 80% of the exposure, which is

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highly concentrated. We need to diversify and build that capacity of the ecosystem. That’s where I see a lot of bottlenecks because the people that actually adopt technology and change how they do things are actually at the bottom of the pyramid. This is why technology is going to be an enabler in driving financial inclusion because there is no alternative, so when I look at what we did with the Beta proposition, we were just replacing one financial institution with another. One that provided certainty, one that provided more trust and the ability to save and transform lives.

There’s a growing number of fitness, how do you think fintech will change banking in the next 10 years?

It’s already changing it, that why we adopted a ‘beyond banking’ philosophy: it is not just about providing banking services, it’s about doing more for the customers. If we were just providing banking services to customers, that means we only know a fraction of his daily life, a fraction of what the customer does, and that’s why we implemented a mobile-first strategy.

We designed our mobile app as one that is easy to use. Our competition

was always going to be CASH, how fast can you make a payment or achieve an outcome with your mobile phone versus CASH. Your competition is always going to be cash. Part of it is also education, financial literacy and record keeping. If all records are there for you, when you want to borrow money from me, I don’t have to ask a lot of questions, I can actually see it, and create a profile for you.

Another thing Diamond bank was known for is that it’s a gender equal workplace, a bank where women occupied many top positions. How important is it to empower women in the workplace?

Nigeria is 50% women, Nigeria is also 50% Muslim and Christian, so if you don’t have a deliberate strategy to include everyone, if you are only providing solutions with male-led bankers, it means that you miss out half the population; so it has to be deliberate.

We live in a society where men are supposed to wash cars and women wash the dishes, and we have to change that mindset. It’s about inclusion, it’s about ensuring we capture as much data to provide the right solutions for people. If women feel like they have

Your show ‘TechTalks’ interviews some of Nigeria’s top tech entrepreneurs. In your opinion, what does the future hold for tech in Nigeria?

We have a lot of Fintech companies in Nigeria, my concern is always, once it gets to a critical scale, I hope that they would have put in what it takes to go through that phase, that is where they now become like an Access Bank, for example, whereby you have all the managerial issues, regulatory issues and how you put that structure in place to manage it.

The Fintechs are making a lot of impact, people like Paystack, Flutterwave, are doing a lot of things that are actually making other players sit up and take note - both financial and nonfinancial organizations. The other concern is investment. Fintechs are filling important market gaps and collaboration as well as open systems are going to be key in the sustainability of these Fintechs.

The CBN has come up with a great KYC (Know Your Customer) system, where KYC level one does not need anything to just open a bank account, and truly that’s how we opened 10 million accounts. Now if you want to reduce BVN (Biometric Registration) at that KYC level, they are just going to destroy the whole system and it’s not about just the regulatory bodies coming together and saying they want to achieve XYZ% this year, so how do you work together to do that? Bringing it from Tax laws that would now reverse any good work that any bank has done, especially when you have over 17 million unbanked small businesses, that’s where the engine of growth is in Nigeria. The opportunity to employ just one more person, if 17 million businesses do so, that accounts for 17 million employed people. The focus should be on SMEs. How will you use your wealth of experience as the former CEO of Africa’s fastest growing retail bank and the platform that you stand on, to impact lives going forward? What’s next www.businessday.ng

for you, what do you have in the works?

Inclusion is very key, and I think there is a lot of profit, both financial and non-financial, in investing in that space and building solutions in the financial inclusion space. Diamond Bank started by identifying a segment of the population that nobody wanted to bank because they thought it was too expensive due to their lack of literacy in technology. There is no economic prosperity without social inclusion. My plan is to create a platform that helps the disenfranchised segment and there are quite a few financially and socially excluded groups in Nigeria. People are socially excluded because they are not financially literate and also because they don’t trust financial institutions. The plan is to build a platform that goes beyond banking and incorporates solutions to some of the bottlenecks. A financial platform, a payment system, one that is focused on small businesses, focused on women because research shows if you look at the adopters of technology, women and youth make up a high portion of that segment.

I want to go beyond a transaction, connecting to an outcome.

People want to be happy, people want to feel safe. We need to start getting comfortable with things that are futuristic; future intelligence, blockchain, virtual reality, robotics, AI; those are the things that will help us include millions of people in a cost-effective manner. truly, you can’t do it any other way, you can’t use people. I want to play a role in building that platform, and I love competition. When we first started the retail game, we spoke to a CEO who said there was no business in retail banking here, but today, there is no bank in Nigeria that does not have a sale/retail strategy, because of that where the opportunity is. A corporate client can access money how they like, and they can even lend banks money.

What does Uzoma Dozie do in his spare time?

Now that I have spare time, what I try to do is play golf, I play tennis, read and I do a lot of photography. I have taken a lot of pictures I need to process, so I’m going to do that and take more pictures.

What do you photograph?

People, places, things, situations and I want to now dive into moving pictures. I also think that is what the future is too.

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People don’t read anymore, so if you want to connect to people, you need to do it virtually and it cannot be too long, as people no longer have the time. Anything more than 5 minutes is a waste of time. So, if you can do a brief movie indication in 1 or 2 minutes and teach people without actually interfering with their lives, you create a visual connection with them.

Using visual to tell a story makes a great impact, and that’s what we did at Diamond Bank; that’s where the leadership comes from.

As a tech enthusiast, what are some of the apps on your phone that you use every day?

Other than writing, I take a lot

of pictures, If you go through my pictures, you will see what my day was like, and you can visualize it as well. I have my pictures in sections, I have my money folder, I have a social folder, then I have my office folder, then there is information in everything I find interesting), there is a whole folder for golf, and for media and photography as well.

Are you an iOS or Android user?

Six years back, I was completely 120% an iOS person, even if I saw a faster innovation coming from Google, it was innovation @Businessdayng

that wasn’t practical every day, so it was nice to have Apple that focused on what you need to have; very simple. Then I began to feel trapped, old system, not able to access the new innovations millennials try, and our business moved as we tried to do more things on mobile - we wanted to make sure we knew what our customers were using, like then Blackberry, then google, then iOS, we now have to start focusing on the apps, the system that people were comfortable using, because it was cost effective, which was Google, so I bought a Google phone. I moved out of the iOS ecosystem so I will actually be able to build an open platform. And if it’s not an open platform, I’m not interested. So now I use the iPhone for

my personal lifestyle, photography and creative because that’s what they are good at. So for me, it’s iOS for my lifestyle and google for my business.

You seem to have a signature style, you wear all black. Can we expect to see any pop of color this summer?

I just can’t go wrong with black, there might be black with a hint of something, but essentially, my colour palette reveals my love of black; black is beautiful.

Many colour pops that do creep into my signature style might reflect the essence of Nigeria.

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Monday 06 May 2019

BUSINESS DAY

real sector watch

Manufacturers battle franchisers as FG vows non-interference in gas market ODINAKA ANUDU

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igerian manufacturers say they are unhap py t hat franchisers of natural gas are dollarising payment of the energy source and selling to them at $$7.45 per standard cubic meter (scm), which is above the international price.

They say the situation is compounding their energy woes and raises production costs while lowering their competitive capacity.

“The persistent increase in the price of natural gas used by our members to power their plants and machineries has reached a crisis dimension,” Mansur Ahmed, president, Manufacturers Association Of Nigeria (MAN), said at an interactive forum on gas pricing in Lagos on April 30.

“Similarly, the continued denomination of price of gas in US dollars has made the product perpetually exorbitant and gradually getting outside the reach of majority of the manufacturers, particularly the small and medium industries,” he said.

The federal government had on January 4 this year gazetted a gas pricing framework for textile industries with a view to cutting down price for key players in the sub-sector. Many manufacturers are, however, unhappy that this was not extended

L-R: Olusegun Osidipe, director, economic and statistics, Manufacturers Association of Nigeria (MAN); Paul Gbededo, chairman, MAN economic policy committee, and Michael Adebayo, chairman, gas users group, MAN, and Segun Ajayi-Kadir, director-general, MAN, at the press conference to launch the Manufacturers CEO’s Confidence Index (MCCI) in Lagos recently.

Pic by Olawale Amoo

to all players in the sector to reduce the huge impact which energy costs make on their margins.

Energy cost has continued to occupy 40 percent of manufacturing expenditure in Africa’s most populous country. While small- and medium-scale manufacturers use fuel-powered generators, large enterprises use gas and low-pour fuel oil (LPFO) to power their factories.

Expenditure on alternative energy source amounted to N93.1 billion in 2018 and N117.38 billion in 2017, according to MAN’s data.

Michael Adebayo, chairman, Gas Users Group of MAN, recalled that in 1999, the federal government took

the bold initiative of stopping gas flaring and encouraged private sector operators, particularly manufacturers, to invest in gas infrastructure and utilisation.

The main objective of this initiative was to make gas cheaper than LPFO by about 30 percent and provide a cleaner industrial environment for the manufacturing sector in Nigeria.

“Manufacturers were motivated by this noble objective and invested heavily in converting their various production technologies and processes to the use of natural gas. Initially, most manufacturers benefited from this scheme as they were saved from constant

power supply challenges and high cost of diesel.

However, the gas pricing controversy started in 2008, when one of the franchisers, with the knowledge of the Nigerian Gas Company (NGC), increased the price of gas from N21.05 per scm to N67.63 on the basis that the company was benchmarking their price with the Petroleum Products Price Regulation and Monitoring Agency (PPPRA) template for fixing petroleum products and thereby adjusted its price accordingly,” he recalled.

This triggered series of negotiations between MAN and the franchisers on the one hand and the Nigerian

Gas Company (NGC) with the Nigeria National Petroleum Corporation (NNPC) on the other hand, prompting the government to intervene, he said, adding that an increase of 15 percent from the initial price was later agreed to by all parties.

This adjustment was to enable franchisers to recoup their investments, he said..

He explained that that was not meant to be a permanent feature in the price of gas.

“Unfortunately, gas franchisers saw this adjustment as an opportunity and used it as the basis to increase prices, thereby undermining the Gas Sale Purchase Agreement (GSPA), which was collectively signed by MAN members.

In 2010, gas franchisers demanded for another increase in price without any amendment to the GSPA, triggering another controversy which created a prolonged dispute that almost grounded the manufacturing sector, he stated.

He said the benchmarking of the price of gas to the US dollars has made the process very volatile and has been responsible for the various increases in the price of gas over time.

He said benchmarking the price of gas to the dollar exchange rate is not in sync with the CBN directive of transacting businesses in Nigeria in the local currency.

“It is also instructive that while the average price of gas

globally has been ranging in between and around $2.5 per scm. The case in Nigeria, where it is $7.45 per scm, is worrisome and with this kind of differential, Nigeria manufacturers cannot and may never be competitive,” he said.

However, Ibe Kachikwu, minister of state for petroleum resources, said the Federal Government is careful not to dictate a price for gas.

He spoke through Timothy Okon, his senior technical adviser.

“What we are trying to avoid is to remove human elements in the market. It needs to be market-drive and we wanted a price which matches with international pricing,” Kachikwu said.

He explained that the model used to arrive at certain figures for gas is not known to the law.

He, however, acknowledged that the distribution tariff is higher than transportation’s and sometimes higher than gas itself which is abnormal.

He assured that the federal government would release a new gas pricing template before May 29 to address some of the controversies around gas.

“If the international price of gas is $5, why should the end user in Nigeria pay $8?” he asked. “We are unable to see how the current structure conforms to the rules that have been set,” he stated.

includes a top-to-bottom redesign of the company’s logo, graphics, communications and correspondence.

PCPL’s new brand assets include a fresh, simplified, logo that features the new name in light grey and in green, the new three-leaf insignia that has been adopted and incorporated in the logos of all the business units under the FMN agroallied division, symbolising uniformity and consistency of purpose.

Premium Cassava Products Ltd, formerly referred

to as Thai Farm International Ltd, was founded in 2006 by Asian and Nigerian shareholders and was later acquired by FMN in 2012.

Premium Cassava Products Ltd. is as at today, one of Nigeria’s largest processors of locally grown cassava tubers and is known for consistently producing high-quality cassava flour (HQCF) and the popular Golden Penny Garri.

FMN was incorporated in September 1960 and quoted on the Nigerian Stock Exchange since 1978.

Flour Mills strengthens cassava processing segment … announces name change and new brand identity for Thai Farm ODINAKA ANUDU

F

lour Mills of Nigeria is strengthening its cassava processing business to improve efficiency and serve the consumers better.

Part of the arrangement is that its subsidiary Thai Farm International Limited, a leading producer of High-Quality Cassava Flour (HQCF) and major stakeholder in the industrial production of garri - Golden Penny Garri, is changing its corporate name to Premium Cassava Prod-

ucts Limited (PCPL), effective April 1, 2019.

The change, which is part of a larger group-wide restructuring programme by the management of FMN for its businesses in agriculture sector, is intended to improve not just the efficiency of its various businesses in that sector but greatly increases the synergy within the group while creating more value accretion opportunities.

Speaking on the change of identity, Nassib Raffoul, chief operating officer of the www.businessday.ng

agro-allied division, said the change was borne from the overall mandate to adopt a common identity across the agro-allied businesses under the division.

“Other than the change of identity, our existing policies on products, customer relations, quality commitment, management and directions shall remain as it is. Our customers, consumers and other stakeholders will continue to get the best of services that they have become accustomed to while partnering Thai Farm,” Raffoul said.

“With the new brand identity, Premium Cassava Products Limited is now truly revitalised to deliver on its core focus of producing quality products to its customers. Admittedly, the ‘Farm’ in the old name was a little confusing to some of our first-time customers.

However, it is important to now clarify that the company is primarily a processor and famed producers of High-Quality Cassava Flour and the popular Golden Penny Garri,” he explained.

The new brand identity

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@Businessdayng

Monday 06 May 2019

BUSINESS DAY

27

real sector watch Africa set to move on without Nigeria as AfCFTA hits minimum threshold ODINAKA ANUDU

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he African Continental Free Trade Area (AfCFTA) is set to commence but the continent’s biggest market may not be part of it.

Last month, The Gambia joined 21 other countries to ratify a continental trade agreement that is set to create the largest trade zone in the world and increase intraAfrican trade by 52 percent by 2022 and remove tariffs on 90 percent of goods.

The Gambia joined South Africa, Ethiopia, Sierra Leone, Lesotho, Burundi, Namibia, Guinea Bissau, and Botswana, among others, which have ratified the agreement to support the commencement of the largest trade agreement since the World Trade Organisation (WTO) in 1994.

The AfCFTA treaty was signed by African Union

(AU) countries on the 21st of March 2018 in an AU summit in Kigali, Rwanda.

However, the signing of the agreement still needed to be ratified by the parliaments of at least 22 member

states of the AU to come into force. Nigeria and many countries in North Africa are still consulting and may be left out of the party.

The Manufacturers Association of Nigeria(MAN)

How poor access to cheap credit affects manufacturers Gbemi Faminu

J

ames Obi, a 35-yearo l d m e d i u m -s c a l e manufacturer, makes paints in Ikeja, Lagos.

Due to the need to expand his business, he proceeded to request a loan of N10 million from one of Nigeria’s tier- two lenders.

The bank demanded collateral that would cover the amount he needed.

The interest rate was 24 percent and the money must be returned in 12 months.

After analysing the requirements, he could not proceed. This left him in a fix and made him lose an opportunity to meet supply needs.

Manufacturers, especially SMEs, are increasingly facing frustration in the hands of deposit money banks.

L e n d i n g ra t e t o t h e manufacturing sector averaged 22.21 percent in 2018 and 22.84 percent in 2017, according to the Manufacturers Association of Nigeria (MAN).

“I am encouraged to expand my business, but my inability to access loans has made it almost impossible and even banks are

not helping matters with the high interest rate and the difficult requirements,” Komolafe Abisola, CEO of K-BIS Bags, said in an interview.

According to MAN CEO’s Confidence Index report for Q1 2019, high interest rate as well as difficulty in accessing loans ranked 3rd place in the list of challenges facing Nigerian manufacturers.

The constrained access to loans has hindered the prospects businesses have to offer, especially in terms of expansion and growth.

Follow ing respons es given by CEOs contained in the report, the majority of them complained that the rate at which comm e rc i a l b a n k s l e n d t o manufacturers discourage productivity in the sector considering the double digit-interest rates across banks.

“Sixty-three percent of the respondents do not agree that the rate at which commercial banks lend to manufacturers encourages productivity in the sector.

This can be justified with the double-digit cost of borrowing from the commercial banks, which no doubt, discourages investwww.businessday.ng

ment,” 200 chief executives said in a recent MAN survey.

The Central Bank of Niger ia (CBN ) reduced the benchmark interest rate to 13.5 percent from the previous rate of 14 percent in a bid to improve the economy. The South African Reserve Bank and the Central Bank of Kenya maintain its interest rate at 9 percent and 6.5 percent respectively.

However, a report released by CEIC Data Company shows that the lending rate of Nigerian banks dropped by 7.21 percent from 16.08 in February 2019 to 14.92 in March 2019.

The double-digit interest rate hinders investors from pursuing investments in the country, bearing in mind high production cost and infrastructure deficit that remain challenges for the business environment.

Affirming the need for measures that will lower cost of borrowing, particularly to the manufacturing sector, the report proposes that “It is important that a policy should be designed to improve the proportion of commercial banks loanable funds that goes to the manufacturing sector.”

believes ratifying the agreement could kill industries in the country. The body with over 2,500 manufacturers say the country’s leadership is yet to do a cost-benefit analysis on the impact of the

trade treaty.

“Right from the period preceding the Kigali Summit and up until now, the content of the Nigerian offer has remained unknown to manufacturers who are the number one stakeholders to be positively and or negatively impacted by the proposition,” Frank Jacobs, former president of MAN, said in Lagos in the second quarter of 2018.

But the chambers of commerce say the treaty is more important to Nigeria than any other African country.

“Our position is that our dear country should sign the AfCFTA. While we continue to address the issues around it, and work on a strategy for implementation to tackle the problems, we should sign the agreement now,”Iyalode Alaba Lawson, national president of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said in Lagos in July 2018.

The Lagos Chamber of Commerce and Industry (LCCI) had, in late May 2018, backed the trade deal, stating that if smaller African countries were not afraid of it, Nigeria with 198 million people and humongous $430 billion GDP, had no business shying away from inking it.

“I don’t see anything to be afraid of,” Babatunde Paul Ruwase, president of LCCI, said at a stakeholders’ consultative forum on AfCFTA in Lagos that month.

“If smaller countries are not afraid of it, we should have no fear to be there,” he added.

On July 17, 2018, Yemi Osinbajo, Nigeria’s vice president, at the 8th Presidential Quarterly Business Forum held in Abuja, expressed concerns about AfCFTA, recalling the country’s experience with dumping and other injurious practices which he said made it obvious to Nigeria that its market could be a real target.

A peep into Mouka’s new insect repellents ODINAKA ANUDU

M

ouka Limited, Nigeria’s leading manufacturer of mattresses and other bedding products, has launched an innovative range of insect repellents in line with its mission of adding comfort to Life.

To commemorate the 2019 World Malaria Day, an event was organised by the foam manufacturer in Lagos on Wednesday 24th April.

Raymond Murphy, chief executive officer of Mouka, said the launch of Mouka Mozzi Insect Repellents which create a protective halo from mosquitoes, is the company’s contribution towards the global campaign against malaria.

Murphy said, in addition to mosquitoes, Mouka Mozzialso provides protection from bedbugs, mould, bacteria spores, spiders, cockroaches and dust mites.

With each application, a consumer can enjoy 24 hours protection for up to 3 months, which is not possible with insecticides.

Omoniyi Kayode Yemitan, who conducted the chemical evaluation, efficacy and toxicological assessment of Mouka Mozzi, endorsed the products as

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safe for all members of the family including pregnant women and young children.

Yemitan, who is of the Department of Pharmacology, Therapeutic and Toxicology at the Lagos State University Teaching Hospital, explained that the active ingredient in Mouka Mozziis extracted from plants which makes it non-hazardous for humans.

Representing Olajide Idris, Lagos State commissioner for health, state Malaria Elimination Programme Manager, Abimbola Osinowo said the state government has renewed its commitment to tackling malaria using a multidirectional approach including environmental management and integrated vector control for prevention of malaria, adding that Mouka has taken a step in the right direction with the production of its repellents.

“As you are all aware, malaria is endemic in Lagos State and it poses a major challenge to the state as it impedes human development. It is both a cause and consequence of underdevelopment and remains one of the leading causes of morbidity in the state,” Idris said.

“The present administration has renewed the @Businessdayng

commitment of the state government to tackle the scourge of malaria using a multi-pronged approach including; environmental management and integrated vector control for the prevention of malaria; effective diagnosis and appropriate treatment of malaria cases; and monitoring and evaluation with emphasis on operational research and the use of its results for evidence based programming,” he said.

Saliu Olugbeng Oseni a , chairman, Lagos State Chapter of the Nigerian Medical Association(NMA), who was represented by Sodipo Oluwajimi, expressed admiration for Mouka’s repellent’s indigenous manufacture, adding that the NMA would be willing to endorse the innovation as it joins Mouka in its resolve to tackle the malaria scourge.

Earlier in the month, Mouka Mozzi was officially launched at Mouka Business Partners Conference which held in Lagos, Abuja and Enugu.

World Malaria Day is commemorated on April 25 annually by the World Health Organisation, in order to sensitise the global population about malaria and its health and economic burdens.

28

Monday 06 May 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

How microinsurance can help the poor, vulnerable to manage risks

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Stories by Modestus Anaesoronye

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ow-income households and micro, small and medium enterprises are particularly vulnerable to risks, be they related to health, agriculture, property or death. These risks often carry heavy financial implications as individuals, businesses and households attempt to deal with them. Since very few of these groups have access to efficient and effective formal risk management and social protection mechanisms, recuperating losses and recovering from shock is at best difficult, and more often impossible.

According to the microinsurance network, Microinsurance provides poor and low-income households with the means to protect themselves against the effects of risk. The role of microinsurance must therefore be viewed alongside government provision of basic health services, employment and education, etc., all of which go towards alleviating poverty.

There are many microinsurance schemes around the world today, but they still only meet a fraction of the overall need. It is difficult to estimate how many people are still uninsured or inadequately insured from risks. According to the Global Findex Database*1, two billion people did not have a bank account in 2014. The number of people who have no or inadequate insurance is even larger. (To find out about the percentage cover of microinsurance across different regions of the

ON THE MONEY Quick tips: Simple steps to successful budgeting

L-R: Chiwueze Ihebuzor, product manager, PayDay Investor; Akinyele Olubodun, chief executive officer, Think First Technologies; Tomi Solanke, chief executive officer Trove; Yusuf Zakari, chief executive officer, Asusu; Jimi Fasina, chief executive officer, Tsaron Tech; and Chiwete JohnNjokanma, chief executive officer, FINT at the Labs by ARM Demo day in Lagos

world, see our World Map of Microinsurance).

What is easier to measure is what is known as the global insurance protection gap, measured as the difference between insured and total economic losses as a share of GDP. A 2012 study

by Lloyd’s*2 puts the total protection gap at USD 168 billion and identifies 17 countries as underinsured, 15 of which are in developing or emerging markets.

In other words, a large portion of risks are uninsured, and the majority of these risks concern low-income populations in developing and emerging economies.

Further, when looking at the non-life insurance gap over time, it has been shown that over the past 40 years, the shortfall has grown continuously from about 0.02 per cent to 0.13 per cent of global GDP, as total losses have grown significantly faster than insured losses.

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Although microinsurance schemes have become self-sustaining, many still rely on receiving essential support in the form of grants and technical assistance. For microinsurance to become successful – for both policyholders and insurers – several elements are key. These include simple and affordable insurance products reaching large numbers of people, streamlined administration and premium payment, simplified claims management, and prompt delivery of benefits. All are important to provide “real value” to the target client.

Microinsurance can also be a tool to extend social protection in the context of providing security to populations in developing countries and contributing to poverty alleviation. Overall, strategies and mechanisms should ensure that microinsur-

ance is not approached in isolation, thereby maximising impact.

As the world attempts to address the tremendous impact climate change is having on all regions of the world, it is worth noting that, once again, the poor and the vulnerable are the most at risk of the dire consequences that push millions into poverty every year. Insurance can play a vital role in mitigating these risks and providing risk management tools to the at-risk and vulnerable, providing both direct and indirect benefits. A direct benefit is that insurance coverage makes individuals and households more resilient and less vulnerable to risks; the indirect benefit is that wide coverage fosters socio-economic growth on a national level, which in turn, provides more economic opportunities and safety across the world.

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udgeting is said to be the foundation of great financial planning. Whatever your financial goals are, be it to settle a debt or save up for a dream; making a budget is the first step towards making that dream happen.

Basically, a budget is “a plan for money”. By differentiating between your wants and your needs, a budget can help you identify where you could spend less than you bring in so you can save for the future. On this edition of On The Money, we will be explaining five simple steps to create a successful budget; 1. Track your income: To create a successful budget, you need to know how much money you make monthly. If you have one source of income from a salaried job, this shouldn’t be difficult, all you need to do is to calculate your net pay after deductions to arrive at your take-home-pay.

If you have multiple sources of income from a business, investment portfolio etc, you need to factor this into your income as well. Once you have an idea of what you earn in a month, you can make a plan for a workable budget.

2.

Calculate your expenses: To create a successful budget, you need to know how much your expenses are, i.e., how much you are spending at any particular time. You can calculate this by checking your bank statements, keeping receipts and taking notes every time you make a purchase. If you cannot track every purchase, you can calculate your income for past three months, deduct your

@Businessdayng

current account balance and divide this value by 3 to find your average monthly spending. Calculating your expenses help you visualize your spending and determines where you can make spending cuts.

3.

Create financial goals: Now that you know your income and expenses, you need to set your financial goals. This goal will guide your budgeting: Do you want to earn more money or build an emergency fund? Are you saving up for education or a vacation? Having a financial goal will help you plan accordingly, and it is also rewarding when you smash them!

4. Be accountable: Now that you have created a budget; make sure you stick it. Remember that following through with your plan will give you the desired results to reach your end goals. You can choose the right financial tools to help you reach this goal or talk to a financial adviser to give tips on how to stick to your budget and grow your money. This is where Old Mutual comes in with their over 170 years of building a solid reputation for providing financial advisory, insurance and wealth management opportunities.

You can call Old Mutual on 01-2719393 to arrange a free financial education session for your team, or on a one-on-one basis. Our financial advisers can help you with savings and insurance services. For more information, visit your nearest Old Mutual branch or go to www.oldmutual.com.ng.

We look forward to helping you with your money matters.

Monday 06 May 2019

BUSINESS DAY

insurance today

29

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Nigeria’s health insurance gap and challenges Stories by Modestus Anaesoronye

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report gauging health insurance mechanism in Nigeria shows that 89 percent of the population pays for health care out of their pocket. This is a reflection of how much or the gap that exist in the Nigeria’s utilization of health insurance to address challenge of healthcare financing. Modestus Anaesoronye present an NOIP report, revealing the challenges in the environment. Excerpt: The United Nations and World Health Organization observe World Health Day on the 7th of April each year and the aim is to raise awareness of the need to improve global health. The theme for the 2019 World Health Day is “Universal Health: Everyone, Everywhere”. The theme means that all people have access, without any kind of discrimination, to comprehensive quality services, wherever they need them, without facing financial difficulties. It requires the definition and implementation of policies and actions with a multisectoral approach to address the social determinants of health and promote the commitment of the whole society with health and well-being.

Universal health is not just about ensuring everyone is covered, but that everyone has access to care when they need it, wherever they are.

In commemoration of the World Health Day, NOIPolls presents findings from its past poll on health insurance which was conducted

L-R:Sanni Oladimeji, DGM/head, Risk Management & Compliance, Sovereign Trust Insurance Pl; Adeyemi Olumuyiwa, winner of the radio programme ‘Trivia’ and managing director/CEO, Morgan Capital Group and Jude Modilim, executive director, Technical Operations, Sovereign Trust Insurance Plc at the Corporate Head Office in Lagos.

in August 2017. The poll gauged the perception of Nigerians regarding health insurance in the country.

Findings from the poll revealed that as many as 89 percent of the population pay for healthcare services out-of-pocket. This finding does not in any way coincide with the main purpose of the National Health Insurance Scheme (NHIS) which is primarily securing universal health coverage and access to adequate and affordable healthcare in order to improve the health status of Nigerians. Further findings from the poll revealed that only 9 percent claimed they have some form of health insurance, of which 71 percent indi-

cated NHIS and 21 percent indicated Private Health Management Organizations (HMOs) as their provider.

Interestingly, a substantial proportion of Nigerians (78 percent) who were not covered expressed willingness to pay a small amount of money monthly/yearly to get enrolled for health coverage.

The findings show that the most utilized healthcare facilities by Nigerians is government owned hospitals (primary, secondary and tertiary health facilities as revealed by majority of Nigerians (63 percent) interviewed. This was followed by respondents who visit private hospitals (39 percent) and Pharmacy/Chem-

ist stores (17 percent), and those who self-medicate (13 percent) amongst others.

In order to probe further, when asked how they pay for healthcare services, most of the respondents (82 percent) reported that they pay “Out of pocket”, and this cuts across gender, geo-political zones and age groups. Further analysis indicated that a total of 89 percent actually pay out of pocket, since 7 percent of respondents said they received support from friends and family, which can also be categorised as out of pocket expenses.

This was followed in a far distance by only 9 percent of the respondents who claimed that they access

health care services using their health insurance scheme. This finding clearly highlights the low penetration of health insurance amongst the populace, which urgently needs to be bridged in order to achieve universal health coverage.

Subsequently, poll also ascertained the willingness of Nigerians who pay out of pocket to pay a small amount of money monthly or yearly (premium) in order to access healthcare services when they need it, especially in time of emergency. In response, 78 percent of the respondents expressed their willingness to pay a small amount to get enrolled into the health insurance scheme. Interest-

ingly, during the course of the poll, some respondents made on the spot inquiries on how to enrol on a health insurance scheme. These findings clearly demonstrate the critical need for sensitization and awareness campaigns to mobilize the citizenry on the need and benefits of health insurance.

In conclusion, contrary to the UN and WHO goal of ensuring that universal health for everyone everywhere, the poll revealed that 89 percent of Nigerians do not have any form of health insurance, thus they pay out of pockets to access healthcare services. Of this proportion, 78 percent expressed their willingness to pay a small amount of money to enable them access service whenever they fall ill. These findings clearly highlight the low penetration of health insurance across the country and calls for intensive sensitization and mass mobilisation of the populace.

It is gratifying that at least 10 Nigerian States have signed health insurance laws to help in achieving equitable and sustainable health financing mechanism. Functional State health insurance schemes will help increase the pool of individuals with health insurance thereby driving down premiums. Finally, while it is critical for government to re-evaluate its current budgetary allocation to the health sector; it is also important for stakeholders to consider more sustainable ways to finance the sector through health insurance, and to mobilise the public to increase the pool of funds available for investment into the sector.

Brokerage fraternity confers Osun Governor, Kari, 15 others Fellows of the Council

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he Nigerian Council of Registered Insurance Brokers (NCRIB) has admitted the executive governor of Osun State, Gboyega Oyetola into the Society of Fellows of the Council.

Also admitted into the Society of Fellows include

the Commissioner for Insurance, Mohammed Kari; NCRIB vice president and honourary treasurer, Rotimi Edu and Ekeoma Ezeibe respectively.

The admission of 17 new members brings the total number to 94 members. The Society of Fellows is the Comwww.businessday.ng

mittee of all Fellows of the Council, including some notable net worth individuals in the country and overseas The admission was ratified at the Board meeting of the Council held in Lagos after the successful candidates scaled the hurdle for admission as stated in Section 6

Subsection 4a of the NCRIB Act No. 21 of 2003.

Shola Tinubu, president of the Council, disclosed that the new Fellows would be required to demonstrate high level of professionalism and assist in taking the broking profession to higher heights.

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He urged the new members to see their new status as opportunity to shun unethical practice and uphold the tenets of the profession at all time.

A former Deputy Governor of Central Bank, Tunde Lemo delivered the Fellows Day’s lecture titled, “After @Businessdayng

Fellowship, What Next”.

Tinubu in his welcome speech explained that the choice of Lemo was informed by the impeccable image and reputation he has earned for himself, both within and outside the shores of Nigeria as an economist.

30

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BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

The legal and ethical implications of using artificial intelligence in hiring privacy in the age of big data remains unsettled. This puts employers in a conflicted position that calls out for caution: Cutting-edge technology is available that may be extremely useful. But it’s giving you information that has previously been considered private.

D

DAVID PRIEMER

igital innovations and advances in artificial intelligence have produced a range of novel talent identification and assessment tools. Many of these technologies promise to help organizations improve their ability to find the right person for the right job, and screen out the wrong people for the wrong jobs, faster and cheaper than ever before.

When used in the hiring context, new technologies raise a number of new ethical and legal issues around privacy, which we think ought to be publicly discussed and debated, namely: 1) PRIVACY RELATING TO PERSONAL ATTRIBUTES As technology advances, big data and AI will continue to be able to determine “proxy” variables for private, personal attributes with increased accuracy. To-

day, for example, Facebook “likes” can be used to infer sexual orientation and race with considerable accuracy.

How the courts will handle situations where employers have relied upon tools using these proxy variables is unclear; but the fact remains that it is unlawful to take an adverse action based upon certain protected or private characteristics — no matter how these were learned or

inferred.

2) PRIVACY RELATING TO LIFESTYLE AND ACTIVITIES Big data is following us everywhere we go online and collecting and assembling information that can be sliced and diced by tools we can’t even imagine yet — tools that could possibly inform future employers

about our fitness (or lack thereof) for certain roles.

And big data is only going to get bigger; according to experts, 90% of the data in the world was generated in just the past two years alone.

In general, state and federal courts have yet to adopt a unified framework for analyzing employee privacy as related to new technology. The takeaway is that at least for now, employee

3) PRIVACY RELATING TO DISABILITIES The Americans with Disabilities Act puts mental disabilities squarely in its purview alongside physical disabilities, and defines an individual as disabled if the impairment substantially limits a major life activity, if the person has a record of such an impairment or if the person is perceived to have such an impairment. The category of people protected under the ADA may now include people who have significant problems communicating in social situations, people who have issues concentrating or people who have difficulty interacting with others. In addition to raising new questions about

disabilities, technology also presents new dilemmas with respect to differences, whether demographic or otherwise.

In conclusion, new technologies can already cross the lines between public and private attributes, “traits” and “states” in new ways, and there is every reason to believe that in the future they will be increasingly able to do so. There are no easy answers to many of the new questions about privacy we have raised here, but we believe that they are all worthy of public discussion and debate.

(Ben Dattner is an executive coach and organizational development consultant.

Tomas Chamorro-Premuzic is the chief talent scientist at ManpowerGroup, where Richard Buchband is senior vice president, general counsel and secretary and Lucinda Schettler is a senior attorney.)

Your company needs a strategy for voice technology BRADLEY METROCK

V

oice assistants, smart s p e a k ers and all manner of voice-first technology have enjoyed remarkable growth and adoption. The emergence of voice, which serves as the front door for artificial intelligence and machine learning, is already making a mark on a wide variety of industries.

Consider these examples: HEALTH CARE: Ambulances in New England have gone voice-first, shedding unnecessary paperwork for emer-

gency techs.

BANKING: Capital One was the first financial company to introduce an Alexa skill offering customers the ability to interact with their accounts, all the way back in 2016.

HOSPITALITY: Marriott rolled out Alexaenabled devices across five of its major hotel lines, while Google Assistant has been integrated by Hyatt to provide translation functionality for guests.

AUTOMOTIVE: Almost every car from major automakers rolling off the manufacturing line has voice-first technology integrated, from

Mercedes-Benz and BMW to Tesla to Chevrolet and Ford.

Voice represents a vast blue ocean of possibili-

ties and potential. As voice assistants become more context-driven, they’ll become more proactive, rather than

just reactive. They’ll find new ways to serve us and improve our lives, while also finding new ways to challenge

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

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Expertise It’s in our DNA

In an ever changing economy, with 125 years of serving YOU, we remain strong, trustworthy, dependable, safe and consistent.

You can be confident that we will continue to deliver innovative banking products and services which seamlessly and conveniently suit your lifestyle needs.

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our notions of privacy and security.

It won’t be long before every company will be expected to own and manage its own voicefirst presence and capabilities, much like every company is expected to own and manage its web presence and capabilities. In fact, every time you see someone asking Siri to give them information, or someone asking Google Assistant for directions, you’ll realize that your customers are already way ahead of you.

(Bradley Metrock is the CEO of Score Publishing.)

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Student debt is stopping U.S. millennials from becoming entrepreneurs VADIM REVZIN AND SERGEI REVZIN

U

p to 60% of millennials (soon to be the largest living adult generation ) consider themselves entrepreneurs, and yet less than 4% are currently self-employed.

When the majority of college graduates (nearly 70%) leave school with an average of $29,800 in debt, the thought of doing anything but getting a well-paying job to try to reduce this burden might seem irresponsible, at best.

While normalizing the cost of tuition might be the long-term answer, in the short term, the power to reignite innovation and entrepreneurial venture creation lies within the parties that help pay the bills of most individuals and entities: employers and capital providers.

Today, student debt is the biggest contributor to the financial burden of the adult population. Providing employee benefits that alleviate this burden beyond the current loan-forgiveness programs available (which

a very small percentage of people are eligible for) could be the first step creating a sense of stability for your employees.

New kinds of capital are already becoming popular among entrepreneurs that

don’t see the traditional equity-based venture capital model as the right path for them. Organizations like RevUp Capital offer revenuebased financing and funds like Indie.vc make equity investments that companies

can repay over time as a percentage of their profits.

The education sector is developing new models that capital investors can learn from. The Lambda School, for example, gives students the option to enter into income-sharing agreements.

Students agree to pay back tuition costs as a percentage of future income, in place of taking on more student loans.

Employers, investors, entrepreneurs and educators all have a role to play in reigniting innovation. Younger generations deserve to have a fair chance at the starting line — our future depends on it.

(Vadim Revzin is an entrepreneur in residence at GenFKD, a national nonprofit.

Sergei Revzin is a venture investor at the NYU Innovation Venture Fund.)

How wearable AI will amplify human intelligence LAUREN GOLEMBIEWSKI

I

ntelligence amplification is the use of technology to augment human intelligence. And a paradigm shift is on the horizon, where new devices will offer less intrusive, more intuitive ways to amplify our intelligence.

Hearables, along with other voice-enabled devices, allow users to seek information and complete tasks without a screen interface, but they are inherently less discreet than smartphones.

The need for an intelligence-amplifying device that is less obtrusive than a smartphone and more discreet than a voice interface is clear. Many technologists and entrepreneurs are working to create the next revolutionary intelligenceamplifying device that will solve the problems of its predecessors while giving users seamless access to advanced AI systems.

We’re quickly moving toward a world where AI will more seamlessly help to power our human intelligence and interactions.

Consider AlterEgo, a project originating from the MIT Media Lab — an intelligence-amplification device that uses silent speech recognition, also known as internal articulation, to measure the electrical signals the brain sends to the internal speech organs.

Augmented-reality devices represent another interesting foray into modern intelligence amplification.

Google Glass, smart eyewear that failed in the consumer market, is now being used in enterprise and industrial applications.

There is also an opportunity to leverage the user data that these new devices capture to create highly personalized experiences.

Pattie Maes, an MIT professor and an adviser to AlterEgo, says, “Systems that have an awareness of the user — their [mental and emotional] state, their intentions — will ultimately be less intrusive and more useful, because they can customize the information that is being provided to the situation at hand.”

There is an immense

opportunity for business leaders to capitalize on intelligence-amplifying technology. Each new device further reduces the barriers between an individual’s and an organization’s knowledge, and provides a new platform on which businesses can build applications to connect with customers, employees and partners.

Intelligence-

amplifying devices will be the primary means by which individuals interact with the world, so business leaders and stakeholders should plan for how their organization will embrace the coming changes in personal computing.

(Lauren Golembiewski is the CEO of Voxable.)

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How Joel Nkwute started ErrandJoe with only N3,000 …. Business now employs 39 workers in just one year JOSEPH MAURICE OGU

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s the saying goes, everything great always starts small.

When Joel Onyeka Nkwute thought of starting a logistics outfit that would cater for the needs of the ever-busy Lagos residents, he wasn’t aware of the enormous task ahead.

But he was conscious of the need to start little and grow the business to a great height.

From the hustle and bustle of city life in Lagos, where everyone is busy with work and do not have time to pay attention to little things, Nkwute saw an opportunity to make money.

“Everyone is busy in Lagos. No time to run errands, but I saw an opportunity there,” Nkwute tells StartUp Digest.

After the usual hard thinking and consultations, he decided to float what he described as ‘the first Facebook-based delivery and errand service provider.’

Specifically on February 24, 2018, ErrandJoe Delivery Services was born.

It was basically a Facebook-based delivery system because that was where he got his first clients.

ErrandJoe is a logistics, door-to-door pickup and same-day delivery firm, which renders services within Lagos and some neighbouring towns in Ogun State.

“ErrandJoe moves from door to door, house to house, bus stop to bus stop to pick and deliver items for people,” he says.

In just over a year, ErrandJoe has become a household name in Lagos, as far as logistics service is concerned.

In 15 months of its existence, the firm has prided itself as one of the fastest growing establishments in Nigeria, directly employing 39 people who work in different departments.

“Tell me any small-scale company in

Joel Nkwute

Nigeria that is just over a year old and could directly employ 39 Nigerians,” he boasts.

Nkwute dreams of growing ErrandJoe to become the number one delivery company

in Lagos in the next five years and among the top five in Nigeria.

“In addition to building a service that helps our customers spend smarter and

save more, we have maintained a team and culture that are focused on continuous innovation. It is fair to say we are futureminded,” he says, enthusiastically.

Apart from this, he also has plans to move ErrandJoe to the international scene where it can compete favourably with other international courier services such DHL, Red Star, and UPS, among others.

He says this is achievable considering the milestone ErrandJoe has achieved in just 15 months of its establishment.

“One year is a big milestone for any company for us as a start-up working to disrupt a heavily-regulated and historically static industry,” he says.

Some Nigerian youths believe that huge chunk of capital is needed before starting a business. But for Nkwute, he only needed his zeal and enthusiasm to succeed after investing only N3,000 to start the business.

He tells this to anyone who cares to listen.

“Before you become jealous of me, think of how I started. I started with just myself, passion and hunger with an account balance of N3,000,” he recalls.

In the 15 months of its existence, he says what has kept ErrandJoe moving is persistence through hard work.

“Through persistence, through trial and errors, and through careful and patient planning, we have been able to survive the odds,” he says.

Funds, bad roads and high way bullies are some of the challenges and hazards encountered on the job as an ‘errand boy’ in Lagos, says Nkwute.

While some youths spend their time on irrelevant things and wait for manna from heavens, Nkwute advises the youth to look around and identify problems people go through, which they could possibly solve.

“To fail or to succeed is a choice. We have problems with us, commit yourself to solving just one and you are on your way to wealth and prominence,” he advises.

AMPZ Mobile App to connect 5000 African talents in 5yrs, CEO says MICHAEL ANI

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MPZ, a sports technology startup company, has launched her mobile app that will allow sports talents to profile themselves, share their data, upload their content and get connected to verified opportunities.

The app, which is known as ‘LinkedIn for Sports’, aims to connect 5,000 African talents within the age 13 and 24, to their dream opportunities within the next five years, CEO of the sports-tech company says.

“We have seen a huge gap in the African sports market and AMPZ is here not only to bridge that gap but also to power the dreams of the next generation of African stars together with our partners”, said cofounder/CEO Abdul-Jabbar Momoh.

He said there are estimated 78 million connected sports participants aged 10-24 years exposed to exploitation, including trafficking, due to lack of access to verified information and platforms to connect

with the right audience. Many African kids and youths believe sports is their ticket to a better life but are confronted with these challenges, he said.

To also support this solution, the firm last week launched the maiden edition of her talent incubation programme called MatchMania.

The event, which would be held annually, is designed to help the younger generation showcase their talents in grassroots sports first in Nigeria and then Africa in the nearest future.

The event featured a team of promising talents from the AMPZ platform who entertained the crowd in games against MPAC Sports and Crest Football Academy formerly cowbell.

Sixteen out of the 24 finalists in football and basketball will proceed to an all-expense paid development programme with partners including The Future Academy and Insurance coverage by Hygeia HMO. Momoh noted that the selection criteria by the firm went beyond participant’s ability in sports to include leadership skill,

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teamwork spirit and their quality of being better sportspersons “During this period, we are going to be tracking their progress on our platforms and after that one year, we believe their progress will be strong enough for us to take them to the next level of their career,” he said.

He explained that the firm aims to tap into 10 most viable cities in Africa, including South Africa, Kenya, Ghana, cote devour and Egypt in a bid to achieving its five-year plan.

“The firm has had a very good start as we have been in talks with the Nigerian Football Federation, Lagos state football association and the Nigerian basketball federation and all have shown positive vibes towards the firm new development,” he explained.

He explained also that since inception two years back, the firm had only raised about $15,000 as well as a $5,000 it won from Greenhouse Lab to fund the project, however, it is very much open for partnership and willing to work with corporate

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partners in ensuring MatchMania becomes a fully-fledged programme.

“The partnership might not just be about money but also value as we welcome collaboration from industry players,” Momoh said.

Start-Up Digest Team

@Businessdayng

Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Start-Up Digest

Atiba and his footprints on Nigeria’s ICT space Gbemi Faminu

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tiba Temitope Moses is a young hardworking Nigerian youth based in Ilorin. He is the proverbial jack of all trades and master of all. As an entrepreneur, he has tried his hands on many businesses and is currently the chief executive officer of Teenet Unique Venture.

A holder of bachelor’s degree in Accounting from the Al-Hikmah University in Ilorin, Atiba delved into the world of ICT to satisfy his drive. He has, today, carved a niche for himself and makes waves in the tech space. His business ranges from software development, accelerated mobile pages (AMP),web development and design, Internet development, import and export of general goods. He is also in other areas such as business contract and promotion, blogging and sale of electronic equipment.

He started his business in 2010 while in the second year. He was inspired to start the business because he loved ‘hustling’ and

Atiba Moses

wanted to find means to fend for himself without placing a burden on anyone. Furthermore,

he always saw himself as an employer of labour, rather than an employee. This is the mentality

which many young Nigerians need to copy.

Hi s s t a r t- u p cap i t a l wa s N300,000, which he got by himself doing various legitimate jobs. He started his business gradually by purchasing a laptop, printer and a small generator which he used for the registration of students in higher institutions.

He has registered his business at the Corporate Affairs Commission (CAC) and has been able to acquire certificates from trainings and seminars. He is still working on getting more certificates and attending various trainings in order to gain more knowledge and expertise that will help his business and person to grow.

Evaluating his business growth, he says, “Looking back when I started, I can only be grateful for how far I have come,” he says.

“Currently, I have two employees who get paid monthly and my clientele has continued to improve and get bigger,” he adds.

Atiba intends to incorporate importation of phones and other electronics into his business and plans to become a full-time techie.

Despite his hard work and passion, he encounters challenges

which constrain the business and prevents it from reaching full potential.

“I wish to expand my business but lack of funds is hindering that.

I also cannot access loans from banks,” he says.

“I also battle with epileptic power supply, outrageous data charges and levies which usually gulp a lot of the revenue I realise,” he explains.

He urges the government to help provide adequate power supply, increase access to loans and also pay attention to the ICT sector as the world is fast becoming digitalised.

He also advises that government should, through the Nigerian Communications Commission (NCC), work on the outrageous charges by telecommunication companies.

Atiba is inspired by tech moguls and his parents. He is an advocate of hard work and honesty and wants young Nigerians to embrace the two traits.

Advising other entrepreneurs, he says, “Make a conscious effort to develop yourself regularly, ensure you grow your people network and work hard.”

said.

“The business of PET bottles recycling is very lucrative and the return on investment is huge,” he said.

He explained that anyone wishing to go into the business needs the training to avoid unnecessary waste of resources in machine sourcing and learn the differences in PET materials while having the

capacity to produce the standard PET flakes,” he explained.

“There is so much to learn. The dynamics of buying PET wastes and their prices need to be learnt.

I will also unveil where to supply the recycled PET both locally and internationally,” he stated.

“PET bottles are littered everywhere and I felt that someone had to find solutions with them,” he said.

“I went to a dump site, stayed there for six months, learned plastics and its different types and I was able to see the gold in it. It is a goldmine, but many people do not know,” he said.

He further stated that recycling is a going trend and the opportunity is so huge that there are only three major participants in it.

“Ninety percent of our plastics are not recycled, unlike in Sweden where 95 percent are recycled. In fact, government will even pay you to bring PET bottled in that country,” he disclosed.

He pointed out that Nigerians need to learn and re-learn about plastics as it is capable of cutting down 23.1 percent unemployment rate in the country.

He assured that participants in the training will have direct contacts of proven local and international vendors and could have access to funds/free export financing.

Business Opportunity

Why recycling of pet bottles, nylons is good business ODINAKA ANUDU

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ecycling is the process of converting waste objects into new materials. This big business is not yet popular in Nigeria as it is mainly done by few foreigners and multinationals.

Nigeria’s population is now 201 million, according to the United Nation Population Fund (UNFPA), which used the 2.6 percent annual growth rate.

The country’s citizens drink bottled water estimated at N938.6 billion annually, according to a report by Euromonitor International.

“The hot weather and poor availability of pipe-borne water in Nigeria lead to strong demand for bottled water, and this continued, despite a strong rise in unit prices caused by the higher production costs largely due to depreciation of the local currency,” said the March 2017 report.

The tendency to spend many hours in traffic in major Nigerian cities has also driven the growth of the industry.

The population of Nigeria is booming, and infrastructure and services are failing to keep up with the growth. Mismanagement of the public water system has compounded the problem, leading to

warnings of a looming water crisis in Nigeria, especially Lagos.

Over 63 million Nigerians have no choice but to get water from wherever they can, while 57 million Nigerians don’t have access to safe water, according to Wateraid.

The water needs of Lagos are put at over 700 million gallons per day. The state has capacity of a little over 200 million gallons per day, but actually produces and distributes between 145 to 150 million gallons each day from its facilities, leaving a huge gap of over 500 million gallons.

But this has created enormous opportunities as water is bottled in PET bottles.

The major area of this opportunity is recycling. Hence it is now possible to recycle these bottles and even nylon into more advanced products, for industrial use.

Owing to this, few entrepreneurs have studied the business and want Nigerians to get more involved.

Sabiduria Consulting Limited and Zeugnis International Limited are organising a training session for Nigerians of all ages about the potential in PET plastic bottle and nylon recycling.

The training will take place on May 18 at Presken Hotel, Opebi, Ikeja, Lagos.

Luther Kington Nwobodo, a PhD student, researcher and CEO www.businessday.ng

of Zeugnis International, told StartUp Digest that after the training, Nigerians would be confident of going into the recycling business as they will understand that the business can give them over 200 percent return on investment.

“There is every need for people to attend the training, especially those that are looking for lucrative ventures to invest in,” Nwobodo

Kington Nwobodo

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cityfile

Controller laments congestion in Enugu prison … as 2,024 inmates cramped in facility meant for 648 REGIS ANUKWUOJI

N

dubuisi Ogbodo, Controller of Prisons, Enugu State command, has cried out over the high number of inmates in the facility which had tripled its capacity.

Ogbodo spoke in Enugu during presentation of a baseline report on decriminalisation and declassification of petty offences organised by Prisoners’ Rehabilitation and Welfare Action (PRAWA).

The controller lamented that the facility originally built for 648 inmates presently hosts 2,024 inmates.

The development, according to him, has made it impossible to classify the inmates, adding that with proper classification of petty offences, cases of congestion which had become the hallmark of Nigerian prisons would be addressed.

Ogbodo said it has become imperative for the government to come up with alternative means of addressing certain levels of wrongdoings in society.

He said that petty offences should be made to attract lesser sanctions, including community service.

“Petty offences should be classified and defaulters should be put under community service so that they are not mixed with

Cross-section of customs officers, during their graduation at the Nigeria Customs Command and Staff College in Gwagwalada, Abuja.

hardened criminals in jail,” he said.

Ogechi Ogu, deputy director of PRAWA, during a presentation, called on the government to stop paying lip service to the urgent need for prisons reforms.

Ogu said almost all prisons in the country were congested, a situation that calls for concern by all stakeholders. She said it was necessary for the government to remove the punitive aspect of imprisonment and highlight the correctional aspect.

According to her, criminalising petty offences and meting out inhuman acts

NAN

that come with petty offences. Let us resort to non-custodial measures.

If not we will be creating more bitter persons that will make the society worst for us,” Ogu said.

The executive director of PRAWA, Uju Agomoh, said that the project, which is being driven by the organisation and Open Society Initiative of West Africa (OSIWA), was a milestone in criminal justice administration.

Agomoh said that the baseline report was for the participants and other collaborators to appreciate the situation that had necessitated the imple-

mentation of the project in the state.

She said that it was gratifying that the state government was doing much in the justice sector, adding that the justice reform team in the state needed to take notice of the decriminalisation and declassification of petty offences project.

“We cannot continue to criminalise poverty in this country,” Agomoh said.

The Abia coordinator of National Human Rights Commission, Uche Nwokocha, said it has become imperative to have sentencing and bail guidelines in the country.

Road crashes claim 540 lives

Furthermore, the report indicated that speed violation accounted for high causes of crashes with 502 cases representing 49.4 per cent of the total causative factors “Commercial vehicles constituted 65.5 per cent of the total vehicles in crashes within the month under review.

“While private vehicles accounted for 32.7 per cent and government vehicles accounted for 1.8 per cent.”

The agency appealed to the Federal Government and private media houses to promote road use education with a view to stepping up road awareness among road users.

on offenders is against Article 45 (1b) of the African Charter which Nigeria signed up for.

Ogu suggested that the government should rather address the circumstances that led to such offenses.

T h e d e p u t y d i r e ctor said that instead of seeking redress in a civil court, law enforcers would rather prefer to criminalise such offences as loitering, prostitution, failure to pay debts and what the y called ‘being a vagabond’.

“We are calling on the state government to join in the campaign to remove the current punishments

… as 3,383 injured in January JOSHUA BASSEY

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total of 540 persons died, while 3, 383 others were injured in 950 road traffic crashes across the country in January, Federal Road Safety Corps (FRSC) has reported.

The agency in its monthly Road Traffic Crash (RTC) report signed by the corps marshal, Boboye Oyeyemi, and made available to the media at the weekend, further indicated that a total

of 7, 827 persons were involved in those accidents.

However, the figures, according to the FRSC, showed a decrease of 21 per cent in fatality.

The report also showed 14 per cent decrease in crash cases and 14 per cent decrease in the number of people injured in the month under review compared to December 2018.

“A comparative analysis of January crash statistics with that of the corresponding month in 2018 www.businessday.ng

revealed a general increase across all parameters.”

According to the report, Lagos-Ibadan road re corde d the highest number of road crashes with 57 cases representing 11 per cent decrease from Dec. 2018.

“Abuja-Lokoja and Kaduna-Abuja roads followed with 54 and 51 cases.

Analysis based on states revealed that Kaduna recorded the highest number of crashes with 95 cases.

“The Federal Capital

Territory (FCT) followed with 83 cases, Ogun with 64 cases while Nasarawa and Oyo recorded 58 and 46 cases.”

On the other hand, he said, Kaduna recorded the highest number of fatality cases with 53 deaths representing 48 per cent decrease as compared to Dec. 2018.

“Bauchi and Ogun followed in order of magnitude with 44 deaths each while Kano and Oyo had 35 and 29 cases.

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Religious leaders call for tolerance in Gombe

C

hristian and Muslim leaders in Gombe have called for tolerance and peace between adherents of the two religions.

Leaders of the Christian Association of Nigeria (CAN) and Jama’atul Nasral Islam (JNI), made the call in Gombe on Thursday while fielding questions from journalists after a meeting with heads of security agencies in the state.

The religious leaders agreed that no society could progress where religious crises thrive.

Chris Godobe, Vice Chairman, CAN, said the meeting would no doubt enhance tolerance and harmonious relationship between people of different faiths and ethnic groups.

“Adherents of both religions must learn to tolerate each other as they live together.

“As a church, we are committed to building a community in peace as well as respect each other’s faith,” he said.

Godobe said that CAN, as a religious organisation, would do everything possible to ensure sustainable peace in the state and country at large.

Speaking on behalf of JNI, Khadi Usman Baba-Liman said Islam preaches peace, not violence; it promotes harmony among people of different religions.

According to him, both religions believe that the tragic incident which happened during Easter was not organised or premeditated.

Also speaking, Sagir Babawuro, the commissioner, Inter-religious affairs, said the aim of the meeting was to discuss security threats in the state as well as find a lasting solution. NAN

Scavenger charged with theft of car radiator

T

he police have arraigned a scavenger, Ibrahim Ahmed, in an Upper Area Court Mpape, for allegedly stealing an immovable vehicle radiator and cooking pot.

Ahmed, 25, and resident of Mabushi, Abuja, was allegedly nabbed in possession of stolen items.

The prosecutor, S. Nwaforaku, told the court on Friday that the accused was arrested on April 24. Nwaforaku said that when Ahmed was arrested, he could not give satisfactory explanation as to why he had those items in his possession. The offence, he said, contravened the provisions of Section 319(A) of the Penal Code. He pleaded not guilty to the charge.

The presiding judge, Hassan Mohammed, admitted the accused to bail in the sum of N50,000 and one surety reasonable and reliable. The judge therefore adjourned the case until May 22 for hearing

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Monday 06 May 2019

BUSINESS DAY

OPINION

Nigeria must help its industries succeed, but not by cocooning them global Perspectives

OLU FASAN

L

ast week, I wrote in defence of free trade. That won’t have surprised regular readers of this column, who are familiar with my views on open trade. But I pitched the argument explicitly within the context of consumers versus producers, drawing on Adam Smith’s famous words that “consumption is the sole end and purpose of all production” and that “the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer”. Thus, the self-interested, profit-maximising producers are only useful to the extent that they produce things that benefit the society in terms of utility, quality and value, and contribute to national welfare. But I want to take that discussion forward this week, and address the question: Does the society, through government, have a role in providing businesses with what they need to succeed and serve the public interest better?

The eighteen century French physiocrats coined the phrase “Laissez faire et laissez passer” (Let be and let pass) as an economic philosophy that says government must leave economic activities strictly and entirely to the operation of market forces. Today, the physiocrats’ disciples are the libertarians, who believe government should leave economic actors alone on the basis that through the exercise of their freedom of choice and voluntary interactions, a spontaneous order would emerge that would produce optimum economic and social benefits for individuals and the society.

But the libertarian views are not shared by economic liberals even though they have many things in common. For instance, both economic liberals and libertarians share a common belief that the market mechanism,

not government, is most efficient allocator of resources. However, while the libertarian believes that a market will self-adjust if it fails, an economic liberal believes such self-adjustment may be difficult without a limited and targeted government intervention. For instance, would the global financial crisis of 2008 have eventually sorted itself out without the coordinated response of governments? The libertarian would say yes, the economic liberal would say no!

That said, both libertarians and economic liberals believe that government failures are far more common and worse than market failures. Indeed, it is precisely because government interventions often result in failures that libertarians don’t want government to interfere at all in economic activities. But economic liberals believe governments have a limited role under certain conditions. In any case, isn’t the government responsible for providing some of the public goods that the market needs to be more efficient?

Adam Smith, the father of capitalism, was not a purist libertarian or a full-fledged adherent to the laissez-faire doctrine. He believed that government had an important role in supporting the market mechanism as a social institution, and that government policies, such as the provision of certain public goods and the establishment of a system of law and justice, could allow the “invisible hand” of the market to operate more effectively. As Martin Wolf, the Financial Times chief economics writer put it recently, “Adam Smith wants capitalism to operate within a law-governed and competitive market, overseen by an honest judiciary”. Truth is, competition policy, contract and property rights protection, the rule of law and robust public institutions and infrastructure, which are essential for the proper functioning of the market, can only be provided and guaranteed by the government.

So, how can government help businesses to succeed? Well, the answer is clear from the above: to create the policy and institutional environment that improves their productivity and enhances their competitiveness so that they can compete and thrive in the global market. I said “the global market” because, in today’s globalised world, any business in a traded sector that is producing only for its domestic market will struggle

to survive. Unless that business is shielded from foreign competition by its government, which is certainly not an acceptable form of government intervention, it will not survive exposure to foreign competition.

As the saying goes, “industries thrive locally when they can compete globally”.

What’s more, a World Bank study shows that “exporters on average are more productive, capital intensive, larger and pay higher wages than non-exporters”. Thus, it follows that a government that cocoons its industries, rather than challenging them to compete internationally, is not only damaging them but also condemning its people to low-wage jobs. After all, higher productivity leads to higher wages and exporting companies are more productive than non-exporting ones!

Unfortunately, government interventions in Nigeria are not designed to help industries succeed; they are not designed to shake industries out of their lethargy and sclerosis so that they can compete in the global market. Indeed, according to the “Nigerian Industrial Revolution Plan”, published by the Jonathan administration and adopted unchanged by the Buhari government, “the Nigerian manufacturing sector has failed to undergo critical structural transformation”.

Its share of GDP is less than 3%, its contribution to foreign exchange earnings is just about 3% and its shares of employment and government generated revenue are miniscule. Surely, the diagnosis even by the government suggests a sector in deep crisis.

Elsewhere, the focus of the government would be to engineer the structural transformation of the sector through the right incentives; any industrial policy or strategy would not be aimed at protecting the sector but to improve its productivity and enhance its international competitiveness.

But the truth is that Nigeria is not helping its businesses even to survive at home, let alone compete and thrive globally. Yet, unless Nigerian businesses can compete globally, they will struggle in the long-run to survive domestically. According to World Bank study, any government that wants to improve its export performance needs to address three broad determinants of trade competitiveness that affect the ability of industries to participate actively in the export market. First, it must address supply-side factors undermine business competitive-

‘

... a government that cocoons its industries, rather than challenging them to compete internationally, is not only damaging them but also condemning its people to lowwage jobs

ness; second, it must secure market access for its businesses; and, third, it must develop trade promotion infrastructure. Of course, Nigeria doesn’t provide any of these.

Take the first. There are huge supply-side constraints limiting industrial performance in Nigeria. Although Nigerian industries have firm-level technical inefficiency and other internal weaknesses, the supply-side problems they face result mainly from government’s policy and institutional failures.

Surely, in a country where the exchange rates are not stable, energy costs are too high, high and multiple taxes exist, cost of borrowing, i.e. interest rates, is excessive, right skills are not available, and intermediate and backbone services or infrastructure are non-existent or weak, it is difficult to expect industries to be internationally competitive.

But that, sadly, is the situation in Nigeria.

Then, take market access. Nigeria is doing nothing to negotiate trade agreements that would enable its businesses to enter and compete in foreign markets without tariff and non-tariff barriers. By refusing to sign the African Continental Free Trade Area (AfCFTA) and the European UnionECOWAS Economic Partnership Agreement (EPA), Nigeria has shown that it doesn’t value securing access for its businesses in foreign markets. In any case, you can’t seek market access in other countries while restricting or banning imports!

Surely, if Nigeria can’t tackle the supplyside problems facing its industries, if it can’t and won’t negotiate trade agreements to secure frictionless access for them in foreign markets, it’s not surprising that it doesn’t take export promotion seriously by addressing market and government failures that restrict export participation, such as Nigeria’s poor standards and certification regime.

The truth is that Nigeria is not helping its businesses to succeed by developing their capacity to export. Instead, its protectionist trade and industrial policies have simply created zombie industries, with anti-export bias. But that’s not how a government should support businesses!

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

Fuel subsidy: And around we go again?

ECONOMIST

NONSO OBIKILI

I

t seems like every few years we get into the same round of policy discussions. Should we remove fuel subsidies? What will the impact of removing fuel subsidies be? Can we afford to keep fuel subsidies? The arguments are the same this time around.

The different levels of government are strapped for cash. At the same time the same government subsidizes fuel indirectly through the NNPC. The numbers are a bit hazy, but the amount spent on fuel subsidy in 2018 could be anywhere from N700bn to over N1tn depending on which exchange rates you use and how you calculate it. For context, in 2018 the federal government budgeted N650bn for education andN356bn for health. By the way, that is budgeted not actual spending. The questions are the same: should we be spending so much on fuel subsidies as opposed to other things?

The economic arguments against

subsidies are simple. When you subside fuel you really subsidize those who consume more fuel. If a household has a fuel generator and three cars they tend to consume more fuel than a household with no cars and just a small generator. Subsidizing fuel therefore means you subsidize consumption for more affluent households as against the less affluent ones. Not that the poor don’t get any benefits though. They do. Removing subsidies hurt the poor too. But a lot more of the benefits go to the rich.

The main argument therefore is that money spent on subsidies can be better spent elsewhere. Spending that subsidy money on infrastructure, or education, or health is a wiser investment than spending on fuel subsidies that benefit mostly more affluent households. To deal with the effect on the poor, a portion of the subsidies can be directly targeted at the poor. There is also the benefit of incentivizing better use of fuel through more efficiency given that fuel would be more expensive. Finally, removing subsides also reduces the incentives for smuggling and corruption.

The political realities are unfortunately rarely about what makes sound economics. Politicians know that historically, removing subsides has heated up the polity in past. The most popular being the Ojota protests which some argue was a big factor towards the end of the PDP regime of Goodluck Jonathan and the birth of the APC. Politicians therefore www.businessday.ng

‘

... how do you move to more efficient spending on health, education, and so on and away from fuel subsidies if your politicians aren’t up to the task?

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aren’t so eager to remove them. As the popular saying goes, “they don’t want to heat up the polity”. But then the question remains, how do you move to more efficient spending on health, education, and so on and away from fuel subsidies if your politicians aren’t up to the task?

The Goodluck Jonathan administration tried a public education campaign to explain the economics behind the need to remove subsidies as well as proposals to direct the savings to a special fund for infrastructure and education.

The SURE-P program as it was called.

All those efforts were torpedoed when the subsidies were removed on January 1st, cue the protests. Corruption was the problem people said.

In 2016, the President Buhari admin removed fuel subsidies after very serious episodes of fuel scarcity. Scarcity so bad that telecom companies were doubting their abilities to keep masts operational.

There was no education campaign on why the subsidies were to be removed and there was no specific plan for redirecting savings to other more efficient spending. Still there were no protests.

People just accepted the removal perhaps because people were more aware of the economics behind it or perhaps because thearoma of corruption was not present with the Buhari administration.

The morale of the story is there may be no rhyme or reason to how people respond to removal of subsides.

So, here we are again debating the @Businessdayng

same questions. The economics of why subsidies should be removed remains the same. The only question is the politics. Will the politicians find a way to get it done or will we need some more bouts of fuel scarcity to convince the politicians of the need to act? Will there be a plan to ease the pain of removal for those at the lower end of the economic ladder? Perhaps through expansion of the cash transfer programs? Or will we just go on as is, hoping that everything just works out?

Given that we are a democracy, the politicians would be wise to think about the consequences of not acting early.

The best time to inflict some necessary pain on the electorate is when you are a long way from elections. Hoping that people forget about the pain and start to see some of the benefits of the policy action before they get to judge you at the ballot box. The longer the politicians wait, the less likely any policy change will happen, and the more likely things will implode shortly before election day.

Then there may be no hiding place.

Oh, and we should probably stop fixing the price of fuel in the first place.

That is the real source of the constant cycle of expanding fuel subsidies and arguments if they should be kept or removed. Just let prices adjust slowly like they do for goats and yams.

Dr. Nonso Obikili is Chief Economist at Business Day.

Monday 06 May 2019

BUSINESS DAY

39

Live @ The Exchanges Market Statistics as at Friday 03 May 2019

Top Gainers/Losers as at Friday 03 May 2019 LOSERS

GAINERS Company

Closing

Change

N164

N162

-2

DANGFLOUR

N18.95

N17.1

-1.85

0.45

MOBIL

N177.8

N177

-0.8

N4.6

0.4

ETERNA

N4.4

N4.05

-0.35

VALUE (N billion)

N66.05

0.3

ETI

N10.3

N10

-0.3

MARKET CAP (N Trn)

Closing

Change

SEPLAT

N575

N579.9

4.9

CCNN

N14.6

N15.85

1.25

GUARANTY

N33

N33.45

FIDSON

N4.2 N65.75

NB

Company

ASI (Points)

Opening

Opening

TOTAL

DEALS (Numbers) VOLUME (Numbers)

29,212.00 4,270.00 356,331,851.00 2.309 10.979

FBN Holdings shareholders approve final dividend payment Stories by Iheanyi Nwachukwu

T

he shareholders of FBN Holdings Plc have approved for the Board of Directors to pay a final dividend of 26kobo per share. The approval was given at the 7th annual general meeting (AGM) of the holding company (HoldCo) which held on Friday May 3, 2019 in Lagos.

The dividends will be paid electronically on Monday May 6 to shareholders whose names appear in the register of members as at close of business on April 23.

At the meeting, the shareholders received and adopted the audited accounts for the financial year ended December 31, 2018 together with the reports of the directors, auditors, board appraisers and audit committee thereon.

The financial highlights of FBN Holdings Plc for the review yearend show gross earnings of N583.5billion, down by 20percent from N595.4billion in 2017.

Profit before tax (PBT) was N65.3billion in 2018, up by 19.7percent from N54.5billion in 2017.

Customer deposit grew by 10.9percent from 2017 low of N3.143trillion in 2017 to N3.486trillion in 2018. Earnings per share went up by 43.5percent in 2018 to N1.65 from N1.15 in 2017. Return on average equity increased to 9.9percent in 2018 from 7.3percent in 2017.

“In 2018, the increased group-wide collaboration resulted in a remarkable achievement of N20billion in synergy revenues, representing three-year revenue synergy targets for the Group between

2017 and 2019,” said Oba Otudeko, chairman, FBN Holdings Plc. He said the execution of key synergy initiatives by employees to drive collaboration and cross-sell across all operating companies, contributed significantly to the achievement of this impressive result for the Group.

“In furtherance of our cost synergy objective, we recently secured approval of the Central Bank of Nigeria to roll out our Group Shared Services model to drive efficiency and ulti-

mately improve the costto-income ratio of the Group,” Otudeko added.

Looking into the future, he noted that the Group is resolute about delivering on its strategic objectives for the year, “as the Board and Management work together to ensure that we create shareholder value and build strong foundations for the future. We are not resting on our laurels, an our renewed approach to synergy and innovation will be major drivers to unlocking earnings potentials for our Group.”

L-R: Austin Avuru; chief executive officer, Seplat Petroleum Development Company Plc; Maikanti Baru, group managing director, Nigerian National Petroleum Corporation (NNPC),and chief operating officer, Gas & Power of the NNPC and Saidu Mohammed, chairman of the newly inaugurated board of directors of Anoh Gas Processing Company Limited, in Abuja recently.

Nestlé Nigeria grows Q1’19 pretax profit to N19.12bn

N

estlé Nigeria Plc has released its financial results for the first quarter (Q1) ended March 31, 2019.

The company posted revenue of N71billion in Q1’2019 recording growth of 5.2percent over the previous year level of N67.5billion. Gross profit for the period stood at N31.5 billion, compared to N25.8 billion during the previous year.

Profit before income tax (PBT) stood higher at N19.12billion against N13.64billion in Q1 2018.

Profit after tax for the Q1 period under review increased to N12.84billion against N8.60billion in Q1’2018.

In the first quarter of the 2019, Nestlé Nigeria continued its emphasis on creating demand as well as strengthening brand loyalty programs to increase market penetration.

The company also continued to focus on Creating Shared Value for society and its shareholders by delivering high quality nutritious products to consumers and contributing to the growth of www.businessday.ng

the local economy through local sourcing and increasing access to clean drinking water in the communities where it operates.

“We are pleased with the sustained growth of our company, the loyalty of our consumers and the discipline and dedication of our people to provide tastier and healthier foods and beverages,” Mauricio Alarcon, Managing Director/CEO of Nestlé Nigeria Plc said.

Looking forward to the rest of 2019, Nestlé Nigeria

Plc is optimistic that its current business model will keep delivering satisfactory results to our shareholders and to society in line with our Creating Shared Value principle.

“Providing high-quality and affordable nutritious products which meet the needs and preferences of our consumers will remain our priority as we help build thriving, resilient communities through sustainable local sourcing and continuous product innovation,” Alarcon said.

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Global market indicators FTSE 100 Index 7,380.64GBP +29.33+0.40%

Nikkei 225 22,258.73JPY -48.85-0.22%

S&P 500 Index 2,940.00USD +22.48+0.77%

Deutsche Boerse AG German Stock Index DAX 12,412.75EUR +67.33+0.55%

Generic 1st ‘DM’ Future 26,438.00USD +173.00+0.66%

Shanghai Stock Exchange Composite Index 3,078.34CNY +15.84+0.52%

SEPLAT announces inauguration of AGPC reconstituted Board

S

eplat Petroleum Development Company Plc, a leading Nigerian indigenous oil and gas company listed on both the Nigeria Stock Exchange (NSE) and London Stock Exchange (LSE), has inaugurated the reconstituted Board of Directors of ANOH Gas Processing Company Limited (AGPC).

The inauguration took place at the Nigerian National Petroleum Corporation (NNPC) Towers in Abuja last Thursday, and is a targeted at delivering 300 million standard cubic feet of gas per day to the Nigerian market.

Maikanti Baru, Group Managing Director of NNPC inaugurated the reconstituted AGPC Board.

The reconstituted Board reflects the 50 percent: 50 percent shareholding of the Nigerian Gas Company Limited (NGC), which is a subsidiary of the NNPC, and SEPLAT. SEPLAT in a statement explained that: “Following the Partners’ completion of their first equity funding, the Corporate Affairs Commission (CAC) applications were filed and approved for the change of Shareholders and Directors of AGPC in order to reflect the equal shareholding of NGC and SEPLAT.” The members of the re-constituted Board of Directors are: Saidu A. Mohammed (NNPC Chief Operation Officer, Gas & Power); Austin Avuru (SEPLAT’s Chief Executive Officer); Babatunde Bakare (NGC’s Managing Director); Stuart Connal (Managing Director, AGPC; Bala M. Wunti (NNPC Group General Managing, Corporate Planning & Strategy); and GertJan Smulders (SEPLAT’s Technical Director).

Following the inaugural ceremony, the new Board of Directors will @Businessdayng

proceed to hold its first meeting to consider and approve critical project activities.

In his address at the inauguration, the Chief Executive Office, SEPLAT, Austin Avuru, appreciated the Nigerian Petroleum Development Company (NPDC) and the NNPC for the support they have given to the SEPLAT brand over the years as well as the AGPC. “I need to register our deep sense of gratitude for the nine years we have been in partnership with the NPDC. In the last three year under the current leadership of the NNPC, we have had a relationship that is non-acrimonious. For the first time, we are doing what people will probably be doing in the future,” he said.

Avuru, who is also the vice-chairman of the AGPC, noted that in less than 24 months the partnership was formed, substantial funding had gone into the project. He added: “Half of the equity funding is already in the bank; thanks to the GMD of the NNPC for making funding available”.

Responding, Baru said the move was in line with the Corporation’s aspiration of the Gas Master Plan, which is to increase the supply of gas to the domestic market, adding that the ANOH gas project was conceived to deliver that.

The NNPC GMD said: “We believe a private sector-driven project should deliver a mandate faster that a public-led one.

According to Baru, finances should be provided not to only fund projects but to also acquire requisite expertise.

The Chief Operating Officer, Gas and Power, NNPC and chairman of AGPC, Saidu Mohammed, on behalf of the company’s Board of Directors, thanked the NNPC GMD for inaugurating the board.

40

Monday 06 May 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

‘Entrepreneurship is not for everyone’ MONEY MATTERS

Nimi Akinkugbe

I

nternational Workers’ Day, also known as “Labour Day” or “May Day”, is “a celebration of labourers and the working class; it is promoted by the international labour movement.”

Entrepreneurship is so widely promoted and there is much focus on the independent business, that the very concept of working in an office for a monthly salary for your entire career can make one feel inadequate.

Entrepreneurship is not for everyone; we must be mindful of the fact that for many people, a steady monthly income is a comfortable, relatively “safe” place to be. This is their chosen path through which they can thrive, excel and make a significant impact.

Do not leave your full time job if you are not ready. Most people simply cannot afford to do this with the financial obligations that they face. The right step or time is determined by your own unique circumstances. Keep being your best, and keep learning every single day. If you enjoy what you do, there is absolutely no reason why you shouldn’t continue doing it.

You can build a great career by staying in one organization, or by moving to various companies over time. Follow your own path and don’t feel intimidated or insecure by colleagues who resign to run their own businesses. It is important to stay focused on your own goals and not someone elses.

Most people live in the cycle of active income, which ties their time to their income. Active income can be earned only by investing time and effort directly in return for money. The salary you get from work is as a direct result of your efforts. With active income, if you don’t work, you don’t earn.

The road to financial freedom Are you living from pay-check to pay-check? Are you always agonizing about not being able to pay your bills? Financial freedom is attained when you can work because you want to and not because you have to. If you are serious about financial freedom and security, then do embrace the passive income machine.

Passive income generally includes income that is not directly related to your daily activity and

which you can generate without having to actively work for it; in fact, your money is actually working for you with no extra effort on your part, apart from the act of active investing.

Creating a passive income stream does not come easily. It takes time, effort, discipline, and consistency at the beginning of the cycle before it becomes passive. It will involve disappointment, failures and frustration, but if you invest your time and effort upfront, it can be the most fruitful and worthwhile investment of your time, as it continues to pay you long after the work has been completed.

Here are some reasons why Passive Income is so important.

Passive income gives you the freedom and flexibility that comes with not struggling to make ends meet, particularly if the income outpaces your monthly expenses.

With this you have more choices; you can engage in work that you love, or even volunteer.

It reduces anxiety and fear of the future The inability to pay bills or debt can lead to fear, anxiety, depression and a sense of hopelessness.

Just knowing you have that steady stream of income or emergency savings reduces stress.

You can do things that you love We all have things that we’re passionate about but we often have to put them off. Passive income builds that important financial momentum of financial security and freedom that makes it possible for you to support others, to do things. You can get involved in a project that you care

deeply about without worrying about a salary.

Passive income in retirement If you are middle aged, and have been living solely on your salary, your goal should be to use as much of your income as possible from your remaining peak earning years to create sources of passive income, which is often the only source of funds for most retirees.

The wealthy are able to detach the time spent from the money that they earn. They earn passive income from various sources including investment property, dividend income, interest income, business interests, royalties, website advertisements and so on.

Interest Income Interest is a most basic form of passive income. Interest earned on savings account balances, fixed deposits, or bonds is a relatively risk free source of passive income. However interest rates hardly keep apace with inflation, so while it is necessary, it will be difficult for you to grow your capital in this way.

Investment Property Residential or commercial property for investment purposes is a time-tested way of enjoying passive income along side capital appreciation. The location and condition of the property is of significant importance for you to realize stable income far into the future.

Dividend yielding stocks One of the most effective ways to earn passive income is to buy shares in a publicly quoted company that regularly pays dividends to shareholders. A repu-

‘

There is always the very real risk of loss as markets can be volatile and prices can go up and down

table stock broking house will select stocks for you but it is also important for you to develop your knowledge of investing to understand how markets work.

Both stocks and real estate have the ability to grow in value over time. Indeed, capital appreciation is one of the greatest benefits of both of these passive income sources when you sell your asset. The proceeds can then be used to create other assets.

Business interests Some of the greatest sources of passive income have come from people taking a chance on a promising entrepreneur, after thorough due diligence.

In discussing the advantages of investing, one should never ignore the ensuing risk. There is always the very real risk of loss as markets can be volatile and prices can go up and down. A diversified portfolio will help to mitigate this.

It is rare to find people achieving their financial goals and dreams from their salaries and subsequent pensions alone. True financial freedom requires alternative sources of income; passive income. This is the foundation for long term sustained wealth and future financial security.

Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi:

Follow Nimi Akinkugbe on: Twitter and Instagram: @ MMWithNimi, Facebook: ‘Money Matters With Nimi’ Send an email to info@ moneymatterswithnimi.com Or visit her Website www. moneymatterswithimi.com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi.com Twitter: @MMWITHNIMI Instagram: @MMWITHNIMI Facebook: MoneyMatterswithNimi www.businessday.ng

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41

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Monday 06 May 2019

BUSINESS DAY

NEWS IBEDC blames poor delivery on vandals tampering with electricity facility Temitayo Ayetoto

T

he Ibadan Electricity Distribution Commission (IBEDC) says activities of vandals tampering with the Discos’ facility are preventing it from tending to customers’ needs.

John Ayodele, chief operating officer, condemned the erection of houses, shops and relaxation spots under tension cables, bypassing of meters by 70 percent of Nigerians, speaking at stakeholders’ engagement and press parley to mark the World Safety and Health at Work Day. Referencing the theme “Safety and Health and The Future of Work,” he said people must be aware of the dangers of living under power lines and breaching electricity cables, adding that it appeared most Nigerians were willing to break the law than adhere to it.

“Safety is a factor in life and people must know this. We are dealing with people’s lives and we must provide safety for them. The power lines range from 11,000 volts to 33,000 to 333,000 volts and the key issue

is that if you live under hightension wire, you are living under a death threat, which is as good as staying in Kirikiri awaiting the noose of the hangman. People who sleep and find it convenient to do trade under such lines should know that it’s dangerous and they should desist from it,” he said.

He ascribed the practice of lawlessness of most Nigerians to the loss of value system in the country but praised officials of the Nigeria Security and Civil Defence Corps (NSCDC) for being helpful at protecting some of their equipment across its five zones of operations.

They are in various strategic discussions with different stakeholders on how to curb the destruction of their properties and are ready to heighten protection, he said.

He believes everyone including staff members must be safety conscious when working on the electricity poles, as the management has realised that staff also fail to follow outlined rules in the discharge of duties.

This most times cause fatal accident.

Ade Ayileka, chief techni-

cal officer, IBEDC, appealed to report electrical issues to the nearest IBEDC office instead of engaging local electricians who could expose the whole community to risks due to illegal connection and tampering of the cables.

The facilitator of the event, Kemi Agbakaye, Ampak Nigeria Limited CEO, said the success of any business was to ensure safety in all facets, which would go a long way in making IBEDC achieve the ISO 45001 mandate.

World Day for Health and

Safety was initiated by the International Labour Organisation (ILO) to stem the tide 6,300 people who die as a result of occupational accidents or work-related diseases. More than 2.3 million deaths are recorded yearly.

317 million accidents occur

Funding Nigeria SMEs: Bankers’ Committee holds workshops for SMEs ISRAEL ODUBOLA

I

n line with the Federal Government’s commitment to growing small and medium enterprises (SMEs), the Central Bank of Nigeria (CBN) through the Bankers’ Committee has introduced the `Funding Nigeria SMEs` initiative as a platform for SMEs to access loans, funds and grants to grow their businesses.

According to Abiodun Tomomero of Sterling Bank, one of the participating banks, “This workshop is aimed at deepening the Federal Government’s financial inclusion process and creating the necessary awareness and public enlightenment across three states of the federation on how SMEs can access funds, loans and grants available

through the Funding Nigeria SMEs initiative.”

He said the sensitisation workshop billed to hold in the cities of Ibadan on May 16, Kaduna, 23, and Port Harcourt on the 30, respectively, was a followup to earlier workshops in Lagos, Kano and Aba. These workshops shall be anchored by experts from Deposit Money Banks, Ease of Doing Business team, Bank of Agriculture, Bank of Industry and SMEDAN. He encouraged SMEs, particularly those in agro business, farmers, local manufacturers and fabricators, fashion and textile, exporters, IT, creative sector and general commerce to avail themselves of the opportunity to participate by registering on www.fundingnigeriasme.com

Buhari arrives Abuja after 10-day private visit to UK … to meet UN General Assembly President Monday Tony Ailemen, Abuja

P

resident Muhamamdu Buhari arrived Abuja on Sunday after a 10- day private visit to the United Kingdom.

President Buhari stepped down from the aircraft at the Presidential Wing of the Nnamdi Azikiwe International Airport at 6.24pm.

He is expected to receive the President of the United Nations General Assembly, Maria Espinosa, on Monday. The visit will be the first official assignment the President will be performing after a 10-day rest in the UK. Espinosa will be paying a day official visit to Nigeria on Monday, according to information

from her spokesperson, Monica Gravley.

The President of the UN General Assembly is also expected to meet with students of the University of Abuja, where she will deliver a speech on “the role of multilateralism and how to respond to global challenges in a fast-changing world.”

She will later meet with UN officials in the country and take part in a discussion with women on their role in promoting multilateralism, which seeks to bind powerful nations, discourage unilateralism (one-sided action) and give small powers a voice and influence they could not otherwise exercise. www.businessday.ng

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@Businessdayng

on the job annually; many of these resulting in extended absences from work. The human cost of this daily adversity is vast and the economic burden of poor occupational safety and health practices is estimated at 4 percent of global gross domestic product each year.

Monday 06 May 2019

BUSINESS DAY

43

NEWS

Pan Ocean’s 67km pipeline portends higher revenue for government SOLA BELLO

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he Amukpe-Escravos Pipeline Project (AEPP), scheduled to be unveiled for use in June 2019 by Pan Ocean Oil Corporation, is a game changer that portends higher government revenue, analysts say.

The 67-kilometre pipeline, jointly initiated by the Nigerian National Petroleum Corporation (NNPC) and Pan Ocean, will evacuate crude oil from the northern fringe of the Niger Delta to Escravos export terminal.

Before the completion of the AEPP, the major evacuation pipeline available to producers was the Trans Forcados Pipeline (TFP), which was plagued by

outages, disruptions and losses. Frequent ruptures and vandal disruptions made the pipeline unreliable, especially in the creeks and swamps, leading to huge revenue loss for Nigeria.

According to Stanley Mudjere, an energy analyst and lawyer, “It is always good to have an alternative, especially in the oil and gas industry that has become more volatile in Nigeria.

“If you consider the fact that the Trans Focardos Pipeline has suffered so much outages you know that an alternative is a welcome development.

This pipeline will serve companies including Seplat, NPDC, Enageed, Summit, Newcross Petroleum, Continental Oil & Gas Pan Ocean PSC and boost government revenue.”

In the period between February

2016 and early 2017, disruptions on the Trans-Forcados Pipeline forced oil producers to lock-in output, a situation that caused the Nigerian government considerable budgetary strains, and for crude oil producers, lean bottom lines.

Trans-Forcados Pipeline was shut down for 305 days in 2016, and more than 182 days in 2017. In the 20062007 and 2009 periods, total crude deferred due to downtime of TransForcados Pipeline by Pan Ocean alone was 16.2mmbbls, an equivalent of $812million (assuming a price of $50/ bbl). In the 2016-2017 period, total crude deferred due to downtime was 3.7mmbbls, equivalent to $188 million. These losses applied to most of the crude producers who are expected

Police intercept truckload of poisonous ‘ponmo’ JOSHUA BASSEY

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agos Police Command has intercepted a large quantity of poisonous cow skin popular called ‘ponmo,’ in Igando area of Lagos State. Six suspects have been arrested in connection with the unwholesome food.

Spokesperson of the Lagos Police Command, Bala Elkanah, said on Sunday that the seizure and the arrests were made on Saturday, May 4, following a tipoff and intelligence gathering.

“Acting on the strength of a information from a credible source that a truck load of cow skins, popularly called ‘Ponmo,’ suspected to be poi-

sonous were heaped in a warehouse at No 9 College Road, Igando.

A team of police officers led by the divisional police officer (DPO) in Igando, mobilised to the scene.

The huge pillage and pyramid of poisonous ponmo and the chemicals used in the preservation were recovered.

“One TATA truck with registration number AKD-375-XB, which was used in conveying the goods was impounded,” Elkanah said.

Elkanah said officials of Lagos State Ministry of Health were contacted and after due examination, the cow skins were confirmed to be poisonous and not fit for human consumption.

Six suspects, including Adelo-

to use the Amukpe-Escravos pipeline in the near future.

Buchi Ejiogu, an energy analyst with an investment bank in Lagos says, “in the past we say a drop in government revenues as a result of disruptions, with this new pipeline, those fears are alleviated in the location of the pipeline.”

The new pipeline system was designed to minimise vandalism and mitigate loss of revenue occasioned by ruptures and vandalism. It has capacity to deliver 160,000 barrels of crude oil per day and was constructed over an 8-year period using Horizontal Directional Drilling (HDD) technology.

Horizontal Directional Drilling (HDD) technology is an installation

method, which ensures minimal ecological and environmental disruption. The entire length of the AEPP is several feet underground to prevent interference of vandals, farming activities and construction. It is the longest of its kind in Africa.

Pan Ocean also plans to unveil two other projects in June: the OvadeOgharefe Gas Processing Plant Phases I & II and OML 147 Early Production Facility at Owa-Alidinma. Speaking on the development, Collins Akinkugbe, General Manager (OML 147 Asset), said “with the support of our joint venture, financial and technical partners, our team delivered these world-class projects safely and with the highest consideration for environmental impact.”

13 killed as Russian plane catches fire mid-air wo Yinka (male), 50 years; Olawumi Onabanjo, (female), 40 years; Omowumi Wasiu (female), 43 years; Adeshokan Taiwo, 43 years; Iyabo Oluwa (female), 38 years, and Taye Kazeem, 40, were arrested in connection with the case.

The Commissioner of Police Lagos State command, Zubairu Muazu, assured Lagosians that the Police Command was determined to continually protect life and property of the people as well as preservation of public health and safety as enshrined in the Constitution. Investigation is ongoing to ascertain the source and destinations of those poisonous food items, as the suspects will be charged to court.

IFEOMA OKEKE

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t least 13 people on board a Russian Aeroflot passenger plane were killed on Sunday when the plane caught fire mid-air and made an emergency landing at a Moscow airport on Sunday, Russian news agencies reported.

Television footage showed the Sukhoi Superjet-100 making an emergency landing at Moscow’s Sheremetyevo airport with much of the rear part of the plane engulfed in flames.

Many passengers then escaped via the plane’s emergency slides that inflated after the hard landing.

Medical workers told the TASS news agency at least 13 people had been killed and that others remained unaccounted for.

Russian news agencies said the plane, which had been flying from Moscow to the northern Russian city of Murmansk before turning back, had been carrying 78 passengers. It was unclear how many crew had been on board.

Russian investigators said they had opened an investigation and were looking into whether the pilots had breached air safety rules.

The cause of the fire was not immediately known.

The Interfax news agency reported that a rescue team was combing through the charred wreckage of the rear of the plane looking for survivors.

The Flightradar24 tracking service showed that the plane had circled twice over Moscow before making an emergency landing after about 45 minutes.

The Nigererian Code of Corporate Governance, 2018 Principle 1 - The role of the board Bisi Adeyemi

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he Code has been long awaited and it is my hope that it will play a unique role in enthroning higher standards of corporate governance and ethical practices in our business environment, helping to rebuild public trust and investor confidence in the Nigerian economy. The implementation of the Nigerian Code of Corporate Governance 2018 is worthwhile and will promote corporate success and economic growth, lower cost of capital and help minimize wastage, corruption and mismanagement” HE Vice President Prof Yemi Osinbajo, SAN, GCON at the unveiling of the Nigerian Code of Corporate Governance 2018.

Recently, the Financial Reporting Council formally unveiled the Nigerian Code of Corporate Governance 2018. The Code is intended to institutionalize corporate governance best practices and promote public awareness of essential corporate values and ethical practices.

The Code is a principles-based (28 Principles) Code and the imple-

mentation philosophy is “apply and explain”. The principles are scalable and adaptable as the size and complexity of a company would permit. The Code will apply alongside sectoral codes and where there is a conflict, the stricter provisions will apply. Companies are required to start reporting compliance from January 1, 2020.

The Code applies to public companies/entities and “all regulated private companies being companies that file returns to any regulatory authority other than the Federal Inland Revenue Service (FIRS) and the Corporate Affairs Commission (CAC)”.

Principle 1 – “A successful Company is headed by an effective Board which is responsible for providing entrepreneurial and strategic leadership as well as promoting ethical culture and responsible corporate citizenship.

As a link between stakeholders and the Company, the Board is to exercise oversight and control to ensure that management acts in the best interest of the shareholders and other stakeholders while sustaining the prosperity of the Company”.

Companies, notwithstanding the legal personality bestowed on

them, still require human hands to function effectively. In coordinating these hands, the company requires directors who jointly act as a Board with skills, commitment and integrity. A director is described as someone duly appointed by the Company to direct and manage the affairs of the Company.

The emphasis on the entrepreneurial and strategic leadership role of the Board underscores the expectations of an effective Board.

Increasingly, Boards are expanding their roles beyond conventional governance to include strategy development, talent management, and shareholder relations. Leading Boards recognize that they bear responsibility for allocating resources, and to do so competently, directors must be increasingly aware of the strategic options available to the company and take a lead role in actualizing these. The Board is expected to provide direction and guidance based on the skills, experience and influence of individual directors.

Placing the responsibility of promoting Ethical Culture on the Board clearly underscores the primacy of culture in achieving the objectives of delivering stakeholder value and

long-term business sustainability.

The Board is expected to set the appropriate tone, define the values to be adopted company-wide and ensure that there is a process in place for enthroning and assessing corporate culture. Responsibility for compliance and responsible corporate citizenship is unassailably that of the Board.

The Code considers the Board as the company’s central and highest governing body. This reinforces the fact that the decisions of the Board are paramount. The position of the Board of a subsidiary company in relation to the holding company sometimes tests the supremacy of the Board. The existence of a shadow director (or a significant shareholder who exercises considerable influence on the Board) also impugns the supremacy of the Board.

To clearly delineate it responsibilities, the Code prescribes the codification of a Board Charter and highlights sixteen recommended practices as responsibilities of the Board which should be enshrined in the Charter. These include acting in the best interest of the Company at all times; providing Strategy & Direction, oversight of Risk Management and internal control; ensuring

adequate Succession Planning and oversight of IT governance.

Clearly, the Board is expected to do more than just monitor the activities of Management in performing its oversight. The business of being a Director is a serious one and Directors are enjoined to recognize this.

“Why does board leadership matter? Because the fate of enterprises, employees and shareholders so often hangs in the balance. A Board’s leadership can create value, and its absence can destroy value”. Boards that Lead – Charan, Carey & Useem.

Bisi Adeyemi Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

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news Partnership with key banks in vehicle finance scheme to commence Q2 ending – NADDC …Stanbic, Wema, Jaiz in focus HARRISON EDEH, Abuja

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orking class Nigerians will soon be able to purchase vehicles without having to make 100 percent out-of-pocket payment.

This is as the National Automotive Design and Development Council (NADDC) is finalising terms on a finance scheme that will see an increase in purchasing of locallymade vehicles with Stanbic IBTC, Wema Bank and Jaiz Bank.

The agency says the initiative will aid easier purchase of vehicles by Nigerians, while also enabling the growth of the Nigerian auto-policy. The auto policy places high premium on locally-made vehicles as well as a finance scheme that makes purchase of vehicles easier for Nigerian consumers.

Jelani Aliyu, director-general, NADDC, confirmed the development at the weekend during the launch of latest Honda H-RV automobile vehicle.

Speaking on how the automotive bill would aid Nigeria’s auto industry, he said, “Two things; we need to have the National Automotive Policy be-

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come a law. As you are aware, the auto policy is a set of fiscal incentives, which have been developed to support local production of vehicles.”

According to Aliyu, “The only way we could ensure that Nigeria continues as a successful nation is to provide industrialisation and jobs. The only way we could provide jobs is to grow industries while supporting local and international investors to invest and produce in Nigeria.”

The Automotive Policy is so important, as it supports local production. This is important as investors from Japan are in Nigeria producing in Nigeria.

We are working together with the National Assembly to ensure the automotive policy becomes a law, he stated.

The director-general informed of the government plans to commence construction of seven automotive training centres in the difference geo-political zones across Nigeria, so that young Nigerians could be trained on how to maintain vehicles with some measure of sophistications, as they have some embedded ICT features in it.

In his remarks on the newly

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launched vehicle, he said, “This is the right kind of vehicle that is perfect for this environment in terms of higher ground clearance with very good features.

“This vehicle is also key in our vehicle finance scheme, which we have been advocating for. In other climes, with better vehicle finance scheme, you put down‎ 10 percent of the money, you get the car and complete the payment according to the design of the scheme.”

Remi Adams, lead sales and marketing manager of Honda Automobile Western Africa Limited, said the launch of the product was an indication of the of the company’s support for the automotive policy.

“Basically, all the assemblers for now are at the level of Semi Knocked Down (SKD) 2 level. The local content from the point of view of Honda is more on the area of transfer of technology.

“A lot of Honda team came down from Japan to train Nigerian men, and the body of the vehicle to the engine where all assembled here in the country.

Honda under this new launch has contributed to the area of transfer of technology,” he said.

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news New oil scramble set to begin for...

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combination of reasons

ranging from ageing Joint Ventures (JV) assets to crude oil theft, insecurity, hostility from host communities, increasing costs of oil and gas projects and unfavourable government policies.

All these, the sources say, are making it more expensive for IOCs to operate such onshore assets.

Nigeria currently has a total of 390 oil blocks that have been discovered, and only 179 of them have been awarded to individuals and corporations, while 211 blocks are yet to be awarded, according to the Department of Petroleum Resources (DPR).

Out of the 179 oil blocks awarded, 90 belong to Nigerians, while the remaining blocks are owned by foreigners.

International Oil Companies (IOCs) account for more than 70 percent of the nation’s daily crude production.

Naturally, a wave of divestment of oil and gas assets previously held by these IOCs presents a unique investment opportunity for Nigerian in-

dependents, especially Seplat Petroleum Development Company plc, Neconde, First Hydrocarbon Nigeria Ltd, Niger Delta Western, Shoreline and Elcrest Exploration and Production Nigeria Limited, to move from marginal to major players.

Stakeholders believe these unique opportunities can become a reality as government setsanambitioustargetofrealising 4 million barrels-per-day oil production and 40 billion crude oil reserves in the near future.

“It’s more profitable for IOCs to sell onshore assets to smaller companies rather than keeping them and paying heavily for them. Remember IOCs also have deepwater (offshore) assets that give them more profits,” Abayomi Fawehinmi, an oil expert in a Lagos-based oil firm, said.

Fawehinmi believes quite a number of indigenous oil and gas firms can buy these assets.

Famfa, Nigeria Petroleum Development Company (NPDC), Consolidated Oil Limited, Yinka Folawiyo Petroleum Company, among others are said to be on the list of top contenders to acquire

the assets.

According to data from DPR, Royal Dutch Shell, French oil company ELF, and Italian Agip currently hold the highest onshore assets which include OMLs 11, 17, 20, 21, 22, 23, 25, 27, 28, 31, 33, 36, 32, 35, 43, 45 and 46. American multinational Chevron owns OML 51 and 49, while China’s Addax owns OML 124.

“As long as JV assets are going old, unresolved issues concerning PIB and a new gas regulation against gas glaring which forces IOCs to pay more fine compared to local firms remain, IOCs will keep selling onshore assets because it’s more expensive and troublesome to produce from them,” Fawehinmi told BusinessDay. Adeoluwa Eweje, an oil and gas analyst at Afrinvest Securities Limited, expects a trend where more IOCs will divest from onshore assets due to insecurity, low commercial viability and hostility from host communities.

“IOCs are more concerned about the commercial viability of an asset, not whether it’s producing or not,” he said.

There are also concerns abouttheabilityofthelocalplayers to effectively and efficiently

operate the divested assets.

“A majority of the local players are not disciplined and they also lack corporate governance, especially after making money,” Eweje told BusinessDay. Eweje noted that apart from Seplat, a majority of the local players don’t have the capital or technical expertise to operate onshore assets.

“All they have is connections which was what we saw when marginal fields were handed over to them,” he said.

Fawehinmi said the sales of the onshore assets by IOCs could be an advantage to the country on the short run with higher production which always happens when there is a change of ownership; for example, when Seplat took over Shell’s asset.

“However, oil is a longterm business, not short term,” he said.

But the IOCs’ attempt to sell their assets to local companies has not always been smooth, particularly where bureaucracy, difficult operating or security conditions feature prominently.

Buoyed by high oil price and the need to boost local content in the nation’s oil

industry, many banks doled out loans to indigenous players for the acquisition of assets being divested by IOCs such as Royal Dutch Shell, Chevron and Total.

Seplat successfully bought assets such as OMLs 4, 38 and 41 from Shell in 2010 which were producing 15,000 barrels per day (bpd) but are today producing 80,000 bpd.

Between 2010 and 2018, a number of indigenous companies including Starcrest Energy, Aiteo, Oando, Seplat, Eroton, First E&P, Neconde, Midwestern, Notore Lekoil, PanOcean, Newcross and Shoreline threw in billion-dollar cheques in their scramble for assets divested by major multinational oil firms which have recorded mixed performance.

Oando Energy Resources, a subsidiary of Oando plc, incurred a $2.5 billion debt after the 2014 acquisition of oil and gas assets from US giant ConocoPhillips, while Seven Energy, a Nigerian company founded in 2004, ran into troubled waters after several defaults on its debt servicing obligations.

Government’s recent directive regarding the transfer of operatorship of an onshore asset OML 11 from Shell to

Nigerian Petroleum Development Company (NPDC) Ltd generated a lot of ripples in the industry because NPDC was seen as unfit to develop and produce the oil fields. Besides, NPDC already has 32 prolific oil fields in the Niger Delta.

“Some time ago, one of the innovations brought into oil lending was reserve-based lending, which implies using your oil reserves to secure loan, but then again, its success was tied to volatility in international oil price,” said Eweje of Afrinvest.

As a result of the oil price slump, the indigenous firms that bought the assets could no longer generate revenue at the levels expected when they agreed to loan terms, putting themselves at risk.

In September last year, the Central Bank of Nigeria revoked the operating licence of Skye Bank and created a bridge bank, Polaris, to take over its assets and liabilities.

Skye Bank was one of the banks that took advantage of the funding opportunities created by the divestment by IOCs before the oil price slump.

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Fraudsters shift focus to mobile...

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types of mobile and online

bankingfraudin2019,”saidSam Okojere, director, payment system management department, Central Bank of Nigeria (CBN).

Okojere said Other Financial Institutions (OFIs), digital wallets and remittance players are prime targets for cyber criminals seeking quick monetisation of stolen credentials.

“But that does not mean we should give up on the fight. We have to galvanise efforts and resources to ensure users are who they say they are,” he said.

According to the 2018 annualreportoftheNigeriaelectronic Fraud Forum (NeFF), mobile channel led other channels in fraudwithN599millioninactual loss on 11,492 transactions.

The increase in mobile channel fraud mirrors the rise in mobile money adoption in the country.

The volume of mobile payments increased by 14.0 percent to 27.6 million in the first half of 2018, from 24.2 million

in the corresponding period of 2017. Similarly, the value of mobile payments increased by 7.0 percent to N594.9 billion, from N555.8 billion in 2017, according to the CBN’s economic report for the first half of 2018.

The rise was due to increased acceptance of mobile payments as an easier alternative, the CBN said.

Fraud in mobile channel in 2018 was followed by Automated Teller Machine (ATM) with 9,471 transactions and actual loss of N497 million, according to the NeFF report.

Point of Sale (PoS) recorded actual loss of N301 million in 1,734 transactions, while 272 across counter transactions recorded actual loss of N202 million in value terms.

Overall,depositmoneybanks recorded a total of N2.081 billion in actual loss value on 38,852 transactions in 2018, as reported on the anti-fraud portal.

Banks lost a total of N163 million in value terms on 9,972 transactions through the web,

37m SMEs on target as FG, Procter & Gamble...

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expected to make available relevant groups, partners to scale up programme support,

sensitise as well as provide venue for other logistics for the training.

She clarified further that the government bears no

$1.5bn Lekki seaport: Analysts proffer...

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existing tank farms and refineries should use railway or pipelines as alternative means of evacuating products.

When these are done, they believe Nigeria’s first deep seaport will become a destination hub for trans-shipment and local cargoes without recording incidents of traffic congestion

that currently obstructs free movement of cargo out of the nation’s major seaports.

Ebubeogu advised promoters of port projects in Nigeria to learn not to depend on port plan but port master plan.

“Port plan covers the jurisdiction of the port while port master plan covers the port itself and its maritime industrial environment. For www.businessday.ng

L-R: Joe Abah, country director, DAI Nigeria; Frank Nweke, former minister of information; Bright Helms,vice president, DAI, Technical Services; Judit Ogedegbe, executive director, DAI Nigeria, and Tayo Aduloju, moderator, during the DAI roundtable and biik launch in Abuja. Pic by Tunde Adeniyi

3,714 transactions valued at N93 million through internet banking, 14 transactions valued at N19 million through cheques, 1,996 transactions

valued at N14 million through e-commerce, and 187 transactions valued at N103 million through other channels.

Johnson Chukwu, man-

aging director/CEO, Cowry Asset Management Limited, said banks and mobile money operators have to find ways to mitigate fraud, adding that

rising incidence of fraud will discourage users.

cost in the setting up of the academy. The duration for the project is five years, she added.

Procter & Gamble, according to the MoU, is expected to facilitate human resource,

alongside access to finance, in addition to mentorship in the SME academy.

Iluyemi, on her part, said the need to equip the SMES with the right skills and capacity to enable them standardise

their operations and raise their competitiveness globally informed the company’s decision to go into this partnership with the government.

“Procter & Gamble has created in this process of sup-

port to SMES about 300 SMEs. And as an academy, we have to provide soft business skills, excellent book-keeping skills, and providing them with market access as well as possible areas to divest,” she said.

instance, if the NPA has had the vision of port master plan at the time Apapa port was built, the whole of Creek Road and Wharf Road would have been secured and owned by the NPA,” Ebubeogu said.

“If the NPA had Creek Road, there is no way the authority would have allowed two tank farms to be located on Creek Road. We must have port areas where the port managers collaborate with the

city administrators to regulate traffic,” he added.

Citing the America example, Ebubeogu said the World Trade Centre and its environs belong to the Port of New York and it enabled the US port authority to regulate the tenancy such that the traffic flow from the city is not in conflict with that of the port.

Folarin said there is no port corridor in Nigeria because there are several residential

houses located 10 metres from the port. He suggested that new ports like Lekki should have ring road exclusively reserved for port operations.

“If we keep using single mode of transportation without rail and waterways, the roads will fail due to the pressure on them. For example, when Apapa-Oshodi Expressway was constructed, it was conceived that the road was meant to serve the Tin-Can

Island Port, but today the road has become a municipal traffic area used by residents,” he said.

According to Folarin, a recent study carried out shows that about 1 million vehicles transit from Oshodi through Apapa to Lagos at peak period, showing that new ports like Lekki should plan for future growth.

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news ANALYSIS

Buhari and Nigeria sports: A shared passion Fred Edoreh

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s we bend another circle in governance, the sports community can be assured of President Muhammadu Buhari’s passion and commitment to the stability and progress of Nigerian sports.

He demonstrated this early in his first tenure when he called up the 1985 class of the Golden Eaglets who won the first ever FIFA U-16 World Championships (now U-17 World Cup), to redeem the pledge he made to them as then Head of State, but which was abandoned while he was out.

In January 2016, not only did he go 30 years back to keep his word, he also assembled and rewarded other athletes who made Nigeria proud before his return as President.

These included the 2015 World Wrestling Championship team, D’Tigers who won the FIBA 2015 Male Afro-Basketball, 2015 FIBA Africa Under-16 Female Champions, medallists at the 2015 IPC Asian Open International Powerlifting Championships, the 2015 CAF Under-23 Cup Of Nations Champions and the victorious Golden Eaglets of the 2015 FIFA World Cup. Then followed series of Aso Rock receptions to reward, honour and inspire various national teams throughout the first term.

President Buhari dutifully encouraged our athletes bearing in mind that “nothing unites Nigerians more than (sports)” and that they carry “the passions, emotions and feelings of (our) over 180 million people.”

Perhaps the most profound demonstration of his commitment to best interest of our sports was his intervention in the crisis that bogged the Nigeria Football Federation after the 2018 World Cup, when he stepped out as a true leader, distinguishing himself as a global citizen to reverse the impending ban on Nigeria by taking a definite stand on respect for FIFA statutes.

The intervention brought stability which unfettered the NFF to pursue its “vision of building a sustainable football culture” and the delivery of its “mandate of promoting sports in Nigeria as a key economic factor.”

A major objective of the NFF is to attain 100% self-financing on which it presently has achieved 60% from the 20% it was before the current board. This is aimed at freeing up funds for the government to service critical areas like education, health and infrastructure. A number of brands and organisations such as Aiteo Group, Coca-Cola, Zenith Bank, Nigeria Breweries, WAPIC, Bet9ja and others have come to play on this score.

The most critical intervention was Aiteo’s signing in 2016 of a 5-year sponsorship worth USD8.2m (N2.9 billion) as Optimum Partner of the NFF. The partnership is enabling the NFF to pay the salaries of the Super Eagles coach and technical crew as well as that of all other national teams for the duration of the relationship, thus putting paid to the hitherto recurrent headache about payment of coaches’ salaries.

Interestingly, the sponsorship also covered the outstanding of

salaries owed coaches even before the entry of both the Pinnick board and Aiteo.

Aiteo’s offer of N50m bonus per goal to the Super Eagles during the qualifiers and the 2018 World Cup proper was especially lifting for the team as it not only became the first team to qualify but so with a match to spare, a sharp departure from the past.

It has also through its sponsorship package revived the Aiteo Cup (formerly Challenge and FA Cup), bringing back the thickness and glamour of the competition, which provides a platform for thousands of youths across the country.

The company went further to bankroll both the NFF-Aiteo Football Awards as well as the CAF-Aiteo Awards as a platform for the inspiration of both elite and budding stars.

This coming from another Nigerian company, after Glo, elicits a huge impression on the African and global community about the strength of our nation in world sports.

Its founder, Benedict Peters, explained this aptly during the signing ceremony: “It is important for Nigerian companies to share their success. As Nigerian companies grow, I believe the benefits should be spread as widely as possible.

Aiteo Group is as passionate about leadership as Nigerians are about football...to reach a shared goal of a more prosperous Nigeria, increasingly seeing global success and competing with global players.”

It is remarkable that Benedict Peters shares with President Buhari the passion for Nigerian sports as a uniting factor for the citizenry and has chosen therefore to act as a matter of responsibility and patriotism to our nation.

The sustenance of relationships like Aiteo’s is necessary for the advancement of our sports and it makes strategic sense in nation building for President Buhari to help sustain the continued commitment of such notable supporters. This can be done through simple official commendations, a thank you call, a Presidential Dinner and national honours.

This imperative is almost urgently so given the nature of the 2019 and 2020 sports calendar in which the Super Eagles will be at the Nations Cup, the Super Falcons will be at the Women’s World Cup, the Golden Eaglets will be at the U-17 World Cup, Team Nigeria will be heading to the Tokyo 2020 Olympic and Paralympic Games with several qualifiers to engage in before then, all requiring funds which we know the sports ministry budget cannot sufficiently meet in the face of other competing demands.

Indeed, there is so much deficit in our sports architecture for which government needs to help in mobilising private sector investments.

Many of our primary, secondary schools and communities are without sports facilities and equipments to raise our kids and even ensure active healthy life for adults, sports federations, especially Para Sports, which enhances the integration of persons with disability into normal life and which provide us sure medals at the Summer Olympics are in dire needs, support for elite athletes development across all sports is lacking. www.businessday.ng

FEC approval of N169.74bn contracts for road construction nationwide to expand economy - Fashola HARRISON EDEH, ABUJA

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he Federal Executive Council (FEC) has approved the award of N169.74 billion contracts for the construction and rehabilitation of 10 roads across the country.

Babatunde Fashola, minister of power, works and housing, confirmed in a statement on Sunday that the projects would enhance Federal Government’s objective of improving transportation infrastructure and restoring the nation’s road network as part of implementation of the Federal Government’s Economic Recovery and Growth Plan.

The approval, Fashola said, is sequel to a memorandum presented

to the Council by the Minister on May 2, 2019, covers the rehabilitation of the Umuahia (Ikwuano)-Ikot Ekpene Road, Umuahia, Umudike in Abia State, rehabilitation of CalabarOban-Ekang Road (Section1) in Cross River State, construction of Yola-Fufore-Gurin Road in Adamawa State, rehabilitation of AdoEkiti–Igede-Aramoko-Itawure Road in Ekiti State, and rehabilitation of Funtua-Dandume-Kaduna State Border Road in Katsina State.

Others, according to the memorandum, are the rehabilitation of Makurdi-Gboko-Katsina-Ala Road (Yandev-Katsina-Ala Section) in Benue State, rehabilitation of Old Enugu-Onitsha Road (Opi JunctionUkehe-Okpatu-Aboh Udi-Oji to Anambra Border), rehabilitation

and Dualization of the 74km (approximately) Aba-Ikot Ekpene Road in Abia/Akwa Ibom states, construction of 4-kilometre Township Road in Gaya Local Government Area of Kano State, and rehabilitation of Billiri-Filiya-Taraba State Border Road in Gombe State.

While the Umuahia (Ikwuano)Ikot Ekpene Road is awarded to Messrs Hartland Nigeria Limited/ Raycon and Company Nigeria Limited in the sum of N13,296,283,958.68 with a completion date of 48 months, the Rehabilitation of Calabar-ObanEkang Road (Section1) in Cross River State is awarded to Messrs Setraco Nigeria Limited in the sum of N27,781,851,866.55 with a completion date of 24 months while the construction of Yola-Furore-Gurin Road

(approximately 56km) is awarded to Messrs Wiz China Worldwide Engineering Limited in the sum of N13,643,670,884.81 with a completion date of 12 months.

The rehabilitation of Ado-Ekiti– Igede-Aramoko-Itawure Road in Ekiti State (35KM approximately), according to the memorandum, is awarded to Messrs Deux Projects Limited/Hitech Construction Company Limited at N14,838,220,269.00 with a completion period of 30 months, while the Rehabilitation of Funtua-Dandume-Kaduna State Border Road in Katsina State is awarded to Messrs Rabash Enterprises Nigeria Limited/Afdin Construction Limited in the sum of N9,887,040,586.50 with a completion period of 24 months.

L-R: Simon Worrell, global medical director; Michelle Elmore, head, business development international healthcare; Mike Caidan, sales director, all of Collinson; Sani Hamid, chairman, Royal Exchange Healthcare; Peju Adenusi, GM, Lagos State Health Management Agency, and Emenike Onwulatu, MD, Royal Exchange Healthcare, at the Royal Exchange Healthcare/Collinson Smart Health International medical product launch in Lagos.

Pic by Pius Okeosisi

Kaduna dry port: FG to commence cargo delivery by rail on Tuesday Stella Enenche, Abuja

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igeriangovernmentsaysit will commence cargo deliverybyrailtotheKaduna Inland Dry Port on May 7, 2019.

Minister of transportation, Rotimi Amaechi, will flag-off the service at the facilities premises in Kakuri, Kaduna State.

According to a statement by Tahir Idris, a special assistant to the executive secretary, Nigerian Shippers’ Council (NSC), Hassan Bello, the Council will also hold an interactivesessionwithallrelevant stakeholders immediately after the event.

The interactive session with the stakeholders has the theme “optimising the Kaduna dry port as key to Nigeria economic diversification.”

The stakeholders’ interactive programme/clinic will witness presentations on the following topics: “Inland Dry Port development and management – key to diversification of Nigeria’s economy; The role of Nigerian Custom Service in facilitating the operations of inland dry ports; promotion of exports and Kaduna Dry Port as key to Nigeria’s economic diversification and prospects and operational challenges of Kaduna inland dry port.”

Commenting on the flag-off, the Executive Secretary said the rail facility will lead to the full optimization of the Kaduna inland dry port adding that it will also drive down significantly the cost of transporting containers from Lagos to Kaduna.

“So much cargo is coming to Kaduna now but on trucks. It takessomuchmoneytotransport goods by trucks from Lagos to Kaduna. If it is by rail, the cost will drop by over 60 percent,” he said.

He also said transporting containers by railway would also eliminate the risks of diversion, goods tampering and also reduce the risks of accidents by over 95 percent, thus driving down the cost if insuring cargo to Kaduna as a point of entry.

Bello also noted that with reduced cost of transporting the goods, the cost of goods would reduce, which will further curb inflation.

According to Bello, in addition to the above, because a lot of containers will be transported by rail,hundredsoftruckswillbetake offtheroadsthusleadingtolonger roads life span and less accidents due to activities of truck drivers.

This should also reduce significantly the traffic jam on Apapa road in Lagos he noted.

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LASPARK to enforce nonbeautification of setbacks SEGUN ADAMS

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heLagosStateParksandGardensAgency(LASPARK)has declared its determination to enforce the law against recalcitrant corporate organisations and property owners that have refused to complywiththestate’sprovisionon beautification of setbacks.

This assertion was contained in a statement issued by Bilikiss Adebiyi-Abiola, general manager of the Agency, stating that it has become imperative to ensure total compliance with the State’s Greening Law in order to appreciate the value of the environment.

“According to Section 19 of the Law establishing LASPARK, all tenement owners and occupiers shall landscape and beautify the perimeter areas of their properties, the neglect, failure and refusal of which shall warrant the penalty of Two Hundred and Fifty Thousand Naira (N250,000.00) or such sums astheStateshallincurindoingsame on behalf of the tenement, or six (6) months imprisonment or other noncustodial sentence,” AdebiyiAbiola emphasised.

She said the Agency’s resolve was to curtail the pronounced negligenceofthegreeningrequirement byprivateestablishmentsandother property owners across the state, @Businessdayng

whichaccordingtoherisfrustrating government’s efforts to ward off the negative effects of climate change in the state.

She said commercial property owner with setbacks would be vigorouslycompelledtodotheneedful and the Agency would be locking up premises for non-compliance.

Shealsoenjoinedownersofpetrol stations to adhere strictly to the approvalgottenfromtheMinistryof Physical Planning, which stipulates that20percentoftheirpropertiesbe reserved for greening.

“Wehavenotedwithdismaythe attitude of owners of Petrol Stations especially the new entrants who have made it a habit of concretising their entire while neglecting the provision of the law which specificallystatesthatacertainpercentage of their space must be reserved for greening,” she said.

LASPARKismoredetermined than ever to prosecute owners of these Petrol Stations and other commercial properties according to the Law unless they show a desire to abide by the state’s provisionwhilealsochargingownersof residential apartments to comply with this directive, she said, stressing the Agency will soon begin a massive enforcement action against non-compliance in residential buildings.

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BD Money

Monday 06 May 2019

Analysis Tax credit masks Seplat’s weak operating performance Earnings after tax surged by 59.0 percent Year-on-year to $32.7 million, largely due to a $13.3 million tax credit that masked significant weakness in core operating performance in the review period.

Cover These numbers show why equity investors should take long term positions If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes” says Warren Buffett, the most successful investor in the world.

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INVESTING What investors need to know about share reconstruction and stock split Investors are usually worried when a company takes a decision to either reconstruct or split its shares. Most times they are left in the dark as to the impact on the value of their shares and returns on investment.

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Analysis

Tax credit masks Seplat’s weak operating performance Oghenerugba Dadson & Philip Anegbe (Cardinal Stone)

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arnings after tax surged by 59.0 percent Year-on-year to $32.7 million, largely due to a $13.3 million tax credit that masked significant weakness in core operating performance in the review period.

Q1’19 highlights Revenue contracted by 11.7percent Year-on-year to $159.5 million, dragged by a 16.5percent Year-on-year decline in oil revenue which concealed the impact of price-induced increase in gas revenue (+5.6 percent Year-on-year).

We attribute the weakness in oil revenue to a 19.9percent Year-on-year decline in oil production to 21,885 barrels of oil per day (bopd) and a 6.2percent Year-on-year moderation in realised crude price to $61.7/bbl. In our view, the decline in oil production may be slightly connected to Nigeria’s compliance to the OPEC production cut deal, which, according to the Minister of State for Petroleum, was kick-started in February 2019.

We also believe that oil price is yet to fully recover from the impact of the supply glut that saw crude oil price crash by 38.0percent to $52.2/bbl between October and December 2018. This lack

of full recovery likely explains the lower realised oil price reported in Seplat’s Q1 2019 numbers. Going forward, management is optimistic that on-going capital expenditure (Capex) on drilling, which was ramped up in H2’18, would have a positive impact on crude volumes and revenue in the second half of 2019.

Therefore, the company retains FY’19 guidance of $200 million in capex, between 24,000 to 27,000 bopd in liquid production, and 146 to 164 Million standard cubic feet per day in gas production EBITDA margin plunged to 35.1 percent in Q1’19 from 64.5 percent in Q1’18, predominantly due to $15.8 million overlift revaluation loss (vs. $8.6 million underlift revaluation gain in Q1’18), $7.0 million unrealized loss on derivatives (vs. nil in Q1’18), and $5.2 million cost of hedging (vs. $1.2 million).

The overlift revaluation loss mirrored the change in the market value of the shortfall between crude oil lifted and crude oil sold during the period. We also recall that SEPLAT entered into crude price hedge contracts at an average premium price of $1.3/bbl on 4 million barrels in December 2018, which remained unexecuted at strike price of $50/bbl to

$55/bbl.

The cost of this contract also weighed on EBITDA margin. Excluding the overlift revaluation and fair value losses, EBITDA margin would have declined by only 4.3 1percentage points (ppts) Yearon-year. Notwithstanding, the combination of lower net finance cost (-47.6percent Year-on-year) and a $13.3 million tax credit (vs. tax charge of $38.3 million in Q1’18) bolstered PAT margin in first quarter of 2019 (+9.1ppts Year-on-year to 20.5percent) Free Cash Flow to Equity (FCFE) surged to $63.3 million in Q1’19 from $474.0 thousand in first quarter of 2018.

The increase in Free cash flow to equity (FCFE) reflected gains from the applica-

tion of Seplat’s huge capital allowance and improved working capital management. We note that Seplat’s huge capital allowance is typically used to offset tax charges—implying no significant passthrough to cash balance.

Seplat’s strong working capital position is mostly evidenced by its negative cash conversion cycle in Q1‘19, which suggests that it likely generates revenue before it pays suppliers. This pattern is likely to subsist in coming quarters.

Seplat trades at a full year 19 estimate EV/EBITDA of 1.6x relative to its fiveyear average of 4.3x and MEA peer average of 5.5x. The stock also has an EV/2P ratio of 1.4x, which compares favourably to 2.1x for selected peers.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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Analysis First Bank sustained earnings recover amid further clean-up Aderonke Akinsola (Chapel Hill Denham)

Stronger full year 2019 estimate earnings on the cards, supported by e-banking income e expect Profit After Tax (PAT) to grow by 19.2 percent yearon-year to N71.22bn in full year 2019. Our higher earnings forecast is hinged on non-interest income growth (+10.0 percent year-on-year) and sustained decline in impairment charges (-13.4 percent year-on-year).

In first quarter of 2019, PAT grew by 6.9 percent year-on-year as non-interest income increased by 21.8 percent year-on-year and impairment charges fell by 45.3 percent year-on-year, offsetting the impact of the 26.3 percent year-on-year growth in operating expenses on earnings. The non-interest income growth was largely driven by electronic banking fees (+83.0 percent year-on-year).

E-banking’s contribution to non-interest income increased to 33.3 percent in first quarter of 2019 from 25.8 percent in full year18, largely reflective of FBN’s stronger digital banking footprint with 10 million digital banking customers as at first quarter of 2019 (9.4 million in 2018).

Notably, the value of USSD and mobile banking transactions grew by over 100 percent in full year 2018 and the quarterly trend shows sustained expansion in first quarter 2019.

Agency banking has also been supportive of increased volumes of e-banking transactions and management plans to further expand the

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number of “Firstmonie” agents to 30,000 by full year 2019 from 20,000 as at first quarter 2019.

Lower impairment charges to remain earnings supportive.

We expect impairment charges to decline by 13.4 percent year-on-year in 2019, post the 42.2 percent year-on-year drop in 2018, given FBN’s tightened risk framework. This is reflective of our lower cost of risk forecast of 3.5 percent (3.5 percent-4.0 percent guidance) vs. the 4.2 percent achieved in 2018.

Impairment charges fell by 45.3 percent year-on-year in first quarter of 2019 with the cost of risk at 2.7 percent. Loan growth was flat as at first quarter of 2019 (-0.6 percent Year To Date), but management expects lending to improve in subsequent quarters and guided to 5.0 percent loan growth in 2019, which could translate to higher impairment charges. It is worth highlighting the increase in FBNH’s Non Performing Loan (NPL) ratio to 25.3 percent in 2018 from 22.8 percent in 2017, against management’s guidance of 17-18 percent.

Management, however, remains confident on delivering its single digit NPL ratio target for 2019. The bank further disclosed that some of its legacy exposures (mainly Atlantic Energy) have been resolved and subsequent improvement in NPLs via restructuring, recovery and write-off, is expected in 2019. We are, however, cautious and forecast the NPL ratio at 15.0 percent vs. management’s guidance of less than 10 percent.

NIMs and cost efficiency could weaken in 2019. We expect the net interest margin to contract by 40bps in 2019 on lower asset yields.

We note that FBNH reported a 150bps year-onyear expansion in yield on assets in first quarter of 2019 as interest income on investment securities was resilient, post the 6.8 percent year-on-year growth in investment securities to N1.48tn.

However, the 1.2 percent year to date drop amid lower asset yields suggests interest income could decline from second quarter of 2019 onwards. We expect funding costs to decline further in full year 2019, despite the pressure seen from higher interest expense on deposits from banks in first quarter of 2019.

We believe sustained mobilisation of cheap deposits (86 percent of total deposits in first quarter of 2019 as against 85 percent in full year 2018) amid lower market interest rates will support the moderation of cost of funds.

On cost efficiency, we expect the cost-toincome ratio to increase to 64.9 percent in 2019 from 63.4 percent in 2018 as we forecast operating expense (OPEX) growth at 8.4 percent year-on-year vs. +5.9 percent year-on-year for operating income.

We note that the cost to income ratio (CIR) spiked to 68.2 percent in first quarter of 2019 from 56.1 percent in first quarter of 2018, due to higher regulatory and promotion costs. www.businessday.ng

Management’s cost-saving initiatives such as branch rationalisation as well as human capital and Information Technology transformation may, however, support improved efficiency from 2020.

We maintain our BUY rating on FBNH, but cut our 12-month TP by 9.0 percent to N9.58.

This implies an expected total return of 34.6 percent (capital gain: 30.3 percent and 2019 dividend yield: 4.3 percent). We expect the full retention of the bank’s profit to persist in 2019 on the need to further strengthen its capital base. It is worth highlighting that FBN’s (bank only) Capital Adequacy Ratio

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(CAR) stood at 17.3 percent as at full year 2018 on regulatory transitional basis post IFRS 9 adoption, but was down to 16.5 percent as at first quarter of 2019.

Management further disclosed that the full year 2018 CAR would have been lower at 10.7 percent on full impact. We note that higher than expected credit losses and operating expenses as well as lower non-interest income are downside risks to our earnings forecasts.

FBNH is trading on a 2019 estimated P/B and ROAE of 0.5x and 12.9 percent respectively vs. our banking coverage average of 0.7x and 16.6 percent respectively.

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Monday 06 May 2019

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Cover Story

Investing

These numbers show why equity investors should take long term positions David Ibidapo & Segun Adams

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f you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes” says Warren Buffett, the most successful investor in the world.

While the Nigerian market may be unique in its own way, the relevance of this saying cannot be disputed as our analysis show why investors should take long term positions.

The high volatility of the Nigerian equity market has made investors susceptible to loss in investment values, hence the need to be strategic when making investment decisions ranging from security selection and investment horizon decisions.

Since no one can be certain about the future and could only make forecast based on historical trends, analysis have shown that investors begin to enjoy value/returns for their investments when held for a longer term.

However, this is largely dependent on the right choice of stock selection amongst the pool of stock options in the market.

Result obtained from the analysis shows that historically, on the average returns on investments are positive when stocks are held for a period of 4 years as lower durations hold higher risk of value loss in the Nigerian market.

Taking our sample from the NSE30 index which comprises of 30 most capitalised companies listed on the exchange, running through these stock performances over a period of five years.

The study adopted 2014 as the base year, on the assumption that the year is the entry point for investors and putting into consideration different investment horizons of players and ultimately performances during the stated periods.

On the average, investors who decided to hold investments within a period of 1 year amongst securities listed in the stated index saw returns dip by 18 percent.

This we may want to blame on declining oil prices during the period which saw

foreign investors take flight on declining GDP growth, downward pressure on Naira which eroded value of their investments in Nigeria, shaky companies’ fundamentals etc. to mention but a few.

Meanwhile, those who held positions for 2 years had value for their investments plunge 30 percent, while investors who held 3 years by 31 percent respectively.

Poor performance of companies stocks could be tagged to a recessed economy during the period 2016 to Q2 2017.

Meanwhile, stocks began picking up in the fourth year as most companies on the NSE30 index began returning value for investments. On the average, companies on the index returned by 24 percent value to investors on the exchange.

Likes of Stanbic Ibtc (137%), International Breweries (125%), Dangote Flour

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(82%), Presco (80%) and Guaranty Trust Bank (75%) topped the chart of the best performers in a 4-year space.

However, result of our analysis shows that investors who anticipated further growth trend, thereby extending the investments into the fifth year saw value drop marginally by 4 percent.

This trend portrays the higher possibility of a reversal in gains once investors’ horizon exceeds four years.

This although is a peculiar case in the Nigerian scenario, hence not applicable to other markets as studies have not been conducted in other equity markets of the world.

Theoretically, it has been established that the longer you invest, the more likely you will be able to weather low market periods. Assets with higher short-term volatility risk such as stocks tend to have higher

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The high volatility of the Nigerian equity market has made investors susceptible to loss in investment values, hence the need to be strategic when making investment decisions ranging from security selection and investment horizon decisions

@Businessdayng

returns over the long term than less volatile assets such as money markets. It is very difficult and risky to time the market.

As stated earlier, the choice of stocks is likewise important in determining returns on your investments.

Highlighting but a few of the benefits of holding long is that long term investments are associated with lower volatility rate.

Another benefit that a long-term investor can enjoy is tax advantages on capital gains. Gains achieved by investing for short term are taxed as regular income whereas gains achieved by investing for long term (at least for more than a year) are taxed at rates lower than your income tax bracket.

More importantly, holding investments in the equity market for a long time enables you to overtime correct your investment mistakes. Riding your winners over the long run tends to fix a large number of, if not all, “investing mistakes.”

What investors need to know about share reconstruction and stock split OLUFIKAYO OWOEYE

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nvestors are usually worried when a company takes a decision to either reconstruct or split its shares. Most times they are left in the dark as to the impact on the value of their shares and returns on investment.

Down memory lane, share reconstruction

by Sterling Bank in 2008 generated bags of dust from the investing public and recently, C&I Leasing Plc share reconstruction and paid-up share capital from N808 million being 1.6 billion ordinary shares of 50 kobo each to N202 million being 404 million ordinary shares of 50 kobo each by consolidating every four (4) ordinary shares currently held into one(1) new share in the company.

Share reconstruction, also known as reverse stock split is a mechanism used by companies to reduce the number of outstanding shares and increase their share price proportionately without affecting the total book value of those shares. It reduces the number of shares, but not the value of shares held by shareholders.

A company with 1million shares of N1 each and trading for N2 per share may decide to reduce the number of shares outstanding by 1 share for every 2 shares held. This means the number of shares held will be halved and the company will now have 500,000 shares of 2kobo each but now trading for N4 each.

Companies carry out share reconstruction to attract investors by reducing the number of shares outstanding investors the company may suddenly look attractive to investors.

The fewer the number of shares outstanding the better more confident investors are about the value of the shares being easily controlled.

Some companies have billions of shares outstanding either due to a scheme of mergers and acquisitions or issuance of bonus shares etc. This makes shares of the company very liquid and by being very liquid the share price can be subjected to a lot of price movement.

Companies also, embark on a scheme of Share Reconstruction when they think their share price is stagnant for too long.

For example, a company that is trading at 50kobo per share for too long may undertake a 1 for 2 share reconstruction which will reduce the number of shares outstanding by half and increase the share price to N1 per share.

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Companies carry out share reconstruction to attract investors by reducing the number of shares outstanding investors the company may suddenly look attractive to investors

Share reconstruction gives companies an opportunity to issue more bonus shares in the future. A Company with 10billion outstanding shares, for example, may find it harder to issue a 1 for 1 bonus issue compared to that of a company with just 1billion outstanding shares.

A stock split is a process whereby a company splits a unit of its shares to make

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it more available and affordable. For a shareholder, stock splits will result in no change to the ownership structure of a company, however, this may or may not translate to increase in value.

A stock split may translate to increase in value due to the increased availability and affordability of the stock. The increase in demand can help push up prices of the stock and ultimately the value of the company.

On the other hand, the increase in the liquidity of the stock may soon make it so tradable and attractive to sellers and because it is now available in tradable quantities a situation where it has more sellers than buyers may affect the share price negatively.

It also results in a huge cost to the company as it has more shares available for the Registrars to manage. This cost is typically passed on the shareholders as it reduces profitability.

In theory, stock splits do not affect the value of companies, however, market sentiments and perception can make post stock split value of companies rise or decrease. It is also more associated with companies with highly illiquid stocks and higher than average industry share price

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Personal Finance What to consider before taking a loan SEGUN ADAMS

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t one point in time or the other, we want to make a purchase, pay for a service or settle an obligation we don’t have the money for immediately.

For many it has been concerning a house of their dream, purchasing a new vehicle, paying children’s school fees or even starting a business.

The inability to meet financial obligations at all times is more common than people would really admit to.

Regardless of your salary size, taking a loan may become necessary in such an instance.

Loans are simply money borrowed in exchange for future repayment at an extra charge, whether they are granted by a banking institution, a credit association or your best friend.

The difference, however, would usually be the formality of the loan contract.

Given the obvious backlogs in accessing loans from banking institutions especially the “leg and arm” banks demand as interest and the requirement for a collateral People are often discouraged from taking loans to meet up with financial challenges as they come up.

However, the inability to access credit has created a new market for many financial technology platforms that now provide loans to individuals and small businesses at affordable rates relative to banks and without the usual cumbersome paper works usually associated with approaching banks for loans.

Peer-to-Peer (P2P) lending and a lot of online borrowing platforms actually help individuals smooth out their consumption by providing the opportunity to put future income to use at a cheap rate than is obtainable at traditional platforms.

While this is a welcome development, many individuals can easily get carried away by the ease and lower cost of bor-

rowing.

On most of these platforms, it takes less than five minutes to process a loan and one can get up to N500,000 on the spot without providing too many documents. In short, it has become money at one’s Beck and Call.

Despite the efficiency brought about by leveraging technology to disburse loans, problems of moral hazard and adverse selection remain.

On the part of the borrower it is aptly put: Not knowing how and what to borrow for because loans are easily accessible.

If you are about taking out a loan, these considerations are critical so you can avoid the debt trap: What am I borrowing for?

As humans, we can be very impulsive; you come across a salesman that shows you the best car ever manufactured or your favourite retail store urges you to make a purchase for an item running out of stock.

Even when we are not driven by sentiments we tend to borrow for the wrong reasons or at times take more than we actually need which means paying interest on money that is not productive. www.businessday.ng

To ensure you borrow for the right reasons, you have to ask yourself if what you are borrowing for is an asset or a liability.

An asset doesn’t necessarily mean buying a property, stock or any investment instrument.

An asset is simply anything that adds long-term value to you or your loved ones. It could be your child’s school fees.

Again, your asset help reduces your liabilities. For example, investing in your health.

In any case, you may want to be sure you have commensurate value at least for whatever you borrow for.

Remember the cost of paying for that item is the borrowed capital and the interest rate to be paid. Not just the market price.

So to rephrase, the first question is: what am I getting back in return.

Can I repay the loan, what would it cost me?

The income stream is very important although most creditors would do due diligence to ensure you are able to pay.

What matters is how long and at what cost you would service the loan.

It is very possible to repay a

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loan and has little left for one’s sustenance.

Oftentimes this leads to a spiralling where the debtor takes on more loan from other sources and is quickly entrapped in debt.

To avoid this, do an honest assessment. If a loan would take more than half your salary to service every month, then it has to be justified by greater returns

“

To ensure you borrow for the right reasons, you have to ask yourself if what you are borrowing for is an asset or a liability

@Businessdayng

for the burden from whatever it is used for.

What is the Interest rate offered?

Most online lending platforms offer loans at an attractive rate but nothing beats getting credit at the best rate available.

Before taking out the loan, compare rates so you do not short-change yourself.

Consider that rates being offered critically to see if you would be able to afford the loan.

Do not take a loan because the lender offers the best rate in town.

You have to be sure the rate is truly affordable for you.

What is the Collateral?

Although many online platforms have a good Know-YourCustomer (KYC) culture and do not need collateral to disburse loans, it is very good to do one’s research and ensure you consider the collateral requirement in the case where it is required.

Collaterals are like an insurance policy for lenders to exchange for any loss they incur in the events of loan default.

You would want to make sure the collateral is not something way more valuable to you than the loan.

What is the term of the loan?

Loans often time come with clauses that spell out new conditions in the case of a default.

The term would often specify the rights and responsibilities of both parties when the borrower misses the repayment schedule. Some terms may spell out a higher rate of interest upon default which would put more burden on the debtor. It is very good practice to know the terms of borrowing.

Alternative means of financing Considering alternative means of financing is a good strategy to ensure you get to achieve your goal at the least possible cost. You may want to consider for example if your small business needs more debt or equity (sharing ownership with someone who has capital you need) or if asking that friend who wouldn’t ask for much interest for a loan instead.

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Data

Federal government eurobond Yields on Eurobonds fell week on week by c.11bps from an average of 6.83 percent when the market closed last week to 6.82 percent as buying interest on sovereign Eurobonds eased marginally.

Brent fell below $71per barrel on Thursday, May 2, after Saudi Arabia was reported consider to boosting its output.

The drop in price which started on Tuesday comes almost a month after prices rose above the $71 sustained by OPEC cut and US sanctions on Iran and Venezuela.

Price was rose 0.44 percent to $71.06, 19:03 (GMT+1) on Friday according to information on Bloomberg.

Corporate eurobond Yields on corporate Eurobonds rose c.439 bps across all tickers from last week with average yield at rising from 8.81 percent on last week to 9.19 percent.

Yields on Diamond Bank Plc rose by 22.2 percent while Yield on UBA dropped the most by 3.18 percent. www.businessday.ng

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Monday 06 May 2019

BUSINESS DAY

Commodities Producers, investors profit in AFEX’s N773m uptick in trade volume Temitayo Ayetoto

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t’s a profit-taking season for producers, investors and processors of agricultural commodities as the total volume traded on the AFEX Commodities Exchange netted N773 million in value at the end of this year’s first quarter.

This means smallholder farmers producing in rural areas would experience increased flow in funding available for their activities; processors would see better price discovery and investors guaranteed liquidity and return on investment, according to Obianuju Okafor, AFEX communication manager.

In line with the Exchange’s bullish projection for H1 premised on the results of the 2018 wet-season farming and high demand for certain commodities experiencing supply shortfall, the platform recorded 7,812 metric tonnes of commodities traded.

This marks an uptick from the 5,249.24 metric tonnes volume traded in Q1 2018 valued at N590.7 million and a drop from the 11,481.90 metric tonnes traded in Q4 2018 valued at N1 billion.

Some of the drivers of the increase from Q1 2018 to Q1 2019 included the Exchange’s scale up of some of its programs, which expanded its access to grains available for trading and consequently increased the volume traded.

AFEX for instance invested more in public understanding and awareness of the Exchange’s activities, leading to more players.

The major players on the Exchange are producers, buyers or processors who need access to quality assured commodities of specific quantity and investors or financiers looking to expand their portfolios.

The value brought by these three players serve as a central role within the agriculture value chain, but the interaction is often fragmented with the absence of points of convergence. AFEX uses its platform to solve that problem and in that way, maximizing the returns for them in the agriculture.

The forecast of AFEX, an e-trading platform for agricultural commodities at the beginning of the year was that prices of staple

and export crops would remain stable within the first half on high output recorded in 2018.

It also expected it would be sustained by prevailing stability in the international market.

The commodities prices began 2018 in the lower region and dropped further in the second half, with crops such as maize and soybeans had trimmed by 18.9 percent to N82.59 and 30.8 percent, respectively.

“The start of the year kept with the trend with the uncertainty of the elections leading a lot of people to buy and store commodities, which led to an increase in demand. Logistic costs were also high in the period contributing to price increases and fluctuations,” Ayodeji Balogun, AFEX Country Manager said speaking on the Q1 report The market which has now settled in sta-

ble region for most commodities, with light fluctuations arising mostly from logistic issues is expected to sustain the decorum in the interim.

In its further projection for 2019, AFEX expects yields of small holder farmers to increase by 1.5 percent and returns on investment of 25 percent and above. On the exchange, it looks forward to an increase in retail participation as well as the introduction of key products targeted at increasing participation of key stakeholders.

To increase the commodities traded on the exchange, AFEX would be focusing on farmer engagement, using its outreach structure to get more farmers to take advantage of the Exchange’s offerings from input financing to storage and grading services.

The Exchange is also making a lot of investment in technology to help automate some of our processes and make for easier data capturing and analysis, Balogun said.

The Exchange is also tinkering creating new products that will make investing in commodities accessible for all investors, some of which will include trainings and interaction that will foster understanding of the products.

Hence, investors are advised to monitor the trends in the market like price movements, external factors that can influence demand and supply like weather conditions, and consider trends internationally as in most other investment undertakings.

Chart of the week

Week Ahead (Monday, 6th May – Friday, 10th May, 2019) Week Ahead Event Week Ahead (Monday, 8th April – Friday, 12th April, 2019)

The 5th Edition of Top 25 CEOs & Next Bull Awards jointly organized by Business Day Media Limited and Nigerian Stock Exchange will come up Friday, May 10. The event aims to recognize outstanding CEOs who typify best business values in Nigeria Wema Bank will hold its Annual General Meeting at Lagos Resturant, 1c, Ozumba Mbadiwe, Victoria Island, Lagos on Wednesday, May 8. The lender recommended for shareholders’ approval of 3 kobo per ordinary share payable to shareholders (who have their names on Registrar of Business at the close of Business Tuesday, April 26.) on Monday, May 13.

Commodities Cocoa – Prices decreased by about 3 percent to $2, 300/MT as a result of increased production in Ivory Coast. In near term, it is expected that lower rainfall in Ivory Coast will likely reduce output and mount pressure on prices.

Oil - ICE Brent Crude traded $71.06 per barrel on Friday at the international market. It is expected that oil prices will hover around prevailing levels on tightened global supplies and refusal of Saudi Arabia to increase output to cushion the effect of US’ decision to halt sanction waivers on Iranian exports.

Data Release The National Bureau of Statistics to release Job creation & Labour Force Statistics (Q4 2018 – Q1 2019) on Friday, May 10. Unemployment rate in Nigeria soared to 23.1 % in Q3 2018 from 18.8% in Q3 2017. Akwa-Ibom (37.7%), Rivers (36.4%) and Rivers (32.6%), all in South-south zone, are the states with highest unemployment rates in Nigeria.

Currency The Nigerian naira traded depreciated 0.03% or 10 kobo at N360.65 against the US dollars at the Investors & Exporters window at Friday’s close of business. Friday’s turnover stood at US$161.12 million. The local currency remained unchanged at N306.95/$ at inter-bank window. Going forward, we expect naira to hover around prevailing levels at various windows boosted by sustained supply of liquidity by Nigerian Apex Bank to the market. www.businessday.ng

Last year, Lagos generated N382.2 billion as revenue in 2018, representing a 14.4 percent increase compared with N333.97 billion realised in 2017, Rivers recorded a 26 percent growth in its IGR to N112.8 billion from N89.5 billion, while Ogun raised N84.55 billion as IGR in 2018, about 13 percent higher than N74.84 billion recorded in the previous year.

Yobe recorded the lowest IGR of N4.38 billion. Kebbi trailed with a total internally generated revenue of N4.88 billion, while Taraba generated the third-lowest revenue of N5.97 billion in the country in 2018.

Also, the Federal Capital Territory (FCT), Abuja generated N65.52 billion as IGR in the review period.

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Osinbajo to outline veritable catalyst for nation building, development at LASU convocation KELECHI EWUZIE

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ice President Yemi Osinbajo will be delivering the preconvocation lecture of the Lagos State University (LASU), titled “Centre of Excellence in African Universities: A Veritable Catalyst for Nation Building and Development, at the event scheduled for May 16, 2019 Olanrewaju Fagbohun, vice chancellor, LASU, while speaking at the pre-convocation press conference held at the 3-in-1 Building, Faculty of Education, main campus, Ojo, last week, said the university would be awarding 57 First Class at the 23rd convocation ceremony, adding that this was the highest in the history of the university.

According to Fagbohun, “This year’s convocation ceremony is a very unique and special one. It is so because our world-class students in their habit of healthy rivalry to be the best at what they do, have pushed themselves so hard that at this year’s convocation we will be graduating 57 First Class students.”

Fagbohun said never in the history of the University had we had it so good, saying, “Two graduands, Ridwan Oladotun Ola-Gbadamosi from the Faculty of Engineering and Nneka Karen Enumah of the Faculty of Sciences graduated with a CGPA of 4.88 to emerge as the best graduating students,” he said.

He said of the 57 First Class, Faculty of Education produced 10, Faculty of Engineering two, Faculty of Management Sciences 13 and Fac-

ulty of Science 19, among others.

In his word, “LASU will graduate 14,369 with 54 obtaining diplomas, 10,252 first degrees and 4,063 postgraduate degrees.

Aside the convocation lecture to be chaired by President of Ghana, John Mahama, the Vice Chancellor revealed that 37 academic programmes of the university were successful accredited by the National Universities Commission (NUC), thus all 70 programmes offered at the first-degree level were duly accredited.

Other activities for the 23rd convocation programme between May 2 and 16 include Coconut breaking festival, Convocation cup competition for staff, Jumat service, Special thanksgiving, command performance and convocation play.

FG, ILO intensify ‘war’ against child labour, trafficking as Netherlands commits €28m Innocent Odoh Abuja

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heFederalGovernment,theInternational Labour Organisation (ILO) and other countries in Africa have intensified collaboration to eliminate the scourge of child labour and trafficking by 2025, as the government of Netherlands has committed €28 million to curb the menace in Nigeria and four other African countries.

This was the thrust of a two-day strategic planning workshop on the theme “Accelerating Action for the Elimination of Child Labour in Supply Chain in Africa (ACCEL AFRI-

CA),” sponsored by the government of the Netherlands, which ended in Abuja at the weekend.

Speaking at the workshop, Chris Ngige,ministeroflabourandemployment, said child labour had assumed a global dimension, which prompted the Nigerian government to create enabling environment for the fight against “child labour, forced labour and human trafficking through the ratification and adoption of some key international conventions relating to the elimination of child labour.”

Represented by the permanent secretary, Williams Nwankwo Alo, the minister lamented that despite

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all the efforts being made to eliminate the menace, child labour still prevailed in Nigeria, especially in the supply chains.

He therefore noted, “This project with an overarching goal of accelerating the elimination of child labour in Africa, through targeted action in selected supply chains hopefully will go a long way in addressing the root causes of the prevalence of child labour in Africa and factors that hinder progress towards its elimination in the region thus contributing in no small measure in achieving target 8.7 of the Sustainable Development Goals (SDGs).”

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Jaiz Bank grows Q1 profit by appreciable 244% HARRISON EDEH, Abuja

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aiz Bank plc on Sunday confirmed recording a well-rounded performance in the first quarter of this year as the Nigeria’s premier non-interest commercial bank continued to improve its cost efficiency and risk management.

Key extracts of the three-month report for the period ended March 31, 2019, released to the Nigerian Stock Exchange (NSE) show that gross earnings rose by 38.7 percent while pre- and post-tax profits jumped by 225.08 percent and 244.19 percent, respectively. Earnings per share rose by 190 percent.

The three-month report indicated that gross earnings rose to N2.59 billion in first quarter 2019 as against N1.87 billion in first quarter 2018. Gross profit grew by 51.9 percent increased from N1.39 billion to N2.11 billion. Profit before

tax jumped from N146.57 million to N476.46 million. After taxes, net profit rose to N428.68 million in first quarter 2019 compared with N124.58 million in first quarter 2018. Consequently, earnings per share increased to 1.45 kobo in first quarter 2019 as against 0.50 kobo in corresponding period of 2018.

The first quarter performance furtherconsolidatedthegrowthtrajectoryofthealternativebankingpioneer andraisedstrongprospectofJaizBank substantially, surpassing its full-year performance in 2018 in the current business year. The net profit in first quarter 2019 is more than half of the full-year net profit recorded in 2018.

Its recently released audited report, accounting for the year ended December 31, 2018, shows 55 percent growth in net profit to N834.37 million. Gross earnings rose by 11 percent from N7.86 billion in 2017 to N8.74 billion in 2018.

Profit before tax increased from N894.01 million to N897.70 million.

After taxes, net profit rose from N537.12 million to N834.37million.

The balance sheet shows stronger underlying strength during the period. Total assets rose by 24 percent from N87.31 billion to N108.46 billion. Deposits also grew by 25 percent from N68.12 billion in 2017 to N85.03 billion in 2018. It expanded its financing and investment activities by 37 percent to N69.36 billion in 2018, as against N50.79 billion in 2017.

Jaiz Bank, as a non-interest bank, makes profit basically from profit sharing on investments and gains on trading activities.

Key underlying ratios showed improvements in returns and operational strength of the bank. Return on assets rose by a quarter from 0.6 percent in 2017 to 0.8 percent in 2018. While cost-to-income inched

up from 85.84 percent to 87.28 percent, return on equity improved from 6.54 percent to 6.85 percent.

Capital adequacy remains considerably above regulatory threshold at 21.13 percent while liquidity ratio increased by 50 percent from 18.64 percent to 27.94 percent. Staff strength and number of branches also increased by 6.0 percent and 16 percent, respectively.

Managing director, Jaiz Bank, Hassan Usman, said the 2018 results further demonstrated that the bank had the capacity to grow sustainably in line with its strategic vision of becoming the leading non-interest bank in sub-Saharan Africa by 2022.

He assured that while maintaining steady focus on elements that contributed to improved performance in 2018, the bank shall work harder to optimise its potential in order to deliver better returns in 2019.

L-R: Khade Idogho, chief marketing officer, Renmoney; Adeola Adeyemi-Solaja, brand and communications manager, Renmoney; Frank Aigbogun, publisher/CEO, BusinessDay Media; Oluwatobi Boshoro, CEO, Renmoney; Iyayi Oludapo, head, sales, Renmoney, and Yetunde Faulkner, head, commercial, Renmoney, at the courtesy visit to BusinessDay head office in Lagos, yesterday.

Pic by David Apara

LCCI tackles Customs over deployment of ‘Strike Force’ to ports ODINAKA ANUDU

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agos Chamber of Commerce and Industry (LCCI) has criticised the deployment of ‘Strike Force’ by the Nigeria Customs Service (NCS) to all ports, saying the move will be detrimental to investment and complicate the already difficult cargo clearing process.

In a statement signed by Muda Yusuf, director-general, LCCI, the chamber said giving the Strike Force the powers to intercept and effect seizures of cargo would undermine the ease of doing business policy of the Buhari administration while negating the presidential executive order on streamlining of ports processes.

“It is a duplication of functions of the Customs resident officers at the ports which have statutory responsibilities to examine and release cargoes to importers,” the statement, sent to BusinessDay on Sunday, said.

“This move would slowdown the cargo clearing process as it amounts to creation of another layer of authority to intercept and seize cargoes that have been duly released by all agencies involved in the examination of the cargoes.

These agencies include Resident Customs officers of the command, NDLEA. DSS, Ports Police, Nigeria Immigration Service, NPA, NIMASA and Port Health,” LCCI said.

The chamber explained that the directive conferred vast discretionary powers on the Strike Force, making the cargo clearing process vulnerable to arbitrariness and coercion, which could undermine the integrity and credibility of the process.

It further said the deployment of a special unit to the

PoS Innovation Summit to drive agency banking for lastmile financial inclusion Jumoke Akiyode-Lawanson

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xperts and stakeholders in Nigeria’s financial technology industry are pushing discourse on how agent banking can be leveraged to reach majority of unbanked and underbanked population in the hinterlands.

At the upcoming PoS Innovation Summit, organised

by Global Accelerex Limited, stakeholders in the fintech ecosystem will gather to deliberate and foster greater understanding of the value chain in a bid to improve service delivery in the e-payment sector.

These discussions are aimed at achieving the financial inclusion goals of the Federal Government and attaining the Financial System Strategy (FSS) 2020 Plan of the Central Bank of Nigeria.

Themed “Agent Banking to Reach the Last Mile”, this edition of the summit will focus on the delivery of convenient, accessible and cost-effective financial services to the underserved and unbanked in

Nigeria. The objective will be to further improve financial inclusion through the agency banking system.

According to the organisers of the event, Aishah Ahmad, deputy governor, financial system stability, Central Bank of Nigeria will be the special guest of honour. Other confirmed keynote speakers are; Patrick Akinwutan, the managing director of Ecobank Nigeria, Ronke Kuye, managing director of SANEF, Jacqueline Jumah, the managing director of Intermarc Consulting, and Tunde Ogungbade, managing director of Global Accelerex.

To deepen understanding of how agent banking really works, a live demonstration of agency banking, using the Accelerex Agent Network Platform, will also occur during the summit.

A considerable number of Nigerians have embraced the deposit, transfer and withdrawal of money through agent banking operators both in urban and rural areas. As this trend evolves, creativity www.businessday.ng

and innovation will be major contributors to sustainable growth, especially regarding new market segments. This is where the overarching need for a summit such as this becomes very instructive.

The event, which is scheduled to hold in Lagos on May 7, will also have in attendance notable stakeholders including Payment Terminal Service Providers (PTSPs), representatives of banks, representatives of the Central Bank of Nigeria and NIBSS, Agent Network Management organisations/ super agents, representatives of microfinance banks, representatives of Fintech companies, merchants, payment processors, among others.

The PoS Innovation Summit is renowned for its invaluable contributions to innovation and improvement of efficiency in the nation’s fastgrowing e-payment industry through insights and shared experiences aptly analysed by seasoned speakers and discussed by experienced panellists. https://www.facebook.com/businessdayng

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ports suggested a distrust and lack of confidence in the resident Customs officers who were deployed to the various commands by the CG in the first place.

“The appropriate thing to do in the circumstance is for the comptroller-general to replace these officers with trusted ones rather than superimpose another set of customs operatives on the system. This new deployment would make the entire process chaotic, cumbersome, costly and inefficient. It could also create an additional credibility problem,” the chamber warned.

The chamber pointed out that Lagos ports were the largest in the country handling over 1.5 million twenty-foot containers equivalent (TEUs) annually, underscoring the enormity of the consequences of physical examination of containers for the efficacy of cargo clearing.

“It is incredibly detrimental to the cargo release process and the economy. It is imperative for the federal government to expedite actions on the procurement of scanners for the ports in order to put an end to the physical examination of cargo and make the system technology driven,” the LCCI said.

Similarly, it expressed concern that many operators in the business community have inundated the chamber with complaints of protracted delays in issuance of Pre-Arrival Assessment Report (PAAR), adding that the situation had led to high demurrage payment by many importers.

“We therefore request the intervention of the Comptroller-General of Customs to ensure a more efficient ways of the processing and release of PAAR,” it said.

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World Business Newspaper

Labour casts doubt on Brexit deal as talks reach final stages Both leaders risk furious responses from their own parties over any agreement JIM PICKARD AND GEORGE PARKER

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enior Labour figures have cast doubt on the prospects of a cross-party Brexit deal as talks approach their final stages this week, with John McDonnell, shadow chancellor, saying prime minister Theresa May is not to be trusted.

Mr McDonnell said on Sunday that trying to reach an agreement with the Conservative government was like “trying to enter a contract with a company going into administration”.

The biggest challenge for Labour was negotiating with Mrs May when her premiership was nearing an end and all her potential successors were “virtually threatening to tear up” any deal, he added. “We’re dealing with a very unstable administration.”

A final round of negotiations between Labour and the Conservatives over Brexit is due to begin on Tuesday.

Some allies of Jeremy Corbyn, the Labour leader, are anxious about ending up in a “national government in all but name” but without any ministerial posts — sharing the blame for any Brexit fallout with the Tories.

Keir Starmer, shadow Brexit secretary, has repeatedly brought up the issue of a second referendum during the talks, warning that Labour will not be able to guarantee the support of its backbenchers without it. So far, the prime minister has refused to give way.

Mr Corbyn and Mr McDonnell are ambivalent about a second vote. But Tom Watson, the party’s deputy leader, told BBC Five Live that if there was no confirmatory referendum it would be a “dealbreaker” for many of his colleagues.

“It’s absolutely right that these talks continue but I don’t think we should be in any doubt that the Labour party membership and vast numbers of my colleagues in parliament don’t want us to just sign off on a Tory Brexit,” Mr Watson said.

“They don’t want us to bail the prime minister out of the problem of her own making and a very large number of our members think the people should decide on what that deal looks like.”

Mrs May said the results of Thursday’s local elections had sent a message to the two main parties to “put our differences aside” and work together. “Let’s do a deal,” she wrote in the Mail on Sunday.

Rory Stewart, the new international development secretary, insisted the two sides were almost in agreement after nearly a month of talks. “Our positions are a quarter of an inch apart,” he told Sky television. “I think a deal can be done.”

But one senior Labour MP said: “The reality is that we’re never going to get anything through parliament without a second referendum.”

Presenting a Brexit deal as a “grand bargain” between Labour and the Conservative government could split both parties. Instead, the two sides are discussing how elements of any deal could be agreed in a low-key manner and how it

GIDEON LONG

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hen Venezuelan opposition leader Juan Guaidó urged people to take to the streets once more on Saturday to defy the government of Nicolás Maduro, his supporters responded with sympathy but also with weariness and fear.

After a week in which they had seen at least four protesters killed and hundreds wounded in brutal clashes with Mr Maduro’s security forces, many questioned whether it was wise to go back on the streets.

“When are you going to march until? Enough!,” tweeted Nangel Medina, a graphic designer from hard-hit Zulia state in the west of the country.

“People have already protested and the world knows that we’re in the majority but we’re fighting bullets with whistles and placards.”

“Stop offering us up as cannon fodder and making martyrs out of us in vain,” added María Hernández, another of Mr Guaidó’s 2m twitter followers. “We need concrete actions.”

Mr Guaidó may still have the support of most Venezuelans in his bid to unseat Mr Maduro but after four months of effort, people are tiring.

Saturday’s marches were supposed to win over the military. Mr Guaidó urged his followers to march to military installations and hand over copies of a letter in which he reminded the armed forces of their constitutional duties and urged

them to support a “peaceful transition”.

But few people heeded the call and even Mr Guaidó, who had been expected to lead one of the marches, did not turn up.

Instead, weary Venezuelans took advantage of the lull to stock up on supplies.

“These haven’t been easy days and things are still tense,” said 62-year-old Magaly Uzcátegui as she shopped for fruit and vegetables at a market in the El Paraíso district of the capital.

“It was brutal this week. The military police fired a lot of shots. In the tower block where I live loads of windows were broken and the colectivos [motorbike gangs that support the government] turned up. We’re just surviving.”

“We don’t know what’s going to happen next,” added 54-year-old Rafael Rojas as he queued to buy tomatoes. “It’s out of our hands.”

The lull in the protests followed an extraordinary week in which Mr Guaidó ramped up his campaign, appearing outside an air base in Caracas flanked by armed men in uniform and calling for insurrection. Thousands of supporters flocked to his side prompting three days of clashes.

The military largely stood firm behind Mr Maduro, who said he had defeated a coup attempt orchestrated by the US. On Friday, his chief prosecutor Tarek William Saab said he had issued 18 arrest warrants for “civilian and military conspirators”. www.businessday.ng

suggesting goods could come under the EU’s common external tariff.

That would mean Britain applying EU tariffs to goods entering from third countries, removing the need for customs checks at British ports for trade going onwards to the bloc.

Other trade discussions include the alignment of single-market rules for goods, such as safety and environmental regulations, to avoid further paperwork at the border.

An independent British trade policy would then apply mainly to services, data, public procurement and other intangible items.

Both sides have made progress on enshrining EU standards

on workers rights, including on a “dynamic alignment” whereby Britain could agree to incorporating new European legislation into domestic law.

Those close to the talks say the Conservatives have “put their foot on the pedal” in recent meetings with a view to completing Brexit

by June 30. The prime minister recognises Britain will have to take part in European parliamentary elections on May 23, but she hopes to conclude the exit process before any newly elected British MEPs can take their seats in Strasbourg when the new chamber meets for the first time on July 2.

Brexit delays Goldman’s Marcus launch in Germany

Venezuelans grow weary of struggle against Maduro Supporters of opposition leader Juan Guaidó disheartened following failed uprising

could be introduced to parliament, probably via the Withdrawal Agreement bill that is needed to ratify Mrs May’s exit deal.

One idea is to give MPs a series of “definitive votes” on different Brexit options, while another could be to change the Withdrawal Agreement to allow amendments such as votes on a customs union or a second referendum.

Although the prime minister insists she wants Britain to have a fully independent trade policy, the cross-party talks include plans for a customs arrangement with the EU. Mrs May’s allies say this would not necessarily cover all trade areas,

US bank pushes back roll-out of high-tech consumer operation LAURA NOONAN, DAVID CROW AND PATRICK JENKINS

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oldman Sachs has postponed the German launch of its consumer bank Marcus until next year after the sixmonth Brexit delay removed the urgency for setting up a new deposit base within the EU. Launched in late 2016, Marcus is part of the 150-year-old group’s reinvention as a financial institution that caters to everyone from individual savers to small and midsized business, alongside the hedge funds, asset managers and wealthy clients it traditionally served.

As well as seizing on the chance to create a high-tech bank without the legacy problems of older rivals, Goldman is using the retail banking unit to attract deposits, lowering its funding costs compared with traditionally more expensive bond finance.

Goldman’s latest earnings showed Marcus’s deposit base had swelled to $46bn. The bulk of that has been accumulated in the US, where it offers highinterest savings products and some loans. In the UK, where it opened last year with a savings product it has attracted $10bn,

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according to one person familiar with the operation.

Privately executives have signalled an ambition to raise as much as $250bn through Marcus, enough to fund more than a quarter of Goldman’s $900bn plus total assets.

Richard Gnodde, who heads Goldman Sachs International, announced plans to expand Marcus into Germany in an interview with the FT a year ago.

The initiative was expected to launch in 2019 to coincide with Brexit and the need to fund EU commitments through a local base. At the same time Goldman’s new group chief executive David Solomon has been keen to turbo-charge the shift in Goldman’s priorities towards consumer banking.

But two people familiar with the plans told the FT that the timeline had been revised. “We want euro deposits and Germany will be where it is,” one of those people said.

“If [Brexit] had happened [on] March 29, we would have wanted [Germany] more urgently,” the person added, referring to the need to fund the trading operation that Goldman has set up in Frankfurt to deal with EU clients, @Businessdayng

but which is not yet needed.

The person said ramping up Marcus would also have been “expensive”, adding that given Mr Solomon’s sharper focus on costs across Goldman “that’s a little bit in our thinking”.

Goldman won plaudits for cost control in the first quarter, and is already facing added overheads from launching a new credit card with Apple and a cash management operation. Both are designed to provide a stable earnings stream that can blunt the highs and lows of more volatile trading activities.

Goldman declined to comment in detail on its German plans but Des McDaid, head of Marcus in the UK, told the FT: “The launch of Marcus in the UK has been tremendously successful and we are focused on expanding our UK offering before we launch in other countries.”

On Goldman’s first-quarter earnings call last month, the company announced a new target of adding $10bn in Marcus deposits annually as part of what chief financial officer Stephen Scherr described as a strategy to build “one coherent [consumer] business” including Marcus, the Apple card, and a push into managing money for the “mass affluent”.

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Democrats threaten Barr with contempt over Mueller report Lawmakers say attorney-general has until Monday to hand over more documents COURTNEY WEAVER

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ttorney-General William Barr risks being held in contempt of Congress if he misses a Monday deadline set by House Democrats to hand over a more complete version of the Mueller report, along with its underlying documents.

The House Judiciary Committee has given Mr Barr until 9am on Monday to comply with its demand for more information about the special counsel’s report in to Russian interference in the 2016 election, or face courtordered fines and other punitive measures.

“I think if the attorney-general does not [comply], the chairman will ask the committee to move forward with a contempt citation,” David Cicilline, a member of the House Judiciary Committee, told Fox News Sunday, referring to committee chairman Jerrold Nadler.

“The chairman has been very patient — has tried to accommodate the attorney-general in every way. But the members of our committee need to see the full report and the supporting documents so we can continue to do our work [and] conduct oversight in a sober and responsible way.”

He said the attorney-general’s office had not yet handed over any of the relevant documents.

Last week, the justice department indicated it would not comply with the committee’s subpoena, which it said did not fall under “legitimate oversight” due to its “unnecessarily burdensome”

demands.

The stand-off between Mr Barr and congressional Democrats reached new heights last week after Mr Barr refused to testify before the House judiciary committee when Democrats insisted that a staff lawyer for the committee question Mr Barr, instead of lawmakers.

Mr Barr faced a grilling from Senate Democrats a day earlier after it emerged that Mr Mueller had criticised the attorney-general for his handling of a summary of the special counsel report — a revelation that directly contradicted Mr Barr’s own testimony to Congress in April.

Senior Democrats, including many of the 2020 Democratic presidential candidates, have called on Mr Barr to resign, while Republicans have argued that Democrats are only going after Mr Barr for partisan purposes and that it is time to turn the page on the Russia investigation.

Should the House judiciary committee move forward with a contempt citation against Mr Barr, the measure would next be considered on the House of Representatives floor where Democrats hold a 235-197 majority.

In the meantime, Democrats are waiting for Mr Mueller to appear before Congress and testify on his report. Both Mr Barr and the White House have indicated they would not block Mr Mueller from testifying. His appearance before the House judiciary committee has been tentatively scheduled for May 15, Mr Cicilline said.

Is Brexit impasse turning Britain into Belgium?

UK stasis about EU departure verges on the surreal, says Brussels’ Charles Michel GEORGE PARKER AND JIM BRUNSDEN

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ven viewed from the land of Magritte and its once famously dysfunctional government, the Brexit paralysis gripping British politics verges on the surreal, according to Charles Michel, the Belgian prime minister.

Mr Michel looks across the English Channel and sees Theresa May’s administration immobilised, normal politics ceasing to function and a civil service increasingly forced to step into the breach. Is Britain turning into Belgium?

“It’s more and more for us a very strange soap, a very strange movie — this impossibility for the British parliament to find clarity about what they want for the future,” the Belgian prime minister told the Financial Times.

While emphasising his respect for Mrs May’s efforts to find a way out, Mr Michel said there had been surprise on the EU side that “the British government was not really prepared for what would happen” after the Leave vote in the country’s 2016 EU referendum.

Belgium is familiar with this kind of paralysis, although the 189-year-old country has also given Europe masterclasses on how to reach across party boundaries to broker compromises of the kind the British prime minister is now trying to reach with Jeremy Corbyn’s op-

position Labour party.

The 2010 Belgian elections, which marked a breakthrough for the Flemish separatist N-VA party, brought the country to a political impasse that left it without a federal government for a world-record breaking 541 days.

Mr Michel said his country “paid the bill for this immobility”, which he added cost Belgium international credibility, in spite of its position at the heart of the EU. He characterises his premiership as, in part, a mission to restore his Belgium’s reputation as a solid, reliable partner.

Britain still has some way to go to match that level of stasis, although Mrs May’s floundering efforts to secure a Brexit deal have in effect brought Westminster to a standstill and turned the country — according to one British diplomat — into a “laughing stock”.

The UK government is often in a state of war with itself. The prime minister’s sacking last week of Gavin Williamson, defence secretary, for allegedly leaking details of national security meetings was indicative of a cabinet in disarray.

Mr Williamson denies any involvement in the leak.

Mrs May, who runs a minority government, has almost run out of laws to pass and MPs — accustomed to working into the night — now often knock off halfway through the afternoon. On Thursday the House of Commons adjourned at 2.57pm. www.businessday.ng

Greg Abel (centre) and Ajit Jain, joined the Oracle of Omaha as he answered questions from shareholders © Bloomberg

Investors glimpse Warren Buffett successors in new Berkshire era

Spotlight on Abel and Jain as investors question conglomerate’s shifting strategy ERIC PLATT

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erkshire Hathaway shareholders were confronted with the potential future of the company as two possible successors to billionaire chief executive Warren Buffett took their turns in the public eye at the company’s annual meeting in Omaha.

Greg Abel and Ajit Jain, the two Berkshire vice-chairmen seen by investors as likely replacements for Mr Buffett, joined the Oracle of Omaha as he answered questions from shareholders, who want more insight over whether decisions such as the purchase of new technology stock Amazon mark a change in philosophy.

The move, which followed their elevation to the board in January 2018, put the spotlight on the two men as Berkshire plans for a day when Mr Buffett and his longtime partner Charlie Munger no longer sit atop the sprawling conglomerate and as some investors are questioning the company’s strategy, particularly over new technology stocks.

Mr Buffett had already caused a stir, speaking in front of a record crowd including Apple boss Tim Cook, with his criticism of privateequity firms over the way they calculate returns. He has promised not to leverage up the $739bn company.

Mr Munger also stated that Berkshire would get “a little more liberal in repurchasing shares” as Mr Buffett underlined his commitment to buy back stock from the company’s thousands of shareholders.

The Amazon decision, which was disclosed last week, and the signal that the company would buy back more shares after the steep increases in repurchases this year is a sign of how Berkshire is shifting its approach in the way it puts its $114bn of cash to work.

Although Mr Jain and Mr Abel did not reveal any big changes in approach, the fact they were answering questions from the floor is a break from the norm.

News that one of Mr Buffett’s two investment protégés — Todd Combs or Ted Weschler — had invested in ecommerce behemoth Amazon also

marked a change. Some shareholders and analysts say this is the clearest indication yet of the company’s evolving investment philosophy.

Mr Buffett, known for an investment style that favours cheap companies with a sound financial core that for a long time kept Berkshire out of technology stocks, defended the Amazon purchase during roughly six hours of questioning from shareholders, journalists and analysts, who were trying to understand how Amazon fits into the Berkshire portfolio. The company only bought its first stake in iPhone maker Apple in 2016.

“Considerations are identical when you buy Amazon versus some, say, bank stock that looks cheap statistically against book value,” the 88-year old chief executive said.

However, some analysts think there is a new shift in approach.

“What you are seeing is an evolution of thinking,” Christopher Rossbach, managing partner of longtime Berkshire shareholder J Stern & Co, said of the investment in Amazon.

“It is slow and it is extraordinary.”

Jumia’s rise exposes challenges of online shopping in Africa Pan-African start-up wrestles with issues of logistics, traffic and customer trust NEIL MUNSHI

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anda Aye’s customer called him three times in the halfhour it took him to creep a few blocks through a notorious Lagos go-slow toward the Lekki Bridge tollway.

“I’ll be there this morning, madame,” he said, his three-wheel truck idling. “This morning. Yes, this morning.” Asked for a specific arrival time, or at least a window of a few hours, Mr Aye demurred.

The courier he works for, Metro Africa Xpress, trained him to be vague, in case customers are disappointed with its client, Jumia, the pan-African ecommerce site that listed on the New York Stock Exchange last month at a valuation of $1.1bn.

Mr Aye’s delivery run shows some of the biggest challenges facing Jumia, and the investors who have sent its shares up by more than 200 per cent, as it tries to expand an African ecommerce business: traffic, logistics, and perhaps most

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importantly, customers wary of shopping online.

Like its rivals in many developing countries, Jumia offers payment on delivery “as a marketing tactic” since customers are worried about being scammed and are uncomfortable sharing their information online, said Juliet Anammah, chief executive of Jumia Nigeria, which accounts for about a quarter of the business by sales, sellers and customers.

“If you have those kinds of mental barriers, one way to break them is to say you’re not sure, fine, use cash on delivery — and when the things come to you, you decide if you want it,” she said.

But cash on delivery has a much higher return rate, and carries risk.

Jumia revamped its system to make sure drivers never carry too much money after a third-party deliveryman in Nigeria was killed two years ago.

Mr Aye delivered to five addresses scattered around Banana Island — probably the most afflu@Businessdayng

ent neighbourhood in Nigeria. But Jumia insists it is not limited to a small market of wealthy buyers and that its potential market is far larger.

Sub-Saharan Africa is projected to have 690m smartphone users by 2025, up from 250m at the end of 2017, according to GSMA, the trade body for mobile carriers.

Sacha Poignonnec, Jumia cofounder and co-chief executive, said this scale was a key advantage.

Roughly 700m people live in the 14 countries Jumia operates in, many with among the fastest population growth rates in the world.

“Already there are 400m internet users in our market, and last year we had 4m consumers,” he said.

“So the question of how big is the middle class, or how many of the 700m can spend money with us — we just know that we have $1.5tn in consumer expenditure [in Africa] that we want to contribute to shift from offline to online and we have dozens of millions of consumers to go after . . . Today we’re very far from hitting any type of ceiling.”

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Facebook opens 40-person EU election monitoring effort in Dublin Team will hunt for misinformation campaigns through the social media group’s apps MADHUMITA MURGIA

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acebook has assembled a team in Dublin to monitor for misinformation ahead of European Parliament elections in May, gathering 40 people at its European headquarters to fight against any attempt to manipulate the outcome of the vote through its apps.

The team, made up of data scientists, engineers, and cyber security officers, are part of a 500-person effort to monitor elections across the world and will work on the EU vote in the run-up to the May 20 ballot. The team will also have policy experts from each of the 28 countries holding elections and native speakers in all 24 official EU languages.

“We all come together because even though we are a tech company, it turns out speaking face-to-face is really helpful,” said Lexi Sturdy, who oversees the real-time election operations. The goal, she added, was to speed up response times to manipulations of the platform, allowing Facebook to “take down content proactively, and at scale.”

The effort comes after fears among European policymakers that this ballot will be a target for misinformation campaigns, either

by Russia or by fringe parties in each of the member states.

Facebook recently banned a number of far-right individuals and organisations from its platforms, in-

cluding Tommy Robinson, founder of the English Defence League, who recently launched his candidacy for the north-west of England in the European elections.

The company said individuals who were banned for being hate figures would remain banned, even if they were democratically elected.

“There are today elected representatives that are not allowed on the platform, like Golden Dawn in Greece,” said Richard Allan, Facebook’s vicepresident for global policy. “It’s not a comfortable position to be in, but this is the trade-off.”

“If somebody is actively stirring up real world violence, whether or not they are elected representatives, they don’t get a place,” he added.

In the past week alone, the team said it had detected hundreds of anomalous behaviours around political topics on Facebook and Instagram, Ms Sturdy said, that has led, in some cases, to removal of voter supression material. Examples of flagged content could include viral politically-charged photos, comments or live videos, or unusually large numbers of invitations to a specific political group that will be reviewed for their veracity.

“For instance, people in the room . . . might see a big ‘virality’ around polling day in Portugal, the goal is we can get to [misinformation] in minutes rather than waiting for it to be flagged to a fact checker,” said Mr Allan.

Britain’s anti-porn law is well-intended but flawed UK efforts to regulate the online world need better implementation

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ne industry that has thrived online is pornography. Now, in what it calls a “world first”, the UK will from July introduce measures aimed at preventing under-18s from accessing adult content online, through mandatory age verification. The goal is commendable. Yet what is being nicknamed the “porn law” is unlikely to be entirely effective, and fraught with risks for adults’ online privacy.

As is often with the UK’s online regulation, well-meaning measures are being poorly implemented.

The government says the new law, part of the 2017 Digital Economy Act but delayed by more than a year, aims to make Britain “the safest place to be online” by guarding against the risk of minors, and especially younger children, stumbling across adult material.

Commercial sites where more than one-third of content is deemed pornographic will be required to implement age verification software or face being blocked in the UK. Viewers will have to enter details from passports, driving licences or credit cards, or purchase a “porn pass” from a shop which will carry out the age check.

The law has multiple actual and potential flaws. For the time being, age verification will not apply to social media — though these are an avenue by which children can access pornography or encounter it accidentally. The government has at least acknowledged this, saying

it will review age verification on social media sites after a year.

Tech-savvy teenagers can also easily use Virtual Private Networks, which mask an internet user’s location, to circumvent age verification.

The sheer number of sites offering pornographic material, moreover, makes it almost impossible to track them all. The British Board of Film Classification, responsible for enforcing age verification, admits it will have to investigate primarily “sites with high volumes of traffic”, though will carry out spot checks on less visited sites. That means minors may still be able to access adult content on smaller sites.

The BBFC concedes “some determined teenagers will find ways to access pornography”. But it insists children will no longer stumble across pornography on commercial websites. Proponents will argue this is an improvement on the current situation.

There are, however, risks associated with adults disclosing identifiable personal data online.

Age verification software will be run by private companies. One leading provider, AgeID, is owned

by MindGeek — which also owns several of the largest porn sites, creating a potential conflict of interest. AgeID says it will not store or share users’ information. The BBFC has said it will set up a voluntary certification scheme to assess and certify age verification providers’ data security. www.businessday.ng

Lexi Sturdy, who oversees the real-time election operations, says the goal is to speed up response times to manipulations of the platform, allowing Facebook to ‘take down content proactively, and at scale’ © Reuters

Will bond markets buckle from the weight of new issuance?

The key questions for investors in the week ahead FT REPORTERS Will bond markets buckle from the weight of new issuance?

Investors are bracing for a busy month in corporate bond markets with a rush of big debt sales to fund acquisitions.

FIS, a Florida-based technology group, begins investor meetings this week to raise debt for its acquisition of Worldpay, with $11bn expected to be issued to refinance Worldpay’s existing debt. Bristol-Myers Squibb could issue upwards of $10bn for its $89bn takeover of Celgene, a rival drugmaker. T-Mobile has begun investor meetings for its still-unapproved acquisition of Sprint, for $58bn.

It all sets up what may be the heaviest flow of new deals in two years, according to Dealogic, with Bank of America Merrill Lynch analysts predicting between $110bn and $130bn to flood the market in May. Since the start of the year there has been more of a moderate trickle, with investors fighting over everything that has come

up for sale to date.

“We have had huge excess demand,” said Hans Mikkelsen, an analyst at BofA. “That will probably continue to be the case but there is a risk we get too much new supply this month.”

The pick-up in new debt could dent the roughly 6 per cent returns for investment grade bonds seen since the start of the year. Yields on a widelytracked index run by Ice Data Services have plateaued in recent weeks at around 3.65 per cent.

But Mr Mikkelsen adds that nonUS investors may provide the market with a boost, with Japanese and Chinese buyers returning from national holidays. “That will help a lot,” he said.

Joe Rennison Which way will metals prices jump after the break in Asian trading?

Metals traders will be looking look east this week as China — the world’s biggest consumer of commodities — returns to the market after a long public holiday.

In the absence of China, copper

fell sharply last week — it dropped 3.5 per cent to an 11-week low of $6,180 a tonne — as a stronger US dollar and fresh concerns about slowing global growth triggered selling by computer-driven funds. Copper is often considered a barometer for the world economy because of its wide range of uses in manufacturing and construction.

Some analysts believe the bearish sentiment will hold and that prices will remain under pressure. They point to rising copper stocks on global exchanges — up about 30 per cent this year, albeit from low levels — and falling premiums, which are the extra payment a buyer makes to get immediate delivery of the metal. At Shanghai’s Yangshan port premiums are about 50 per cent lower than this time a year ago.

Others are more positive, saying Beijing’s programme of fiscal stimulus is starting to kick in, boosting demand in the most metal-intensive parts of China’s economy, such as infrastructure.

Labour to pay £15bn to renationalise water industry Amount based on Moody’s calculation is much less than other valuations JIM PICKARD

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he next Labour government would pay less than £15bn to investors when it renationalises the water industry, compared with an estimated £44bn market value of their investments, shadow chance John McDonnell has confirmed.

Mr McDonnell said on Sunday that the cost of nationalisation would only be £14.8bn, citing a recent report in the Financial Times that was based on calculations from Moody’s, the rating agency, of the book value of the 15 English water companies’ shareholder equity.

The figure was less than one contained in a memo circulating among Labour MPs and cited by the Sunday Times, according to which shareholders would get compensation of under £20bn.

The memo stated: “We think this is a better place to start than market values because it reflects how much shareholders have actually put into a company, and doesn’t incorporate future expected profits.”

The Moody’s figure — which is in fact £14.5bn — is much lower

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than other valuations. For example, Ofwat, the regulator, estimates the total value of the industry’s assets to be £73bn, although that includes debt. The Social Market Foundation has estimated a market value of £44bn and believes nationalisation would cost £90bn.

A dozen of the British water companies are held by unlisted groups. But the three listed companies — Severn Trent, Pennon and United Utilities — have a market capitalisation of about £13.5bn.

The cost of the renationalisation, which would be funded by the government issuing new bonds, would have to be approved

by MPs, the shadow chancellor added. Although he cited the Moody’s calculation, he added: “It will all depend on what price parliament puts on it. Parliament will decide.”

Labour has indicated the final price could be lowered to take into account an industry pension fund deficit of £1bn, land sales by the companies since privatisation, and other factors.

The Conservative party said the move would represent “huge levels @Businessdayng

of state intervention in people’s personal finances” because some investors in the industry are pension funds.

Michael Roberts, chief executive of Water UK, the industry body, said more than 5m pensioners had funds invested in the sector. “It would be an absolutely devastating blow for millions of pensioners if the water industry was subject to a smash-and-grab raid by a future government paying well below market value for it,” he said.

Examples of pension funds investing in the water industry include the BT Pension Fund, which owns a 13 per cent stake worth £260m in Thames Water.

Labour argues the extent of investment in water by British pension funds has been exaggerated: for example, Wessex Water is entirely owned by YTL Corporation of Malaysia, while Northumbrian Water is owned by CK Hutchison Holdings and the Li Ka Shing Foundation of Hong Kong.

Another three UK water companies are wholly owned in Jersey and another is a UK-owned private company with offshore subsidiaries.

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ANALYSIS

Women, hopeful for change, are driving Sudan’s uprising Rejecting military rule goes hand-in-hand with redefining a more moderate Islam ZEINAB BADAWI

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or all but a decade of Sudan’s 63 years of independence from Britain, the country has been governed by the army. It is vital that civilians maintain pressure on the military in discussions about the terms, structure and duration of the transition. Talks have faltered over the division of power on the supreme council to over see the transition period. However, the revolution now under way is being interpreted only as a rejection of miliary rule.

The uprising was not just sparked by a fervent desire to oust General Omar al-Bashir. The umbrella group representing the professionals, trades unionists, students, activists and political parties includes many advocates for

Sudan. I must declare an interest: she is my aunt. My great-grandfather Babiker Badri pioneered girls’ education in Sudan at the turn of the last century and my family have long been campaigners for secularism, female emancipation and education.

Sudanese women are eager to ensure the clock will not be turned back after this revolution: my aunt warns that the opportunity to improve women’s rights must be seized before the patriarchal norms reassert themselves.

She has been heartened by the young women in this revolution, who marched, staged sit-ins, climbed trees, sat on fences, stood atop vehicles and threw tear gas canisters back at soldiers: these women protested without any regard for their personal safety.

Women revolutionaries are called ‘Kandaka’, the title given to the powerful queens of the ancient Sudanese Kingdom of Meroe, who ruled nearly 2,000 years ago and led their people into battle © Bloomberg

women’s rights as well as groups opposed to political Islamism.

President Bashir came to power in 1989 with the National Islamic Front; his movement, the National Congress party, was composed of political Islamists. He introduced prescriptive and invasive laws governing personal behaviour which have particularly restricted the rights of women. Mr Bashir may have done this more out of political expediency than personal conviction but, after 30 years, reactionary and exclusionary forces dominate.

Sudan’s last civilian prime minister, Sadiq al-Mahdi, deposed by Mr Bashir, is a descendant of the charismatic religious leader the Mahdi — who overwhelmed Britain’s General Gordon in 1885 and restored Sudan’s sovereignty. Mr Mahdi argues that Islam in Sudan has always been tolerant. At 84 he is very much seen as a member of the old guard, but he has anointed his daughter Maryam, rather than one of his sons, as heir to the leadership of his Umma party — one of the oldest in the country.

Women are taking the lead in Sudan. During the early stages of the demonstrations they reportedly even outnumbered male protesters. Balghis Badri, a prominent female activist and academic, has been instrumental in getting major gender rights legislation passed in

Before the fall of Mr Bashir, security forces are reported to have mounted sexual assaults on women, but there were few — if any — serious reports of harassment by male protesters. Indeed 22-year-old female student Alaa Salah has been described as the icon of the revolution after a video of her chanting revolutionary poems went viral.

Women revolutionaries are called “Kandaka,” the title given to the powerful queens of the ancient Sudanese Kingdom of Meroe, who ruled nearly 2,000 years ago and led their people into battle.

These are heady, exciting and precarious times in Sudan. One chapter has successfully been closed; but the old influences remains. Moreover, there are worries that the army has become addicted to power, and that pro-Bashir Islamists are plotting a return.

There is much cause for optimism. The official spokesperson for the professional association that led the protests, Mohammed Yousif, a professor at Khartoum university, wants Sudan to be led by a young person — preferably a young woman. It is too early to tell if this vision will prevail. For me, Prof Yousif captures the spirit of the revolution: pro-women, antimilitary rule, and against Bashir’s brand of Islamism. If the revolution fails the women of Sudan, it has failed the whole country. www.businessday.ng

India: the WhatsApp election It is the most influential social media platform in many parts of the world — it could also shape the country’s political future MADHUMITA MURGIA , STEPHANIE FINDLAY AND ANDRES SCHIPANI

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anjukta Pandey quit her job as a hair and make-up stylist in March to devote herself to Indian prime minister Narendra Modi’s re-election campaign on social media.

Ms Pandey, a feisty 32-year-old wearing huge hoop earrings, neon pink lipstick and a tattoo of Mr Modi’s name on her left forearm, now spends her waking hours spreading his election message on WhatsApp and other social media apps. “I’m online almost 24/7. I don’t go to sleep; we want Mr Modi to come back,” she says. “You won’t see anyone getting inked with Rahul Gandhi’s name.”

India’s ruling Bharatiya Janata party is using WhatsApp to wage one of the world’s most sophisticated digital political campaigns, carried out by a vast army of volunteers like Ms Pandey, who are devoted to Mr Modi’s brand of Hindu nationalism.

As internet access surges in India with the proliferation of smartphones and cheap data, more than 300m Indians are now on WhatsApp, making the country by far its biggest market.

While campaigns used to be conducted on TV and at large rallies, WhatsApp has become the central battleground of India’s election, which began on April 11 and will conclude on May 19.

The Indian contest follows a divisive election in Brazil, where far-right candidate Jair Bolsonaro swept into power in October — helped in part by a wave of toxic rumours and misinformation, much of it spread over WhatsApp. Now India is becoming the latest test case of the capacity of the messaging app, whose millions of small groups of encrypted users are often beyond the purview of electoral authorities or independent fact-checkers, to potentially shape the election in the world’s largest democracy.

For every supporter who says the app has helped bring together families and friends with a cheap communication tool, there are as many critics who fear it has become an impossible to monitor conduit for fake news.

“WhatsApp is the echo chamber of all unmitigated lies, fakes and crap in India, it’s a toxic cesspool,” says Palanivel Thiagarajan, an elected official and head of the IT department of DMK, a regional party in the state of Tamil Nadu who is running against the BJP. “If it were up to me I would say just cut it, there are hundreds of substitutes.”

The messaging app, which has 1.5bn users globally, has risen to

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popularity particularly outside the US in countries where its parent company Facebook is hoping to grow new revenue streams.

Claire Wardle, a research fellow at Harvard University and cofounder of First Draft, a non-profit group addressing misinformation on social media, says WhatsApp took off with the explosion of smartphone users in countries such as Brazil, Nigeria and India, where it has become “a primary source of information”.

“These questions about its role in the spread of misinformation are not just to do with elections,” she says. “It’s about WhatsApp’s role in societies, full stop.”

In recent years, it has been Facebook itself which has attracted most of the criticism around the spread of false news and electoral manipulation. The report by special counsel Robert Mueller outlined the extensive efforts by Russian actors to manipulate the 2016 US presidential election using Facebook. It also came under fire when it emerged Myanmar’s military was using the social network to incite violence against the Muslim Rohingya minority in the country.

But it is WhatsApp, which Facebook bought for $22bn in 2014, which has become the communications platform of choice not just in India and Brazil, but also across swaths of Europe including Spain and the UK. Mark Zuckerberg, the Facebook founder, has said WhatsApp’s intimate form of communication is the future of the Facebook group.

“In the last year or so we have seen a move from Facebook news feed to more private channels, including WhatsApp and Messenger, particularly in places like Brazil,” says Ms Wardle.

Its encryption system means that in contrast with Facebook or Twitter, WhatsApp conversations are impenetrable even to the company itself, say executives. But that has made it more vulnerable to misuse, especially in elections, say critics, who argue it has become a platform for spreading campaignrelated misinformation.

This risk came to a head in Brazil last year, in what became known as the first “WhatsApp election”.

With 120m WhatsApp users in a country of over 211m, the platform was flooded ahead of the October vote with false rumours, doctored photographs and audio hoaxes — much of which helped Mr Bolsonaro. Researchers studying 100,000 images circulating in 347 groups found that only 8 per cent were “fully truthful”.

“Misinformation was huge in Brazil. It was an election plagued with fake news that left behind a country split in half by hatred,” says @Businessdayng

Fabrício Benevenuto at the Federal University of Minas Gerais and a researcher on the impact of the social media network. “The political discussion ended up being reduced to a meme.”

In India, the BJP has been the most active of the main parties in trying to use WhatsApp to win votes.

“I’ve been trying to reach every household via at least WhatsApp,” says Punit Agarwal, the BJP’s social media co-ordinator for the Delhi area.

Mr Agarwal says the party has 74,000 volunteers tasked with spreading its message over WhatsApp. “There was a limited audience last time,” he says. “This time we have a vast audience.”

WhatsApp has become the platform of choice for politicians because of its massive reach that goes beyond a party’s loyal voter base, but also because of the lack of gatekeepers. Messages forwarded through the system have no context about where they originate, but benefit from the trust of coming from a contact.

Mr Agarwal denies that the BJP is spreading polarising content, but public WhatsApp data collected by analysts and anecdotal evidence show that Indians are being flooded with propaganda memes, much of it anti-Muslim and critical of the opposition Congress party. “WhatsApp groups are considered the most dangerous,” says SY Quraishi, India’s former election commissioner. “The disastrous potential of this media is very strong; you’ve seen how rumours floating [around] can cause havoc.”

Because of the extensive political participation on WhatsApp in India, the company said it began to plan its election strategy early. “We know political parties are using WhatsApp to organise, and we decided to do a test run [to monitor it] during the Karnataka election,” says Carl Woog, WhatsApp’s head of communications, referring to regional elections last May. At the time, WhatsApp discovered that one of the political parties, which it declines to name, had created a large number of groups using the party’s name all at the same time, and was adding several people to them in an obvious effort to spread propaganda in contravention of WhatsApp rules. “We had a pretty good sense of what was going on and we banned those groups,” he says, adding that this was the first time the company had observed this viral group behaviour.

Kiran Garimella, a researcher at the Massachusetts Institute of Technology who is studying misinformation in India, analysed more than 5m WhatsApp messages posted in 5,000 public groups over the past five months, covering roughly 1m people.

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Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 03 May 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

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Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 245,262.06 6.90 0.72 192 60,389,335 UNITED BANK FOR AFRICA PLC 229,136.12 6.70 0.75 262 11,693,898 ZENITH BANK PLC 659,326.37 21.00 -0.94 415 16,983,117 869 89,066,350 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 265,625.17 7.40 0.68 179 1,746,856 179 1,746,856 1,048 90,813,206 BUILDING MATERIALS DANGOTE CEMENT PLC 3,067,291.33 180.00 - 62 159,474 LAFARGE AFRICA PLC. 177,185.75 11.00 -1.79 88 738,315 150 897,789 150 897,789 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 341,239.00 579.90 0.85 19 18,362 19 18,362 19 18,362 1,217 91,729,357 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 - 0 0 0 0 0 0 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 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 68,681.52 72.00 - 16 19,014 PRESCO PLC 58,000.00 58.00 - 34 208,658 50 227,672 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 3 400 3 400 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,860.00 0.62 - 8 50,883 8 50,883 61 278,955 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 741.24 0.28 7.69 9 369,342 JOHN HOLT PLC. 182.90 0.47 - 4 23,429 S C O A NIG. PLC. 1,903.99 2.93 - 1 100 TRANSNATIONAL CORPORATION OF NIGERIA PLC 50,809.99 1.25 2.46 282 92,587,902 U A C N PLC. 20,169.08 7.00 2.94 137 16,571,526 433 109,552,299 433 109,552,299

BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 35,574.00 26.95 - 26 183,809 ROADS NIG PLC. 165.00 6.60 - 0 0 26 183,809 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,365.30 1.68 1.20 8 272,276 8 272,276 34 456,085 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 11,196.18 1.43 - 6 55,024 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 109,519.14 50.00 - 44 110,474 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 8 18,630 NIGERIAN BREW. PLC. 528,195.38 66.05 0.46 99 2,986,103 157 3,170,231 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 85,500.00 17.10 -9.76 295 4,958,315 DANGOTE SUGAR REFINERY PLC 168,600.00 14.05 - 72 778,418 FLOUR MILLS NIG. PLC. 66,221.13 16.15 - 52 221,968 HONEYWELL FLOUR MILL PLC 9,357.63 1.18 2.61 27 922,796 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 47,557.42 17.95 - 17 95,568 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 463 6,977,065 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 22,162.78 11.80 - 40 371,508 NESTLE NIGERIA PLC. 1,204,837.50 1,520.00 - 33 66,519 73 438,027 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 3 13,800 VITAFOAM NIG PLC. 4,990.87 3.99 -5.00 28 1,014,051 31 1,027,851 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 35,535.77 8.95 - 25 140,072 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 33 268,209 58 408,281 782 12,021,455

BANKING ECOBANK TRANSNATIONAL INCORPORATED 183,495.51 10.00 -2.91 70 3,874,615 FIDELITY BANK PLC 55,341.86 1.91 0.53 68 4,415,397 GUARANTY TRUST BANK PLC. 984,472.95 33.45 1.36 198 4,114,714 JAIZ BANK PLC 15,910.69 0.54 5.88 9 693,028 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 76,294.61 2.65 -1.13 20 12,657,737 UNION BANK NIG.PLC. 206,757.34 7.10 1.43 46 548,567 UNITY BANK PLC 9,351.47 0.80 - 3 47,310 WEMA BANK PLC. 28,545.10 0.74 1.37 33 2,847,282 447 29,198,650 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,405.56 0.78 1.30 45 1,648,158 AXAMANSARD INSURANCE PLC 21,000.00 2.00 - 2 1,200 CONSOLIDATED HALLMARK INSURANCE PLC 2,357.70 0.29 - 6 65,110 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 4 70,320 GOLDLINK INSURANCE PLC 1,637.98 0.36 -10.00 2 2,501,000 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 100 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 3.45 9 336,685 LAW UNION AND ROCK INS. PLC. 1,976.31 0.46 - 3 100,249 LINKAGE ASSURANCE PLC 4,080.00 0.51 - 5 77,700 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 - 5 487,549 NEM INSURANCE PLC 11,669.91 2.21 - 10 152,904 NIGER INSURANCE PLC 1,547.90 0.20 - 9 408,074 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 2 9,000 REGENCY ASSURANCE PLC 1,533.81 0.23 -8.00 20 2,940,292 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 -8.00 22 3,000,000 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 1,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 3,500 VERITAS KAPITAL ASSURANCE PLC 3,050.67 0.22 - 0 0 WAPIC INSURANCE PLC 4,951.61 0.37 -7.50 39 7,075,232 186 18,878,073 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,224.16 1.41 -6.00 16 628,400

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16 628,400 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,000.00 4.00 - 38 348,269 CUSTODIAN INVESTMENT PLC 37,349.84 6.35 - 11 31,036 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 38,615.29 1.95 -0.51 124 18,712,974 ROYAL EXCHANGE PLC. 1,183.44 0.23 -4.17 12 475,165 STANBIC IBTC HOLDINGS PLC 445,464.05 43.50 - 34 321,136 UNITED CAPITAL PLC 15,120.00 2.52 -3.08 71 1,459,072 290 21,347,652 939 70,052,775 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 4.35 7 421,574 7 421,574 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 1 149 1 149 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,900.00 4.60 9.52 19 367,090 GLAXO SMITHKLINE CONSUMER NIG. PLC. 10,762.89 9.00 - 15 16,767 MAY & BAKER NIGERIA PLC. 3,899.03 2.26 0.44 28 1,057,375 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,272.44 0.67 - 8 99,974 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 70 1,541,206 78 1,962,929 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 781.44 0.22 10.00 41 33,350,625 41 33,350,625 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 2 NCR (NIGERIA) PLC. 648.00 6.00 - 2 120 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 3 122 PROCESSING SYSTEMS CHAMS PLC 2,113.23 0.45 -10.00 141 16,946,868 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 0 0 141 16,946,868 185 50,297,615 BUILDING MATERIALS BERGER PAINTS PLC 2,130.20 7.35 - 7 39,040 CAP PLC 23,800.00 34.00 - 65 44,348 CEMENT CO. OF NORTH.NIG. PLC 208,324.49 15.85 8.56 54 754,824 FIRST ALUMINIUM NIGERIA PLC 886.35 0.42 -4.55 1 100,000 MEYER PLC. 313.43 0.59 - 1 1,153 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 1 100 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 129 939,465 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,293.67 1.87 - 12 40,241 12 40,241 PACKAGING/CONTAINERS BETA GLASS PLC. 27,998.43 56.00 - 14 17,293 GREIF NIGERIA PLC 388.02 9.10 - 0 0 14 17,293 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 155 996,999 CHEMICALS B.O.C. GASES PLC. 1,731.58 4.16 - 2 20,200 2 20,200 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 55.00 0.25 - 2 49,423 2 49,423 4 69,623 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 2,442.45 0.39 8.33 30 13,396,955 30 13,396,955 INTEGRATED OIL AND GAS SERVICES OANDO PLC 60,292.35 4.85 1.03 91 949,601 91 949,601 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,825.36 177.00 -0.45 16 2,032,607 CONOIL PLC 13,948.44 20.10 - 30 130,682 ETERNA PLC. 5,281.79 4.05 -7.95 21 481,410 FORTE OIL PLC. 45,521.71 34.95 - 32 82,081 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 0 0 TOTAL NIGERIA PLC. 55,002.54 162.00 -1.22 38 72,943 137 2,799,723 258 17,146,279 ADVERTISING AFROMEDIA PLC 1,997.57 0.45 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 3 1,800 3 1,800 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 2 400 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 0 0 2 400 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 100 IKEJA HOTEL PLC 3,637.89 1.75 - 3 1,010 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 3 275 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 7 1,385 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 181.44 0.30 - 2 683 LEARN AFRICA PLC 1,033.74 1.34 - 17 185,926 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 4 4,000 UNIVERSITY PRESS PLC. 793.79 1.84 0.55 7 162,962 30 353,571 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 5 47,100 5 47,100 SPECIALTY INTERLINKED TECHNOLOGIES PLC 764.54 3.23 - 0 0

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Company IN FOCUS

BUSINESS DAY Monday 06 May 2019 www.businessday.ng

The charts that show Cadbury’s best performance in 3 years LOLADE AKINMURELE

C

adbury Plc is still some way off from replicating a stellar 2013 financial performance, but in 2018 the company churned out its best numbers in three years.

In its 2018 scorecard, Cadbury showed improvement since making a loss in 2016, when the Nigerian economy slipped into its first recession in 25 years. But even more impressive was how the numbers stacked up against a five-year trend analysis.

The trend analysis revealed that the food and beverage maker picked up the pieces of a poor year bedevilled by weak consumer purchasing power in 2016 by growing profit before tax from a loss position of N563 million to N360 million in 2017 while after tax turned from a loss of N296 million in 2016 to a gain of N299 million in 2017, a 201 percent increase.

In 2018, that improvement continued.

This time, profit before tax surged 249 percent to N1.2 billion from 2017 numbers, while profit after tax rose by 174 percent to N823 million, the highest in three years.

Despite the improvement, however, Cadbury’s 2018 PAT was still some way off the record N6 billion recorded in 2013.

Cadbury’s bottom-line turnaround was driven more by cost-cutting measures than increased sales.

While Revenue grew below 2018’s average inflation rate (12 percent) at a meagre 8.75 percent, in reflection of an industrywide struggle of shrinking sales volumes on the back of low demand, Cadbury chalked over half a billion naira (N522 million) from selling and distribution expenses alone in 2018.

When we looked at the breakdown, we found that Cadbury had knocked off N394 million in “redundancy costs” which turned out the biggest driver of the reduction in Selling and Distribution expenses in the period.

Here’s the company’s explanation of how N394 million in “redundancy costs” was saved.

“The 2017 expense related to the Company’s plan to reposition its structure and processes and optimise resources to achieve a simpler and agile performanceoriented organisation. This resulted in the reduction of 149 positions. Agreements were reached with union representatives

which specify the number of staff involved and the redundancy compensation package offered by the company, as well as amounts payable to those made redundant, before the financial year end. In 2018, there was no redundancy of this nature.”

Operating costs reduction also helped Cadbury’s operating margin increase to 4.72 percent in 2018 from 2.15 percent in 2017, which means N95 of every N100 of sales was used to pay for variable costs excluding interest and tax.

Not the best margin in an industry with an operating margin average of 11 percent where Nestle boasts the highest margin— 22.77 percent in 2018. But the positive to take away is that Cadbury improved its margin when others fell short.

Nestle’s operating margin declined mar-

ginally to 22.77 percent in 2018 from 22.81 percent the year before, while Unilever’s also fell to 9.9 percent from 14.36 percent.

Perhaps, Cadbury benefitted from a low base.

Operating margin measures what percentage of revenue is made up by operating income. It therefore demonstrates the strength and profitability of a company’s operations.

It doesn’t stop at operating margin. Cadbury recorded improvements in other key profitability ratios.

Cadbury’s profit margin rose to 2.29 percent from 0.91 percent. A profit margin in low single digits leaves much to be desired, particularly as it is below the industry average of 10 percent. However, it still shows progress from last year’s abysmal figure.

At this growth rate, Cadbury would have achieved a 15 percent profit margin two years from now, by 2021. In 2018, Nestle had a profit margin of 16.85 percent while Unilever’s was 11.32 percent.

Value investors use the profit margin metric to assess the profit-generating capacity and efficiency of firms. Profit margin represents how much naira of profit the businesses generated for each naira of sale.

Cadbury also recorded improvement in Return on Assets and Return on Equity. In 2018, Cadbury generated more profit per naira of assets compared to 2017 as its ROA went from 1.06 percent to 3 percent in the period. Very low compared to the industry average but again, shows progress. ROA gives investors an idea of how effective the company is in converting the money it earns. The higher the ROA figure, the better, because the company earns more money on less investment.

On the Return on Equity (ROE) front, Cadbury’s ROE more than doubled to 6.49 percent in 2018 from 2.55 percent in 2017, a sign of improvement even though the promise land remains some distance away.

ROE provides investors with insight into how efficiently a firm is handling the funds that shareholders have contributed to it.

Cadbury’s earnings per share nearly tripled to 44 kobo in 2018 from 16 kobo in 2017, also the highest in three years but well behind 2015’s 66 kobo and 2014’s N1.06.

The rally in 2018 went unnoticed by stock investors as Cadbury’s share price shed 36 percent, the most among industry peers in a 2018 bear rout that saw the entire equities market decline some 17 percent as a result of massive foreign outflows driven majorly by policy normalisation by the US Federal Reserve and heightened political risks related to the 2019 general election.

This year, Cadbury is up roughly 10 percent, well above the 5 percent year to date loss of the consumer goods index.

But after the 2018 scorecard was published two weeks ago, it seemed investors ignored the company’s improving numbers or had priced it in much earlier, only for the stock to emerge one of the highest gainers last week.

It stock gained 8.91 percent to N11 from N10.10, according to data by the Nigerian Stock Exchange (NSE). That earned Cadbury a spot on the list of top gainers for the week-ended April 18, beating Nestle, the only other consumer goods firm to make the list, to 8th place.

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.