BusinessDay 06 May 2020

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news you can trust I ** wednesDAY 06 may 2020 I vol. 19, no 557

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Covid-19: LCCI recommends 1-year tax break for manufacturers, suspension of 50% VAT Odinaka Anudu

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agos Chamber of Commerce and Industry (LCCI) has asked the Federal Government to grant a one-year tax break to manufacturers, pharmaceutical firms, agro processors, airlines, small businesses and hospitality players to enable them navigate through Covid19-induced economic crisis.

In a statement on state of the Nigerian economy released on Tuesday to BusinessDay, Toki Mabogunje, president of the LCCI, says the global economy will likely become stiffer, with supply chains getting more complex and countries being more protectionist in the coming months.

Mabogunje projects that countries across the world may place technical embargo on Continues on page 30

Inside

NAICOM to issue new recapitalisation guidelines as COVID-19 hinders execution P. 2 Nigeria faces a debilitating 8% GDP slump, say economists P. 2

Officials of Lagos State Water Regulatory Commission (LSWRC), led by Funke Adepoju, executive secretary, during hand washing advocacy with soap and running water to stop the spread of coronavirus in Lagos, yesterday.

Health experts outline 3 priorities for Nigeria in COVID-19 fight LOLADE AKINMURELE

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ealth experts have recommended three priorities for the Federal Government and private sector in Nigeria’s quest to curtail the coronavirus pandemic which has exposed the nation’s frail healthcare system

and brought the economy to its knees.

Focusing on these priorities, the experts say, will prove decisive for Nigeria in the coming weeks if the country is to avoid a wide outbreak of the virus which Dalberg, a leading international development advisory group, predicts could see the economy contract by as much as 23 per-

cent this year.

Leading the way on the top priorities for Nigeria is testing.

Nigeria is doing far too little testing compared to its African peers despite being the most populated. Africa’s largest economy has only managed 90 tests per 1 million people, according to data from Worldometer.

Of the African countries con-

ducting tests for the virus, only Mozambique (79), Malawi (47) and Burundi (24) have done less tests. In contrast, South Africa, which is the second-largest economy in Africa, has done 4,342 tests per 1 million people, 48 times more than Nigeria.

Egypt, Morocco and Algeria, Continues on page 30

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NAICOM to issue new recapitalisation guidelines as COVID-19 hinders execution Modestus Anaesoronye

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he National Insurance Commission (NAICOM) says the key pillar objectives of the ongoing insurance industry recapitalisation exercise earlier slated to be concluded on December 31, 2020 have been hindered by the coronavirus (COVID-19) pandemic.

Expectations on the key pillars including consolidation, foreign direct investment and attraction of local investors, which the insurance industry regulator said were to reposition the industry for new phase of growth, have suffered setback as a result of the novel virus that has affected Nigeria as well

as global economy.

Sunday Thomas, commissioner for insurance/ CEO, NAICOM, made the disclosure at the NAICOMFITC Webinar Conference with the theme ‘Post-COVID-19: Impact on the Insurance Industry’.

Thomas said post pandemic, NAICOM would issue a new guideline for the recapitalisation, after considering all the scenarios.

“We are re-strategising and considering different scenarios, after which we will look at available models to see which one will be more appropriate and result oriented,” Thomas said.

“With what the economy is going through now, the game has changed. As far as the recapitalisation is

concerned, those things that formed the pillar of the recapitalisation objectives have been hindered by reason of COVID-19 pandemic.

The moment we are out of this situation, we will release new guideline for the recapitalisation exercise,” he said.

The insurance industry in Nigeria is in a recapitalisation exercise that requires operators to shore up their paid-up share capital to as much as 300 percent.

The exercise, which commenced on May 20, 2019 with a deadline of December 31, 2020, requires that life companies increase their paid-up share capital from N2 billion to N8 billion; general business from N3 billion to N10 billion; composite business from N5 billion to

N18 billion; and reinsurance companies from N10 billion to N20 billion.

The webinar organised

by FITC in partnership with NAICOM witnessed presentations from other industry players including Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance plc, as moderator; Ganiyu Musa, managing director/CEO, Cornerstone Insurance plc; Shola Tinubu, managing director/CEO, SCIB Insurance Limited; Rashidat Adebisi, executive director, AXA Mansard Insurance plc, and Chizor Malize, CEO of FITC, as the host.

Thomas also spoke of the importance of a stronger

Continues on page 30

Sadiya Umar-Farouq (r), minister of humanitarian affairs, disaster management and social development, receiving Muhammad Muhammed, new directorgeneral, NEMA, during his courtesy visit to the minister in Abuja.

Nigeria faces a debilitating 8% GDP slump, say economists FIKAYO OWOEYE

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he task facing Nigeria’s economic managers will get even more daunting after a poll of economists suggested that Africa’s largest economy would shrink by at least 8 percent in 2020 as a result of a contraction inflicted by coronavirus.

The initial forecast by the IMF was for a GDP slump of just under 4 percent, but emerging trends, say the economists, mean Nigeria’s economic recession will be worse than first thought.

Receipts from oil, mainstay of Africa’s most populous nation, has virtually evaporated with close to 80 million barrels of Nigerian oil floating aboard ships in international waters without buyers.

Even non-oil exports including agricultural products are piling up in farms and warehouses across the country as faltering demand and new health regulations slow down shipment from the Lagos ports.

On Tuesday, Bloomberg reported that health protocols just introduced by Nigerian authorities to curb the spread of the COVID-19 disease have delayed cocoa exports, leaving at least 30,000 tons stranded at the Lagos port and in warehouses in Nigeria.

DIPO OLADEHINDE

... opens secretariat for senior civil servants ... as Lebanese community donates N82.5m ambulance, food items

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he Lagos State government says it will be extending palliatives to many more households notwithstanding the gradual easing of the lockdown.

The government disclosed that over 440, 000 households have been reached through its COVID-19 Emergency Food Response Initiative, promising that more residents will benefit from the economic stimulus as distribution will continue in days and weeks ahead.

Meanwhile, some offices at the state secretariat, Alausa, Ikeja, were opened on Tuesday, as civil servants from directorate cadre (level 15-17) resumed for work after more than five weeks of lockdown).

Continues on page 30

Oil surges above $30 amid cautious easing of lockdowns

O LASG to reach more households with palliatives Joshua Bassey & Seyi John Salau

Under new rules introduced by Nigeria’s shipping regulators, crews of vessels entering the country’s waters are required to observe a mandatory 14-day quarantine period before they can discharge their goods or take up fresh cargo, according to Muftau Abolarinwa, president, Cocoa Association of Nigeria, which groups farmers, traders and processors.

Nigeria has received approval for a $3.4bn lifeline from the International Monetary Fund (IMF), but economists say the credit support is far short of what the country requires to get out of the fiscal bind that it has found itself.

“The sum of $3.4bn sounds like a large amount of money but it is roughly 1-2 percent of Nigeria’s GDP. It is not enough to solve our fiscal challenge,” said Mustapha Chike-Obi, former CEO of AMCON. The Wall Street journal calls Nigeria’s oil-induced fiscal crisis existential, but so far senior government officials including some ministers are resisting the vital reform measures Nigeria badly needs to rebuild.

“Cargo ships full of millions of barrels of Nigerian crude have nowhere to go, with much of the world on lockdown.

Nigerian oil companies are desperately competing to fill

Notwithstanding the resumption, however, the sprawling secretariat remained largely scanty, just as those who reported to work closed earlier than 3pm and were seen driving out.

The state governor, Babajide Sanwo-Olu, had on Sunday evening, while giving an update on developments relating to the coronavirus pandemic, directed public servants on grade level 15 to 17 to resume on Tuesday, May 5 while those from grade level 14 to 1 should continue to work from home pending a review of the gradual easing of the COVID-19 lockdown in two weeks.

Gbolahan Lawal, the state commissioner for agriculture, who spoke with journalists on Tuesday after taking delivery of truckloads of food items www.businessday.ng

and an ambulance all valued at N82.5 million, donated by the Lebanese Community in Lagos, said government would distribute more palliatives to the vulnerable.

He said due diligence had been followed in identifying and distribution of the food items to those who really need them.

According to Lawal, the pandemic had a negative effect on the financial and economic status of Lagosians, hence the state government started the Emergency Food Response Initiative to cater for the aged, vulnerable, people living with disabilities, and daily income earners who might have been affected by the lockdown.

Items donated by the Lebanese Community ambulance, 1,848 cartons of Aquafina

water, 105 cartons of sanitizers, 350 cartons of noodles, 100 cartons of 1kg rice, 120 cartons of margarine, 1,000 cartons of Supreme noodles, 1667 cartons of biscuits, 300 cartons of chips, soya oil, 1,000 cartons of semovita and 1,000 cartons of spaghetti among many others.

The Consul General of Lebanon, Elias Nicolas, who presented the donation to the government, on behalf of the community, commended the state government for the efforts made so far to contain and combat the spread of COVID-19 pandemic.

Faysal El Khalil, the chairman, Lebanese Community in Lagos, noted that the donation was a token of appreciation for their country of choice, Nigeria, which has accepted them as citizens.

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il prices rose for a fifth consecutive day Tuesday, with the international crude benchmark Brent trading for $30.31 its best level since April 13.

Equities also soared on hopes for a recovery in the easing of restrictions globally and fuel demand as some European and Asian countries along with several US states began to ease coronavirus lockdown measures.

West Texas Intermediate (WTI) crude CLc1 futures were up 18.1%, or $3.68, at $24.07 per barrel at 1400 GMT. The US benchmark has closed higher for the last four sessions. Brent crude LCOc1 futures were up 11.4%, or $3.11, at $30.31.

Italy, Spain, Nigeria and India, together with Ohio and other US states, began allowing some people to go back to work and opened up construction sites, parks and libraries.

Vehicle traffic in most of the United States, including those yet to lift shelter-in-place orders, has also rebounded, RBC Capital Markets research said in a note.

US President Donald @Businessdayng

Trump on Tuesday praised the rise in oil prices and hailed measures by the states to reopen their economies, a reversal from anger he has frequently mooted throughout his administration at price rises as the U.S. shale industry confronts unprecedented pain.

Swiss bank UBS said the easing of restrictions would help lead to a balance in supply and demand for the oil market in the third quarter and even projected an undersupply by the fourth, forecasting an end-2020 recovery of Brent to $43 per barrel and $55/bbl by mid-2021.

“Themarketisstillvulnerable but now one thing is clear, the demand bottom is behind us,” Rystad Energy’s head of analysis Per Magnus Nysveen said.

“If you’re a trader and open the window, do you see traffic? Is it noisy? That’s the indication that demand is coming back, that the price rebound is not too far away.”

Reflecting hopes that the oil industry may have passed the worst of coronavirus-induced lockdowns, hedge funds and money managers were buyers of petroleum derivatives for a fifth straight week in the week ended April 28.

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cityfile Group distributes palliatives to Lagos communities Anthonia Obokoh

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nited Way Greater Nigeria (UWGN) with the support of Unilever Nigeria Plc, Nigerian-American Chamber of Commerce and Red Star Logistics has distributed care packages containing hygiene products, cooking ingredients and face masks to families to ameliorate the impact of the Covid-19 pandemic on them.

The palliatives were distributed in Makoko, Akoka and Lafiaji communities in Lagos. Over 1000 individuals and families in these communities received the packages.

According to United Way Greater Nigeria, the aim was to bridge the gap between low and middleincome earning Nigerians and corporate organisations.

“This is why we have partnered with organisations to provide these products, logistics and financial support during these trying times,” said Oyejoke Coker, board chairman, United Way Greater Nigeria.

The organisation said

it was hoping to reach out to more Nigerian families and individuals affected by the nationwide lockdown.

“During times of uncertainty and crisis, people come together to support one another.

Covid-19 is a new test of our collective strength and United Way Greater Nigeria is on the front line, mobilising people and organisations to provide critical services and vital information for those in need,” Coker added.

According to him, the organisation’s response to the Covid-19 Response Fund was set up to support individuals and families access basic amenities, personal protective equipment (PPE) for health workers and accurate information for the general public.

United Way Greater Nigeria is a non-governmental organisation that focuses on education, health and financial stability for all in Nigeria.

It is the local partner of United Way Worldwide, an organisation that has been in operation over 100 years in 40 countries and 1800 communities worldwide.

Edo begins arrest of violators of order on face mask

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do State government has began arrest and prosecution of violators of its order on compulsory use of face masks and other measures put in place to curtail the spread of the novel coronavirus.

The violators are being prosecuted in Mobile Court located at Urokpota Hall in Benin, the state capital.

The arrests are being made by the State Public Work Volunteer Scheme (PUWOV), in collaboration with the police and other security agencies.

Commercial drivers violating the directive on the number of passengers to be carried are also being arrested as well as those carrying passengers without face masks.

Some popular markets in the city, including the one on Lagos Street, remained closed on Monday while some others for foodstuffs were partially opened.

Governor Godwin Obaseki, had on April 30, authorised the opening of some offices in the state, in line with the directive of the Federal Government.

O b a s e k i , h o w e v e r, warned that anybody going outside his/her home must wear a face mask or risk being arrested.

The governor also cut down the number of passengers to be carried by commercial buses and taxis as part of measures to maintain social distancing, but many of the commercial drivers are not adhering to the directive. www.businessday.ng

Hundreds of Ogun State residents trooping into Lagos State as lockdown eases in Lagos, yesterday.

Pic by Olawale Amoo

Covid-19: Oyo launches digitized C of O to boost economy … to bear applicants’ cost of survey, planning permits Remi Feyisipo, Ibadan

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n a bid to grow its gross domestic product amid Covid-19, Oyo State government has launched an online platform for issuance of Certificate of Occupancy(C of O).

The government said with this, processing and collection of C of O would become faster, easier and affordable.

According to the commissioner for lands, housing and urban development, Abiodun Abdu-Raheem, it will now take 60

days under the Oyo State Home Owners Charter (OYHOC) scheme. The government is also to bear the cost of survey, planning permit and all other relevant documents for applicants who do not have them under the OYHOC scheme.

“All C of Os issued under the improved OYHOC will not only be digitized, for ease of authenticity confirmation, they would also be the same legal instrument as any other C of O being issued by the government,” Abdu-Raheem said.

He said that records have shown that major-

ity of residential landed properties in Oyo State have no registered titled documents leaving such property owners open to many risks, hence the need for the C of O. While urging all eligible property owners without title or approved documents to take advantage of the opportunity, the commissioner said that the state government would ensure all land owners have digitized title documents by December 2022.

He added: “Property owners can now easily use their properties as collateral for any financial

transactions as well as having their documentation on the digital database of the ministry for ease of confirmation and transfer”.

Abiodun said application forms can be obtained at the ministry of lands, housing and urban development at the state secretariat, all local government authority offices as well as local council development authority offices for N6,000.

He noted that the concessionary processing fee applicable for the OYHOC scheme C of O would be available for applications received between now and December 31, 2020.

Enugu: Police to prosecute violators of curfew … warn officers against unprofessional conducts

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he police in Enugu say violators of the 8pm to 6am curfew imposed by the Federal Government to stem the spread Coronavirus risk arrest and immediate prosecution in the court of law.

President Muhammadu Buhari during a broadcast on Monday, April 27, imposed an overnight curfew across the country between 8 pm and 6 am starting from May 4.

Spokesperson of the Enugu State Police Command, Daniel Ndukwe, in a statement on Monday, May 4, said that the Commissioner of Police

(CP), Ahmad Abdurrahman has directed security operatives to arrest anyone found violating the curfew order.

“The command wishes to reassure the general public of its preparedness to enforce the new presidential order alongside those still in force in Enugu, in the most professional manner deemed non-prejudicial to discipline in the force.

“These nationwide orders would be enforced without failure in Enugu, with effect from May 4.

They include daily overnight curfew from 8 pm to 6am across the state. This

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means that movement of persons and vehicles, except for those on essential duties with valid proof, are prohibited.

“Ban on non-essential inter-state passenger travels until further notice.

Partial and controlled inter-state movements of goods and services, allowed only for the transportation of medical supplies, petroleum products, food stuffs, livestock, agro-allied products and other essential goods and service providers,” the police said.

They added that “strict and mandatory use of face masks or acceptable cov@Businessdayng

ering in public places, in addition to maintaining physical distance and personal hygiene in such places; and restriction on social and religious gatherings in the state must be strictly adhered to.

The police command directed all officers, especially area commanders, divisional officers, heads of tactical/operational departments and formations to enforce the new and existing orders, professionally. “Any officer found wanting will be severely sanctioned and their supervisors held liable for supervisory failures,’’ Ndukwe added.

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Survival: A note for microfinance institutions Small Business handbook

Emeka Osuji

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y now everyone must have realised that what we have is a socio-economic disaster that will not go away in a hurry.

This is a business cycle worsened by a pandemic, and the full impact is still unfolding. Even before the pandemic, the microfinance industry was already struggling. What with the rising volume of Non-Performing Loans (NPL), increasing insolvency and closure of many operators, some of which shut down voluntarily while others received regulatory action? It is just unfortunate though that COVID-19 happened when oil price was racing south, on account of many variables led by the crisis between Russia and Saudi Arabia, and the slowing down of the China industrial machine.

We have spent one quarter of the year doubting the nature of what hit us, then believing it is what it is, denying again and finally accepting that the trouble at the door is COVID-19 - not a respecter of skin colours, and

that hot weather is, at best an uncertain deterrent. Therefore, there is little or no time left for sermonisation, even on the pulpit. We have used up all the time we had for economic jargons and theorising. The only time left now is for taking practical steps to protect our citizens and their different economic endeavours. It is even more urgent for us in microfinance.

The people of faith will always go back to seek God in the churches and mosque, when the weather improves.

However, a microenterprise one destroyed cannot come back.

The general rule for now, and despite the easing of the lockdown, is to maintain the mandatory two metres or six feet gap between persons, use sanitizer and wear the face mask. There should be no physical meeting with clients, even as we go out to work this week. We should begin plans to make all services available online, including applications and appraisal of credit. Charity must begin at home. In that regard, we should protect our staff and be flexible in dealing with them, especially with women who have little children to nurse. It may be appropriate to seek alternative and friendly work schedules for them.

It should be company priority to report any illness or signs of illness to a doctor or the relevant authorities, as quickly as possible. Keeping staff safe by providing free gloves, hand sanitizers, and gloves where necessary will be evidence that we truly mean business when we say “our staff are our best resources”. Keep all meetings short as staff may lower their guards

unconsciously, if meetings drag and workers become worn out. Staff must be taught how to react to suspected cases of infection. They must not panic nor mistreat suspected victims.

It may be appropriate to appoint a Crisis Manager, with support staff, that have the right aptitude, to deal with eventualities and follow up on any crisis, with regard to health.

Working from home could be quite tasking as we have all seen over the past several weeks. First, we need to find a secure place where we can have relative peace and be able to keep the children away to gain concentration. It is important that we be reachable on telephone, just in case a client or colleague needs our attention. We must ensure that regular normal work practices are not discarded, just because we are working from home. Proper dressing and regular meetings, like Monday morning meetings, should as much as possible be maintained.

Of course, proper dressing should be adhered to, especially when clients are involved and videos are used in online meetings. At the end of the week, obtain the regular weekly Activity Report, and where possible obtain Daily Activity report, made as precise as possible. There are a number of digital infrastructures that can be used, including Zoom, Skype, Google Team, WhatsApp, Slack and Hangout. This is the time to begin to gain capacity as things are going that direction for good.

We should be busy taking necessary steps to ensure that our business will come ashore, when all the

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It should be company priority to report any illness or signs of illness to a doctor or the relevant authorities, as quickly as possible.

Keeping staff safe by providing free gloves, hand sanitizers, and gloves where necessary will be evidence that we truly mean business when we say our staff are our best resources

Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii

Child is the father of man

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’ve always insisted that both actions and inactions will always have consequences, no matter how long it may take them to materialise. There are times when the repercussions take so long, one could be forgiven for believing one had gotten away with it. But we never really do. I’m reminded of my early boarding school days in the UK when I would go home with school reports which I knew would do nothing to endear me to my parents. Till this day, I blush when I remember my headmaster, McDonald’s remark to sum up one of my reports. To put it in his exact words, he said, “Dapo seems to think the whole school is one big playground.”

Chai! I knew the consequences of that. Did this oyinbo man not know how such a comment would sound to a Nigerian parent? I was in big trouble. Now, if my dad was the type of person whose nature it was to thrash out matters that don’t sit well with him instantly, that would have been good. Unfortunately for us, he was not. After handing him my report at a time when I believed the joy of seeing his son for the first time in almost two months meant he would sheath his sword for a while, I would then proceed to reading his body language on a daily basis to gauge if he has read the report. A whole week would pass and my dad’s countenance would give nothing away. Just as I begin to convince myself that I had gotten away with it, he would pounce. He caught me off my guard every single time. I never escaped the consequences of my actions.

As a people, we have over the years perfected the art of turning the other way, in the presence of very obvious infractions by our leaders; adopting a conspiracy of silence with the hope that when it’s our “turn”, others will do the same and not “pour sand in our garri”.

We carry on with the less than wise attitude of

“what’s my own, if it doesn’t affect me directly?

Let me just maintain my lane.” I believe that’s the current parlance.

The ongoing situation the world finds itself in, only affirms my position that one day, as sure as it is that the sun will rise in the morning and set at dusk, the proverbial hen will one day come home to roost. The current Coronavirus pandemic has exposed us to no end. The inadequacies of our government hospitals and health care system in general is obvious for all to see.

Stories of those who lost their lives to COVID-19 because of our lack of preparation are heart breaking. Such pathetic stories abound.

There’s one glaring thing this tragic period should teach us however and it’s this. Failure to do the right things at the right time will almost certainly result in unpleasant consequences. That’s not the end of it though.

Failure of those standing by to insist on the right thing being done when it should be done, will produce adverse results, not just for everybody else, but for you too. To adopt a nonchalant attitude to the infractions of our leaders and people around us, because it doesn’t affect us in the immediate, is nothing short of foolish because a day will come when we will all pay for it.

Time has shown that whatever we do now will still catch up with us in the future just as surely as what we did or omitted to do in the past is haunting us right now. There is no better time for us to teach our children the way that they should go. There is no better time than now to ingrain in their psyche a society focused attitude rather than a self-focused one, because as the dreaded COVID-19 has clearly shown us, there may come a time when neither money nor privilege will save us; despite our almost absolute faith in them.

The majority of us find it difficult to see any

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need in investing precious time and resources in inculcating these values in our children.

We attach scant importance to getting our children to read material that will teach valuable lessons and positively shape their minds, and we certainly don’t see the need to involve them in activities that will help them to learn these things experientially. Instead, we invest only in the things we believe will help them to “get ahead”. Things, we believe will put them at an advantage over their peers; and even if it so happens to give them an unfair advantage, well, that’s the name of the game.

Someone must lose just as someone must win. There’s nothing like a “win, win” situation.

I find this prevalent attitude of “let our society take care of itself and let me take care of me”, not only to be myopic, especially when the same society makes it so difficult for you to enjoy in peace what you may have gained by “getting ahead”, but also defeatist. Regarding the myopia, I don’t believe it to be a coincidence that in the last few years, those who have abandoned the ship called Nigeria to seek greener pastures abroad, have increasingly included those who by all means of measurement would be regarded as prosperous. In a number of cases, the man may stay in Nigeria to continue his hustle while he spirits his wife and children to a country which functions better as a society, and affords them all more peace of mind. So, for us to think all that’s required we do, is to help our children “get ahead” while failing to stimulate in them a desire to evolve a better society, the more fool us.

Concerning yourself with only what will “get you or yours ahead” is also defeatist.

Why? Because it clearly indicates that one has given up on one’s country. As far as you’re concerned, it can’t change. It can’t be better than it is, so what’s the point in trying. Why not

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ill-wind settles. In doing that, a major task is activating our business continuity programmes. This is more so important as most of us, having not experienced any disasters before, are likely not have had a proper Disaster Recovery Plan; at least not one that addresses a virus attack. Accordingly, the immediate task in addition to self-preservation and everyone contributing to efforts to cut the transmission of COVID-19, is to help restart our economic engines. Business Continuity Plans are critical and they begin by identifying the relevant likely risks, analysing them and their likely impact on the business and developing a strategy to prevent or deal with them.

Such a plan also shows the company’s response capability and readiness to guarantee that business will continue whatever the disaster may be. We cannot do this successfully without showing interest in the affairs of our clients. This is the time to show them that we are not a group of Shylocks. Indeed, this is the time for raising hope among your stakeholders. Both staff and clients need to be kept hopeful. Many are already broken by irreparable losses. As the world tends to go virtual and online, there is need to help those that are not computer savvy to be rest assured that they are not going out of fashion.

Plans should therefore be made to update their competencies and give hem new skills.

Character Matters with Daps

Dapo Akande just yield to the appealing notion of “joining them if you can’t defeat them”? A much easier option and certainly a more expedient one.

But a wise man once said, “a soft people will vote for those who promised a soft way out, when in truth there is none.” There is indeed no substitute to character.

To quote from my book, Shifting Anchors, “Every parent owes the nation a duty to bring his or her child up well, by inculcating them with the right values. We Yoruba will call such a child, “Omoluabi” (and I believe “Ezigbonwa” in Ibo. I’m yet to get the Hausa equivalent.

Maybe someone can reach out to help me with this). Once you abdicate this responsibility, you lose the moral right to complain about the state of the nation because when your child grows up, his behaviour will only compound the problem. It behoves you to do your bit.

But first, you must lead in the way you would want to be led.”

William Wordsworth’s genius was put beyond doubt when he reminded us that indeed, “child is the father of man.”

Changing the nation...one child at a time.

Akande is a Surrey University graduate with a Masters in Professional Ethics. An alumnus of the institute for National Transformation and author of two books; The Last Flight and Shifting Anchors. Contact: dapsakande25@ gmail.com

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comment Nigeria’s healthcare system in the eye of the storm comment is free

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Olanrewaju Rufai

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cross the world, the rapid growth in the number of people infected with COVID-19 has overburdened health systems, causing severe human suffering and resulting in almost 250,000 deaths.

As the pandemic rages, it continues to pose a significant threat to the global economy, particularly affecting the most vulnerable and further stretching a social fabric challenged by high levels of inequalities.

In light of this unprecedented health crisis, several countries have ramped up efforts to contain the virus, implementing measures including social distancing and mass testing and contact tracing. Nigeria has followed the lead of developed nations and adopted similar measures. However, a stark difference in the implementation of these measures in Nigeria in comparison to other countries is that while these measures build upon already existing, well-funded and viable healthcare systems in these developed nations, the same cannot be said about Nigeria.

That Nigeria’s healthcare delivery system has been neglected and left to crumble is an understatement.

Decades of underinvestment and misappropriation of funds have ensured that Nigeria’s healthcare system has deteriorated into one of the worst in the world. A 2018 study in the Lancet of global health care access and quality ranked Nigeria 142nd out of 195 countries.

Over the past decades, the nation’s budgetary allocation to healthcare has consistently fallen below globally and regionally recommended thresholds.

In the nation’s 2020 federal budget, the sum of N427 billion was earmarked to finance the health sector, up from N365 billion in the previous year. Nevertheless, this allocation to healthcare constitutes less than 5 percent of the government’s budget and remains significantly below the 15 percent benchmark stipulated in the African Union’s 2001 Abuja Declaration. The story is similar at the state level, with the average budgetary allocation to healthcare in states consistent with the federal government’s and below recommended thresholds.

A consequence of this chronic underfunding of the nation’s healthcare system has been the massive brain drain of the nation’s health workers.

Nigerian healthcare workers, especially doctors, continue to migrate in droves to other parts of the world to find better working conditions. As at 2019, over 5,000 Nigeria doctors were registered with the United Kingdom’s General Medical Council (GMC).

Overall, it is estimated that 40,000 of the 75,000 registered doctors in Nigeria practice abroad.

In addition, World Bank data shows that Nigeria’s total health expenditure amounted to 3.8 percent of GDP in 2017, below peers like Kenya (4.7 percent) and South Africa (8.1 percent). In fact, it is estimated that more than 100 million Nigerians cannot afford to pay bills for treatment in public health facilities. Furthermore, Nigeria currently has no viable system for affordable health care, thus lowincome families, which constitute more than half of the population, do not have access to formal health care. The nation’s health insurance plan, the National Health Insurance Scheme – NHIS established in 1999 and intended to be universal, remains flawed, meaning that access to free and good quality healthcare for the entire population is limited. All of these explain the prevalence of poor health outcomes in Nigeria.

These health challenges are wellknown and Nigeria has drawn global attention for its failing health care system. Nevertheless, the nation’s leaders had never paid attention to the nation’s healthcare system. In fact, despite having a three-month head start before the COVID-19 pandemic made landfall in Nigeria, Nigeria still failed to prepare adequately for the pandemic.

Now that the virus has laid bare the nation’s deplorable healthcare system, desperate efforts are being made to bridge the gap against the pandemic. However, this will most likely fall short, as the rot inherent in the system due to lack of attention over decades cannot be fixed in weeks. A sadly unfortunate situation given the heroics of the nation’s

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A consequence of this chronic underfunding of the nation’s healthcare system has been the massive brain drain of the nation’s health workers. Nigerian healthcare workers, especially doctors, continue to migrate in droves to other parts of the world to find better working conditions

healthcare workers who continue to fight valiantly despite their deplorable working conditions and historical lack of support from authorities.

It is therefore pertinent that postCOVID-19, Nigeria must take a long, critical view of herself to understand the factors responsible for the abysmal state of the nation’s healthcare system, with a view to taking concrete steps to address the flaws in the health sector.

In particular, it has become imperative that the nation’s governments at all levels dedicate significant budgetary allocations and public investments into the nation’s health sector.

Furthermore, there needs to be a realization that no nation can achieve a superb healthcare system without the existence of a functional health insurance scheme strategically conceived and implemented to guarantee universal health coverage. Therefore, there is a need to strengthen the nation’s health insurance system by addressing its flaws and ensuring that health insurance in Nigeria becomes universal and not only the preserve of the well-to-do.

COVID-19 has laid bare Nigeria’s deplorable healthcare system, and the nation’s leaders can no longer feign ignorance of its deplorable state.

Only proactive actions to address the flaws inherent in the system and the factors responsible for its deterioration will help forestall another public health disaster in the future. A word is enough for the wise.

Rufai holds a first class degree in Management and Masters degrees in Management and Finance. He is a finance and strategy analyst and can be found on Twitter @LanreRufai_.

Reskilling your workforce for the future

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hen organisations invest in the training and development needs of their workforce, they empower them to add value to the business which ultimately translates to increased productivity, reduced employee turnover, and other positive brand advantages. Besides, top talents prefer to work at organisations that create skill-enhancing opportunities. On an individual level, amongst other benefits, employees who are constantly trained experience increased job satisfaction which is an important goal for organisations should strive for.

However, since new models of operations, market trends, and technology sprout every other day causing disruptions in business flow, managers keep seeking out ways to thrive. One of the ways they can ensure continuous growth is by accessing the impact of these changes on human capital, and work towards closing potential gaps in knowledge and skillset created by these shifts. In light of this reality, the question for executives remains whether to adopt a hire new people or to upskill or reskill employees who have great potentials so that they can successfully transition into new roles. How do these changes apply to our business? What is the strength of our workforce? How do we realign our people to prepare them for these changing roles and responsibilities? These are other questions organisations need to address.

Some managers may prefer to hire if the new employees already have the skillset, connections, and experience. Yet, although new employees bring fresh perspectives and solutions to the table, growing existing talents and enforcing policies that will encourage employee retention may be a better alternative. According to a study by Harvard Business Review, when a highly rated employee moves to a new company, there is a likelihood that their performance may decline. The reason for this is because asides personal capabilities, other external factors such as an organisation’s internal systems contribute significantly to employee competence. An employee that was thriving in a company whose work environment played a substantial role in their success may not deliver as expected in a reverse environment. New employees may struggle with transitioning to a new workspace, having to adopt new work styles, work with new personalities, or even adapt to new work cultures. And while the study highlights that these classes of workers are likely to leave the company, existing workers whose skills have been up (reskilled) tend to show loyalty. More so, an existing workforce already knows the peculiarities of an organisation, thus training efforts will be more effective as they will be targeted to meet specific company needs.

Before embarking on a reskilling program, a defined objective should be set. Managers

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need to research extensively on how their industry is changing and identify how these changes apply to their organisation. What trends are being introduced in the market place? How is customer behaviour changing?

What soft and hard skills would be in high demand? Would the nature of business change that more freelance workers will be required as against full-time workers? Would there be a need to shut down a particular unit if the introduction of certain technology displaces operations from that unit? Would there be a need to create an entirely new department to fill critical roles? By defining these trends as it relates to their scope of business, managers are better positioned to define crucial roles which are needed to map out a suitable reskilling strategy. It is equally important for the lower cadre of staff to be fully involved in the design of the plan, especially if they are the ones who will be changing roles.

Once clarity has been ascertained on the new skills to develop, learning, and development initiatives should be tested and adjusted alongside before launching out full time. While some workers are open to the idea of reskilling, others will be resistant.

On the other hand, some managers may not know how to identify candidates to reskill. Start with team members who are high-achievers, take initiative, go out of their way to develop themselves, and who have performed exceptionally well in their cur-

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OSAYI ALILE

rent roles. These make the best candidates for your test run. You want to select people who will make a complicated process rather easier. Staff who are resistant may need some time to come around, hence forcing them to change may make them resentful. Supervisors should capitalise on the work behaviour of each team member to decide on how best to buy them in.

By offering incentives, strengthening positive learning behaviours, and giving constructive feedback, organisations can and should encourage a work culture of continuous learning and development. Leaders should lead by example. Skill upgrade is easier when everyone sees the need to constantly reinvent themselves.

Alile is the CEO ACT Foundation and consultant for Access Bank Plc on its CSR projects, Ms. Alile was the Executive Director of FATE Foundation, a leading private sector led not-for-profit organisation in Nigeria

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COVID-19, Nigerian banks and employee loyalty Franklin Ngwu

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n a recently leaked video, the Group Managing Director (GMD) of Access Bank, Herbert Wigwe was portrayed as planning to sack about seventy-five percent of his workforce and a pay-cut for the remaining twenty-five percent as part of the strategy to survive the COVID-19 crisis. As it is in Access Bank, so it is in other banks and many other firms in Nigeria, a friend ardently maintained! With revenue and profit targets unlikely to be achieved, cost saving measures especially retrenchment of workers is normally the default option of most businesses.

While this might be perceived as an appropriate management strategy during a recession/crisis, research of different economies and firms shows that focusing entirely on cost cutting measures are most of the times counterproductive. The firms that cut costs faster and deeper have the least probability of sustainable growth and profitability even when business environment improves.

While the Central Bank of Nigeria has commendably reached an agreement with the banks to tentatively jettison the sacking of their employees, there are pertinent issues that need to be highlighted. First, is it within the powers of CBN to stop the banks from sacking their workers and will the banks faithfully comply? Second,

who or which agency will negotiate with other sectors as CBN did with the banks? The third issue which I will focus on is if the planned retrenchments are justified and will it be in the banks interest?

Based on research, when a wide retrenchment of employees takes place, the concerned firm suffers two major risks with the first being that the engagement level of the remaining employees significantly declines due to fear that they might be affected if another downsizing exercise is initiated. With most of the remaining employees consequently hovering between disengaged and actively disengaged, the second risk relate to subsequent recruitments that might be done when the economy improves. In addition to the cost of recruitment, the firm will also struggle to attract and retain loyal and committedly engaged employees.

Reason being that the new recruits will be influenced by the old employees that are mainly disengaged and actively disengaged in addition to inherent risks of adverse selection and moral hazard.

Before the COVID-19 crisis, a research on the level of employees’ engagement in Nigeria revealed that only 12 percent are engaged. While 65 percent of our employees are disengaged, 23 percent are actively disengaged. With such grim situation, the question is if wide retrenchment of employees is the best strategy for the COVID 19 challenge? In another research, CEOs from different parts of the world were asked to state the most important asset or stakeholder to a firm. With shareholders, regulators, employees, community and consumers considered as key stakeholders, majority of the CEOs selected the employees as their greatest asset and stakeholder. If employees are considered the greatest asset to a firm, a

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There is no doubt that COVID-19 comes with many negative impacts on businesses.

However, the doubt is if the banks are among the most affected and if the impacts are so much to warrant the sacking of employees just within month of COVID-19

further question is if the greatest asset should be the first to be sacrificed in a time of crisis.

While sacking of employees will be inevitable in some circumstances, it should be the very last of the last when other options are fully exhausted. In another research, firms that have achieved sustainable growth and profitability did not use wide retrenchment of employees as a survival strategy during and after crisis such as COVID-19. Of the different options that can be used, the one that results to highest sustainable growth and profitability is a combination of operational efficiency and promotion focused strategies particularly innovation led market development and asset investment. Such firms are described as progressive firms with growth of about 37 percent during and after crisis.

As indicated, the strategy of progressive firms is that of creative thinking and customer led innovation, an area that Nigerian banks cannot be said to be doing very well.

By innovation, I am not referring to only deployment of technology. I mean deep ideation and creation of products and services for sustainable financial intermediation and growth.

Just to buttress the limited innovation of our banks, their revenues and profits come from both interest and non-interest services that are common to all banks.

In a country of about 200 million people and a banking sector since 1894 (over 120 years), all the banks can only boast of about 40 million customers even with all the noise about financial inclusion. Moreover, even when some innovate, it is not really to provide any superior innovative services but mainly to make more money through many questionable charges.

There is no doubt that COVID-19 comes with many negative impacts

on businesses. However, the doubt is if the banks are among the most affected and if the impacts are so much to warrant the sacking of employees just within month of COVID-19. I do not think so. With all the banks claiming to have good digital platforms, they offered most of their services during the COVID-19 lockdown including both debit and credit transactions. Not only did transactions take place, a significant part of non-bank transactions interestingly moved into the banking sector due to the lock down and social distancing. Moreover, as the lockdown led to increase in data usage and entertainment services, most banks are recorded increasing revenue and profits from selling the products and services of telecommunication and entertainment firms like MTN and DSTV. It is therefore a bit difficult to justify the sudden decision to sack workers with COVID-19 as an excuse just within one month of the crisis.

Before COVID-19, most banks declared huge profits even with an average cost-income ratio of about 65. If the banks want to reduce the high cost-income ratio, they should not use COVID-19 as an excuse.

What is required is creative thinking and innovation. While our banks are sacking their workers, another firm in Nigeria recently approved and paid the yearly salary increase to all their employees at the peak of the lock down in April. Between the firm and Nigerian banks, who will achieve higher employee engagement and loyalty? And who will better stimulate the innovative capabilities of their employees for sustainable growth and profitability?

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

E-mail- fngwu@lbs.edu.ng

COVID-19 and its impact on renewable energy companies in Nigeria

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ncreasing electricity access is still a major challenge as the national grid can barely boast of 45 percent electrification across the country according to the USAID Power Africa fact sheet for Nigeria. Renewable energy solutions now create a means to increase electricity access across the country due to the rapid development associated with the technology. Renewable energy companies who frontline the deployment of these projects have been impacted in various ways as a result of the pandemic.

These renewable energy companies have had to observe the lockdown imposed on movement and adherence to the local guidelines in a fight against the virus. The pandemic has resulted in a halt on the execution of current projects and inability to commence new ones, resulting in performing most tasks remotely. Cash flow has been affected as significant drops in sales have crunched quarter one earnings already. System maintenance, Inability to access goods (power equipment) and also

pay salaries are some of the effects of the pandemic on the companies. In essence, we have seen a continuous decline in revenue generated from these companies and a continuum in recurrent expenditure.

Some projects have experienced a decrease in electricity unit vending and plans to stimulate and expand productive demand have been halted. Opportunities to collect cash physically from new customers who are paying connection fees have been deferred. A renewable energy company (Auxano Solar) who runs a solar PV assembly manufacturing plant explained that there has been a complete shutdown of their facility. Insecurity of goods, system design change and loss of funds due to overzealous lockdown enforcement security personnel and increase in project overhead cost are some of the problems directing affecting their projects.

Renewable Energy companies have had to create innovative solutions to the current problems posed by the pandemic. They have joined in the technological train of

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working remotely and have also employed the use of virtual meeting platforms to engage in team meetings and communicate with stakeholders. They also leverage on sales optimisation to boost sales, and on ground support staff to help manage any system malfunctions. The use of internet based remote monitoring and smart metering infrastructure to observe hourly energy consumption trends have also proved very effective. Pay-As-You-Go operations have aided revenue collection, creation of technical implementation plans and an increase in patronage from local power equipment vendors have proven a positive outcome. Companies have applied stricter cash management controls to reduce their overhead costs. Some of these companies have also entered into partnerships with relevant organisations and sent in proposals in response to COVID-19 relief funding and stimulus funding opportunities announced by the government, various local and international organisations.

Finally, companies may choose to take

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David Arinze

advantage of funding opportunities in the form of relief funds or stimulus funding to enable them meet existing financial obligations such as payment of salaries as they are already digging deep into their pockets.

Also, companies can request for an exemption across the country which permits them to fully carry out their services since electricity is an essential service.

Arinze is the Program Officer, Off Grid Energy at Diamond Development Initiatives (DDI), a not-for-profit organisation in Nigeria that provides technical assistance to communities & international organisations.

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BUSINESS DAY

Wednesday 06 May 2020

13

Editorial Publisher/Editor-in-chief

Frank Aigbogun

Containing COVID-19 spread amid lockdown easing Easing of restrictions will show the reality of Covid19 in Nigeria

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

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he Federal Government’s move to ease lockdown measures with the push of the 36 Governors is a calculated risk that would undoubtedly deliver some home truths in a few weeks. Whether the result would be positive or negative would depend on what the states do in the management of the new orders. The states have been hands-on partners in the management of the coronavirus in the country.

First, we acknowledge the Morton’s Fork before the government. Given the structure of our informal economy, continued closure for another one week was probably the most to expect. Push the people further, and there may be an unpleasant pushback of citizens in an economy dependent on daily wages. Yet. The political solution in the choice between two dreadful alternatives presents a considerable risk that the move may put significant numbers of human lives at the risk of contracting the deadly virus. Citizens in the two cities may now be test cases for herd immunity without the benefit

of a protocol such as vaccines. Lagos and FCT may need other stringent measures to enforce even the limited restrictions that come with the new order.

The federal government approved on Monday, 27 April a phased and gradual easing of the COVID-19 lockdown measures in FCT, Lagos and Ogun States. They will come into effect on Monday, 4 May. According to the president, selected businesses and offices can open from 9 am to 6 pm; there will be an overnight curfew from 8 pm to 6 am, which means prohibition of all movements during this period except essential services.

Furthermore, “There will be a ban on non-essential inter-state passenger travels until further notice.

Partial and controlled interstate movement of goods and services will be allowed for the movement of goods and services from producers to consumers, and there will be mandatory use of face masks or coverings in public in addition to maintaining physical distancing and personal hygiene”.

The relaxation of the lockdown comes when COVID-19 cases are increasing rapidly in the epicentres of Lagos and the FCT. At 1002 out

of the 1532 cases, Lagos and Abuja account for a high 65 percent of cases. The Lagos incidence rate is disturbing as it continues to grow with increased testing.

The surge brings to the fore Nigeria’s lack of efficiency in attaining a full appraisal of the current reality. The most recent situation report of the NCDC shows Nigeria has tested just 12,004 samples.

South Africa and Ghana with lesser population, have carried out more than 20 times and ten times more tests than Nigeria has done. This data speaks for itself.

An appraisal showed that the lockdown failed in many areas. Our value system was the chief culprit.

Characteristics of the Nigerian Value System on display during the lockdown were indiscipline, disregard for lawful instructions, abuse of office by law enforcement and other officials and failure of service delivery.

Palliatives went only to a few.

Citizens travelled across the country aided by corrupt law enforcement that looked the other way. The travellers served as vectors to introduce the disease to new areas.

We worry about the indicators of 4 May and after that. It is mute

debating whether the lockdown should have continued. Officials must manage it to avoid a spike in numbers of infections and deaths.

According to President Buhari, the easing, “will be followed strictly with aggressive reinforcement of testing and contact tracing measures while allowing the restoration of some economic and business activities in certain sectors.”

We also advise the FG and state government to fully implement safety measures as it concerns hygiene in public places, bus terminals, use of face masks, and sanitizers.

The Lagos State government has an even more difficult task of managing the curfew. Lagosians on social media doubt the feasibility of a 6 pm cut off for the city.

Lagos State government must ensure adherence to the curfew times, whatever it would take. Part of that would be enhanced traffic management, communication and strict enforcement.

Citizens must see themselves among the living as we enter a testy period from 4 May. The risk is high. They should cooperate with a government that must do all it can to enforce the rules. Stay safe, stay home and stay alive, dear Nigerians.

HEAD, HUMAN RESOURCES Adeola Obisesan

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

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Wednesday 06 May 2020

BUSINESS DAY

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ECONOMY

Nigeria’s reserve losses to worsen despite external support as global risk-off behavior drags capital flows OLUFIKAYO OWOEYE

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igeria may have gotten s o m e s h or t relief with the $3.4 billion external support u n d e r t h e I M F ’s Rap i d Financing Instrument (RFI)-to augment its balance of payment needs, analysts at the Institute of International Finance, (IIF) have predicted sign i f i ca nt re s e r v e l o s s e s to the tune of $8billion in 2020, as the spread in COVID-19 continues to exacerbate existing external pressure on Africa’s biggest economy.

IIF in a report seen by BusinessDay, said in addition to the extremely limite d room for fis cal stimulus, monetary policy room is restricted by the c o u n t r y ’s m u l t i p l e e xchange rates regime. The significant external stress, together with the risk of local COVID-19 outbreak, the country will need to rely on external support.

In addition to the recently approved $3.4 billion in IMF RFI funding, Nigeria is planning to receive an additional roughly $3.6 billion from t h e Wo r l d B a n k , A f r i -

can Development Bank, Afreximbank, and Islamic Development Bank.

“Nevertheless, we believe that reserve losses will remain substantial in 2020—around $8 billion or around 25% of the current stock” IIF said.

The report said with dramatic decline in oil prices since the beginning of the year—together w i t h p ro d u c t i o n l i m i t s

under the OPEC+ agreem e n t , t h i s w i l l re d u c e goods expor ts by more than 40percent in 2020, noting that the large nonresident inflows observed in first half of 2019 have since reversed, and capital flow dynamics are not expected to improve anytime soon in the context of global risk-off behavior.

“Nigeria’s current account balance stood at

-$17 bn (or 3.6% of GDP) in 2019. The shift from a $3.9 bn surplus in 2018 was primarily driven by a smaller goods surplus.

We expect this surplus to turn into a deficit in 2020 as lower oil prices and production cuts reduce exports dramatically,” IIF said.

A s a re s u l t, a n d d e spite substantial import compression, we project

a current account deficit of $14.7 bn (or 3.4% of GDP) this year. A sharp decline in goods imports and services debits mean a l ow e r b re a k- e ve n o i l price of roughly $70/bbl.

However, we expect the average crude oil price in 2020 to be around $35/ bbl.

Ni g e r i a e x p e r i e n c e d substantial inflows of short-term portfolio

L-R: Bolaji Abimbola, communication lead, Mask4AllNG initiative; Lanre Oyegbola, strategic team lead, Mask4AllNG initiative; Josaih Balogun, baale of Oko Oba, Agege, and Bountiful Busayomi Adelanwa, member, execution team, Mask4AllNG initiative, during the flag off of the free mask for vulnerable communities by Mask4AllNG held at Eid Ground Oko Oba, Agege in Lagos.

debt in first half 2019, on the back of foreign purchases of Central Bank (CBN) bills. Sadly, over the first three months of this year, gross foreign reserves declined by $3.3 billion, bringing the total to $35.3 billion at the end of March.

Noting that it expects weak inflows to continue until the global risk-off sentiment subsides.

The report noted that low oil prices would not only contribute to a sharp decline in merchandise exports, but also widen the fiscal deficit further, as oil revenue accounts for more than 50percent of total revenue in most years and is strongly correlated (0.8 over 2008-18) to the Nairavalue of oil exports.

“For 2020, we expect the fiscal deficit to reach close to 5% of GDP. While expenditures are rising in GDP-terms as well, revenue collection weakness clearly dominates, with non-oil revenue remaining persistently low. As the deficit has increasingly been financed externally, global risk-off behavior and capital outflows will impact the government’s ability to run fiscal deficits,” IIF said.

ECONOMY

These numbers explain latest face of poverty in Nigeria SEGUN ADAMS

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fter a decade, the National Bureau of Statistics (NBS) has surveyed 22,110 households to measure national poverty and to help you understand it, we break down the report (published Monday) in numbers.

N137,430 This is the least amount you need to spend on consumption per year to be classified as non-poor. On a daily basis, this would be N376.5 or roughly $1 based on the new official exchange rate of 360/$.

40.1% Four in ten Nigerians or over 82.9 million Nigerians live in poverty as at last year, this is lower than a 62.6% poverty rate reported by the

NBS in 2010.

If you are in a rural community, there is a 52.1% chance you are poor but if you are in an urban community then that likelihood is 18%.

N17,728.47 The exact amount the 40.1% of Nigerians considered poor, on a national level, need per year to escape poverty. This is based on a poverty depth or gap of 12.9.

Poverty gap is steeper in the rural population at 17.4 (N23,912.82) compared to 4.5 (N6,184.35) in urban ones.

8.5% This is what is it took Osun to be the state with the least poverty rate. Only around 9 in 100 people in the state are poor.

Sokoto (87.73%), Taraba (87.72%), and Jigawa

(87.02%) had the highest poverty rate, while Lagos (4.5%), Delta (6%) and Osun (8.5%) had the least.

35.1 The distribution of wealth/expenditure is fairly equal in Nigeria, where Gini Co-efficient is 35.1 (100 means perfect inequality of expenditure distribution while 0 means perfect equality).

In the rural population, it is 32.8 while in Urban population measure of inequality is 31.9.

66.17% Nation-wide, households headed by male with No Education or Less than Primary Education had a poverty rate of 66.17%. The probability of poverty falls as education rises. Male household heads with post-secondary educa-

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tion had a poverty rate of 18.13%.

Male household heads in urban area had significantly lower poverty rate across levels of education than their rural counterparts.

34.72% Households with female heads outperformed those with male head across educational levels and area of settlement.

Ac ro s s t h e c o u n t r y , households headed by a female with No Education or Less than Primary Education had a poverty rate of 34.72% which progressively fell as education level rose, so that those led by a female with post-secondary education had 5.66% nation-wide poverty rate, outperforming the best scenario for male heads who have post-secondary

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education and live in urban areas.

Female-heads with tertiary education in urban areas had 3.42% poverty rate while counterparts in rural areas without formal or less than primary education had 39.17% poverty rate.

58.76 vs 37.75 That is the poverty rate for household head involved in agriculture only by sex (male and female respectively.)

Poverty headcount by income-generating activities was least for both male and female in wage work only at 17.53% to 13.99% per gender.

1 That’s the household size with the least poverty rate in Nigeria (2.66%).

Household size of 2-4 people have a rate of 17.88%, 5-9 people (40.9%), 10-19 @Businessdayng

people (67.27%), 20 or more (77.66%).

Urban households, however, have a lower rate than rural ones across all family sizes.

N81,767 You need to spend roughly N82,000 a year or N225 per day on food to meet the minimum nutritional requirement of 2251 calories to escape food poverty.

6x The top 20% spend an average of N415,254 on consumption per year, 6 times the bottom 20% spend (N65,690).

This measure of nominal expenditure (i.e not adjusted for inflation) means the top 20% spend aroudnd N1,137.7 per day or $3 (360/$) while the bottom spend roughly N180 or 50 cents ($0.5).

Wednesday 06 May 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

15

ENERGY

Siemens provides technical support for Nigeria’s energy sector amidst COVID-19 IFEOMA OKEKE

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s communities are kept indoors due to lockdown directives aimed at stopping the spread of COVID-19, leading service provider for the energy sector, Siemens Energy Limited has reiterated their commitment towards supporting Nigeria’s oil and gas sector in this critical time.

Through this pandemic Siemens Field Service Engineers has continued to deliver solutions to customers and partners in industries catering to vital infrastructure, providing them with much needed technical support. The Field Service Engineers ensure that customers’ plants and sites keep running uninterrupted, for the lights in all our customer locations nationwide Speaking on the company’s commitment to keeping the lights on in Nigeria, Seun Suleiman, Vice President, Service & Digital, Siemens

Energy Limited, said, “It’s amazing to share with you the business advantage of localizing the Field Ops organization in Nigeria especially with the pandemic of COVID-19. We have been able to successfully meet most of our customer field service interventions without any hinderance and these FSRs have been fully supported via in-country Tier 1 technical support.

“This has significantly kept us in operation despite the suspension of international flights in Nigeria and multiple curfews imposed in Lagos & Port Harcourt. We are immensely proud of our frontline employees working hard on all our customers’ sites to keep the lights on for millions of Nigerians during these difficult times.”

Also commenting, Oladayo Orolu, head Business Development, Siemens Energy Limited, highlighted the importance of essential utilities running during this period.

“In these challenging times, it is important we

keep the lights on to power essential utilities that keep our homes and hospitals conducive, powered and safe. As we support our customers and work to keep Nigeria powered, we continue to prioritise the health and safety of our employees, cooperating with the relevant public and health authorities.

“We recognise that without them there will be no business to run so we continue to minimise risk by putting all the safety measures in place. Also, beyond this pandemic, we continue to communicate and work with key contacts in the Federal Government on the Presidential Power Initiative to ensure that we keep the lights on for a much longer time in Nigeria.”

Siemens remains committed to contributing towards Nigeria’s long-term developmental goals and customers in the power generation, oil & gas and utilities industry with world-class products, solutions and services.

L-R: Konyenasom Ikuni, learning and development manager, Inlaks; Femi Muraino, executive director, Inlaks; Femi Adeoti, MD/CEO, Africa Operations, Inlaks; Adetokunbo Ayo-Ogunsanya, group head, human resources and administration, Inlaks, and Rufus Fayeun, human resources, business partner, Inlaks at the 2020 Inlaks Graduate Development Program in Lagos.

L-R: Funmi Awelewa, CSR manager, IHS Nigeria; Olufemi Arosanyin, chief commercial officer, IHS Nigeria; Cima Sholotan, associate director, CSR, IHS Nigeria, and Honourable Folorunso Oladoyin, commissioner for education, Osun State, at a recent courtesy visit to explore partnerships around STEM and Digital Literacy, in Osun State.

Remita, Cellulant partnership to extend payment services across Nigeria SEGUN ADAMS

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housands of individuals and businesses, especially the unbanked and underbanked, would now be able to conveniently make payments to the Federal and State Governments and a wide array of billers and merchants in Nigeria. They would also be able to make interbank transfers for personal and business purposes through web and mobile channels as well as at agent locations.

Expected to deepen financial inclusion in the country, this development is courtesy of a recent partnership between Remita and Cellulant, pan-African leader in fintech and agritech.

The partnership combines Remita’s robust financial technology and Cellulant’s extensive agency network. It would empower a larger number of Nigerians with easier means of making payments to Ministries, Departments and Agencies (MDAs) of Federal and State Governments and other billers such as hospitals, educational institutions, electricity companies, water service providers and

others on Remita’s large merchants’ base.

In addition, Cellulant customers would now be able to make interbank electronic funds transfers from Cellulant’s web channel, Tingg mobile application and at any agent location.

All agents on the Cellulant nationwide network would also be able to process payments to all Remita billers and make interbank transfers from their current web and mobile applications.

Speaking on the partnership, Ezinne Obikile, executive director, infrastructure and payment gateway, SystemSpecs – provider of Remita, says it is yet another stride in extending financial services to the excluded and underbanked communities in Nigeria.

“We remain committed to driving innovation in the financial ecosystem through collaborations that provide seamless and secure technology to accelerate financial inclusion,” Obikile states.

Remita thrives on partnerships with other players within Africa’s financial ecosystem and has emerged a provider of robust payment infrastructure and solutions to fintechs, fiwww.businessday.ng

nancial institutions as well as SMEs, large enterprises and governments. Today, Remita processes about $6billion worth of transactions monthly.

B o l aj i A k i n b o ro, c o founder/co-CEO of Cellulant Corporation, notes: “We believe fundamentally that technology is the key to making markets work, accelerating and broadening financial inclusion for all across Africa. In particular, in a large economy such as Nigeria, there is a need to consolidate and extend the frontier of payment services to individuals and businesses in rural and urban communities.

“This partnership further enhances our brand promise of delivering a unified experience to customers while connecting them to their key needs and things that matter to them irrespective of their location.”

Powering digital payments across 18 African countries, Cellulant organises the continent’s marketplaces by connecting individuals, businesses and organisations across rural and urban locations to a single digital payments platform that enables them to make and receive payments easily.

L-R: Segun Ajekiigbe, permanent secretary, Oyo State ministry of energy and mineral resources; Temilolu Ashamu, commissioner for energy and mineral resources, Oyo State, and Arto Tenhunen, chairman of Soprano PLC, during the signing of Memorandum of Understanding between the State Government and Finnish Consortium on the establishment of Energy Innovation Centre for Excellence at Tampa, Florida, United States of America. NAN.

L-R: Biodun Adefila, chief operating officer, SO&U; Udeme Ufot, group managing director, SO&U/ winner industry recognition lifetime award; Mojisola Saka, chief operating officer, Soulcomms Ltd, and Abiola Williams, chief operating officer, Lucid Audio Visuals, at the Inaugural Industry Evening with Goddie Ofose in Lagos.

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Insurance industry increasingly impacting as Covid-19 takes greater toll on economy Modestus Anaesoronye

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he last few days were significant for the insurance industry, not only because it supported the federal government in the fight against Covid-19 like many other sectors did, but because its contribution was directly on frontline health workers who have through their role sacrificed their lives for the rest of us.

The contribution was the provision of free life insurance cover for 5000 frontline health workers on Covid-19, which will ensure that in the event of any death their families or dependants will be compensated.

This significant geniture was not taken for granted by the Federal Government, as President Mohammadu Buhari in his second national broadcast on Federal Government response on Covid-19 acknowledged and appreciated the support of the insurance industry in this fight, as significant.

President Buhari said “In keeping with our Government’s promise to improve the welfare of healthcare

workers, we have signed a memorandum of understanding on the provision of hazard allowances and other incentives with key health sector professional associations. We have also procured insurance cover for 5,000 frontline health workers. At this point, I must commend the insurance sector for their support in achieving this within a short period of time”.

Sunday Olorunda Thomas, acting commissioner for Insurance who role in ensuring that the industry plays significant role in supporting government in this fight has not only displayed leadership quality, but has also shown that the industry have the capacity to contribute more to the economy.

Thomas said during a television interview that the insurance cover is meant for health workers that the insurance industry is sure of and can identify through government agencies saddled with responsibilities to tackle the pandemic.

He said the cover will enable families or named beneficiary of any medical doctors that dies in the line of duty to claim N3 million; Pharmacists/Nurses N2 mil-

lion and others N1 million.

The premium which is in the sum of N112,500,000 for the cover has been fully paid by the Nigerian Insurance Industry in line with the principle of No Premium No Cover, stressing that a total of 19 Life Insurance companies have been accredited to provide the Cover.

He said the cover is for a period of 12 months effective April 14, 2020 and that in event of any fatality, the relevant agencies of government will immediately advise the lead underwriter.

The insurance industry players who expressed their excitement over the President’s commendation say they will be prepared to support more until the situation is completely arrested.

Tope Smart, chairman, Nigeria Insurers Association (NIA), said they are happy that for the first time, their role is being appreciated, nothing that the recognition will further spur them to do more.

Smart said the sector has always played major roles in the economy but this is the

Sovereign Trust Insurance pays N2.7b in 2019 …as fire top loss list Modestus Anaesoronye

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overeign Trust Insurance Plc in its commitment to settling all genuine claims as and when due has paid out N2.79 billion to various insured ho suffered losses during the 2019 financial year.

In a statement made available by the company’s Segun Bankole, spokesperson and head of Sales and Corporate Communications said that the underwriting take as priority settlement of genuine claims when they occur.

He stated that the claims experience in 2019 was higher when compared to the N4.2 billion paid in 2018.

The summary of the claims paid in 2019 shows that fire had the highest figure of N932 million with Oil and Gas Insurance ranking second with total claims settled to the tune of N701 million. Motor Insurance claims amounted to N537m while Marine & Aviation claims stood at N305m.

The total sum of N248m was paid as claims on General Accident Policy with CAR closing the figures with N56m bringing the total claims paid to N2.7b.

While commenting on the intent of the organization as regards claims settlement, Jude Modilim, executive tirector, Technical Operations said “there is no compromise to genuine

claims settlement in Sovereign Trust Insurance Plc because the major focus of the company is to ensure that our teeming customers enjoy the benefits of taking out any form of insurance policy with us. That to us, is the only way to prove that we are well and alive to our responsibilities as an underwriting firm We intend to uphold this obligation and we will continu-

Olaotan Soyinka, managing director/CEO www.businessday.ng

ally strive to make good our promise, he said.

In the same vein, Olaotan Soyinka, managing director/ CEO of the company stated that it has put in place a friendly-claim-process with the aim of putting smiles on the faces of its various customers across the country by ensuring that claims are settled within the shortest period possible on completion of all necessary documentation.

Our commitment to uphold the tenets of our Vision and Mission has made the company one of the Country’s most relevant and responsive insurance Company in the country.

Sovereign Trust Insurance Plc is no doubt a formidable force to reckon with in the Nigerian Insurance landscape with a network of offices spread over (18) locations in the country buoyed by cuttingedge technology in delivering seamless and convenient insurance service to all teeming customers in the country and beyond.

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first time they are getting a presidential recognition, stating that the industry will look forward to more partnership with the Federal Government in developing the country.

Eddie Efekoha, president, Chartered Insurance Institute of Nigeria in his remarks lauded the Federal Government for its initiatives in combating the spread of the COVID-19 virus nationwide. He also commended President Muhammadu Buhari on his recognition of the contributions of the Insurance sector to the fight against the Covid- 19 virus.

Eddie Efekoha joined industry stakeholders in acknowledging the President’s compliments, stating that it was a thing of pride that the industry’s impact was being recognised by the highest level of governance in the country.

He attributed it to the collective hard work of all the stakeholders in the sector who have strived hard to ensure the industry is on the right path.

Efekoha also commended the Federal Government on its efforts to ensure that the country wins the fight against the corona virus

which has beleaguered nations all over the world.

He said “We are thankful that the Government has not let up on its oars in trying to ensure that the lives of Nigerian citizens return to normal within the shortest possible time. This is indicated in the efforts they have made in terms of Health infrastructure and business stimulus packages since the spread of the pandemic began.

Addressing insurance professionals, Efekoha urged practitioners to live exemplary lives and equally show compassion in their dealings. He said,” In times like this when we are tested on all fronts; we are urged to stay true to our beliefs as model professionals and compassionate beings. At all times, we are ambassadors of the noble profession of insurance and our actions should serve as a light to inspire and guide others.”

He stated that the Institute was remodelling its operations in the light of the current situation in order to stay true to its core duty of providing a development platform for the manpower needs of the insurance sector.

PenCom ends regulatory intervention in First Guarantee

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he National Pension Commission (Commission) has announced regulatory intervention in First Guarantee Pension Limited (the PFA), which resulted, among other things, in the appointment of an Interim Management Committee (IMC) to superintend over the affairs of the PFA had been concluded.

The intervention was undertaken in August 2011 based on the findings of the Routine and Special examinations carried out by the Commission.

The conclusion of the intervention was as a result of the judgement delivered by the Court of Appeal, Abuja Division on Thursday, 30 April, 2020, in the three Appeals filed by the Commission, the Attorney-General of the Federation and the PFA, against the judgment of the Federal High Court that nullified the Commission’s regulatory measures. The Court of Appeal’s decision upheld the @Businessdayng

Appeals, thereby setting aside the judgment of the Federal High Court in its entirety.

Thus, the judgment of the Court of Appeal validates the regulatory actions taken by the Commission in 2011.

Accordingly, the Commission has handed the PFA over to its reconstituted Board of Directors under the chairmanship of Kashim Ibrahim Imam with TsegbaTerngu, Ahmed Salik, Pat Asadu, and George I. Ozodinobi as members.

Concurrently, the Commission has dissolved the Interim Management Committee it appointed on 12 August, 201, the Commission said.

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insurance today E-mail: insurancetoday@businessdayonline.com

Stakeholders welcome appointment of Sunday Thomas as commissioner for Insurance dustry players from Ghana, South Africa, among others are pouring in their congratulatory messages to wish the new commissioner well.

The statement of Thomas appointment was signed by from Special Adviser, Media and Communications to the Minister of Finance, Budget and National Planning, Yunusa Tanko Abdullahi, who described Thomas as having over three decades of experience in the industry as an operator and regulator The Federal Government had on August 2019 appointed Sunday Thomas, the acting commissioner for Insurance/CEO of the National Insurance Commission (NAICOM), replacing Mohammed Kari, immediate past commissioner for Insurance whose four years tenure ended 30th July 2019, but was not renewed for second term.

Meanwhile, Thomas had been the Deputy Commissioner for Insurance Technical having been appointed by President Muhammadu Buhari On April 15, 2017.

Prior his appointment in April 2017 as Deputy Commissioner in

Modestus Anaesoronye

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here was joy and excitement within the insurance industry weekend following the appointment of Sunday Thomas, the erstwhile acting commissioner for Insurance as the substantive commissioner for Insurance and CEO of the National Insurance Commission (NAICOM).

The announcement of his appointment by President Mohammadu Buhari on Friday night brings to rest agitation and worries from many quarters, as concern has been giving the regulation of the volatile industry to a wrong hand. But the retaining of Thomas was a welcome development, as stakeholders said they can be sure its current successes and progress made in recent past under leadership of Sunday Thomas would continue on hindered, particularly the ongoing recapitalization in the insurance industry.

Stakeholders including shareholders, operators and even in-

Sunday Thomas

charge of technical matters at the Commission, Thomas held the position of Director –General at the Nigerian Insurers Association (NIA) for seven years from May 2010.

He is a vastly experienced and knowledgeable Insurance Professional with over 35 years uninterrupted service to the Nigerian insurance industry.

During these years, Thomas worked as a Director for seventeen (17) years at the National Insurance Commission from 1992 to December 2009 where at different times, he superintended over different departments in the technical division.

He had also worked as an insurance operator for over 10 years and rose to the position of Assistant General Manager at AIICO Insurance Plc until he left in 1992 to join NAICOM. Thomas is an active participant in the insurance industry activities and had served as member of several Committees not only within the insurance industry but the entire Financial Services Sector. He holds a BSc (Hons) in Actuarial Science and an MBA Finance both from the University of Lagos.

Mutual Benefits Assurance able to meet claims AIICO feeds under privileged communities as COVID-19 palliative obligations despite Covid -19 lockdown Modestus Anaesoronye

…pays N399 million Modestus Anaesoronye

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nderwriting firm, Mutual Benefits Assurance Group says it was able to service its customers and paid matured claims during the Covid-19 lockdown across different parts of the country.

The company says also that despite the lockdown, claims in excess of N399 million were paid to various customers across her businesses, a demonstration of the value it places on the needs of customers at times, such as these.

In a statement signed by Ellen Offo, head of corporate communications at Mutual Benefits, the Company assured customers of its financial stability and resilience of its businesses, stating that it is committed to fulfilling her obligations to esteemed customers.

Meanwhile, following directives of phase relaxation of the lockdown, Mutual Benefits Assurance Plc and her subsidiary, Mutual Benefits Life Assurance Ltd has informed its customers of Business Continuity Plan relating to the resumption.

Offo said, her branches across the country will resume business activities on Monday 4th May 2020, while Kano branch will, however,

remain closed and remote business transactions will continue due to the lockdown still in force in that State.

“Our operations will recommence with critical functions who would be physically present in the various offices and those who will continue working from home. Business hours will be between 9:00 am and 4:00 pm.

“During the period of the lockdown, we leveraged on technology to enable our customers to carry out their business transactions with us unhindered.”

She said the Company also activated its Mobile App; in-line with

Femi Asenuga, MD, Mutual Benefits Assurance www.businessday.ng

our strategic plan on IT transformation across our businesses operations; to provide our customers with speedy, accessible, efficient service delivery at their convenience. The Mutual Benefits Finance App is available on Google Play Store. We encourage our customers to download and make use of the mobile app.

To ensure the safety of our staff and customers; safety protocols earlier put in place before the lockdown continues along with the compulsory wearing of face masks and social distancing.

This means all staff, customers and visitors at any of our offices will be required to wash/sanitize their hands and have their temperatures checked before entering the offices.

Frequent disinfecting of floors, door handles, and flat surfaces will also continue. Anyone with temperatures of 37.6oC and above will be denied entry and advised to go for tests. Our security operatives are authorized to deny access for noncompliance.

We remain optimistic that when this pandemic is over, our Nation will emerge stronger and better.

Our esteemed customers and the general public are encouraged to adhere to all safety measures to stay safe.

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IICO Insurance Plc. has embarked on a Feeding Relief Programme to cater to the needs of underprivileged communities in Lagos amid the COVID-19 lockdown.

As a socially responsible organization, the Company has seen the need for this Corporate Social Responsibility intervention to complement Government’s efforts aimed at ensuring access to food supply while restricting movements to contain the spread of the virus.

The Company has made provisions to feed over 130 people daily for 14 days. These include women, children and young adults.

It has collaborated with DreamsFromTheSlum (a Non-Profit Organization with a commitment to humanitarian causes) and Chicken Republic, a retail fast food company, for logistics and implementation.

According to Abimbola Shobanjo, AIICO’s Corporate Responsibility and Sustainability manager, “The movement restriction has affected the ability of these people to pursue their day-to-day livelihoods.

These are mostly petty traders and artisans in impoverished communities who now find it extremely difficult to provide for their families and dependants. We aim to provide @Businessdayng

daily meals to support them during this challenging period.”

The Company also believes that it is one of the ways to encourage them to stay at home and to maintain social distancing to avoid the spread of the virus; the food is delivered to them at their various homes.

The distribution is being done un-

der safe and appropriate hygiene conditions to protect both the officials and the beneficiaries.

Babatunde Fajemirokun, managing director/CEO stated, “We are prioritizing the needs of the vulnerable and less privileged in these extraordinary times in line with our commitment to the United Nation’s Sustainable Development Goal on ‘Zero Hunger’. We will continue to pursue causes and drive initiatives to ameliorate the impact of the lockdown, through this season and beyond”.

It will be recalled that the Company is actively involved in collaborative efforts with other industry stakeholders in donations towards the fight against COVID-19.

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Nigea faces high risk of food insecurity amid coronavirus spread in north …food prices to further spike Josephine Okojie

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he rapidly s p re a d o f t h e coronavirus pandemic in the northern parts of the country could trigger scarcity of food in Africa’s most populous nation by 2021, if the government fails to take proactive measures to mitigate the severity of a looming food crisis, farmers say.

Farmers who spoke with BusinessDay hinged their believe that there may be food crisis next year on the fact that the pandemic has already obstructed the country’s fragmented farming supply chain which has led to the recent spike in food prices.

Also, they attributed it to the rapid spread of the virus in northern Nigeria, where over 60percent of the country’s food is grown and to the Muslim Ramadan period – when most farmers tend to be less productive

d u e t o t h e i r re l i g i o u s obligation.

They further said that the country is approaching the peak period of the raining season – May through July when vegetables such as tomatoes and pepper becomes scarce owing to their inability to grow well

during the raining season. “ We a re g o i ng t o experience food scarcity next year if the government fails to act now” said Ibrahim Kabiru, national president, All Farmers Association of Nigeria.

“The coronavirus pandemic has obstructed

the farming systems and the two weeks lockdown of Kano state will further worsen the problem,” Kabiru said.

He called on the government to adopt disruptive innovative solutions to address the impact of the pandemic on the agricultural sector.

Can CBN’s 50bn credit facility, interest rate cut drive agribusinesses?

Josephine Okojie

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n a bid to mitigate the impact of the novel coronavirus on micro, small and mediumsized businesses (MSMEs), the Central Bank of Nigeria recently unveiled a 50 billion credit facility and cut down interest rate on intervention funds from nine to five percent among other measures to support businesses.

Stakeholders in the agricultural sector have lauded the step by the apex bank to help agribusinesses survive in this difficult moment of the economic fallout of the COVID-19 pandemic, but say that much more still needs to be done to support businesses amid the pandemic.

Agriculture which has long been known to hold a great promise in terms of job creation and poverty reduction remains the most critical sector for economic recovery post-Covid-19.

Since the outbreak of the novel coronavirus, many agribusinesses and farmers in Nigeria are feeling the heat as both local and global export supply chain has been grounded on suspended freight.

Also, the rise in the prices of major inputs for production amid low demand triggered

by consumers falling income has added to the pressure on agribusinesses.

“It is a good initiative by the apex bank but we would want the reduced interest rate to remain the same postCOVID-19,” AfricanFarmer Mogaji, head-agribusiness group, Lagos Chamber of Commerce and Industry (LCCI) said in a phone response to questions.

“Agric is long term and whatever support the apex bank is providing must also be long term,” Mogaji who is also the chief executive officer of FarmCredit said.

He stated that the country currently does not have any option than to fully diversify through agriculture especially in a period of the pandemic that has triggered low oil price and FX volatility.

Mogaji says that the palliative measures to support agribusinesses will help increase the production of food in the country as farmers and other actors across the value chain will be encouraged.

He said that accessing the N50billion credit facility will remain a big challenge to most small businesses, saying that the apex bank must ensure that SMEs are the ones accessing the fund and not politicised as usual.

Ibrahim Kabiru, national www.businessday.ng

p re s i d e n t , A l l Fa r m e r s Association of Nigeria (AFAN) said that the agricultural sector remains the most critical for the country’s economic growth especially amid the coronavirus, low oil price, and FX volatility.

“The CBN’s support is very crucial at this time and we must commend them for the recent reduction of interest rate on intervention funds from nine to five percent but this support has to be ongoing,” Kabiru said.

He noted that thousands of smallholders under the CBN’s intervention programmes will benefit from the recent cut and this will further impact their production capacity greatly.

He also noted that the problem with the stimulus packages to support businesses by the apex bank is the implementation, saying that most previous intervention facilities similar to this never get to the operators of small businesses but usually hijacked by politicians for their selfish interest.

He stated that if there i s t r a n s p a re n c y i n t h e disbursement of the funds, then it would be the best thing the government has done in ensuring that businesses are supported in an adverse period like this.

However, as the apex

bank continues to roll out palliative policies for the various businesses, there are questions around how the businesses will manage especially agribusinesses that engage actively in wholesale and retail trade.

There are concerns about currency stability and disruption to global supply chains remains critical.

Currently, the fall in oil prices is further pushing the Federal Government to think up other ways to raise revenue besides depending on the monthly crude oil sales.

This is the second time Nigeria has been in a similar situation within a decade. In 2016, oil prices bottomed, pushing the economy into its first recession in 25years.

The government promised then to diversify the economy through agriculture and reduce its dependency on oil.

But official figures show that not much progress has been made as agriculture exports still account for less than two percent of the country’s total export while oil export still accounts for a dominant share.

Currently, thousands of metric tons of cocoa, cashew are being stocked- piled in warehouses across the country, an indication that the country’s revenue from nonoil will be greatly impacted.

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S i n c e t h e l o c k d ow n started four weeks ago in Lagos, Ogun and Abuja, prices of key staples have surge by more than 20percent across the country.

Similarly, hunger rate has risen fast as government fails to provide sufficient social safety net to protect the poor from the economic fallout of the COVID-19 pandemic.

“There is going to be food crisis next year and it is not just in Nigeria but globally,” said Abiodun Olorundenro, m a n a g e r, A q u a s h o o t s Limited. “ The grains we are consuming now are the ones grown last year. We supposed to start growing the ones for next year now bu t t h e p a n d e m i c ha s obstructed the farming systems,” Olorundenro said.

“If we are to advert this food crisis next year, we need to do much more to grow enough food this year,” he added.

He stated that the

government has been trying to support the sector but much more will be required now, saying that inputs must be made available to farmers at affordable prices and security of lives and properties must be guaranteed on farmlands.

Re cently , th e Wo rld Food Programme (WFP) warns that the coronavirus pandemic will push an additional 130 million people to the br ink of starvation.

“There will be a 10 or 12percent reduction of farm produce this year and if the coronavirus continues to spread to rural communities the reduction might get to 25percent,” Ayodeji Balogun, country manager, AFEX Commodities Exchange Limited said.

“We need to declare a state of emergency on cultivation of wet farming and ensure that there is free movement of trucks conveying food on the roads and ports,” Balogun said.

Post-COVID-19: Kwara set to unveil Agricultural Master Plan to stimulate economic growth SIKIRAT SHEHU, Ilorin

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h e Kw a r a S t a t e Comprehensive Agricultural Master Plan will be ready soon to guide the Abdulrahman Abdulrazaq admin ist rat io n ’s p o lic y direction on agriculture as the world prepares for postCOVID-19 economy.

Adenike AfolabiOshatimehin, commissioner for Agriculture and Rural Development made this known while speaking on the side-line of the just concluded 2020 budget review session.

Afola-Oshatimehin says t h e ma ste r p la n w ou l d capture various engagements t h e st at e ha s ha d w i t h stakeholders in the sector and experiences from other climes.

“The plan is to utilise the heavily untapped agricultural potentials in Kwara as a major instrument to stimulate economic growth, create massive decent jobs among youth and women, accelerate r ural de velopment and ensure food security in the state between 2020 and 2025,” she said in a statement.

She stated that the master plan will revolutionise the sector, create thousands @Businessdayng

of jobs for the people, and develop the grassroots.

“Though delayed by the COVID-19 pandemic, the Kwara State Agricultural M a s t e r- p l a n w o u l d b e available soon. It is going to be a robust data-based plan that gives clear developmental roadmap for various aspects of agriculture in the state,” she said.

“The focus of the master plan includes; improved/ mechanised crop farming across the state through well-galvanised out-grower s c h e m e s l e v e ra g i n g o n cooperation with existing and new farmers (smallholder and commercial farmers), energetic youth populace and rural women across the states.”

Others are appreciable investments in livestock and fishery which are already a critical part of the National Livestock Transformation Plan which Kwara is tapping into, the commissioner said.

She added that agroprocessing zones, revamp of moribund agro-processing factories and opening up of new agro-processing companies by harnessing of various national, regional, and global funds initiatives and partnership with the private sector will also be included in the plan.

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CSR post-COVID-19 in Africa needs to be radically different

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Nestlé partners with IDH’s Grown Sustainably in Africa programme to boost local sourcing in Central and West Africa 24

Lockdown and doing business from home Lockdown of the economy, brought about by the current Coronavirus pandemic, expectedly, has come with excruciating pains – stagnation of business activities, insecurity from hoodlums, hunger. SIAKA MOMOH went to town to feel the pulse of business players and found out how the dreaded lockdown is throwing up business operation rethinking.

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yler G. Hicks is author of ‘203 Home-made Businesses that can Make You Rich’. Hicks’ book is good sell to all in this season of lockdown and generally to self-employment seekers.

Hicks tells you the following: • How to pick a home-based business you like and succeed in it; • How to find a low-cost, lean way to start your business; • How to generate substantial income quickly from your home; • How to build a strategic cash reserve for your future; • Having plenty of free time to do what you richly enjoy; • How to expand your business to bring in more money.

He tells you about businesses you can use to build your wealth, that is: • Businesses that can be run from a simple desk at home – made by putting a plywood door on two low cost (or salvaged) filing cabinets; • Businesses that do not require a credit, heavy machinery, minerals in the ground, or any other large investments of any kind; etc.

The businesses he has in mind are those that will appeal to many of today’s Beginning Wealth Builders – BWBs - such as stay-at-home mothers who must care for young children, handicapped people of all ages and gender, poor credit-history BWBs who have less-than-perfect credit report because of past illness, ex-military personnel who can’t find a suitable job in what seems like an alien world, former prison inmates with little employment history to use in getting a job, unemployed people who were downsized and retirees.

With doing business from home, you enjoy the benefit of reduced costs because you leverage on your house rent – since rent is off your cost. This is why such move is good for start-ups. With home-based business, you can combine selfemployment with a side business and augment your earnings; you are free from traffic-jam inflicted

stress, etc.

Lockdown and homebased business Home-based business is here with us. It is more in vogue now with the lockdown that the Coronavirus scourge has forced on us.

Adeola Momoh is into fitness business. Hitherto, he woke up 4.30 am daily to render his service to clients across cosmopolitan Lagos with Lekki, Ikoyi and Victoria Island as core areas. With Coronavirus, he needs to maintain social distance.

This spelt the doom of the business.

What should he do? The business model had to change. Technology came in handy. Interestingly, he is a graduate of Computer Science who trained in Federal University of Technology, Akure. The fitness exercise business is via online now.

Good thinking. That is business from home for you.

Adeola Momoh is not alone in this business model rethinking.

Mile12vegiessupply, Lagos is on Instagram offering an array of food items that can be delivered at your doorstep on order. These include vegetables of all types, yams, fish, snails, etc. There is also Mile12tou doing your food items shopping for you. It is not that this food supply stuff didn’t exist before now; the fact is that the lockdown which has brought pains to many across the country, residents in the metropolis in particular, is a blessing in disguise for small business players in Nigeria’s business place. The likes of Jumia, Konga, and Jiji who are big players in this online retail business must be exploiting the opportunity now.

A colleague told me the story of her sister who hit gold doing business from home. It is the business of cooking the traditional Calabar variety of soup. Her clients are wives of chief executives – most of them career women and high flying business women who have little time for

home chores. Her clientele is growing by the day and she fears she may be forced to turn down some offers soon. If you are good at the art of cooking home food, you can do it from home and become rich.

Lagos International Trade Fair Complex and lockdown This complex is a multibillion naira market space that stocks home need items such as food items, wearing apparels, spare parts, etc. It is currently shut down. Government gave exception for foods for specified hours. How does this complex leverage on this? Stories sourced from players in this market say security hands allow store owners move out goods for sale elsewhere but on payment of unfriendly fees.

Government need to step in here to allow for the Mile 12 Business Model to thrive here. Store owners here need to feed thousands of other stores across Lagos as well as across the country.

Advertise here

And at the manufacturing end, skeletal service like it applies to the banks now will do.

Wheel Barrow food retailers and women, who source food items from Mile 12 Market, face a similar problem from security operatives.

Nigerians must feed and live any way.

Not too long ago, some businesspersons shared their experiences on doing business from home with us: Eyo Okpo-Ene CEO - Xeus Nigeria Limited: “I moved my office to an accommodation I built in my estate, where I reside. This was informed by my desire to save on rent. Also, to save on shared service like power generation, water supply, DSTV, etc. I save on commute cost as well.

It wiped off the guilt of spending long hours in the office. I must say

Continues on page 24

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Companies and CSR

CSR post-COVID-19 in Africa needs to be radically different KENNETH AMAESHI, a professor of Business and Sustainable Development at the University of Edinburgh Business School argues in this piece.

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lobally, there are concerted efforts by the private sector to find creative ways of contributing to tackling the pandemic. Some businesses are adapting their manufacturing systems to produce some of the essential materials and equipment required to combat the pandemic such as sanitizers, ventilators, testing kits, et cetera. Others, especially those in the biochemical and pharmaceutical industries, have intensified their Research and Development (R&D) efforts towards a solution. It is literally all hands on deck!

The corporate sector in Africa is not left out. Given the paucity of manufacturing and R&D capabilities in the continent, local businesses are crowding in their capabilities in different forms through donations of funds, construction of isolation centres, and collaboration with governments and third sector organisations, amongst others. It is literally a matter of life and death and a race against time!

Whilst these good deeds are appreciated, they call for some reflections. Why does it take a crisis of monumental proportion for businesses to truly appreciate that they are part of society and need to contribute positively to it? Why is it unattractive for businesses to collectively contribute to institution building in Africa, instead of spending energy on ad hoc, in some cases tokenistic, individual corporate philanthropic initiatives?

Many more questions could be asked. However, one thing remains unquestionable – the reality that businesses love one thing in particular; more money! And even better when it comes with good reputation. Business leaders understand this and often do their best to protect this interest. This understanding and philosophy is at the heart of the Corporate Social Responsibility (CSR) industry and practice – especially in Africa, where CSR is still mainly seen

as voluntary corporate philanthropy ( he cited Adeleye et al., 2020 and Ezeoha et al., 2020).

As the name suggests, corporate philanthropy is mainly “an act of giving back to society at large” ( citing Amaeshi, et al., 2006). This has included donations to schools, hospitals, local communities, prisons and orphanages; construction of roads and decoration of public spaces; economic empowerment and poverty alleviation.

However, the other side of the equation that is not often explored in the CSR debate is the idea that CSR should be a business philosophy, which takes the private governance of externalities seriously. Externalities here connote the positive and negative impacts arising from corporate entrepreneurial activities that are borne by some third parties who are unconnected to the business. This could be at the production, sale or consumption point.

Traditionally, the burden of governing corporate externalities has always been borne by the State. In order to curtail negative externalities, the State uses such regulatory mechanisms as taxes, subsidies and quotas. But institutions in many African countries are weak, hence the inefficiencies in the system.

A classic case is the apparent revelation of the poor health system in many African countries in the evolving face of COVID-19. As the rich and poor confront their common demons, it makes much sense to now appreciate that we are www.businessday.ng

all victims of the system. Unsurprisingly, these institutions need to be strengthened; and this is where true CSR comes in. This will require more collective action than isolated corporate initiatives.

CSR post-COVID-19 will need to be radically different.

It should focus on addressing the root causes of many of the inefficiencies in Africa, which are strongly linked to bad governance and weak institutions. To meet this goal, Corporate Social Responsibility, as corporate philanthropy, needs to become Collective or Collaborative Social Responsibility, where businesses will need to work with each other, and other possible partners, to address the weaknesses in the system.

The focus should primarily be on strengthening the public service in most African countries to function effectively and efficiently. And businesses will have to learn to overcome this challenge and find new ways of extracting value from collective or collaborative social responsibility.

By implication, the dominant view of CSR as corporate philanthropy amongst most African businesses needs to be seriously challenged. And there is no better time to do that than now. The good crisis should not be allowed to waste, as they say!

Amaeshi is a professor of business and sustainable development at the University of Edinburgh Business School.

He tweets @kenamaeshi and can be reached on kenneth. amaeshi@ed.ac.uk

https://www.facebook.com/businessdayng

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Editor’s Note

t is the season of lockdown courtesy of Coronavirus. Many businesses are down; workers are forced to stay at home. They are on compulsory leave. This is happening not only in Nigeria but across the globe. The lockdown has come with pains, yet there is a sweet side of it.

It is giving rise to business operation rethinking, to innovations. Read the full story in our cover authored by Siaka Momoh.

Kenneth Amaeshi, a professor of Business and Sustainable Development at the University of Edinburgh Business School argues CSR postCOVID-19 will need to be radically different. He says it should focus on addressing the root causes of many of the inefficiencies in Africa which are strongly linked to bad governance and weak institutions. To meet this goal, he argues, Corporate Social Responsibility, as corporate philanthropy, needs to become Collective or Collaborative Social Responsibility, where businesses will need to work with each other and other possible partners, to address the weaknesses in the system.

Siaka Momoh

Get the rest of the gist in our piece in Companies and CRS. Also in our package for this month are Nestlé partners with IDH’s Grown Sustainably in Africa programme to boost local sourcing in Central and West Africa, Businesses and CSR, and more.

You are welcome on board.

For advert placements, call Siaka: 08061396410 or email siakamomoh@yahoo.com.

DFIs and COVID-19

DFIs positioned to play essential role in COVID-19 economic support in Africa

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new research paper considers the devastating impact of COVID-19 on the private sector in Africa and argues that development finance institutions (DFIs) are uniquely placed to provide financial support to businesses and lead the eventual recovery.

The Association of European Development Finance Institutions (EDFI) asked a group of researchers to consider the impact of COVID-19 on the private sector in Africa, and the role that its members could play in supporting businesses through crisis and recovery.

Researchers from the Overseas Development Institute, the United Nations Economic

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Commission for Africa and the European Centre for Development Policy Management examined the economic fallout of the virus in Africa, the responses of governments and international donors, and the role that DFIs could play in delivering support for the private sector.

The report found that the economic impact of COVID-19 on African nations has already been profound, that governments across the continent lack the financial resources necessary to respond effectively, and that international donors have to date focused primarily on the public sector.

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How COVID-19 is Changing Philanthropy and Responsible Business Practices in Africa suffering but the true test for corporate citizenship lies ahead in long-term and collaborative engagement with structural poverty and related sustainable development challenges.

IJEOMA NWAGWU

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he Coronavirus (COVID-19) has spread across the globe with devastating consequences. The advent of the pandemic in Africa – in most of the 54 nations that make up this young, beautiful, vibrant yet fragile continent – holds important lessons for the practice of corporate citizenship and responsible business.

There is Power and Promise in Collective Philanthropic Action The COVID-19 crisis triggered an outpouring of homegrown corporate philanthropy and community solidarity at an unprecedented scale. One good example is South Africa’s Solidarity Fund which has so far mobilized over 2 billion Rands (about $105 million) to combat the health and socio-economic aspects of the crisis. Another example of this is the partnership of leading businesses in Nigeria under the Private Sector Coalition Against COVID-19 (CACOVID), to support the Nigerian government’s humanitarian response to the crisis with over 21.5 billion Naira (about $56 million).

This collaborative philanthropic action, in the spirit of the United Nations Sustainable Development Goal 17 on Partnerships, demonstrates the power of private sector response. The private sector has stepped up in ways African governments – themselves perceived as corrupt, inept and now impoverished by the plunge in commodity prices – could never have done alone. however, there is still room for greater cohesion and accountability in the private sector response.

Responsible Business Action is a Marathon, Not a Sprint

It is important that the response of businesses at this moment is not a solitary act of charity but a long-term commitment to strengthening the social fabric.

The COVID-19 crisis reveals a torn social fabric with most Africans living precariously at $1.90 a day. A long-term institutional approach is needed when considering that – from the World Health Organization records – in the current pandemic, people over 60 years of age in Asia, Europe, and North America are known to suffer severe cases of COVID-19. With the median age in Africa being 19 years, Africa’s youth may seem a significant protective barrier in this pandemic.

However, widespread malnutrition, anaemia, malaria and tuberculosis in African nations may result in a higher incidence of severe forms of COVID-19 in younger patients. These endemic immunity-suppressing conditions combine with weak public health infrastructure and

the exodus of doctors to “greener pastures” to invite a more robust approach to CSR. Africa’s business leaders must now reflect closely on how their initiatives positively impact government priorities under the United Nations Sustainable Development Goals (SDGs). According to the United Nations, 587 million Africans; making up 60 percent of the continent’s population live in overcrowded and unsanitary urban slums.

In Africa’s urban slums – from Alexandria, Makoko, to Kibera – the social distancing needed to fight COVID-19 is impossible to enact and citizens balk against lockdowns which bar them from eking a living from informal sector jobs. Yet the battle against the virus will be won or lost in the continent’s poorest communities and there is a long road to socio-economic recovery ahead.

The private sector at all levels has remarkably established relief funds to ameliorate the present

Tackling Social Challenges Can Drive Business Innovation Faced with the spread of COVID-19, businesses responded with agility to recreate their products and services in safer, more accessible and affordable forms.

Governments and startups in Africa instituted measures to push cash transactions toward digital payments, limiting physical exchanges of cash as a vector “community spread” of the virus.

Yoco in South Africa encouraged the use of contactless payment options on its point of sale machines. Nigeria’s Paga made fee adjustments allowing merchants to accept payments from Paga customers for free to reduce the handling and exchange of cash.

Safaricom, the creator of the M-Pesa mobile money, waived fees on transfers below the 1000 Shilling (about $10) threshold.

These financial service providers demonstrate that working from the strength of their core business competencies, Africa’s businesses can innovate around this pandemic and pivot towards market-creating opportunities to meet the needs of the poor and vulnerable. As Rosabeth Kantor, Professor at Harvard Business School, puts it: “Companies that are breaking the mold are moving beyond corporate social responsibility to…social innovation.

They view community needs as opportunities to develop ideas and demonstrate technologies, to find and serve new markets, and to solve long-standing business problems.”

There is Scope for More Private Sector Action on the Environment The current crisis throws up

possibilities for business commitment in the transition to the low-carbon economy. While we are yet to see whether some of the changes in investing and behaviour induced by the crisis will last beyond the lockdowns, we do know that new and resource-efficient habits have been formed, potentially moving businesses to more responsible production and consumption as well as increasing investment in clean energy.

The abrupt shift by schools and businesses to teleconferencing platforms like Zoom and remote work in Africa’s bustling metropolises may eventually ease demand for fossil-fuel based transport as businesses cut all but essential business travel, migrate training online and explore remote work options. Lockdowns coupled with poor power supply from the grid may also force African households to explore affordable renewable energy options. Businesses investing in affordable low carbon and renewable energy solutions could emerge from the crisis in a better competitive position to their carbon-heavy counterparts help secure the health and financial resilience of African households.

There is a hopeful story in the way the Coronavirus crisis has inspired responsible business practices across Africa. The Coronavirus crisis teaches us that it is possible to forge new corporate alliances and inclusive business models for the common good, activate multisectoral networks for positive social change, disrupt and transform failing systems of public service provision and demonstrate purposeful corporate leadership and business innovation beyond individual brands and the glossy photos of the latest sustainability report.

Dr Ijeoma Nwagwu teaches Sustainability and Strategy at Lagos Business School.

News

DFIs join forces to respond to COVID-19 in developing countries

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The DFI Alliance members are committed to working collaboratively to meet the unprecedented global demands resulting from the outbreak of COVID-19.

This unparalleled health crisis will seriously impact developing countries in ways that will impede their economic and social progress.

The ability of DFIs to mobilize significant financial resources and bring technical expertise to private sector enterprises in emerging and frontier markets

he Development Finance Institutions (DFIs) of 16 OECD countries, grouped under the DFI Alliance, have announced they will work together to respond to the COVID-19 global pandemic in developing countries.

The group will work collaboratively to bring liquidity to the market, support companies impacted by the virus, and promote new investment in global health, safety, and economic sustainability. www.businessday.ng

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will be more important than ever.

The DFI Alliance members, through enhanced cooperation and the leveraging of pooled resources will focus on reducing the impact of COVID-19 on essential business activities in these countries.

The DFI Alliance is developing mechanisms designed to sustain companies, return them to full production, and restore employment opportunities essential to the societies in which they operate.

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Lockdown and doing business Continued from page 21 that it is easier when you open B2B operations, where clients’ visits are limited.

“The only drawback is that I can’t send the children away when they come to “help” with filing of papers etc. and maybe private visitors dropping in. But generally it works for me. I trust that converting a part of the home, say guest room into an office may be more challenging and may create more drawbacks.”

Eniibukun Adebayo CleanAce Drycleaners & Launderers: “Managing business at home could be unprofessional and will definitely require a greater level of discipline as home affairs would sometimes interfere with business ideals. It’s a lot for husband and wife to work together and be professional and ethical, bringing the business home to the kids and family and friends to me is an error...

Business can start at home, no doubt about that (in fact, CleanAce began in our home while we were looking for a conducive space which didn’t last more than one month).

But if one desires taking the business to the next level, it will require a structured and professional setting.”

Idris Okuleye Muhlabdeen Nig ltd: “In my own opinion, depending on how the business is being handled, I think it’s not really a bad idea so

far the business is separated from the home affairs.”

Other experiences (outside Nigeria): Operating out of your house may be convenient. But it can also be annoying. Patricia Colombo-Beyeler, who runs Top Fitness Inc. out of her home in Oxnard, California, shared her experience: After an hour-long power-training session, Ms. Colombo-Beyeler realized she never saw one man depart. She searched her house for him to no avail, so “I thought he must have slipped out past me,” she says. Then she went up to her room and there he was, “at the foot of my bed, passed out.”

She brought the client around, and he explained the last thing he remembered was finishing the class and going to his car. When he left—for sure, this time—Ms. Colombo-Beyeler “went right to the computer to find a place that could build a door for me with a lock so that can never happen again.”

When a client comes into your home, they say, it creates a false sense of intimacy—making an appointment feel more like a personal visit. That can lead clients to do things they wouldn’t in a store or office, like borrowing your phone or taking a snooze. Avoiding those situations means setting boundaries, says Susan L. Reed, a smallbusiness expert and author. Insist that your clients treat your home like a professional space, even in the smallest things.

“It’s amazing what clients think they can or should be allowed to do when your business is in your home,” she says. “For most brick-and-mortar businesses, a client wouldn’t ask to use the business’s computer or telephone. Neither would they expect little favours like borrowing a stamp or faxing something—they would expect to pay for that.”

So, don’t give out any freebies, and don’t let your clients take liberties like bringing in coffee, sodas or snacks. If you do decide to offer food or facilities, make them as professional as possible. For instance, have a mini-fridge where clients can get a drink; don’t let them use your personal refrigerator.

Likewise, “dedicate one bathroom in your house as your office bathroom and make it into an office bathroom” by taking out all the personal items and any fancy soaps or personalized linens, Ms. Reed advises.

It’snotjustclientswhopresentproblems—it’s their kids. Ms. Reed urges entrepreneursnottoletclients’children into the house, if it’s at all optional.

Jamie Adams, owner of Gotta Dance, in Eagle Mountain, Utah, holds dance lessons in a small studio in her basement. One day, her family was having dinner during a dance class, and one young dancer came into the kitchen, and innocently sat down and asked what was for dinner. They shared a little of their meal with the child, along with a gentle reminder about house rules.

Agribusiness

Nestlé partners with IDH’s Grown Sustainably in Africa programme to boost local sourcing in Central and West Africa The three-year partnership aims to support 25,000 farmers and 50 Small and Medium Enterprises (SMEs)

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estlé has signed a Memorandum of Understanding with IDH Sustainable Trade Initiative, as part of the Grown Sustainably in Africa (GSA) programme.

The three-year partnership aims to support 25,000 farmers and 50 Small and Medium Enterprises (SMEs), as well as open-up new markets for them in Cote d’Ivoire, Ghana and Nigeria, increasing employment and food security.

The collaboration seeks to develop and empower these farmers and SMEs to help Nestlé meet its goal of boosting from 60% to more than 70% by 2022, it’s responsibly and regionally produced, high-quality raw materials used in the production of Maggi, Milo and Cerelac. By improving local agricultural produce, imports of food crops for local markets will be reduced.

“In line with Nestlé’s Creating Shared Value approach, our new partnership with IDH will increase the capacity of farmers to produce high quality crops that will enhance local supply and help develop local economies – this is all part of our commitment to improving 30 million livelihoods in communities directly connected to our business activities” said Rémy Ejel, Chief Executive Officer (CEO) of Nestlé Central and West Africa Ltd. Overcoming challenges in local agriculture According to the Food and Agriculture Organisation (FAO), the

agricultural sector helps to support food security and eradicate hunger in the region, contributing about 15% of total Gross Domestic Product (GDP). However, based on current trends, the food production system in Sub Saharan Africa will only meet 13% of its food demand by 2050.

Low productivity means agricultural output in Central and West Africa is only 56% of the world average.

Poor quality and high post-harvest losses impact on raw materials production, while a lack of knowledge, inadequate infrastructure and rising youth unemployment all affect sustainable supply.

The IDH-Nestlé partnership aims to address such challenges by encouraging farmers and SMEs to efficiently produce high quality and high-yield crops using best agricultural practices, and in turn, also help to reduce their environmental impact and the need for natural resources.

Such efforts highlight the importance of this year’s Earth Day, which focuses on climate action.

In 2019, the company announced a new ambition to achieve zero net GHG emissions by 2050, in line with the UN climate pledge. To guide its efforts, Nestlé identified several key actions: fight deforestation, reduce food loss and waste, work with farmers to reduce GHG emissions, develop alternative packaging solutions, and help suppliers manage soils through regenerative agriculture and tree planting.

Boosting farmers’ income and rural economies As part of the GSA programme, the partnership aims to address challenges faced by farmers and SMEs who lack access to affordable finance, technical and management capabilities.

In line with Nestlé’s Responsible Sourcing Guidelines and IDH’s vision, the collaboration will enable farmers to become reliable suppliers for other companies beyond Nestlé, increase African trade, and create permanent employment and opportunities for youths and women across the region. For example, Nestlé has already trained over 150,000 farmers, of whom a third are women, providing them with financial stability and increased ability to produce high-quality and traceable crops.

“This partnership pairs IDH’s technical expertise in agriculture value chain development and innovative financing through the EUR 500 million IDH Farmfit Fund, with commitments from Nestlé’s supply chain. It will help to transform farmers and SMEs into long-term, sustainable operators and have a massive impact on building up the African economy, creating jobs and increasing food security,” said Joost Oorthuizen, Executive Director for IDH Sustainable Trade Initiative.

This partnership supports Nestlé’s purpose of enhancing quality of life and contributing to a healthier future.

Businesses and social responsibility

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orporate social responsibility (CSR), as a concept, requires that business concerns have a duty of care to all of their stakeholders in all aspects of their business operations. Their stakeholders include employees, customers, suppliers, community organizations, subsidiaries and affiliates, joint venture partners, local neighbourhoods, investors, and shareholders. CSR requires that businesses have the interests of society at large as an integral part of their policy making.

Social responsibility is therefore a very vital aspect of the business that it should not be taken lightly. Some of our businesses do not pay attention to it and I believe they do this to their own peril.

I once worked for Syrian company that only thought of corporate social responsibility when it needed immigration stay renewal from government.

I guess it was one of the requirements for stay renewal. The management of the company hurriedly made some donations to selected churches and mosques and obtained receipts for the donations! Can you imagine that?

Kudos must go to the likes of Zenith Bank and a few other banks, as well as the Dangote Group, Nigerian Breweries Plc, FrieslandCampinaWAMCO Plc, Guinness Nigeria Plc and some other blue chip companies that are deep into CSR. It is heartwarming how the private sector recently responded to the need to combat the current Coronavirus pandemic. How did the sector respond?

• The Coalition Against COVID-19, known as CACOVID, was formed on March 26, 2020. Led by Aliko Dangote, Africa’s wealthiest man, the coalition is backed by Access Bank Group, Zenith Bank, Guaranty Trust Bank, and several others.

• Mission: To mobilize private sector leadership and resources to support health facilities to respond to the crisis but also to use their reach to increase awareness about the pandemic • The group, a mix of corporations, philanthropists and donors, provided thousands of beds to Lagos, Kano, Rivers, Abuja, Enugu and Borno states and hoped to quickly set up testing facilities and treatment centres in some states. It aims to get private labs involved in testing to speed up the process.

• Total donation to the CACOVID relief fund totalled over $55.7m as of April 6, with Dangote and the Central bank donating $5.1m each.

• Other major private players such as Segun Agbaje (Guaranty Trust Bank), Jim Ovia (Zenith Bank), Herbert Wigwe (Access Bank), Tony Elumelu (United Bank for Africa), Abdulsamad Rabiu of BUA Group, Folorunsho Alakija of Famfa Oil Limited, Oba Otudeko (First Bank), Femi Otedola of Amperion Power, billionaire businessman Mike Adenuga of Globacom and the Nigeria Deposit Insurance Corporation provided $2.59m each.

• The Nigerian National Petroleum Corporation alongside some oil com-

panies pledged $30m to the Nigeria Centre for Disease Control to improve patient care, medical supplies and equipment.

• Union Bank contributed $130,000 to the Lagos State emergency food response programme which provides food supplies to low-income families following restrictions on movement.

• The UBA Foundation, part of the Lagos-headquartered United Bank for Africa, provided $14m to support efforts locally and in countries where it has operations in Africa.

• The private sector’s efficiency is highly valued in Nigeria. In just about five days, Guaranty Trust Bank partnered Lagos state authorities to build a 110-bed isolation facility at the Onikan Stadium.

Bill Gates Microsoft has a very fascinating approach to this issue of corporate social responsibility. It is committed to being a responsible industry partner, working with businesses, communities, and governments to help advance social and economic well-being and to enable people around the world to realize their full potential. According to industry reports, over the past three decades, Microsoft has expanded its business from the United States into more than 90 other countries, and now employs nearly 60,000 people globally.

As a successful global corporation, the company believes it has a responsibility to use its resources and influence to make a positive impact on the world and its people.

Microsoft software products have enabled hundreds of millions of people to fulfill their personal and professional goals. From the onset, the company built its business through partnerships with approximately 650,000 companies, and it is expanding its global citizenship efforts through the same kind of proactive collaboration with other industry leaders, governments, community-based organizations, and nongovernmental organizations (NGOs).

Microsoft made a commitment to provide technology access and skills training to a quarter billion people by 2010—people previously underserved by technology. At last estimate, 400 million people are using Microsoft Windows operating system.

One must however draw business stakeholders attention to the postulation of erudite professor of Business and Sustainable Development at the University of Edinburgh Business School, Kenneth Amaeshi that CSR post-COVID-19 will need to be radically different; that it should focus on addressing the root causes of many of the inefficiencies in Africa, which are strongly linked to bad governance and weak institutions. For him, to meet this goal, Corporate Social Responsibility, as corporate philanthropy, needs to become Collective or Collaborative Social Responsibility, where businesses will need to work with each other, and other possible partners, to address the weaknesses in the system.

His argument, I believe, is worth addressing.

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TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Transporters yet to obey Lagos guidelines on COVID-19 ..As gridlock returns to metropolis

MIKE OCHONMA

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MIKE OCHONMA Transport Editor

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ehicular traffic resurfaced in many parts of Lagos metropolis last Monday as commercial and business actiivties is gradually returning to normalcy in various parts of the city with commercial bus drivers yet to comply with the new transport policy announced by the state government to mitigate the negative impact of the global coronavirus pandemic (Covid-19).

Checks by BusinessDay transport reporter who drove round major roads of the state as early morning on Monday following the partial easing of the lockdown by the state government in line with federal government’s directive shows that commercial bus operators have not started complying with the 60 percent passenger capacity and wearing of face masks by all occupants.

However, a drive on LagosBadagry road, Agege Motor Road, through the Third Mainland bridge to Lagos Island and terminating at Apapa shows that while the 14-seater buses that use to carry four passengers on a row have now reduced to three instead of two in a row as stated by the latest transport to meet the 60 percent full capacity directive by state government.

Under 24 hours into the trooping out of commuters on the road, the provison of hand sanitizers by the commercial bus operators to their passengers is yet to fully take effect.

Following last week Monday’s gradual easing of the lockdown announcement by President Mu-

FRSC gifts ambulances, medical personnel to PTF against Covid-19 fight

Picture by Olawale Amoo

hammadu Buhari in the federal capital territory, Ogun and Lagos states which commenced two days ago, the Lagos state government introduced new guidelines to prevent a further spread of the Covid-19 virus.

Commissioner for transportation, Frederic Oladeinde said the new guidelines are proactive measures put in place by governor Babajide Sanwo-Olu to curtail apossible spread of the deadly virus among the commuting public through transportation activities when gradual ease of the lockdown commences.

Details of the public transportation guidelines as stated by the transport commissioner explained that effective from Monday, May 4, all commercial and commuter operations within Lagos shall be between 6a.m and 7p.m daily.

Oladeinde asserted that, it is mandatory for all commuters to wear nose covers, wash their hands with soap under running water and, thereafter, use

alcohol-based sanitisers before and after each trip.

In announcing the immediate suspension of all inter-state operations and movements, the commissioner mentioned that the decision was taken to effectively manage and control movement within the metropolis while measuring the level of success achieved with various strategies adopted by the State Government to control further spread of Covid-19.

He also warned all commercial passenger vehicles not to exceed 60 percent of their capacity at this crucial time, while physical distancing rule must be obeyed both at the parks and in the buses, maintaining that Bus Rapid Transit (BRT) and Lagos Bus Services Ltd (LBSL) must not convey more than 21 passengers, must not permit standing in their buses and should keep the airconditioning systems switched off always.

“In the same vein, yellow buses, popularly called ‘Danfo’, must

not carry more than eight passengers (two on a row), tricycles are to carry just two passengers at the back, while private car owners must also observe the physical distancing,” Oladeinde stated.

While he maintained that, the use of motorcycles, popularly called okada, for commercial activities would not support the physical distancing rule as directed by the Nigeria Centre for Disease Control (NCDC), he further pointing out, therefore, that its operations are disallowed in any part of Lagos State at this period.

BusinessDay traveling experience last Monday along the Lagos-Badagry expressway and Agege Motor road shows that, the directive on ban of okada as outlined by the commissioner has been completely violated as the operators are seen carrying two passengers and many of them are nor wearing face masks in complete violation of the social distancing order and ban on their operations.

ive basic life support ambulances with a team of medical personnel has been approved for use by the Boboye Oyeyemi, corp marshal of the Federal Roads Safety Corps (FRSC) together with teams of medical personnel of the Corps and 30 active close user group lines to the Presidential Task Force (PTF) on COVID-19 as part of its commitment towards facilitating prompt evacuation of Coronavirus victims from point of identification to isolation centres.

The approval came shortly after the request was presented to Sydney Ibeanusi, country director, United Nations Decade of Action on Road Safety and Traffic Injury Prevention in Nigeria and the coordinator, ambulance and emergency response unit of the PTF on COVID-19 at the National headquarters of the Commission.

Sydney who presented the request on behalf of the PTF

noted among others that FRSC has always been at the fore front of national commitment and at this moment of global emergency.

He said, the PTF seeks to further the existing collaboration with the Corps in the area of emergency response services in a bid to enhance established collective efforts geared towards combating the dreaded virus.

Sydney also stated that the need to activate the ambulance service system has become grossly consequential at this time that Continues on page 26

Toyota expects 10.77m vehicles sales in 2020 MIKE OCHONMA

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oyota Motor Corporation said that the group planned to sell 10.77 million vehicles worldwide in 2020, up slightly from the 10.72 million figure estimated for this year, as rival carmakers slow down.

Within the same period, overseas sales are expected to grow 2 percent to 8.50 million vehicles on the back of robust demand for its new models in China and Europe, offsetting a 4 percent fall in domestic sales to 2.26 million units.

Sales in the home market suffered from the impact of the consumption tax hike from 8 percent to 10 percent in October this year.

Global sales, which include those of vehicles sold by its two subsidiaries, minicar-manufac-

turer Daihatsu Motor Co and truck maker Hino Motors Ltd, are on course to surpass the 10 million mark for the seventh straight year, according to the projections. The group would set a global sales record for the fourth straight year if the goal for 2020 is attained.

Toyota had placed third, bewww.businessday.ng

hind Volkswagen AG and the alliance of Nissan Motor Corp, Renault SA and Mitsubishi Motors Corp, in global group sales rankings in the whole of 2018. But it climbed to second in the first half of 2019, replacing the three-way Japanese-Franco group.

The tripartite alliance has

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struggled mainly due to sluggish global sales by Nissan, which has been rocked by the arrest of former chairman Carlos Ghosn in November last year.

Germany’s Volkswagen kept the top spot but has seen sales fall from the same period the year before due to slowing demand in China, @Businessdayng

the world’s biggest auto market, amid prolonged trade frictions between the United States and China.

Toyota said the group also planned to raise its global production next year by 1 percent from 2019 levels to 10.90 million vehicles, even as it aims to manufacture 6.49 million units abroad, up 4 percent and 4.41 million in Japan, down 4 percent from the previous year’s projections.

The automaker plans to sell 2.31 million hybrids and other vehicles powered by electricity in 2020, up 20 percent from the year before.

Car manufacturers have also come under increased pressure to raise competitiveness as consumer demand shifts to autonomous, electric and connected vehicles, which require hefty investments and advanced technologies.

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TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

PAN outlines Peugeot 508 GT’s winning USP at Argungu Motor Rally MIKE OCHONMA

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igeria’s historic Argungu Motor Rally may have come and gone, but winners and losers at this year’s event are still taking reviewing their participation, and one of such participants among top auto assemblers in the country is PAN Nigeria Limited, manufacturers’ representatives and owners of the Peugeot brand in the country.

Only recently, Ibrahim Tanko Mohammed, managing director and chief executive of PAN Nigeria Limited received the winning trophy from Shima Shimbe, the driver of the Peugeot 508 GT sedan that won the last Argunugu Motor rally.

While commending Shimbe, the driver and winner of the trophy, Mohammed added that, “The unique selling points of the winning brand are performance, comfort, fuel economy, adaptability and safety.

These are the things that worked in favour of and enabled the car to win the keenly contested race. For the average Nigerian car users, the major attractions of the Peugeot 508GT are its ruggedness and durability.”

At the trophy presentation ceremony, which was decidedly low-key due to the current global pandemic, Mohammed said that, “PAN Nigeria is the oldest and the

espite the coronavirus-induced nationwide lockdown, authorities of the Lagos district of Nigeria Railway Corporation (NRC), says movement of imported goods into the country and taking in of export goods in containers for the APMT by the corporation is still ongoing as a way of decongesting the Apapa seaport.

Jerry Oche, Lagos regional district manager (RDM) of the NRC said a total of 19 numbers of the 40 feet con-

20-feet containers in and 38feet to 20-feet containers out and that will give us 76 trucks moved off the roads’’.

The service consists of movement of containers from Apapa to various district offices where the articulated vehicles could start transporting them to their various destinations.

He told BusinessDay on telephone chat last Monday, that the freight haulage out of Apapa port as complementary role to the Nigeria Ports Authority determination to decongest the ports was to scheduled to start on April 9, but could not begin as

tainers or 38 numbers of the 20 feet conatiners are being moved on the existing narrow gauge line from the Apapa port to Ebute Metta Junction (EBJ) containing holding bay up to Ijoko station from where the owners of the said containers will move it to the destination points as well as dropping empty or fully loaded containers for exports.

“If we look at 40 feet containers, we are talking of 19 containers in (for exports) and 19 containers out (for the imports) each day. That is equivalent to 38 trucks off the road a day for now.

“It could also be 38-feet to

scheduled due to the series of health and safety training programmes given to the selected railway staff in line with the federal government guidelines on possible ways of containing the coronavirus pandemic.

Though Jerry Oche did not disclose the frequency and total number of containers moved out of the port and the amount of revenue generated by the Lagos district between the commencement date and at the time of filing this report, he said that, the services are being rendered whenever the Nigerian Railway Corporation is called upon to do so.

MIKE OCHONMA

D 5th L-R; Ibrahim Tanko Mohammed, managing director and chief executive of PAN Nigeria Limited receiving the winning trophy from Shima Shimbe, driver of the Peugeot 508 GT luxury sedan that won the 2020 Argungu Motor Rally.

most consistent participant in the Argungu Motor Race.

The Argungu Motor Rally is Nigeria’s premium and first motorsport that started in the early 1970s as part of the Argungu Fishing Festival.

It as overtime developed into a growing and internationally recognized brand. The rally was however suspended in the 80s, later revived in 2004 before going into extinction again till early this year again when the event held.

Peugeot beat others competing brands to win the trophy and was adjudged the overall best winner because it met all the criteria stipulated by the organizers of the rally.

The managing director said, PAN participated in the 2020 edition of the motor race in order to support the National Automotive Design and Development Council (NADDC), the federal gov-

ernment agency that drives the modernization, development and growth of the automobile industry in the country. NADDC aspires to use the annual auto rally to prove the importance of the nation’s auto policy, and we fully support this.”

The auto boss explained that “The motor rally created good opportunities for the industry to make a formal presentation of all locally manufactured vehicles in Nigeria to the executive and the legislature arms of government at an elaborate level’’.

“Show and Tell” media ceremony, hosted by the Federal Ministry of Industries, Trade & Investment at the Eagle Square, Abuja.

The event gave PAN Nigeria and other local assemblers a platform to showcase its capacity as a foremost manufacturer/assembler in the country, and we commend

the organizers for a job well done.”

In 2020, the event made a major comeback as it teamed up with the National Automotive Design and Development Council (NADDC) to showcase locally manufactured and assembled automobiles, aimed at promoting and galvanizing our automotive sector.

The three days race covered seven states: FCT, Nasarawa, Kaduna, Kano, Katsina, Sokoto and Kebbi.

From the flag-off point at the Eagle Square in Abuja, FCT, to the flag-down centre in Argungu, Kebbi State, the drivers traversed 13 major cities and towns: Abuja, Keffi, Kachia, Kaduna, Funtua, Gusau, Sokoto, Shagari, Dogondaji, Tambuwal, Jega, Birnin Kebbi and finally terminating at Argungu, Kebbi state, venue of the event.

Health advocate lauds TOAN over commuters’ safety MIKE OCHONMA

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elechi Okoro, a medical expert and leading health advocate has commended the Tricycle Owners Association of Nigeria (TOAN), one of the country’s largest tricycle operator unions for taking proactive steps to ensure safety of tricycle drivers and passengers during the COVID-19 crisis.

Making this known via her social media handles, Kelechi Okoro said, “As a medical practitioner, I say kudos to TOAN for taking proactive steps to increase the safety of their riders and passengers, by announcing health and safety norms to help curb the spread of COVID-19. Kekes can be a safer option of public transport because of limited passengers and open ventilation,

NRC keen about safety rules on Apapa freight on COVID-19

and TOAN has gone one step further by limiting passengers to two persons at a time’’.

Over a week ago, TOAN issued a circular advising their affiliated tricycles to limit the number of passengers they carry in tricycles (popularly known as Keke), in what is being seen as an essential form of transporta-

tion at this time of crisis as well as the wearing of face masks and sanitization of frequent contact points in the vehicles.

Augustine Apeh, TOAN president, also said, “We at TOAN encourage keke operators affiliated to us to do their utmost to support the populace in these difficult

times. We shall do everything we can in line with different safety directives as issued by the Nigerian Government and health agencies while ensuring the public has access to what has been identified as one of the safer modes of public transport in this situation.”

While the general public may have necessary restrictions imposed on movement to curb the virus, it is important that point-topoint public transportation still remains open for those who are unwell, those who are travelling for essential services and most importantly for emergency and medical workers who have to commute for work. So, it is imperative that the public finds a mode of transport that is as safe as possible and for now the tricycle seems to be one of saafer choices.

FRSC gifts ambulances...

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records have shown a consistent rise in the number of infected persons in the country which is already less than two dozens away from a thousand cases.

He noted that irrespective of the fact, that other agencies have also donated a number of ambulances for the said programme, the need for more cannot be over emphasised. He assured the Corps that the personnel detailed on this assignment will be fully catered for with adequate personal protective equipments, and accommodation.

In a statement by Bisi Kazeem, Corps Public Education Officer, the detailed FRSC health workers will

be first subjected to intense training on personal protection, handline of victims and decontamination of the vehicle among others.

They are to work for two weeks, after which they will be subjected to two weeks isolation by the PTF in designated centres and certified negative before they can be allowed to reunite with their families and report back to duty.

Oyeyemi while reiterating the commitment of the Corps to the fight against COVID-19 in the country said that the FRSC will always be readily available to offer the services of both personnel and its operational tools to support the Presidential Task Force in conquering the dreaded unseen enemy.

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FEATURE

Will Polaris Bank sustain this new path of profitability?

OLUFIKAYO OWOEYE

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olaris Bank seems to be back on the path of profitability, after a turbulent past if numbers from its recently released 2019 financial result is anything to go by.

Under the watch of Adetokunbo Abiru, who took over the reins of the bank in 2016 following a CBN action that dissolved the bank’s then board and management, Polaris Bank has undergone series of restructuring which are already yielding fruits.

By all objective standards, the results are impressive especially given the legacy constraints under which the institution was birthed. A review of the results shows positive performance across most major key prudential ratios: capital adequacy, liquidity, Non-Performing Loans which is now significantly in compliance with stipulated regulatory requirements, the bank is set to further benefit from its IT investment in 2020.

Analysis of the bank’s result shows it printed a profit after tax of N28.5 billion for the year well ahead of some tier 2 banks.

In its hey days, the defunct Skye Bank was one of the biggest tier 2 banks, but one would have thought that its reincarnation will at least need some time to recover.

A further analysis shows that the bank’s total deposit was N857.9 billion, likewise, the loan book stood at N261billion in December 2019 providing the Bank with the desired headroom to accommodate the required growth in risk assets to support the nation’s economic growth.

The bank’s cost to income ratio, a metric for how cost-efficient banks are, also moderated to 68percent, again far lower than most of the Tier 2 banks.

The bank also has a high liquidity ratio of 81percent compared to the CBN’s 27.5percent target.

Capital Adequacy ratio of 14percent suggests the bank’s capital is just about right for its balance sheet size.

Expectedly, its loan to deposit ratio was just 22percent significantly lower than the CBN approved 65percent. In fact, out of its total assets of N1.1 trillion, N518 billion was invested into investment securities like treasury bills and bonds. The rest were either held as cash with banks, CBN and AMCON or invested in assets. A way of playing safe on its path to recovery.

Adetokunbo Abiru, MD of Polaris Bank

Out of the bank’s N131.6 billion in interest income N79.1 billion of it came from investment in CBN securities such as treasury bills and the now restricted Open Market Operations (OMO). Same period last year (2018) the bank earned just N15.1 billion from investment securities.

‘

“We will leverage our knowledge of an ever changing world to constantly design innovative solutions that facilitate our customers’ enterprise” as well as values-Boldness, Sustainability, Innovative, Continuous Learning and Trustworthy

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The Bank also closed the 2019 financial year with Total Assets of N1.1trillion and Shareholders Fund of N83billion Polaris Bank’s ratios compare favourably with the leading Tier 1 and Tier 2 banks and are in virtually all cases better than industry averages. Return on Assets at 2percent is at par with Zenith Bank; Return on Equity at 33percent is competitive against all Tier 1 banks with the exception of Gtbank; Return On Sales at 18percent ranks third behind only Zenith and Gtbank benchmarked against Tier 1 banks.

Despite the impressive results Polaris bank still lives with scars from its old wound. The nonperforming loans of 46percnet is one of the highest in the industry despite coming down from the high of 80%. Bringing this ratio down to the single digit level espoused by the CBN for other banks will be an onerous task still.

Commenting on the Bank’s performance, Adetokunbo Abiru, managing director/chief executive officer, Polaris Bank Limited, said the emergence of Polaris Bank on September 21, 2018, has heralded a new dawn as it laid the foundation for institutional competitiveness and service innovation in Nigeria’s challenging banking space.

Noting that the bank’s strategy which anchors on rebuilding the franchise and strengthening the

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balance sheet position provide enablers for ongoing initiatives towards lean operations and efficient balance sheet management devoid of capital erosion risks.

“We shall continue to run an ethically governed Bank upholding sound risk management practices and proactively taking measures to mitigate the impact of the adverse business environment while the Board and Management continue to guide the Bank towards a path of sustainable growth,” he said.

In 2019, Polaris Bank pursued strategic initiatives for future growth which have continued this year including digital transformation and launch of the bank’s agency banking platform, Sure Padi.

Starting from September 2018 immediately after the transition to Polaris Bank, the management worked with KPMG, EY, Deloitte and other first class advisory and consultancy firms to develop a strategy and corporate transformation plan and defined aspirational and inspirational new vision statement, “The preferred partner providing superior financial solutions for customers” and mission statement, “We will leverage our knowledge of an ever changing world to constantly design innovative solutions that facilitate our customers’ enterprise” as @Businessdayng

well as values-Boldness, Sustainability, Innovative, Continuous Learning and Trustworthy.

The bank also adopted a predominantly retail market focus in line with its core strengths and competences and defined new customer value propositions:- Ease, Friendliness and Accessibility: focused on convenience, customer excellence and customer delight; Creating opportunities and providing empowerment for selected sectors: Youths, SMEs, Women and the Underserved; Digital First: providing easy and simple banking through digital and being future focused.

The objectives of the Corporate Transformation Plan included sustainability; profitability and capital preservation; regulatory compliance and buy-in; realizing value from investments; aligning business and operating models to strategic aspirations; and execution-achieving quick-wins, and phased implementation. The critical pillars of transformation as designed are Digital Transformation, Enhancement of IT Infrastructure and Technology Platforms, Cost Optimisation and Operational Efficiency, Workforce and Culture Alignment, Brand Equity Enhancement and Business/ Strategic Initiatives.

2020 Outlook Going into the year 2020 and despite the challenging macroeconomic environment amid devastating impact of COVID-19 on businesses, the Bank says it is poised to reap the benefits of its investment in both the capacity of its employees to improve service experience as well as in critical infrastructures that will support the digitization of its operations.

We believe bank management understands that while Polaris Bank is now well capitalised based on regulatory standards, the institution may benefit from enhanced capital levels if benchmarked against the major banks and telecommunications companies in the context of a competitive, technology- led, globalising financial services industry. These considerations coupled with Polaris Bank’s status essentially as a “bridge bank” owned by the Central Bank and AMCON mean that a divestment by these regulatory/ government entities and investment by a well-capitalised financial services group would have to be a strong consideration.

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news Covid-19: LCCI recommends 1-year tax...

R-L: Giles Omezi, lead consultant on reconstruction of the Edo State College of Agriculture; Godwin Obaseki, governor, Edo State, his wife Betsy Obaseki, during the governor’s inspection of ongoing construction work at the Edo State College of Agriculture, Iguoriakhi campus, in Ovia South West Local Government Area of the state.

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exports of essential goods in a bid to meet local de-

Health experts outline 3 priorities for...

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which, alongside South Africa in first place and Nigeria in fifth, make up the list of the top five African countries with the highest number of reported cases, have done 879, 1,296 and 148 tests per 1 million population, respectively, all more than Nigeria.

“The data clearly show Nigeria needs to increase testing in order to better manage the spread of the virus,” one private sector health expert said.

The second priority for Nigeria is to identify the people most vulnerable to fatal illnesses from the virus and isolate them, while efforts to ramp up testing on a large scale continue.

Based on currently available information and clinical expertise, older adults and people of any age who have serious underlying medical condi-

tions might be at higher risk for severe illness from COVID-19.

Th e U S Ce nt re f o r Disease Control (CDC) provides a more specific description of those at high-risk for severe illness from COVID-19 and they include people 65 years and older, people with chronic lung disease or moderate to severe asthma, and people who have serious heart conditions.

People with diabetes, severe obesity (body mass index of 40 or higher), and chronic kidney or liver disease are also deemed high risk as well as people who are immunocompromised.

Many conditions can cause a person to be immunocompromised, including cancer treatment, smoking, bone marrow or organ transplantation, immune deficiencies, poorly controlled HIV or AIDS,

and prolonged use of corticosteroids and other immune weakening medications.

“Some countries are already trying to isolate these vulnerable persons,” another health expert told BusinessDay. “What that does is it reduces the number of the elderly getting the infection and so reduces the mortality rate of the virus and buys time for finding a vaccine.”

Nigeria had recorded 93 deaths as of May 4, according to the NCDC. That’s lower than South Africa’s 138 but higher than Ghana’s 18. Algeria has the highest deaths in Africa at 436.

Paul Hunter, a professor in medicine at the University of East Anglia, shares similar thoughts.

“We know that the chance of someone dying if they get the infection is higher in older people and increases steeply over age 70,” Hunter said in an

article published by the Science Media Centre.

“If we can delay infections of the most vulnerable people till next year by asking these people to self-isolate for a while then hopefully a vaccine will have become available,” he said.

The third priority for Nigeria is to develop a critical care protocol and putting out more information on how to manage the more severe cases.

Previously there was limited guidance on acute management of critically ill patients with COVID-19, although the World Health Organisation and the United States Centers for Disease Control and Prevention have issued preliminary guidance on infection control, screening and diagnosis in the general population.

Nigeria should do same and work towards making it public knowledge, the health experts said.

mand, and as way of managing disruption to global supply chain, and urges Nigeria to react rightly by placing a temporary suspension on 50 percent increase in the Value Added Tax (VAT) rate till the end of 2020.

She wants the government to suspend the Pay As You Earn (P.A.Y.E) for the next six months to boost the purchasing power and aggregate demand of Nigerians, thereby stimulating the economy.

The novel Covid-19 has dislocated all the markets across the world as countries are caught between saving their citizens’ lives and repairing economies undone by lockdowns.

The Nigerian economy had been in a bad shape before the pandemic, with over 80 million citizens living in extreme poverty and the country ranking as sixth most miserable country in the 2019 Hanke’s Annual Misery Index.

The LCCI president says the chamber has found that 83 percent of business owners plan to cut down salaries, downsize workforce or do a combination of both, which is worrisome.

She discloses that 54 percent of business owners want banks to reduce interest rate and give moratorium on loans, while 17 percent seeks waivers on import duties and demurrages.

“Businesses therefore request adequate stimulus and intervention to preserve investments and save jobs,” she says.

She further recommends that agro-processing companies enjoy import waivers for the next one year in order to support food security and agricultural supplies, saying, “Commercial banks are implored to offer reprieve to

NAICOM to issue new recapitalisation...

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Nigeria faces a debilitating 8% GDP...

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the last few empty tankers,” the newspaper reported.

The government of President Muhammadu Buhari recently abolished the cashguzzling petrol subsidy and he has ordered the implementation of the Oronsaye committee recommendation for a drastic cut in the number of the country’s MDAs, but economists say he has to do more to save the economy from total collapse.

“There is a battle going on for the soul of Nigeria,” said economist and investment analyst Clarke Huntingfield.

“There are those in government in Nigeria who do not see the big picture because of their parochial pursuit, and it

is why purposeful leadership at this time is even more critical. Nigeria cannot afford to be borrowing and then failing to rebuild the economy.”

Analysts say Nigeria requires a well thought-out programme to sell down its equity in oil joint ventures; adopt the NLG model; and sell or concession the extensive products pipeline and depots that leak up to 50 percent of imported petroleum products that are pumped through them.

However, there are powerful forces in government defending the status quo and who have sought to create the impression that those pushing for long-delayed reforms were less altruistic than Nigerians defending the status quo, www.businessday.ng

including continuation of the over-bearing state control that has virtually suffocated economic growth.

Nigeria’s economic woes predate the coronavirus outbreak, according to Cambridge University-trained economist Ayo Teriba.

“Nigeria had been in search of ways of stemming the economic decline before COVID-19 pandemic forced the country. Unfolding global realities now give Nigeria a chance to leverage its vast public assets to raise external liquidity thresholds enough to switch from contraction to expansion by adopting securitisation privatisation, liberalisation, commercialisation policies. Global liquidity glut has seen capital inflows to developing countries double in the last decade and

Nigeria is well-placed to get a share of that,” Teriba said.

“At well below 10 percent of GDP since 2015, the total revenues available to the three tiers of government has fallen so low that they do not cover even recurrent spending threshold of fiscal liquidity, as salaries and debt service each amounted to about 70 percent of Federal Government revenue in 2017, and deficits had to be incurred to meet both in full, with additional borrowings to meet shrinking overheads and a small and contracting capital spending. With less access to debt markets, many states were known to have been unable to meet salary obligations in full, creating unpaid arrears of more than 12 months in a few states,” he said.

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businesses and corporates indebted to them.

“The reprieve could be in form of loan moratorium and restructuring. We urge the CBN to review the cash reserve ratio downwards to 20 percent from the current 27.5 percent, to enable commercial banks have more liquidity to support businesses.”

For the aviation industry, she recommends support towards augmenting insurance premiums that are dollardenominated, as covers were mostly underwritten abroad due to lack of local capacity.

She also urges support to pay for operational cost, including international lease rental on grounded aircraft and maintenance (C& Dchecks), and recommends, “There should be full implementation of the Executive Order on Removal of VAT from air transportation.”

She says the chamber is concerned that the current approaches used in implementing some of these measures targeted at cushioning the effects of the pandemic will not yield the desired result, stressing that there is a need to re-strategise and ensure proper coordination both at the states and federal levels.

“We urge the government to focus on the completion of critical infrastructure projects nationwide such as the Lagos-Ibadan expressway, Lagos-Ibadan rail project, Enugu Airport, the Second Niger Bridge, East-West Road, among others,” she says.

“Also, there should be an upgrade of power and broadband infrastructure across the country in order to support ICT and digital economy.”

She explains that these public goods will have significant positive impact on commercial activities and businesses as they reduce cost of doing business and boost productivity.

and more flexible insurance legislation, stating that this has been a major drawback to the effective supervision of the industry.

According to him, efforts would be doubled to ensure the coming on board of a new insurance law to enable effective policy direction for the industry.

The players who also shared their opinions on the COVID-19 era and how insurance will remain relevant emphasised a new work culture that has emerged as result of the lockdown, which now sees insurers as well as other businesses provide services from remote locations, and with help of technology.

According to them, insurers would have to embrace more technology and inno@Businessdayng

vation as well as flexibility to align with the new expectations of the consumer.

For underwriters, they agreed that they must rise to the challenge of providing endto-end service from the point of policy issue to claims payment, as that is the way to go.

The brokers, for whom the COVID-19 era has limited their face-to-face contact with clients, they would have to also embrace technology to intermediate for consumers going into the future.

They speakers also brought to the fore the importance of new product developments to meet the needs of the consumer, as the pandemic has thrown up many challenges for consumers and the insuring public, which will also mean opportunities for the industry.

Wednesday 06 May 2020

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INSIGHT Unfolding global realities Covid-19 Pandemic...

Continued from back page infrastructure to boost production and trade growth.

In more specific terms, Nigeria and Africa must identify the corporate assets they are willing to sell to equity investors to attract Brownfield FDI inflows, the intangible assets they are willing to license to foreign investors to attract Greenfield FDI inflows, the financial assets they can securitize to attract remittances, and the idle/underutilized lands and built structures they can repurpose, redevelop and commercialize for lease/sale.

Nigeria (and Africa as a whole) should proactively make the above investment opportunities clear to the global investment community, rather than passively waiting for investors to come and then provide them with incentives once they are in the country, as it is also common knowledge that, unaware of the real opportunities, these investors never enter the country with adequate investment funding to make an impact and reap the benefits.

They can offer equity investment opportunities in the following ways: Securitizing Financial Assets- issue foreign currency bonds based on JV equity stakes Privatizing Corporate Assets- sell up to 51 percent of all wholly owned SOEs Liberalizing Intangible Assets- break government monopoly infrastructure sectors Commercializing Non-Financial Assets- optimize underutilized lands and buildings.

Credible Roadmaps We should articulate clear visions of our future with national and continental plans that we can engage diaspora and foreign investors with, like India, Saudi Arabia, and Egypt do. We also need to optimize underutilized public assets to open large non-tax, non-oil revenue streams that can compensate for lower commodity export and tax revenue, while issuing large-scale equity to replace debt.

The National Liquidity Challenge: Types of Illiquidity & The Problems Since the weakening of the global commodity prices in the second half of 2014, the Nigerian economy has been weighed down by three types of liquidity stress: fiscal, forex and financial.

Fiscal- Low Revenue and High Debt Burden News headlines express concerns about Nigeria’s weak fiscal situation- dwindling revenue, low capital spending, soaring deficits, growing debts levels, and escalating debt burden. These have led IMF to repeatedly urge government ‘to lower the ratio of interest payments to revenue and make room for priority expenditures’ in its annual Article IV Consultations with Nigeria, while some local/foreign media organizations and commentators have flagged issues about Nigeria’s solvency.

Forex- Low Reserves and Weak Exchange Rate News headlines have since 2015 been concerned about weak foreign reserves position of Nigeria, which

made the central bank ration foreign exchange, devalue Naira, and maintain multiple exchange rates.

The fear of devaluation in the face of inadequate levels of foreign reserves has constrained the central bank’s ability to ease monetary policy levers to spur growth. The IMF also often called upon the central bank to end the multiple exchange rate regime in its article IV consultations with Nigeria. Although the IMF has often commended the tight monetary policy stance of the central bank in the Article IV Consultations.

Financial- Tight Credit and High Interest Rates News headlines have harped on the increasing tightness of the Nigerian financial system as reflected in banks’ low loan-to-deposit ratios, high lending rates, high interest rates on government bonds, and perennial contraction of the stock market.

The central bank has targeted subsidized funds at sectors it considers as priorities, while directing banks to raise their deposit-to-loan ratios. The federal government has expressed preference for ‘cheaper’ foreign bonds for which it has very slim headroom.

Overcoming Illiquidity: The Prognosis Fiscal conversations in Nigeria should be focused on net worth, not revenue and debt in isolation. We must situate revenue and debt in the broader context of assets owned

by Nigeria and the enormous equity issuance headroom the assets bequeath the country in a post-boom environment in which we are assetrich, even as income shortfalls have trimmed debt issuance headroom.

This ties well with the IMF’s recent declaration that, ‘It’s not just what governments owe, it’s what they own’. Although the IMF is yet to reflect this insight in its Article IV consultations with Nigeria. It is hard not to agree with Gaspar et al (2018) that, ‘Knowing what a government owns and how they can put their assets to better use matters because they can earn … as much revenue as governments make from corporate income tax receipts’. Finding new streams of non-tax revenue will be helpful. www.businessday.ng

Nigeria’s debt liabilities are wellknown, but her assets are not. Harris et al (2019) says, ‘When governments know what they own, they can make better use of the assets for the well-being of all their citizens’.

Not knowing what we own depress perceptions of our net worth as the bulk of our assets do not come into reckoning in assessing our solvency.

Nigeria should list all assets owned by government in a National Asset Register, value them, and rationalize/optimize them to align use values and market values.

We identify ways of unlocking liquidity from four asset classes.

Large stocks of under-exploited assets owned by the Government mean Nigeria could be sitting on a treasure-trove of assets whose value could be larger than GDP, not to speak of debt. Since 1997, Hong Kong has funded its capital budget, ‘with a slight surplus, with liquidity unlocked from underutilized land’, from which India also gets a tenth of government revenue.

Forex- Maintain Reserve Adequacy to Underpin Stability: Raise External Liquidity Threshold Forex conversations in Nigeria should focus on foreign reserve adequacy, not narrowly on levels of reserves, devaluation overhang, or multiple exchange rates. We must situate these in the broader context of the minimum foreign reserve thresholds that Nigeria must attain to meet foreseeable payments and capital flow obligations plus some precautionary buffer to insulate the stability of the Naira exchange rate against unforeseen adverse developments like the impact of the Covid-19 pandemic on oil price.

Financial- Deepen Financial System to Underpin Growth: Make Naira a Preferred Store of Wealth Financial conversations in Nigeria should be focused on the store of wealth function of the Naira, not narrowly on banks’ loan-to-deposit ratios or lending rate as the central bank has tended to do. Strengthening the Naira relative to the US dollar to make Naira denominated assets the preferred stores of wealth over foreign exchange and real estate is the only way of deepening bank

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deposits, bonds and equity to thresholds required to guarantee increased access to financing at low interest rates in Nigeria.

Ways of Unlocking Liquidity: The Solutions We suggest four ways of unlocking liquidity: Nigeria needs to securitize its equity holdings in joint ventures by issuing large-scale foreign currency bonds that Nigerians at home and in the diaspora can invest in, privatize state-owned enterprises to attract large-scale brownfield foreign direct investment, liberalize infrastructure sectors to encourage inflow of large-scale greenfield foreign direct investments, and commercialize idle/underutilized public lands and buildings to open new non-tax revenue streams.

Assets to Unlock Liquidity From Financial Assets: Government’s minority equity holdings in JVs and other companiesSecuritize Government’s equity stakes in LNG and other oil sector joint ventures though issuance of diaspora bonds and other foreign currency denominated bonds to provide much needed external liquidity that will lift Nigeria out of the current growth and devaluation traps.

Corporate Assets: Wholly owned or majority equity holdings in SOEsPartially Privatize until Government holds no more than 49 percent stake in any entity, such as Nigerian Pipeline and Storage Company (NPSC) with 5000km Network of Pipelines; Nigerian Railway Corporation (NRC) and its Rail network, Termini and, Lands and Buildings; TCN and its Power transmission network; National Universities and their lands and buildings; National Hospitals and their lands and buildings, DICON, etc.

Non-Financial Assets: infrastructure networks, lands and built structureCommercialize or Decumulate assets such as, Valuable but underexploited or idle, lands and buildings owned by Government Ministries, Departments and Agencies (MDAs) on prime commercial land across the country, especially educational, health and sports institutions, such as 2000-plus Nigerian Postal Services (NIPOST) lands and buildings; 2000-plus Police lands and buildings; Lands and Buildings owned by the defunct Nigerian Telecommunications National Carrier (NITEL) and the defunct Power Holding Company of Nigeria (PHCN); 235 aging and uneconomic inner-city prisons; Many aging and uneconomic inner-city barracks; and Numerous aging and uneconomic inner-city stadiums.

Intangible Assets: Rights, Licences, Spectrums, flight routes- Liberalize by replicating the GSM and Pension Fund Liberalization in other sectors, such as e.g. liberalizing government real estate portfolio management, US-style, by encouraging the entry of wholesale Re-developers, Lease Managers, and Facility Managers.

How to Unlock Specifically, Nigeria could raise domestic and external liquidity thresholds by doing the following: Securitize government equity stakes in Joint Ventures with foreign currency bonds to give Nigerians at @Businessdayng

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home and in diaspora opportunities to invest while shoring up our foreign reserve thresholds.

•Issuing Asset-Based Securities and/or Diaspora bonds against financial assets •Issuing Asset-Based Securities against new income streams from non-financial assets Privatize all wholly or majority owned corporate assets to attract brownfield FDI by encouraging foreign investors to own up to 51 percent, while keeping 49 percent securitizable equity stakes.

Liberalize to attract greenfield FDI by breaking government monopoly in all infrastructure sectors to encourage entry of foreign investors to operate in parallel to the Joint Ventures.

Commercialize idle or under-utilized public lands/built structures by relocating uneconomic activities from prime locations and redeveloping the sites to open non-tax revenue streams.

How much, how easily, and in what sequence? Some rules of thumb Close Value Gaps: We need National Asset Registers for the four assert types. We should then value the assets know the gaps between use values and market values. This will give clear ideas about how much could be unlocked across the four asset types to close the gaps.

Raise Liquidity Thresholds: We however should unlock enough to raise our fiscal, financial and forex liquidity thresholds to levels required to underpin growth and stability.

Sequence: Securitization is the quickest of the four options. The other options could in many instances take time to consummate, but we can always securitize verified new income streams, pending consummation of privatization, commercialization, and liberalization.

Develop a National Roadmap: How much should be unlocked, how easily, and in what sequence should ideally be determined for each asset category in the context of a National Roadmap for Unlocking Liquidity in Nigeria that should offer guidance to all tiers of government in the same way as the National Pension Reforms did. Where there is a will, there is a way: each of the four levers require political will, transparency, and general acceptance by key stakeholders. A roadmap can help to articulate the vision needed to strengthen the political will and provide a step-by-step guide from vision to consummation that would help to get stakeholder buy-ins.

Doing these will change Nigeria’s economic, fiscal and financial narratives by unlocking the liquidity country needs to strengthen the Naira, rejuvenate fiscal, financial and foreign exchange streams, break dependence on volatile oil revenue and costly deficits, rebuild infrastructure, diversify and accelerate growth, eradicate poverty and unemployment, and lay the foundations for shared prosperity. Leading developing countries adopt different combinations of these four options to fuel their transformation.

Dr Ayo Teriba is CEO of Economic Associates (EA) where he provides strategic direction for ongoing research and consulting on the outlook of the Nigerian economy, focusing on global, national, regional, state, and sector issues.

The full text with footnotes and graphs can be downloaded from ssrn.com/abstract=3590393

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ISSUE

Covid-19 pandemic — the black swan metaphor New economic imperatives for securing lives and livelihoods in Nigeria

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y any measure, the COVID-19 pandemic exemplifies the Black Swan metaphor.

Either way, we are in the midst of this pandemic as the Nigerians and the rest of the world, combat this highly infectious disease. The economic consequences will be catastrophic, and we are already starting to feel the hardship.

According to the latest economic outlook by IMF, “the health crisis is having a severe impact on economic activity. As a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis.”

Sub Saharan Africa is facing an unprecedented health and economic crisis. The regional economy is projected to contract by (-)1.6% down from a GDP growth of 3.1% in 2019- the lowest ever. Across countries, the less diversified economies will be hit the hardest, reflecting the impact of lower commodity prices and containment efforts. The region’s two largest economies Nigeria and South Africa will contract in 2020. Nigeria’s GDP is predicted to contract by (-)3.4% and a recovery projected in 2021.

Policy imperatives for Nigeria What are the policy options available? The immediate priority is indeed to contain the impact of the health crisis and protect the lives of citizens. This must be accompanied by solutions to safeguard livelihoods by helping the firms and vulnerable masses. Every crisis is also an opportunity: This article examines what Nigeria should do in the short term i.e., next 6 months and in mid-term i.e.,2020-21. We’ll also discuss the examples of other Sub Saharan countries that have achieved relative progress in diversifying their economies in recent years and inoculated themselves

Sesame – a success story Thanks to Government policies to encourage exports of valueadded products, exports of hulled

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Mr. Bill Gates had prophesied: “If anything is going to kill 10 million people in the next decade it is likely to be a virus, not a war, not missiles but microbes.” While we had invested billions in nuclear deterrence, the Microsoft founder continued: “we have invested very little in a system to stop an epidemic. “

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“The Black Swan” is an idiosyncratic tittle of a best seller book written by Nassim Nicholas Talib, which was published thirteen years ago in 2007. In the book, he explained: “the Black Swan is about those unexpected events that end up controlling our lives, the world, the economy, history, everything. Before they happen, we consider them close to impossible; after they happen, we think that they were predictable and partake of a larger scheme.

They are rare, but their impact is monstrous.”

against the debilitating effects of economic downturns. We chose to focus on two segments which can have a vast impact on diversification of revenue base and resultant job creation: Non-oil exports and Textiles.

Non-oil exports According to WTO statistics, Nigeria’s merchandise exports in 2018 were USD 61 billion, predominantly crude oil(93%) As per data published by CBN, the non-oil exports in the first half of 2019 (Top 100 exporters)amounted to USD 976 million This indicates tremendous potential to grow the non-oil exports sub-sector.

Nigeria’s non-oil exports consist of mainly semi-processed and processed agro-allied products such as cocoa, sesame, cashew, sheanuts, frozen shrimps & prawns and cotton, accounting for 47% of all products (CBN,2018). The European Union is the principal destination for Nigeria’s non-oil exports representing 25% market share followed by ECOWAS at 17%.

However, in recent years, exports to non-traditional markets such as Vietnam, Brazil, China, India and Japan has increased significantly.

Certain non-traditional products added to the Nigerian export basket include Urea.

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US$ 5 billion create an opportunity for import substitution. However, that would require a high level of consistent support to provide the industry a level playing field and an enabling environment. This is one industry which can rapidly create jobs, add value to our raw materials and save foreign exchange.

sesame seeds have been a success story in the last decade. Nigeria’s present exports of sesame seeds are estimated at over USD 200 million.

Exporters have invested in stateof- the-art processing plants. This has resulted in higher income for the sesame farmers as the volume and value have both increased.

According to CBN data, in 2007, Nigeria’s production of sesame (aka Beniseed) was estimated at 137,000 tons and the price realized by the farmer was N 94,000 /ton.

Whereas in 2018, the output had quadrupled to 399,000 tons and price realization increased to N 390,000/ton. The farmers not only benefited from market access but also boosted their incomes.

Shea nuts – women’s empowerment Shea nuts are sourced from trees which grow naturally in the wild, in a process that involves collection, selection, washing, drying, pulp removal, and in some cases, shelling. This process has an important socio-economic role in Nigeria because over 500,000 local women are involved in collecting the nuts, many of whom are otherwise unemployed. Shea cake and Shea butter production therefore provides off-take of Shea nuts which in turn secures the livelihoods of women and youth in communities growing Shea trees.

Although Nigeria is ranked top in the production of shea nuts, but in terms of export of shea butter, the country is lagging behind.

Whereas, Ghana is a leading exporter of shea butter, most of the nuts processed in that country are from Nigeria. This is an irony!

Concerted efforts should be made to support small and medium sized

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‘ For Nigeria, the

impact of the crisis is compounded due to ‘comorbidity’.

The economy had been undergoing a fragile recovery from the 2014 commodity downturn. It is now confronted with a grave public health and economic crisis

not only become self-sufficient in production but became part of the global supply chain. In 2000 China’s exports of textiles & apparel were US$ 53 bn; in 2019, they had increased five-fold to US$ 271 bn.

However, as China’s cost competitiveness is getting eroded, international buyers have diversified their sourcing to other developing and less-developed countries such as Vietnam, Bangladesh, Cambodia and Myanmar. Bangladesh is a success story. In 2018 its export of apparel was US$ 36 bn, accounting for 80 % of the country’s total merchandise exports. Bangladesh has a population of 165 million of which 4.5 million are directly employed in the garment industry and over 70% of them are women.

Emerging East Africa East African nations have achieved great strides in attracting Foreign Direct Investment (FDI) in the textile and gar-

ment industry as reflected in their rapidly growing exports. According to Gherzi, a Swiss based textile consulting firm, exports of textile & apparel from Africa increased from $14.8 bn in 2010 to 17.2 bn in 2019 and is expected to further grow. Sub Saharan African countries like Ethiopia, Kenya and Madagascar have established large industrial parks to attract FDI from Asia and created an enabling environment to boost exports.

Ethiopia’s textile industry is vertically integrated and employs about 100,000 persons. The Hawassa Industrial Park built in 2016 has attracted investment from vendors who supply mainly to PVH, the renowned US clothing buyer and envisaged to create 60,000 jobs in the zone.

Kenya, likewise boasts of being the No.1 exporter under AGOA with apparel & textile exports in 2019 valued at USD 536 million providing direct employment to 45,000 workers.

West Africa West African countries have taken a cue with Ghana, Burkina Faso and Senegal attracting FDI in the industry. In fact, the Ghanaian Trade Minister Hon Alan Kyerematen has been aggressively pursuing FDI to leverage its developing infrastructure, efficient ports and investor-friendly policies. Burkina Faso’s policy imperative is to add value to its cotton, 90% of which is currently being exported as a primary commodity.

In Nigeria, the Central Bank has been driving the agenda for revival of Nigeria’s cotton-textile industry.

It has achieved some result however there are further improvements to put the industry on a growth track. According to Gherzi, Nigeria’s imports of textiles valued at over

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Ade Adefeko & JP Olanrewaju

firms to set up small to medium processing plants in various parts of Nigeria to process shea nuts instead of allowing them to be informally moved to Ghana where valueadded exports of the produce take place. In addition, efforts should be made to develop shea plantations to complement the existing shea trees which grow in the wild.

Textile & garments Textiles was the cornerstone of economic development in most developed and developing countries in the late 60s and early 70s.

The developing countries in Asia @Businessdayng

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Competitiveness So, what ails Nigeria’s non-oil exports? Nigeria lacks the competitiveness due to several factors such as infrastructural bottlenecks, high cost of doing business and productivity. The Global Competitiveness Index (GCI) evaluated by the World Economic Forum, covering 141 economies, measures national competitiveness—defined as the set of institutions, policies and factors that determine the level of productivity. According to the GCI 2019, Nigeria was ranked 116 with a score of 48.3 compared to Kenya at 95th place with a score of 51.2.

Even regional rivals such as Ghana were ranked above at 111th place whereas South Africa, the second largest economy in sub Saharan Africa was ranked 60th with a score of 62.4. Nigeria’s competitiveness was impacted by lack of an enabling infrastructure skill set and innovation.

Incentives Most developing countries support their export-oriented industries with fiscal and other incentives. China, which is the world’s largest exporter of merchandise with exports in 2018 at US$ 2.5 trillion gives an export tax rebate of up to 17% to neutralize the incidence of indirect taxes and levies on its exports. India, likewise, with merchandise exports of US$ 326 bn offers a package of incentives, especially to its labour intensive industries such as textiles & garments as well as leather & footwear.

Interestingly, these two developing countries were also ranked among the Top 10 exporters of agricultural products and growing at 6-7% p.a. as per WTO. Nigeria had long recognized the need to diversify the economy and promote non-oil exports. The Export (Incentives and Miscellaneous Provisions) Act was passed in 1986.

The new Export Expansion Grant (EEG) guidelines were introduced in 2017 and based on the policy commitments, non-oil exporters embarked on renewed investment in processing capacity and made commitments to international buyers.

According to CBN data, non-oil exports increased from N 675 million in 2016 to N 1,367 bn in 2018.

In the first half of 2019, non-oil

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export was to the tune of about US$ 1 bn. The EEG scheme has helped to formalize the export channels as goods undergo pre-shipment inspection by agencies appointed by the government. Moreover, the forex proceeds are repatriated through banks and verified by the Central Bank Of Nigeria.

Unfortunately, the current policy to encourage exports through the policy instrument of EEG has not been effective due to implementation bottlenecks. Although the enabling Act puts the administration of the EEG squarely on the Nigerian

serious consideration of fiscal and monetary incentives as support for non-oil exports in Nigeria therefore cannot be overstretched.

Call to Action The imminent decline of oil revenue in the wake of the pandemic should be a call to action for policy makers .Diversification of the Nigerian economy needs to be taken up on a war footing to create momentum in the next 1 to 3 years. There is the need to identify the “quick wins” and assiduously create an enabling environment

World Bank Doing Survey 2020, placed Nigeria at 131 among 190 countries, with a score of 56.9 with Kenya having marched ahead to 56th place with a score of 73.2. A particular disadvantage faced by Nigeria is the high cost of trading across borders – a parameter on which Nigeria was ranked 182 among 190 countries. The cost of import of a container at Nigerian ports was estimated at US$ 1640 whereas for exports it was estimated at US$ 645.

The comparative cost at Ghanaian ports were 60% and 40% lower and the turnround time at ports faster.

World Bank Doing Business Report Export Promotion Council (NEPC), however ministerial bureaucracy stifled efficiency resulting in perennial backlog of claims.

The new EEG guidelines were introduced in 2017, with a provision that the NEPC should prepare and submit annual budgetary proposals to government for consideration and approval. This was meant to create transparency and predictability in the disbursement of incentive the Ministry of Finance, Budget and Planning is yet to put in place an effective mechanism for implementation.

The non-oil export value chains in Nigeria employ over 10 million people, most of them in rural areas. The sector also fosters gender-equality as a lot of women are employed in the harvesting and processing of exportable agricultural produce. The need for a @Businessdayng

for the private sector to realise them. The Nigerian Export Promotion Council has identified some of these quick wins, and all we need to do is to support them with implementable policies on a consistent basis. This is the right time to bring up the NEPC’s “Zero Oil Policy” for serious consideration and implementation. The impetus given to the cotton-textile sector needs to be sustained. Enough of rhetoric. The time to act is now With clear vision and consistent implementation of policies, Nigeria should be able to mitigate the impact of Coronavirus on human lives and also secure livelihoods.

Ade Adefeko is Chairman, Agricultural Trade Group at NACCIMA, JP Olanrewaju is the former DG of NTMA and currently Executive Secretary of OPEXA)

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Outrage as controversial control of IDB enters Senate in new title Solomon Ayado & James Kwen,

…as Gbajabiamila disagrees with critics of Bill

here was outrage as the control of Infection Diseases Bill (IDB) that generated controversy after being passed in the House of Representatives scaled first reading in Senate, under a new title.

During plenary on Tuesday, a new bill tagged National Health Emergency Bill, 2020, sponsored by Chukwuka Utazi (PDP Enugu North) was mentioned for first reading.

Utazi is the chairman, Senate Committee on Primary Healthcare and Communicable Diseases. Immediately the bill was read, there was agitation as senators kicked against it, insisting the content of the bill must be made open before subjecting it to any consideration.

The senators alleged that the new bill might have disguised, and or might have been the replica of the controversial bill passed by the House of Representatives, hence the necessity for senators to be provided the draft copy.

The same bill speaker of House of Representatives,

Femi Gbajabiamila, disagreed wholeheartedly with the suggestions that this was not the ideal time to seek reforms of the infectious diseases and public health emergency framework in the country via the Infectious Disease Control Bill.

Gbajabiamila said the weaknesses of the present system had already manifested in the inability of the government to hold to proper account those whose refusal to adhere with Nigeria Centre for Disease Control (NCDC) guidelines led to the further spread of the coronavirus in Nigeria.

“We have had people break out from isolation centres, and others, who fully aware of their status chose to travel across state lines on public transport”, he noted.

The speaker, who made these assertions while members of the House at the resumption of plenary session on Tuesday, said since the introduction of the Bill a week ago, there had been a barrage of criticisms against it, with allegations of sinister motives.

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Meanwhile, former deputy Senate president, Ike Ekweremadu, on point of order, demanded that a draft copy of the bill should be shared to lawmakers to enable them know whether it is the controversial bill or not.

However, Senate president, Ahmed Lawan, quickly ordered that the bill be distributed to all senators and further ruled that the second reading would be taken, next week in plenary.

There has been growing concern that the proposed control of Infectious Diseases Bill, if allowed to become law, will give excessive powers to the director-general of NCDC and pave the way for a police controlled health sector.

Many people have posited that the bill is draconian and has semblance with Singapore’s Infectious Diseases Act of 1976. For instance, Section 48 of the bill proposes that “the director-general of the NCDC may by order direct unvaccinated persons to undergo vaccination or other prophylaxis within such period as may be specified in the order.”

Naira gains N5 over dollar at black market Hope Moses-Ashike

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igeria’s currency on Tuesday appreciated by N5 as the dollar traded at N430 from N435 traded on Monday at the black market.

Some traders sold the dollar for N435 based on how they sourced it.

“Dollar is not much in the market and people are selling at different prices,” one of the traders at Festac area of Lagos said.

At the retail Bureau, the naira weakened by N5 with the dollar

selling at N435 on Tuesday compared to N430 sold the previous day.

The Central Bank of Nigeria (CBN) on Wednesday last week resumed dollar sales for school fees and Small andMediumEnterprises (SMEs).

The CBN has also made complete arrangements to resume foreign exchange sales to the BDC segment of the market for business travels, personal travels, and other designated retail uses, as soon as international flights resume.

The apex bank on March 26, suspended foreign exchange sales to the Bureau De Change (BDC) operators until further notice due to the Covid-19 lockdown as requested by the operators. The suspension notwithstanding, some BDCs are still active in the market.

At the Investors and Exporters (I&E) forex window, the market opened with an indicative rate of N384.83/$, which showed a N0.50k gain over N385.33k/$ opened on Monday, data from FMDQ revealed.

Change Africa Foundation offers palliatives to orphanages Modestus Anaesoronye

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s COVID-19 pandemic affects various aspects of the economy and more importantly the sources of livelihood of many people, with some of the most affected being the orphans and generally the less privileged, support to these group of people cannot be overemphasised.

Motivated by this, Change Africa Foundation, an African-focused empowerment non-governmental organisa-

tion, extended various relief materials ranging from bags of beans, garri, onions, kegs of groundnut oil, cartons of chicken, baskets of pepper, tomato, spices and data subscription vouchers, to four orphanage homes.

The homes are: Lekki Motherless Babies Home, Sought After Orphanage Home, Olive Bloom Orphanage Home, and Peculiar Saints Orphanage Home. All benefiting homes are domiciled in Lagos.

Change Africa Foundation

in last seven years has built its essence around catering to those whom the society has failed to empower. In the last seven years, the foundation has provided practical support through her various initiatives for various orphanage homes across Lagos, with some of the previous beneficiaries including, Love Home Orphanage, Heritage Orphanage Home, Optimal Orphanage Home and Life Fountain Orphanage Home, all catering for kids in Lagos.

Covid-19: CFL, British partner launch ‘fast result-oriented’ test kit Wednesday Iniobong Iwok

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onfederated Facilitators Limited (CFL), a facilities management and marketing company, in collaboration with its British partner, will Wednesday launch a ‘fast result-oriented medical test kit’ into the Nigerian market.

Lai Omotola, managing director of CFL, in a statement, said: “These are Rapid Antigen test kits produced in South Korea and have been highly effective in the testing of suspected cases of coronavirus in the United Kingdom, USA and other parts of Europe as well as in

Asia. The product turns out a result in 20 minutes after application on suspected Covid-19 cases. It tests for the existence of current and live infections in individuals.”

Omotola, who laments the delay in getting the results of tested cases in Nigeria following the PCR and antibodies procedures currently used in the country, said there was the need to test more at a faster and cheaper rate considering the huge population size of Nigeria.

“These Antigen tests are particularly useful, faster and cheaper in Resource Deficient geographies where PCRs are not readily available,” he said. www.businessday.ng

According to Omotola, “The country cannot afford to continue with the present system of testing ahead of expected spike in the number of cases as relaxation of the lockdown in place in the last one month, commences this Monday.”

He appealed to the private sector and other stakeholders to step out on behalf of the Federal and State Governments to massively patronise the product in order to ensure a better and faster management of the testing procedures.

He promised that the CFL and its UK-based partner would make availableabout750,000Antigentests into the Nigerian market this week. https://www.facebook.com/businessdayng

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news

Israel records breakthrough in path to cure for Coronavirus

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srael has isolated a key coronavirus antibody at its main biological research laboratory, the Israeli defence minister said on Monday, in a step cited as “significant breakthrough” in race for a treatment for Coronavirus.

The “monoclonal neutralising antibody” developed at the Israel Institute for Biological Research (IIBR) “can neutralise it (the diseasecausing coronavirus) inside carriers’ bodies,” Defence Minister Naftali Bennett said in a statement.

The statement quoted IIBR Director Shmuel Shapira as saying that the antibody formula was being patented, after which an international manufacturer would be sought to mass-produce it. No timeline was given for when it will be available for use.

The statement added that

Bennett visited the IIBR on Monday where he was briefed “on a significant breakthrough in finding an antidote for the coronavirus”.

The IIBR has been leading Israeli efforts to develop a treatment and vaccine for the coronavirus, including the testing of blood from those who recovered from COVID-19, the respiratory disease caused by the virus.

Antibodies in such samples - immune-system proteins that are residues of successfully overcoming the coronavirus - are widely seen as a key to developing a possible cure.

The antibody reported as having been isolated at the IIBR is monoclonal, meaning it was derived from a single recovered cell and is thus potentially of more potent value in yielding a treatment.

Rwanda’ Kagame seeks to delay debt payment, gets hearing

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aul Kagame of Rwanda is seeking to postpone debt repayments for at least two years to deal with the economic fallout from the coronavirus pandemic, and he is getting a hearing.

“The idea is to retain the disbursements due and reinvest in reviving the economy and fighting the pandemic,” he said. “Some lenders have been positive.”

The economy will probably only grow 3.5% this year, from an earlier projection of at least 8%, Kagame said Monday in a virtual media briefing. The central bank has said last year’s expansion reached double digits.

Rwanda has won attention from investors on the back of Kagame’s reformist agenda. The

administration is negotiating with lenders to delay repayments and use the money to stimulate economic activity instead, Kagame said.

Among the businesses that will require funding is the national carrier, RwandAir, which has announced drastic salary cuts.

Kagame didn’t specify if he also wanted a moratorium for Rwanda’s commercial debt. The country has one Eurobond outstanding, $400 million of notes maturing in 2023. The yield rose 6 basis points to 10.29% as of 10:12 a.m. in London.

Rwanda has implemented one of the most stringent lockdowns in Africa and ordered most of the population to stay indoors.

COVID-19 fight: NBC intervenes with relief materials for families Chuka Uroko

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igerian Bottling Company (NBC) Limited has demonstrated support and commitment to the fight against COVID-19 with the provision of relief materials to vulnerable Nigerians.

The brewer has commenced the distribution of food items to thousands of households across the country to help them mitigate the impactofthecoronaviruspandemic.

Thefirstphaseofthe‘NBCFood Relief Intervention’ will see over 2,000 households in 14 locations across the country receive essential food items, including rice, noodles and cooking oil amongst others.

The intervention, which commenced on Thursday, April 30 in Ota, Ogun State and Asejire, Oyo State, saw 300 beneficiaries receive foodstuff with an additional 150 households each set to benefit in Abuja, Port Harcourt, Maiduguri, Makurdi, Warri, Enugu and Minna.

Two hundred households each will also get relief packages in Benin City, Owerri, Challawa and Ikeja as the company continues reaching out to families

during these difficult times. The social interventions and volunteering campaigns is expected to run through the end of the second quarter of this year.

Receiving some of the household supplies on behalf of 150 families in Ota, Ogun State, chairman of Nice Estate Community Development Association, Eric Gbibgi-Jackson, commended the gesture by NBC. “We are using this medium to thank you, Nigerian Bottling Company Limited. For these food items that you have given us; we remain deeply grateful and pray that your company will continue to grow from strength to strength,” he said.

Commenting on the intervention, Director, Public Affairs and Communications, NBC, Ekuma Eze, said the exercise was part of NBC’s commitment to support its host communities across the country.

“The impact of the COVID-19 pandemic has been quite unbearable for many families. As a socially responsible organisation, we believe there is no better time to identify with these people across our communities than now,” he said. www.businessday.ng

Dapo Abiodun, governor, Ogun State (r), presents a cheque of N210, 275, to Beatrice Akanbo, during the Anchor Borrowers Programme grant presentation to some of the 2,947 farmers in Ogun State.

Notore grows revenue, posts N2.7bn income in H1 2020 OSA VICTOR OBAYAGBONA

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otore Chemical Industries plc, Nigeria’s leading agribusiness company, has posted N13.12 billion revenue and N2.7 billion operating income for the half year ended March 31, 2020, on the back of its strategic Turn Around Maintenance (TAM).

This was contained in the company’s unaudited results for the half year ended March 31, 2020, which reported gross revenue of N13.12 billion compared to N12.86 billion for first half of 2019, representing a 3-percent growth.

Onajite Okoloko, group managing director/CEO, in a statement by the company, said, “The modest growth in revenue is attributable to some

improvements in plant reliability derived from the ongoing TAM programme, which has begun to impact positively on plant operations and resulting in some marginal increases in production volume during the period.

“Operating expenses increased by 29 percent to N10.43 billion during the period from N8.05 billion for the corresponding period of 2019H1 due mainly to a combination of increases in production activities, plant repair and maintenance expenses and the impact of naira devaluation. Operating income for the period was N2.67 billion, a decrease of 42 percent as compared to N4.63 billion in 2019H1.”

According to Okoloko, while the coronavirus (COVID-19) pandemic and the attendant

measures/restrictions put in place by various governments aimed at halting the further spread of the virus has had a negative impact on businesses globally, the impact of the pandemic on the fertilizer market and Notore in particular, remains minimal, as it operates in the “essential goods” industry.

“The Nigerian fertilizer demand is quite robust and is expected to continue to grow considering the Federal Government’s strong and decisive policy focus on agriculture as one of the keys to unlock the diversification of the Nigerian economy. The domestic fertilizer market is yet to reach its full potential as the consumption of fertilizer per hectare of arable land in Nigeria is still far below the 200kg per hectare recommended by Food & Agriculture

Organization (FAO),” the statement noted.

Noting that the strategic TAM programme would propel its plant to meet and sustain its nameplate capacity of 500,000MT per annum, the company said, “The TAM programme once completed at the end of Q4 2020 as anticipated, is expected to improve significantly the Plant’s reliability and production output to meet and sustain its 500,000MT per annum design nameplate capacity. Achieving this level of production output will not only lead to significant improvements in the Group and Company cash flows from operations, but also significant increases in revenues annually, thereby returning the Company to profitability post the TAM programme.”

Concept Nova offers fuel control solution to COVID-19: Infinity Trust Mortgage Bank holds virtual AGM essential service providers Daniel Obi

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oncept Nova, one of Africa’s fast growing tech solution firm, has unveiled Fuel Control System (FCS), a diesel management solution to enable essential service providers eliminate diesel leakage and theft challenges in their day-today operations.

The FCS is a state-of-the-art telematics solution that puts control of stationary and mobile assets in the hands of essential service providers, allowing them save cost, maintain profitability and meet rising business demands.

Chukwuma Ochonogor, managing director of the company in a statement, said, “With the erratic public power supply in the country, many essential service providers such as FMCGs, Pharmaceuticals, Logistics and Haulage companies and others rely more on diesel for their generators, storage facility and fleet to stay productive during this period. This is why we are offering our affordable diesel

management solution to help prevent diesel leakage and theft occurrences during offloading and refuelling of diesel-powered assets.”

Relating his experience with the solution, Obi Okafor, admin and procurement manager at a financial services firm, according to the statement, said, “Diesel is one of the top three expenses incurred by my organisation every year as we rely heavily on our generators for constant electricity supply.

For some time, we suspected our diesel suppliers were shortchanging us by not delivering the exact volume of diesel paid for. Using Concept Nova’s diesel management solution helped us confirm our suspicions, get our money’s worth and save millions of naira.”

Speaking further, Ochonogor said, “To ensure our customers also save cost while enjoying Return on Investment on every litre of diesel purchased, the FCS provides real-time reports that help businesses remotely monitor and audit diesel usage trends for accountability purposes.

https://www.facebook.com/businessdayng

HARRIDON EDEH, Abuja

U

pcoming 14th annual general meeting (AGM) of Infinity Trust Mortgage Bank plc has been scheduled for Thursday, on a virtual platform to avert concerns of COVID-19 pandemic spread, the bank’s management said.

The AGM has earlier been scheduled to hold physically but was disrupted by the Covid-19 pandemic and the associated national response. The decision for a virtual AGM was reached by the Board of Directors after extensive deliberations, the bank said.

The bank in an official notice of the AGM signed by the Company Secretary, Tolulope Osho, which was posted on the Nigerian Stock Exchange (NSE) website, indicated that the meeting would be by proxy.

According to her, the meeting would hold at the Penthouse, Infinity House, 11 Kaura Namoda Street, Garki, Abuja on May 7, at 11am. She said the convening and conduct of the AGM shall be done in compliance with the @Businessdayng

Corporate Affairs Commission’s (CAC) issued Guidelines on Holding AGM of Public Companies by Proxy.

“We have concluded plans to hold our first virtual AGM in line with CAC guidelines. This would be done in order to curtail the spread of the Covid-19 pandemic while observing related directives and guidelines by both the Federal and State Governments and other Regulatory Agencies. This is due to the fact that the national guidelines for managing the pandemicdoesnotgiveroomforlarge gatherings and we have a responsibility as a Bank to hold the AGM and carry on necessary day-day operations while observing the guidelines by the Government.

“The Federal Government has prohibited the gathering of more than 20 people, so attendance of the AGM shall be by proxy only,’’ she said.

She explained that the AGM would be streamed live online on the bank’s YouTube channel to enable shareholders who would not be attending physically to follow the proceedings.

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Wednesday 6 May 2020

BUSINESS DAY

news

General Electric set to cut 10,000 aviation jobs as COVID-19 impact bites IFEOMA OKEKE

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Usman Jidda Shuwa (l), secretary to Borno State g overnment, presents an appointment letter to Umar Ibn Shehu Kyari , new Shehu of Bama, at the palace in Bama town.

UNICEF says internally displaced children most vulnerable to COVID-19 pandemic Cynthia Egboboh, Abuja

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he United Nations Children Fund (UNICEF) on Tuesday warned that internally displaced children including those in Nigeria are among the world’s most vulnerable to the COVID-19 pandemic.

According to a recent UNICEF report, globally, an estimate of 19 million children more than ever before, are living in displacement within their own countries due to conflict and violence in 2019.

Peter Hawkins, UNICEF representative in Nigeria in a statement, says the report, ‘Lost at Home’, looks at the risks and challenges internally displaced children face, and the urgent actions needed to protect them as COVID-19 continues to spread around the world, saying these children are among the most vulnerable to its direct and indirect impacts.

“Hundreds of thousands of children in North-east Nigeria are living in the shadow of conflict and now in the increasingly challenging shadow of a global pandemic and its potential socioeconomic aftermath.

“When a new crisis like the COVID-19 pandemic emerges, displaced children are especially vulnerable and the gaps in our ability to keep them safe are even more stark. We must urgently work together, all of us, government and humanitarian partners to keep them safe, healthy, learning and protected,” he states.

The report shows that in the North-eastern part of Nigeria, there are currently 1.9 million people displaced from their homes while 60 percent of them are children, with 1 in 4 under the age of five.

“The COVID-19 pandemic is making a critical situation for displaced children and families around the world even worse.

The situation of displaced chil-

… as number rose to 19m in 2019 dren in the north east is further worsened as they often live in overcrowded camps or informal settlements, where access to basic hygiene and health services is limited, and where physical distancing is not possible.

“This is true in Nigeria’s northeast, where conditions pose a particular challenge to containing the possible spread of diseases like COVID-19”.

The report further shows that the internally displaced children around the world often lack access to basic services and are at risk of exposure to violence, exploitation, abuse and trafficking, child labour, child marriage and family separation, which all pose direct threats to their health and safety.

“There were 12 million new displacements of children in 2019 - 3.8 million of them were caused by conflict and violence, and 8.2 million by disasters linked

Lagos Assembly denies spending N17m monthly on speaker’s house Iniobong Iwok

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agos State House of Assembly has denied report in the media alleging that the speaker, Mudashiru Obasa, spends N17 million monthly for the maintenance of his residence and his official guest house, describing the allegation as unfounded and misleading.

Speaking in plenary Tuesday, Clerk of the House, Azeez Sanni, who called the attention of the lawmakers to the report that made the rounds in April, explained that the report was erroneous.

Sanni said the amount stated covered a lot more, and was for the smooth operation of the offices of the Speaker and the Assembly.

According to Sanni, “The sum covers various expenditure of the full offices; the Office of the Chief of Staff, Special Advisers (Budget, Political Matters),

office of the Chief Press Secretary, Special Assistant (Protocol), Special Assistant (Research and Development), Special Assistant (Women Affairs), and 15 Special Assistants engaged to give relevant advice with respect to their areas of speciality and fields of expertise for the smooth operation of the legislature.

“I must also state that these expenditures have been in existence prior to the emergence of Speaker Obasa. In fact, it dated back as far as 2012, when it was N27 million monthly and I have the documents here to show that.”

The Clerk added that the report was a deliberate attempt to tarnish the image of the House of Assembly, adding that if the information was sourced through the right channel, the matter would have been clarified, and everything would have been captured rather than a bit and piece, which he said was miswww.businessday.ng

leading and disparaging.

The chairman, House Committee on Information, Security and Strategy, Tunde Braimoh, faulted the medium that published the report for not reaching out to the House to get their own side of the story and ensured a balanced report, adding that the report was malicious and that it should be totally ignored.

Braimoh, who further stated that the medium was known to be writing unbalanced reports lately, said that had it been that the medium reached out to the House before rushing to publish their report, they could have been better guided.

“A responsible journalist could have reached out to me as the Chairman of the House Committee on Information before publishing what is not. If they had asked a question, this would have been well cleared; we should ignore all this shenanigan and dismiss it in its entirety.

mostly to weather-related events like flooding and storms.

“UNICEF and partners are currently working to protect displaced children in north-east Nigeria through critical health and nutrition services, providing access to life-saving WASH services through accelerated construction of facilities, and adapted solutions to continuing education including the provision of radios for distance learning while schools are closed.

“What we really need now are strategic investments and a united effort from government, civil society, private sector, humanitarian actors and children themselves to find solutions that can protect children from the effects of displacement, especially as we face the COVID-19 pandemic and also address and help mitigate the longer term impacts this can have on children’s health and education,” Hawkins says.

eneral Electric says it will cut an additional 10,000 jobs from its aviation sector as the coronavirus pandemic impacts the industry, forcing several companies to cancel orders.

The cuts will be both voluntary departures and layoffs, and is taking effect after an initial wave of 2,600 job cuts in March, GE states in a statement on Monday.

The company wants to reduce its aviation employment base by 25 percent, or some 13,000 employees. The austerity programme, which will affect all geographic zones, is reflective of the rough time the entire aviation sector is going through.

Boeing announced last week that it was cutting 16,000 jobs, about 10 percent of its workforce, in civilian aircraft manufacturing.

It also heavily reduced production of its long-haul 787 and 777/777X planes. The company has yet to announce a date when it will resume assembly of its flagship 737 MAX aircraft. Airbus has similarly reduced production.

GE is directly affected by these

decisions, as it makes plane engines for Boeing and Airbus.

Global air traffic is expected to fall 80 percent during the second quarter compared to February, GE said in a letter to 52,000 employees.

“To protect our business, we have responded with difficult cost-cutting actions over the last two months,” CEO David Joyce said in the letter. Unfortunately, more is required as we scale the business to the realities of our commercial market.”

The job cuts are part of a $3 billion savings plan that will be implemented this year. In addition, half of the employees in charge of aviation maintenance and repairs are out of work for three months. Hiring has also been frozen and bonuses cancelled.

GE, which makes aircraft engines in a joint venture with the French company Safran, CFM, saw revenue fall by eight percent to $20.52 billion in the first quarter. The aviation division’s revenue plunged 13 percent to $6.9 billion, while its orders were down 14 percent.

Eroton reaches out to host communities in fight against COVID-19 Onyinye Nwachukwu, Abuja

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roton, an independent oil and gas producing company, says it has initiated an intervention process in its host state as part of its contribution towards combating the COVID-19 pandemic in the country.

The company said the intervention, which would be in stages, kicked off in its host communities on April 7 with an awareness campaign.

“At Eroton, we believe that every gesture of support from all stakeholders will be needed to effectively combat the spread of the novel coronavirus (COVID-19) pandemic in Nigeria,” the company said in a press release.

“Increasing public awareness is vital in the fight against COVID-19,” it said.

To this end, Eroton said it handed over COVID-19 CSR flyers and prevention supplies to its host communities through

the Cluster Development Boards (CBD) and Community Trusts (CT).

“The beneficiary CDBs are DAA – 1 (Bille & Krakama), DAA – 2 (Bukuma etc), DAA – 3 (Abonema, Bakana Tombia etc), Wakirike CDB and Ilomatoru CT,” Eroton said.

“This goodwill gesture was appreciated by the CDBs and CT representatives who stated it came as a pleasant surprise to them,” the company said.

The company said the second stage of its initiative would be the donation of COVID-19 prevention and mitigation materials to the Rivers State government.

It said it also contributed to the industry-wide initiative spearheaded by the Nigeria National Petroleum Corporation (NNPC) which focused on the provision of medical consumables, deployment of logistics/in-patient support systems, and delivery of medical infrastructure.

500 South African health workers enrol for Coronavirus cure trial

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trial is under way in South Africa to test if the BCG vaccine against tuberculosis is also effective against coronavirus - something unproven at the moment.

Some 500 health workers are taking part in the study, which has seen 250 of them given the injection, and another 250 given a placebo.

Children immunised with BCG tend to suffer less from respiratory illnesses including asthma, Prof Andreas Diacon of Task, the clinical research organisation

funding the study, told the AFP news agency.

“South Africa does vaccinate all new-borns with BCG. Revaccinating adults could help reduce the consequences of this pandemic,” Task said in a statement.

Covid-19 is a respiratory illness, but the World Health Organisation (WHO) says there is no evidence that the BCG protects people from Covid-19 infection.

The health body said last month that two clinical trials were under way involving BCG, and

when completed, their findings would be evaluated by the WHO. Despite the lack of medical evidence, global search for the term “BCG” has spiked, according to Google.

Another concern for the WHO is that increased demand for the vaccine could mean there will be less of it available to inoculate children against tuberculosis.

Task in South Africa told AFP it planned to extend its BCG trial to up to 3,000 health-care workers in Cape Town, observing participants for at least a year.

Buhari approves duty waivers for medical supplies Onyinye Nwachukwu, Abuja

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resident Muhammadu Buhari has granted blanket duty waiverstothepharmaceutical and health sector to allow for seamless import of medical equipment and supplies needed, particularly to handle the Covid-19 pandemic.

Theapprovalhasalreadytakenef-

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fectfromMay1,2020,accordingtothe Minister of Finance, Budget and National Planning, Zainab Ahmed, who spoke Tuesday at the WebEx Citizens Dialogue Session on Government Fiscal Policy Response to COVID-19 Pandemic and Oil Price Fall.

The dialogue was to provide opportunity for citizens to understand the twin impacts of the Co@Businessdayng

vid-19 and oil price fall on the 2020 Budget, government’s fiscal policy proposals, and more importantly, to make informed input into the 2020 budget review process.

“It was important that we give support in this regard since supply chains are broken across the world andtohelpfasttrackimportofhealth equipment, and other materials we requireatthisperiod,”Ahmedstated.

Wednesday 06 May 2020

BUSINESS DAY

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MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

COVID-19: NSC seeks facilitation of export trade to boost forex earning …Wants Kaduna Port, ICDs designated as consolidation centers amaka Anagor-Ewuzie

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orried by the encumbrances facing export trade during this period of intra and inter state movement restrictions to contain the spread of Coronavirus (COVD-19) in Nigeria, the Nigerian Shippers’ Council (NSC), has called on government agencies in the nation’s seaports to facilitate the movement of export goods from hinterlands to Ports.

Facilitating export trade, the Council says, would help the country to earn foreign exchange in the wake of dwindling crude oil revenue due to fall in demand as a result of the COVID-19 outbreak.

Hassan Bello, executive secretary of the NSC at a recent meeting with Organised Private Sector (OPS) in Lagos, said government agencies including the Nigerian Export Promotion Council (NEPC), Nigerian Ports Authority (NPA), the Central Bank of Nigeria (CBN), NSC and preinspection agents must come together to facilitate export cargo during this movement limitation period.

According to him, export cargo could be consolidated

L-R: Jonathan Nicol, president, Lagos State Shippers’ Association; John Aluya, vice president, Lagos zone, Manufacturers Association of Nigeria; Hassan Bello, executive secretary/CEO, Nigerian Shippers’ Council; Margaret Orakwusi, representative of Nigerian Association of Chamber of Commerce Industry, Mines and Agriculture and Muda Yusuf, director general, Lagos Chamber of Commerce at the meeting of the Nigerian Shippers’ Council with organized Private Sector and Shippers’ Association at the Nigerian Shippers’ Council headquarters recently in Lagos

and escorted along supply chain to ensure ease of moving goods to the port.

He suggested that Kaduna Inland Dry Port and other Inland Container Depot (ICDs) located in six geo-political zones in the country could be designated as export consolidation centres.

“Export is going but not as expected. We have the problem of export going into the port terminals. We cannot joke with export because most of them are perishable goods. Nigerians are hardworking people and we can-

not allow them to lose their investments just because of the bottleneck of moving their export cargo into the port,” he said.

He noted that within the export supply chain (from farm to port of origin) employment is being created, adding that Nigeria needs to look inward to salvage this country by ensuring access to market as well as the logistics chain.

“We need to fast track cargo movement into the port by using call up system that works and this would

Seafarers to get payment for extended services during COVID-19 – Folarin amaka Anagor-Ewuzie

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eafarers who have their stay on board ships extended as a result of the Coronavirus (COVID-19) pandemic would receive wages due them for the extra days, the National Seafarers Welfare Board (NSWB) Nigeria, has said.

Kunle Folarin, chairman of NSWB stated this recently while responding to the fears expressed by some Nigerian seafarers on Maritime Television’s premium show tagged Live Conversations.

During the virtual meeting, Folarin expressed the readiness of the Board to provide assistance to Nigerian seafarers facing any kind of difficulties at this time, adding that seafarers who toil to keep the economic balance deserve their pay.

Where employers attempt

to short-change seafarers, he urged victims of such ill treatment to log complaints with regulatory bodies and ensure that such matters are dealt with decisively.

He explained that seafarers have right to escalate such issues even with the International Labour Organisation (ILO) when they are not handled properly.

The NSWB chairman who also referred to seafarers as the engine that propel international trade, said they deserve support through a collective bargaining agreement as Nigerian seafarers should receive remuneration comparable with their counterparts all over the world.

He disclosed that a tripartite agreement on seafarers’ welfare in which government represented by the Nigerian Maritime Administration and Safety Agency (NIMASA), Maritime Workers Union of www.businessday.ng

Nigeria (MWUN) representing seafarers and shipowners was reached in 2019 and signed by the parties.

On how the travel ban has weighed on crew changes, Folarin who said that the shut airports and land borders have adversely affected the repatriation of seafarers, stated that shore passes are no longer issued by the Nigerian Immigration Service so as to protect seafarers from contracting COVID-19 by coming ashore.

He assured seafarers that in extreme matters like health crises, and upon the recommendation of the Port Health, evacuation of anyone with a delicate case can be arranged.

It would be recalled that the International Labour Organisation had recently, in a white paper called on governments to treat seafarers respectfully and to allow crew changes and travels for seafarers.

also reduce the volume of traffic congestion around the port. We have always said that there is no time for diversification but now because necessity is the mother of invention. Maritime including transport industry as a whole is an alternative to oil but it has to be handled in a very efficient way. We cannot be joking with this industry in Nigeria anymore,” Bello said.

On the importance of automation of clearing process, he stated that Nigeria cannot continue to do things manually if we must fast track ex-

port trade.

“Our cargo clearing system is primitive because if Customs continue to do 100 percent physical examination of containers, it would take longer time to examine a good number of the containers in the port. Customs has embraced technology for a long time going by the introduction of the Nigeria Customs Interacted System (NICIS) 11 and e-Customs,” he said.

He however noted the need for all government agencies in the port to come together to integrate all the existing platforms better than each operating separate platforms.

Bello, who noted that rail is the revolution, which the Federal Government is working to ensure the connection of Port Harcourt to Enugu, and Jos-Kano-Lagos rail line become operational, said that transportation of goods from the hinterland would become a lot cheaper and more coordinated, if rail transport becomes efficient.

He described the Lekki Deep Seaport, which is located within the Lagos Free Trade Zone as a game changer that has a draft to accommodate larger vessels, which we can allow for the use of smaller vessels to transship

cargoes to other ports such as Easter ports.

Responding, Margret Orakwusi, representative of the the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) at the meeting, who pointed the need to encourage businesses to grow than driving revenue generation, stated that most of export in Nigeria are agricultural produce with short life span.

She solicited the help of the Council in ensuring efficiency in facilitating export at the port to avoid exporters losing their goods after the goods must have perished due to delays at the port.

Muda Yusuf, director general of Lagos Chamber of Commerce and Industry (LCCI), said Nigeria cannot look up to the oil sector for foreign exchange or revenue generation within the rest of this year judging by the slump in oil prices in the international market due to decline in demand.

He however stated that the country would likely rely on non-oil sector to salvage the economy post COVID-19, adding that the challenges of the private sector people is having to deal with the bottlenecks in the port processes and procedures.

CRFFN frowns at members for embarking on ‘illegal’ warning strike amaka Anagor-Ewuzie

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he Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) has described the warning strike carried out by a group of freight forwarders last week as illegal and a threat to the lives of Nigerians relying on the supply chain for their essential supplies amid the COVID-19 pandemic in the country.

The Council in a letter addressed to the Presidents of the five registered freight forwarding associations including the Association of Nigerian Licensed Customs Agents (ANLCA), National Association of Government Approved Freight Forwarders (NAGAFF), National Council of Managing Directors of Licensed Customs Agent (NCMDLCA), National Association of Freight Forwarders and Air

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Consolidators (NAFFAC) and the Association of Registered Freight Forwarders of Nigeria (AREFFN) has subsequently demanded a reversal of the strike action, which it noted could jeopardise government’s effort in containing the COVID-19 pandemic.

According to the letter titled ‘Reversal of Strike Action at the Ports’ which was signed by Sam Nwakohu, CRFFN Registrar, the Council said, “We have heard unofficially that a fraction of freight forwarders have embarked on strike action which we consider illegal and a serious threat to the life of teeming Nigerians relying on the supply chain for their essential supplies.

“We want to believe that you understand the urgency of the times we are in and the fact that the Federal Government classifies freight forwarding as essential service especially @Businessdayng

in the context of COVID-19.

We must not engage in anything that will jeopardise the efforts of government in containing the COVID-19 pandemic as well as sustain the lives of people,” the letter reads.

According to the letter, “Any action obstructing the flow of the essential supply chain at this time may be tantamount to sabotage of a high order. The situation we are in is similar to wartime and those entrusted with ensuring the sustainable flow of life support essentials must be professional enough and ethically responsible in the discharge of their duties.

Nwakohu warned that if this developing trend is not nipped in the bud as quickly as possible, it may attract serious consequences from the Federal Government and the association’s leadership may be held responsible.

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Wednesday 06 May 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

German court calls on ECB to justify bond-buying programme

Bundesbank told to halt participation unless central bank shows policy is ‘proportionate’ MARTIN ARNOLD IN FRANKFURT AND TOMMY STUBBINGTON IN LONDON

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er many’s consti tutional court has threatened to block fresh purchases of German bonds through the European Central Bank’s flagship stimulus programme, potentially weakening the bloc’s monetary policy response to the coronavirus crisis.

The court on Tuesday ordered the German government and parliament to ensure the ECB carried out a “proportionality assessment” of its vast purchases of government debt to ensure their “economic and fiscal policy effects” did not outweigh its policy objectives, and threatened to block new bond-buying unless the ECB did so within three months.

In recent weeks the central bank has vastly expanded its quantitative easing programme of bondbuying to mitigate the economic consequences of coronavirus. It has bought more than €2.2tn of public sector debt since launching quantitative easing in 2014 in an attempt to halt a slide in inflation.

The bond-buying programme has long been controversial in Germany, where critics argue the central bank has exceeded its mandate by illegally financing governments and exposing taxpayers to

The European Central Bank has bought more than €2.2tn of public sector debt since launching its quantitative easing programme in 2014 © Kai Pfaffenbach/Reuters

potential losses.

Ruling in a long-running case about the legality of the bondbuying, the court in Karlsruhe said the German government and parliament had “a duty to take active steps against” QE “in its current form”.

The complainants — a group of about 1,750 people, led by German economists and law professors — first brought their case in 2015.

They argued the ECB was straying into monetary financing of governments, which is illegal under the EU treaty.

The case was referred to the European Court of Justice, which

ruled in favour of the ECB in 2018, but it went back to the German constitutional court, which on Tuesday rebuffed part of the ECJ’s earlier ruling, calling it “untenable from a methodological perspective”.

By setting aside the ECJ’s 2018 judgment, the Karlsruhe court raised serious questions about the even application of EU law across the bloc. German courts have over decades of jurisprudence qualified the supremacy of EU law; other national courts have also raised objections.

“What was different with Germany was that it always made

clear the [constitutional] court was prepared to step in and do something about it,” said Panos Koutrakos, professor of European law at London’s City University.

“This is the first case where a German court says the judgement of the European court has no jurisdiction.”

The court laid out a long list of reasons why the ECB may have exceeded its mandate, but said it could not decide if the ECB had broken EU law without more information on how the central bank balanced the economic and fiscal impact of its actions against its monetary policy aims.

“Unless the ECB provides docu-

mentation demonstrating that such balancing took place, and in what form, it is not possible to carry out an effective judicial review as to whether the ECB stayed within its mandate,” it said.

Clemens Fuest, head of the Ifo economic institute in Munich, said the German court’s dismissal of the earlier ECJ ruling “reads like a declaration of war”.

The euro fell 0.7 per cent against the dollar — its lowest level in a week — and the spread between 10-year Italian and German borrowing costs — a key measure of country risk in the eurozone — widened by 0.2 percentage points to 2.5 per cent.

The decision may open the door to legal challenges against the ECB’s new €750bn pandemic emergency purchase programme (PEPP). The court did not rule on PEPP but it said the earlier bond purchases were only acceptable because of a number of limits that had subsequently been eased under the new programme. The plaintiffs are expected to consider whether to bring a fresh case.

“This is the big risk,” Vítor Constâncio, former vice-president of the ECB, said on Twitter, saying the court had made a “ridiculous distinction between monetary policy and economic policy”.

“New court cases will come immediately in Germany against PEPP,” he warned.

Turkey’s virus deaths may be 25 per cent higher than official figure FT analysis raises questions about government’s explanation for spike in Istanbul fatalities JOHN BURN-MURDOCH IN LONDON AND LAURA PITEL IN ANKARA

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urkey’s death toll from coronavirus could be as much as 25 per cent higher than the government’s official figure, adding the country of 83m people to the raft of nations that have struggled to accurately capture the impact of the pandemic.

Ankara has previously rejected suggestions that municipal data from Istanbul, the epicentre of country’s Covid-19 outbreak, showed there were more deaths from the disease than officially reported.

But an analysis of individual death records by the Financial Times raises questions about the Turkish government’s explanation for a spike in all-cause mortality in the city of almost 16m people.

The FT findings show 3,377 more deaths in Istanbul when compared with the average for the same period in March and April over the previous five years.

Nationwide, all-cause mortality

data for Turkey are only available with a lag of more than a year. But the Istanbul figures suggest the true Turkey-wide toll could be as much as 25 per cent higher than the official figure, which stood at 2,706 on April 26.

“These figures indicate underreporting of Covid-19-related deaths,” said Onur Altindag, an economist specialising in health at Bentley University in Massachusetts, US. “There are clear patterns of excess mortality in Istanbul, which is not surprising.”

Mr Altindag stressed there was no evidence of deliberate misreporting, adding accurate coronavirus mortality data was “a notoriously difficult task even for countries with the most advanced death registries”.

Previous analyses by the FT have suggested the death toll in the UK is double the official figure, while the worldwide figure could be 60 per cent higher than reported.

The true death toll has become a subject of heated debate in Turkey, a deeply polarised country where there is profound mistrust www.businessday.ng

between opposition groups and the government.

Doubts about the figures have been stoked by the government’s sometimes harsh response to those who have questioned the data — including the arrest of several hundred people for “provocative” social media posts — and its reluctance to publish regional breakdowns.

The FT’s analysis lends credence to warnings from the Turkish Medical Association (TTB), a trade union, that the official death toll is under-reported. Deaths from coronavirus are only officially counted following a positive test, and the TBB says that, while testing levels have increased, they are still not high enough.

Yet the analysis also supports President Recep Tayyip Erdogan’s claim that Turkey has a much lower death rate than many European countries and several US states. It corroborates official assertions that the country has reached a “turning point” in the outbreak, with the number of new daily deaths on the decline.

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Details of deaths in Istanbul are available almost in real time through a central government website. A comparison of this year’s data with previous years shows a marked spike in deaths that began in mid-March, less than a week after Turkey’s first confirmed case of Covid-19.

Some of these deaths could be explained by a reluctance among people who are sick with other ailments to go to hospital to seek treatment amid the pandemic. But expert consensus worldwide is that the impact of that phenomenon is usually dwarfed by deaths from coronavirus.

Stephen Evans, a statistical epidemiologist at the London School of Hygiene and Tropical Medicine, said that all-cause mortality was important for examining the true impact of the outbreak. “You actually need to look at total deaths, and not just deaths ascribed to Covid-19,” he said.

Turkey’s government has repeatedly rejected assertions that the Istanbul figures point to a higher-than-reported death toll from coronavirus in the country. Re@Businessdayng

sponding to an article published last month by the New York Times, Turkey’s health minister Fahrettin Koca insisted that the Istanbul data set was a registry of burials in the city rather than a registry of deaths.

He said that travel restrictions aimed at stopping the spread of coronavirus meant that Istanbul residents who would normally be buried in their ancestral homeland were instead being laid to rest in the metropolis, leading to higher than usual burial numbers.

Ekrem Imamoglu, the opposition mayor of Istanbul, disputed this, claiming that 30 to 35 per cent more people were dying than usual in the city.

The FT analysis supports Mr Imamoglu’s assertions. It shows that, both before and after the onset of the virus outbreak, people who died in Istanbul but were buried elsewhere were usually logged in the city’s records.

Asked to comment on the findings, Turkey’s health ministry directed the FT to comments made

by Mr Koca during a press conference last week.

Wednesday 06 May 2020

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Global stocks rally as Brent crude breaches $30 Investors anticipate boost in oil demand as economies reopen MYLES MCCORMICK IN LONDON AND HUDSON LOCKETT IN HONG KONG

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rally in energy stocks l e d Wa l l S t re e t higher as Brent crude breached $30 a barrel for the first time since mid-April.

The S&P 500 climbed 1.5 per cent at the open, with energy the best performing sector. The Nasdaq Composite was up by a similar margin, leaving the techheavy index just 1.5 per cent off entering positive territory for 2020.

The cautious reopening of economies have helped buoy markets. Countries such as Spain, Italy and India have tentatively eased lockdown measures this week, allowing some businesses to reopen. Austria has reopened stores while Denmark has already sent children back to school.

Hopes that lockdown exits will boost crude demand have underpinned a rebound in the oil prices. Brent added 10.7 per cent to trade at $30.12 a barrel, rebounding from a drop to less than $16 a barrel last month.

West Texas Intermediate was up 16.7 per cent at $23.66 a barrel, setting the US marker on track

© REUTERS

for its fifth consecutive day of gains and leaving it up more than 80 per cent during the past week.

“The market is still vulnerable but now one thing is clear, the demand bottom is behind us, and this is manifesting in oil prices which are on the rise,” said Per Magnus Nysveen at consultancy Rystad Energy. Analysts at RBC Capital Markets also noted that congestion data showed US vehicle traffic levels had already rebounded off their lows.

Donald Trump, the US presi-

dent, who has sought to boost prices through a push for global supply cuts welcomed the rally.

“Oil prices moving up nicely as demand begins again!” he wrote on Twitter.

But with consumption still well below levels at the beginning of the year and storage capacity continuing to fill, some analysts are concerned that crude prices may yet slip back.

“Many market participants believe there is light at the end of the tunnel,” said Giovanni Stau-

novo, an analyst at Swiss bank UBS. “But while the inflection point appears near, we would describe the current environment as the darkest hour just before the dawn. With oil inventories still increasing, crude oil prices remain vulnerable to renewed setbacks.”

The uplift in market sentiment spilled over into European and Asian equities.

The Stoxx Europe 600 was up 1.7 per cent in afternoon trade, while London’s FTSE 100 and

Frankfurt’s Dax gained 1.7 per cent and 1.8 per cent, respectively.

Elsewhere in Europe, the euro and Italian bonds sold off after Germany’s constitutional court called on the European Central Bank to justify its bond-buying programme. While the court found the ECB’s purchases of public sector debt were legal, it asked that it review whether they were “proportionate” in pursuit of its monetary policy objective.

The single currency fell 0.7 per cent against the dollar to $1.0832 — its lowest level in a week — before recovering slightly in the afternoon.

Investors also moved out of Italian bonds, worried about potential constraints on the ECB’s ability to expand its debt purchases. That widened the spread between 10-year Italian and German borrowing costs — a key measure of country risk in the eurozone — by 6.9 basis points to 2.39 per cent.

Asian equities made modest gains overnight, with markets in Japan, China and South Korea closed for public holidays.

Hong Kong’s benchmark Hang Seng closed up 1.1 per cent while Australia’s S&P/ASX 200 rose 1.6 per cent.

Wall Street ‘flying blind’ after companies scrap guidance Profit forecasts ditched as coronavirus disrupts operations RICHARD HENDERSON IN MELBOURNE

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he number of US bluechips offering full-year profit guidance alongside their first-quarter earnings has been cut in half, leaving Wall Street analysts struggling to assess the full impact of measures to contain the spread of coronavirus.

America’s earnings season has passed the halfway mark, with 283 companies in the S&P 500 having reported by Friday last week. Within that group, 53 of the 103 companies that provided earnings guidance earlier this year have scrapped it according to Credit Suisse data.

The bank expects just 23 per cent of S&P companies to offer guidance for the year, a little less than half the usual proportion.

“For analysts, they’re really flying blind,” said Jonathan Golub, Credit Suisse’s chief US equity strategist.

© REUTERS

The shift reflects the uncertainty for corporate executives after widespread lockdowns that have caused revenues to collapse across a variety of sectors. Yet strategists say the lack of guidance for investors comes at a critical moment. The US stock market is up by about a quarter since its March low in a rebound driven partly by optimism over www.businessday.ng

an end to the crisis — even as some economic data continues to deteriorate.

“I haven’t experienced anything like this since the fall of 2008 — companies don’t feel like they have any predictive power at all,” said Jim Shanahan, an analyst covering insurers and banks for Edward Jones in St Louis, Missouri. “Companies

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can give you a lot of guidance about earnings when you least need it, but when you need it the most, that’s when it’s pulled.”

It’s forcing investors to think long-term, rather than obsess about what the valuation should be in the short term Jim Tierney, AllianceBernstein Companies that have declined to provide 2020 guidance include Delta and United Airlines, the hard-hit carriers, and Mastercard and Ford. The automaker is one of a number of companies to have shared estimates for the second quarter, despite scrapping its forecast for the full year.

The withdrawal of estimates is encouraging analysts to think for themselves, “rather than being spoon fed by these companies”, said Jim Tierney, chief investment officer for AllianceBernstein’s concentrated US growth strategy. “It’s forcing investors to think long-term, rather than @Businessdayng

obsess about what the valuation should be in the short term.”

In recent years, some highprofile corporate leaders have pushed back against the practice of providing profit forecasts. In 2018, investor Warren Buffett and Jamie Dimon, chief executive of JPMorgan Chase, wrote an op-ed in the Wall Street Journal arguing that such guidance creates an “unhealthy focus on short-term profits”. Larry Fink, chief executive of BlackRock, which manages $6.5tn in assets, is also a vocal critic of the practice.

Liz Young, director of market strategy for BNY Mellon Investment Management, said the lack of forecasts was probably a positive thing for what is, at the moment, a nervous market.

“If companies come out with conservative guidance it has a real possibility of disappointing . . . during a fragile rally,” she said. “Investors don’t need another reason to be afraid.”

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BANKING Banks loan quality to deteriorate on challenging economic conditions Stories by HOPE MOSES-ASHIKE

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eaker econ o m i c growth and the collapse of the oil price will lead to a deterioration in banks’ loan performance, according Moody’s Investors Service, a leading provider of credit ratings, research, and risk analysis.

“We expect problem loans to rise to between 8% and 10% of total loans from 6% in December 2019, with risk tilted to the downside should the depressed oil price persist for more than a year. Loan restructuring and forbearance will lessen the impact of loan quality deterioration”, the analysts said.

Since the outbreak of coronavirus, the price of brent crude (oil) has fallen to as low as $36.68 per barrel as at Monday May 4, 2020.

FBNQuest have anticipated further slowdown in banking sector loan book expansion due to the lockdown, notwithstanding the pressures of the Loan to De-

posit Ratio (LDR).

Edward Lametek, a member of the MPC and former deputy governor of the Central Bank of Nigeria (CBN) noted in his personal statement at the last Monetary Policy Committee (MPC) meeting that most financial soundness indicators have remained strong notwithstanding the rapid expansion in credit –strong Tier 1 capital (88.2 per cent of the total qualifying capital

at end-February 2020); relatively low non-performing loans (NPLs) ratio; rising industry capital adequacy ratio (15.0 per cent in February 2020 from 14.5 per cent in December 2019); and growing industry size.

Despite the measures taken by the Nigerian central bank to support the economy, Moody’s expect the creditworthiness of most Nigerian corporate borrowers to weaken. Since corpo-

rate borrowers account for around 90 percent of banks’ loans, banks’ asset quality will deteriorate. In addition, Nigerian banks have extended large volumes of outsized loans to single customers.

“We believe the top 100 customers represent more than 40 percent of total gross loans in the banking sector, leaving the banks disproportionately vulnerable to defaults by one or a number of borrowers,” the analysts said.

Moody’s on April 27, 2020, changed its outlook for Nigeria’s banking system to negative from stable.

The change reflects the film’s view that banks will face weakening loan quality and foreign-currency liquidity challenges as depressed oil prices and the coronavirus pandemic weigh on Nigeria’s economy.

These new difficulties add to existing headwinds from weak economic growth and rising regulatory costs.

Nigeria’s largest banks, however, will continue to benefit from a high probability of government support.

Reacting to the development, Ayodele Akinwunmi, relationship manager, investment banking at FSDH Merchant Bank Limited said the current challenges are real, but “what we should concentrate on is how we should develop structures to harness the opportunities in the crisis.

And banks will facilitate this development”.

Banks’ exposure to the oil and gas industry is substantial, at around 27% of

total loans at the end of 2019, making the system susceptible to the oil price slump.

The banking system is also highly dollarized, putting pressure on both assets and liabilities in the event of a naira devaluation. Nigeria’s largest banks, however, will continue to benefit from high government support, Moody’s said.

Nigerian banks’ capital ratios is expected to decline but remain sufficient to absorb unexpected losses under Moody’s baseline scenario. “The firm expects system-wide tangible common equity (TCE) to decline to 13 percent of risk-weighted assets (Moody’s adjusted) at year-end 2021 from 14 percent at the end of 2019.

This is primarily because of higher risk-weighted assets and an anticipated increase in loan-loss provisioning costs, which will erode the banks’ profitability. In the event of a naira devaluation, banks’ risk-weighted assets will further increase due to their large volume of foreign-currency denominated loans.

Ecobank maintains focus on improved customer satisfaction Access Bank alerts customers as fraud rises during Covid 19 crisis

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roup Chief Executive Officer of Ecobank Bank Transnational Incorporated, Ade Ayeyemi, has said the focus of the bank is on making sure that it meets the needs of customers despite the pandemic, while also ensuring their wellbeing and safety as well as those of its employees. Ayeyemi stated this why commenting on the performance of the financial institution in the first quarter ended March 31, 2020.

He said the quarterly performance was resilient, again reflecting the strength of our diversified business model.

“We delivered $90 million in pre-tax profits, an increase of 27 per cent if adjusted for currency translation effects, and a return on tangible shareholders’ equity of 17.1 per cent. We are managing impairment losses prudently, and as a result, our cost-of-risk increased to 1.5 per cent, versus 0.5 per cent in the prior-year quarter,” he said.

He explained that all their countries have successfully activated their business con-

tinuity plan in line with the needs of each local environment. According to him, the number and value of transactions on bank’s digital/ online channels across our businesses grew by eight per cent and 15 per cent to four million and $6.1 billion, respectively, on Ecobank Omni+, Corporate and Investment Bank’s corporate clients’ online banking platform in Q1 of 2020.

Ayeyemi said Ecobank Pay, its payments platform saw a 61 per cent increase in merchant acquisition numbers to 195,000 merchants.

“Registered customers increased by 3,000 to 9,000 year-on-year on our Africa

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RapidTransfer App, which facilitates low-cost money transfer across 33 African countries. The number of XpressPoints (our physical agency network) grew by approximately 4,000 agents to 43,700, with the value of transactions reaching $445 million,” he added. He said the OmniLite, Commercial Bank’s online banking platform designed specifically to meet the unique financial needs of SMEs increased number of transactions by 40,000 to 126,000, which amounted to $435 million.

The GCEO noted that through investment in technology over the years, working from home has been

seamless and indeed a pretext to a possible new normal post COVID-19. As the leading pan-African bank. “ Ecobank embraced the call to duty with a sense of urgency. With our knowledge of Africa and its intricacies in the fight against the spread of COVID-19, we have contributed about $3 million in the form of cash, healthcare equipment and supplies, in addition to mounting sustained and robust awareness campaigns, while we are also using our digital banking platforms to provide money to some of the most vulnerable members in our communities,” he said.

Ayeyemi noted that in recognition of the effects of the pandemic on a significant sector of African businesses, MSMEs, the bank is further co-leading, with the African Union-NEPAD, and is actively committed to an initiative to support MSMEs with technical knowledge, mentoring, knowledge sharing and financial support, thus playing a vital role in helping their businesses survive the pandemic.

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ccess Bank PLC, Nigeria’s leading retail Bank has implored its customers to be vigilant in these uncertain times as incidents of fraud are on the rise.

Since the start of the Coronavirus pandemic in the country necessitated the lockdown of first, 3 major cities, and eventually the entire nation, the Bank has observed a worrying increase in reports of fraudsters targeting unsuspecting customers.

This development has become even more worrisome, especially as these people not only disguise themselves as bank representatives, but also use the palliatives from the government as bait to collect customers BVNs and other key banking details.

According toVictor Etuokwu, executive direc@Businessdayng

tor, retail banking, “Access Bank is imploring its customers to be wary of any message, demanding their personal or bank details. Customers must remember that the Bank will never ask for their BVN, full card PAN, PIN, mobile app activation code, OTP or password as it is readily available to the Bank via its database. Any call, email and text message, claiming to be from Access Bank demanding for any of these details is certainly a scam,” he concluded.

Access Bank has always maintained a strong antifraud awareness as part of its responsibility to protect the interest of its customers. The Bank has dedicated pages on its official website that constantly updates customers on all the ways in which fraudsters can swindle them.

Wednesday 06 May 2020

BUSINESS DAY

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Live @ The Exchanges Market Statistics as at Tuesday 06 May 2020

Top Gainers/Losers as at Tuesday 06 May 2020 LOSERS

GAINERS Company

Opening

Closing

Change

N920.2

N975

54.8

DANGCEM

N130

N143

MTNN

N116

NESTLE

ZENITHBANK

ACCESS

Company

ASI (Points)

Opening

Closing

Change

FLOURMILL

N21

N19.75

-1.25

13

BUACEMENT

N32.6

N31.8

-0.8

N120

4

MAYBAKER

N2.7

N2.43

-0.27

VOLUME (Numbers)

N14.35

N14.85

0.5

NPFMCRFBK

N1.25

N1.13

-0.12

VALUE (N billion)

N6.1

N6.5

0.4

LINKASSURE

N0.53

N0.48

-0.05

DEALS (Numbers)

MARKET CAP (N Trn)

23,809.31 4,689.00 345,175,086.00 4.252 12.408

Nestle, Dangote Cement, MTNN, others push stock market to new high ...Investors book additional N375bn gain Stories by Iheanyi Nwachukwu

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igeria’s stock market reached new high on Tuesday May 5 as more investors remained on the buy side at the Bourse in favour of attractive counters. Investors gained about N375billion at the close of trading session.

The market increased by 3.12 percent as equity investors continued to snap up value stocks like Nestle Nigeria Plc which moved up by N54.8 or +5.96percent; Dangote Cement Plc (N13 or +10 percent); Zenith Bank Plc (50kobo or +3.48percent), MTNN Plc (N4 or +3.45percent) and Lafarge Africa Plc (40kobo or +3.88percent).

“We believe it makes sense to increase portfolio positions which we consider to be good value,” said equity research analysts at Coronation Merchant Bank.

The NSE All-Share Index and Market Capitalisation opened for remote trading on Tuesday at 23,089.86

points and N12.033trillion increased to 23,809.31 points and N12.408trillion respectively. The market’s negative return year-to-date (YtD) stood lower at -11.30percent.

Given that a number of

fundamentally sound stocks remain below their fair value, market watchers expect investors to continue to take position in attractive counters in the near term in spite of the persistent threat of the

Coronavirus pandemic.

Banking stocks were actively traded stocks on the Bourse. In 4,689 deals, equity dealers exchanged 345,175,086 units valued at N4.252billion.

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FTSE 100 Index 5,849.42GBP +95.64+1.66%

Nikkei 225 19,619.35JPY -574.34-2.84%

S&P 500 Index 2,891.82USD +49.08+1.73%

Deutsche Boerse AG German Stock Index DAX 10,729.46EUR +262.66+2.51%

Generic 1st ‘DM’ Future 23,972.00USD +401.00+1.70%

Shanghai Stock Exchange Composite Index 2,860.08CNY +37.64+1.33%

Covid-19: SEC urges investors to explore opportunities in capital market

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igerians have been asked to look to the capital market as an avenue to create wealth as the Coronavirus (Covid-19) pandemic continues to ravage the world and businesses, with resultant impact on individuals.

This was stated by the acting Director General of the Securities and Exchange Commission (SEC), Mary Uduk on Tuesday.

Uduk said the Commission is aware of the economic implications of the virus and that is why the Management of the SEC has ensured that the market remains open for trading.

T h e S E C B o s s s t at e d that while the lockdown and its partial easing has had tremendous negative impact on Nigeria’s economy and lives of citizens, she however urged Nigerians to remain resolute and explore opportunities available in the capital market.

According to her, “we must continue to make the best we can of the situation.

As a regulator, we have put

measures in place to ensure our market does not shut down, trade is presently going on at the various exchanges that make up our market. The Nigerian Stock Exchange is continuing with trading, the FMDQ and all the Exchanges are actually continuing and everything is going well. “ We a re l e v e ra g i n g technology to continue our activities. Initially, people were afraid that technology would have bad effects like loss of jobs, but right now it has become a saving grace.

So most of us have put our Business Continuity Plans (BCP) in process. Staff are working, we are interacting with market operators who are also working, and our market is open.

“We released three circulars concerning actions against COVID-19. One of them was to request Capital Market Operators and organisations we regulate to send us reports on their Business Continuity Plans and processes (BCP) and as you can see the market has been trading as everyone activated their BCPs.

Union Bank holds virtual 51st annual general meeting

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Total transactions on Nigerian Bourse increased by 63.6% in March otal transactions at the Nigerian Stock Exchange (NSE) increased by 63.58percent from N148.50billion (about $484.60million) in February 2020 to N242.91billion (about $630.04million) in March 2020.

On monthly basis the Nigerian Stock Exchange polls trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows.

The performance of the review month when compared to the performance in March 2019 (N110.11billion) revealed

Global market indicators

t h a t t o t a l t ra n s a c t i o n s increased by 120.60percent.

As at March 31, 2020, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by circa 10percent.

Analysis of the total transactions executed between March and prior month (Febr uar y 2020) revealed that total domestic transactions increased by 71.97percent from N77.16 billion in February to N132.69 billion in March 2020.

Als o, total foreign transactions increased by 54.50percent from N71.34 www.businessday.ng

billion (about $232.79million) to N110.22 billion (about $285.89million) between February and March 2020.

The value of domestic transactions executed by institutional investors outperformed retail investors by 10percent.

A comparison of domestic transactions in the current and prior month (February 2020) revealed that retail transactions increased significantly by 103.72percent from N29.56 billion in February 2020 to N60.22 billion in March 2020.

Similarly, the institutional composition of the domestic market increased by

52.23percent from N47.60 billion in February 2020 to N72.46 billion in March 2020.

Over a thirteen (13) year period, domestic transactions decreased by 72.30percent from N3.556trillion in 2007 to N985billion in 2019 while foreign transactions increased by 53.08percent from N616billion to N943billion over the same period.

Total domestic transactions accounted for about 51percent of the total transactions carried out in 2019, while foreign transactions accounted for about 49percent of the total transactions in the same period.

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hareholders of Union Bank of Nigeria Plc have approved the Group’s 2019 annual accounts, during the bank’s first ever virtual Annual General Meeting (AGM) which held on Tuesday, May 5, 2020.

Shareholders’ attendance at the AGM was by proxy, in keeping with physical distancing measures put in place due to the global COVID-19 pandemic.

The proceedings of the meeting were however streamed live online for the benefit of all the Bank’s shareholders.

Addressing shareholders during the AGM, the Bank highlighted some of its key achievements in2019, including - the launch of alpher, the Bank’s proposition for women; the introduction of digital loan offerings; the issuance of a fully subscribed Tier-2, N30 billion bond and; the Board’srecommendation of a dividend payment to its @Businessdayng

shareholders owing to the Bank’s overall strongperformance.

In a statement, the Board Chair, Beatrice Hamza Bassey said; “On behalf of the Board, I am pleased to inform our shareholders that we haverecommended a dividend payment for the first time in over a decade. We remaincommitted to delivering high-quality earnings to our shareholders, and I am pleasedto announce we were able to deliver this in 2019, despite the challenging operatingenvironment. We remain focused on delivering value to our shareholders as wecontinue to drive growth and profitability of our business towards sustaining thistrend.”

Shareholders at the AGM approved the recommended dividend of twenty-five (25) Kobo per N0.50 ordinary share, while applauding the Bank’s strong performance and focus on shareholder value enhancement.

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Wednesday 06 May 2020

BUSINESS DAY

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@Businessdayng

Wednesday 06 May 2020

BUSINESS DAY

43

FINANCIAL INCLUSION

& INNOVATION

Banks’ earnings from e-transactions shrink in Q1 after CBN slashes charges on electronic channels …as Zenith, GTB post N4b revenue decline Stories by Endurance Okafor

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he policy by the Central Bank of Nigeria (CBN ) that saw a downward review of bank charges has impacted the first quarter financials of tier-one banks as their earnings from electronic transactions dropped by N7 million, the first decline in decades.

Nigeria’s biggest banks generated N32.19 billion from e-transactions in the first three months of 2020, this was a 0.22percent decline from the N32.26 billion they raked in the comparable quarter of 2019.

“If you recall last year, the CBN implemented significant cut to E-Banking and other transactional charges for banks. Thus, while many of them saw volumes grow, the cut in fee per transaction outweighed volume growth,” Ayorinde Akinloye, research analyst at CSL Stockbrokers said.

With effect from January 1, 2020, charges on electronic funds transfer, for instance, attracted N10 for transactions below N5,000; N25 for those between N5,001 and N50,000, and just N50 for those above N50,000. This is compared to the initial flat rate of N52 per transfer.

“In a bid to encourage financial inclusion and to reduce the burden of bank charges on consumers of financial service, CBN has issued a revised Guide to charges by Banks, Other Financial and Non-Bank Financial institutions in response to the evolution in the financial industry over the last few years,” the Central bank said in December 2019.

The Guide to charges which was first released 15 years ago was revised in 2013

Earnings from electronic transactions

and 2017 in the light of market developments such as innovations in products and/ or channels and new industry participants.

The new Guide sent to Banks, Other Financial and Non-bank Financial Institutions as contained in a circular includes, amongst others, a downward review of charges for electronic banking transactions, removal of Card Maintenance Fee (CAMF) on all cards linked to current accounts, reduction in the amount payable for cash withdrawals from other banks’ Automated Teller Machines (Remote-on-us), review of other bank charges to align with market developments, and inclusion of new sections on accountability/responsibility and a sanction regime to directly address instances of excess, unapproved and/or arbitrary charges.

According to the data from the financials of Nigeria’s biggest banks as analysed by BusinessDay, Zenith Bank, the lender with one of the largest customer base saw the most revenue decline from electronic transactions

in Q1 2020.

The commercial bank reported N3.3 billion revenue drop from its electronic business. From the N8.7 billion generated in the first three months of 2019, Zenith Bank’s earnings from electronic banking shed 37.76 percent as it reported N5.44 billion in Q1 2020.

This was followed by GTB, which reported a decline of N69 million, from N3.18 billion generated from electronic transactions in the first quarter of 2019 to N2.49 billion in the three months ended March 31 2020.

To ensure strict compliance with the new guide to charges for financial institutions, the Central Bank instructed that an infraction by the lenders will attract a penalty of N2million.

“To guard against excess, unapproved or arbitrary charges by banks and other financial institutions, the Guide to Bank Charges stipulates a penalty of N2 million per infraction,” the Central Bank said.

The apex bank emphasized that the failure by any bank to comply with the

directive in respect of any infraction shall attract a further penalty of N2 million daily until the directive is complied with or as may be determined by the CBN from time to time.

Further analysis of the banks’ first-quarter financials revealed that Access Bank had the most revenue from electronic transactions. The tier one bank reported an increase of N2.38 billion, from N2.56 reported in 2019 to N4.94 billion in Q1 2020.

The result by the tier-one lender largely reflects Access Bank post-merger benefits.

The recent acquisition of Diamond Bank increased the bank’s customer base and the total customer deposit is expected to shoot up considerably to about 16percent of the banking total deposits.

With over 400 branches, access Bank has over 1,881 ATMs, 5.7 million cards (both debit and credit cards) and 11,011 Point of Sales (POS) terminals. These diverse channels have enabled the bank to generate more revenue from its electronic business.

Bankers and financial analysts point to the emergence of the FinTechs and

the e-banking policies of the Central Bank of Nigeria (CBN) as the reasons for this increase.

Other banks that reported a revue growth from their electronic transactions included; FBN Holdings and UBA. Both lenders reported N970- million and N57o million increase in the electronic business as of March 2020.

Meanwhile, Nigeria still has an unbanked population of over 40 million and the figures by EFIna put the country’s financial exclusion rate at 36.8 percent as of December 2018.

To achieve a more inclusive financial inclusion at an affordable rate, industry experts have advised that Nigeria would need to leverage technology to give access to its excluded population.

“To achieve financial inclusion target that the CBN financial inclusion strategy has set up of 80 percent inclusion rate by 2020 technology has to play a massive significant role and what I see technology doing in terms of Nigeria’s financial inclusion is actually to democratize access that is the first thing it does,” Wole

Adeniyi, executive director at personal & business banking, Stanbic IBTC Bank said.

Telecommunication operators’ push to offer mobile money service, a financial inclusion model that has helped other Africa countries in their included population was recently given an official nod by the regulator, the Central Bank with the issuance of guidelines for players to apply for the licence to operate as payment service banks (PSB).

“The roll-out of Payment Service Banks guidelines that allows licensing of telco subsidiaries is welcome and should be implemented,” International Monetary Fund (IMF) said in April 2019.

About a year and six months after the Central Bank loosened its policy to accommodate new players in Nigeria’s financial services industry; the direction of the mobile money initiative remains unclear.

Since October 2018 when the apex bank requested that industry players should apply for the licence to operate as a Payment Service Bank, only three firms; Hope PSB a subsidiary of Unified Payment, Globacom’s Money Master and 9Mobile’s 9PSB have been issued Approvalin-Principle (AIP).

A PSB license will allow the companies to among other things; maintain savings accounts and accept deposits from individuals and small businesses, which is covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and prepaid cards, and operate an electronic purse or wallet.

EFInA recommends financial service agents for FG’s palliative distribution

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o distribute palliatives to households who have been affected by the coronavirus pandemic Enhancing Financial Innovation & Access (EFiNA) has recommended the use of financial service agents to also open bank accounts for the beneficiaries.

Estimated at 300,000 across Nigeria, financial

services agents who are important rail for providing financial services, especially in hard to reach areas were recently excluded from the Central Bank of Nigeria’s list of financial institutions exempted from government lockdown restrictions.

“The Nigerian government can use financial services agents to drive

account opening among beneficiaries of cash transfer programmes, which will not only cushion the effect of the pandemic but also contribute to Nigeria’s financial inclusion drive,” Henry Chukwu, Agent Networks Specialist at EFInA said.

The financial sector organization also advised that Financial service pro-

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viders (FSPs), should come up with measures to support agents during this pandemic period.

It said their support could be through the provision of soft loans, equipping agents with personal protective equipment (PPE), and online training on precautionary measures that agents can take to reduce the risk of infection.

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“FSPs also need to seek business collaboration that can stimulate transaction flow at agents’ locations to help agents remain active and profitable,” Chukwu said.

According to EFInA , financial services agents have been playing an important role in their communities for many years as they have been extending @Businessdayng

access to financial services to underserved Nigerians. “ They can now play a critical role in helping those communities through the COVID pandemic. We must work together to support agents in operating safely and to identify ways in which agent networks can help us weather the coming storm,” it said.

INSIGHT

BUSINESS DAY Wednesday 06 May 2020 www.businessday.ng

Unfolding global realities Covid-19 Pandemic intensifies the Twin-Gluts AYO TERIBA

Global Economic and Financial Divergence e must come to grips with the strategic implications of the widening divergence between weakening global export flows and surging capital flows for countries and companies.

Technological advances boosting supply of shale oil, genetically modified crops and livestock created the commodity glut that weakened global commodity prices, exports, and growth.

Liquidity injections by leading central banks created global liquidity glut that boosted flows and foreign direct investment (FDI) stocks , triggering a liquidity race among emerging market economies.

Capital inflows are fast displacing net-exports as the main source of external liquidity and countries with investment-friendly policies now attract record capital inflows for sustaining growth and stability.

Diverging Global Economic and Financial Paths Diverging paths of global real and financial flows raises growth and stability challenges for countries, as Nigeria grapples with liquidity shortfalls in fiscal, financial and forex spheres, calling for strategic realigning of income, liabilities, and assets.

Exports Lost its Dominance in the 1990s Real globalization had raced ahead of financial globalization prior to the 1990s because governments held on to capital controls as they liberalized trade. Slogans like ‘export or die’ underscored the fact that net export inflows were the main source of external liquidity inflows before the 1990s. Global foreign direct investment (FDI) stocks of US$2.2 trillion were just half of global export flows of US$4.3 trillion by 1990. Countries however began to liberalize their capital accounts from the early 1990s and financial globalization gained speed as FDI flows and Remittances surged. Global FDI stocks surged during the nineties to equal global exports of US$7 trillion by 1999.

Exports and Capital Stocks Remained Equal in the 2000s Both types of globalization remained roughly equal forces until the global economic and financial meltdown of 2008/2009 challenged both, but they remained equal at about US$20 trillion by 2010, each gaining US$13 trillion in the decade.

Capital Flows and Capital Stocks Became Dominant in the 2010s The last decade has however seen financial globalization outpace real globalization with FDI stocks surging again by US$13 trillion to US$33 trillion by 2018, fuelled by quantitative easing that underpinned a global liquidity glut, while exports struggled to grow by US$5 trillion to US$25 trillion, weakened by technological

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progress that created gluts of shale oil and genetically modified crops and livestock that depressed commodity prices. Net capital inflows is now the more reliable source of external liquidity.

Covid-19 and Global Economic and Financial Divergence: Fallouts of the Pandemic Following the confirmation of the index case on 27th February 2020, the President acknowledged an outbreak in a nationwide broadcast on the 29th March and announced a temporary lockdown involving inward travel restrictions, and restriction of movement in Lagos State, Ogun State, and the Federal Capital Territory (FCT), in addition to prohibition of public gatherings already announced in many States.

Covid-19 pandemic thus forced the country, like most other countries across the world, into a lockdown that brought the economy to a halt since March 2020, and would most probably end at some point in May 2020, with 2170 confirmed cases and 68 deaths as of 1st of May, when Nigeria must push policies that could brighten the post-pandemic outlook.

Apart from grappling with the epidemiology of this pandemic, Nigeria has also endured: Social fallouts, including anxiety and panic buying of nose-masks, sanitizers, chloroquine-based antimalarials taunted as remedies for the virus as the public took precautions ahead of the outbreak.

Economic fallouts as the weakening of the global oil price since the lockdown in parts of China in early February threatened to derail the budget and inflict another round of devaluation of the Naira. These could combine to precipitate another recession as absence of adequate foreign reserve buffers makes Nigeria’s economy vulnerable to oils price contractions.

Political fallouts like the breakdown in OPEC’s collusion with OPEC+ countries, travel bans, and export bans on medical kits as some exporting countries fear they may not have enough for residents.

How long the adverse social, economic and political fallouts for

Nigeria would last depends on how long it takes the world to bring the pandemic sufficiently under control for the lockdowns to end. This could be short if the impact of the disease weakens by itself, by changing weather, or a vaccine crops up; but could be long if the pandemic must run its course in full rage and without a vaccine.

The uncertainty about how severe the pandemic might get before things get better and uncertainty about the duration of the lockdown bring uncertainty into our assessment of how much of the economic consequences are likely to fizzle out once the lockdown ends how much are likely to persist beyond the lockdown, as knowledge of these will help us to figure out the likely impacts on the economy.

While these assessments are admittedly blighted by uncertainty, it is worth hinting that the shorter the duration of the lockdown, the milder the economic losses will be, as palliatives, furloughing, and moratoria on rents, loans, trade credit, etc. should absorb the likely shocks from two or three months of lockdown without much lasting adverse consequences.

But the longer the duration, the harsher the consequences and the higher the likelihood of the

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Social fallouts, including anxiety and panic buying of nose-masks, sanitizers, chloroquinebased antimalarials taunted as remedies for the virus as the public took precautions ahead of the outbreak

temporary bit protracted lockdown inflicting permanent/irreversible economic damages like job losses, bankruptcies, bank failures etc. It has been only about two months since Nigeria reported its first case on 27 February, and one-month since we locked down. We are preparing to unlock in phases from tomorrow 4th of May. If this works out, we can hope that we will avoid harsh economic consequences.

If for any reason we are forced to retrace our steps and resume another lockdown, the we should brace up for the worst possible economic outcomes that in the African context may likely have social and political backlashes like mass uprisings or even political upheavals. We hope these dismal scenarios do not play out so we can hopefully get back to life as usual by June.

Finally, how should we respond to this situation? We should be clear about the responses we are proposing for the lockdown period and those we are proposing for the post-lockdown period. In general, we should prepare for the worst and hope for the best. We must remember that presumption blights precaution, as Mr. Trump’s attitude towards the pandemic has clearly but painfully taught us all.

Economic Essence of Covid-19 Pre-Lockdown: The Status Quo Ex-Ante •Slowing global growth and trade owing via technology induced supply gluts •Surging global liquidity and capital flows via massive decade long QE •In-person interactions for work and leisure dominated virtual interactions Lockdown: What the Pandemic Reinforced or Reversed •Freezing global growth and trade via demand and supply disruptions of lockdown •Injections of over US$8 trillion liquidity induced by Covid-19 pandemic •Virtual interactions grew as frozen in-person interactions led to lockdown Post-Lockdown: What is Transi-

tory or Permanent •Global growth and trade will be slower as both gradually unfreeze •Global liquidity and capital flow surges will intensify right after lockdown •In-person and virtual interactions will continue the battle for supremacy Post-Lockdown Green-Shoots On the negative side, global lockdown has cut export and growth opportunities. It is not just that the price of oil is weak. It is also that oil producers cannot get enough buyers, because importing countries are locked down. Exports have been halted. Growth has slowed.

However, a positive side to the story is that, in their efforts to cushion the adverse effect of the lockdown on their people, countries have injected ‘about US$8 trillion’, according to IMF’s April 2020 Fiscal Monitor, thus pumping more money into a global financial system that was already in a liquidity glut. They are giving people money they cannot spend until the lockdown ends. When the lockdown ends, the injections will further increase the liquidity glut in the global financial system.

Some of that liquidity will end up in developing countries that have investment-friendly policies. The combined inflows of foreign direct investments and remittances into developing counties were already in excess of US$1 trillion by end of 2018.

The Covid-19 induced injections might push that above US$2 trillion by end of 2020. The net effect of Covid-19 on the global economy would be to further widen the eco-financial divergence: ensuring more financial green-shoots than economic.

Getting Ready for AfCFTA and Eco: Realigning with Global Realities African continental single market and West African single currency were conceived in a global environment in which net-exports dominated net capital inflows. They must now be realigned with a new global reality in which net capital inflows dominate net-exports. Nigeria and Africa need to realign with the evolving reality that surging Foreign Direct Investment (FDI) and Diaspora Remittances are more reliable sources of external liquidity than meagre Donor Funds, also known as Official Development Assistance (ODA), or volatile Foreign Portfolio Investment (FPI).

Steps Towards Readiness In general terms, Nigeria and Africa must align their policies with unfolding global realities by: repositioning themselves through effective investment friendly policies to obtain a fair share of the financial green shoots needed to promote growth and stability; attracting large FDI/ Remittances inflows as their main sources of external liquidity; deploying these into transport and energy Continues on page 31

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