BusinessDay 07 Aug 2019 by BusinessDay

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Kennedy Uzoka, group managing director/CEO, United Bank for Africa (UBA) plc (l), and Babajide Sanwo-Olu, governor of Lagos State, during the visit of executive management of UBA to the Ggovernor in Lagos, yesterday.

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news you can trust I **WEDNESDAY 07 AUGUST 2019 I vol. 19, no 366 I N300

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I&E FX Window CBN Official Rate Currency Futures

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3M 0.60 10.16

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NGUS jul 29 2020 363.53

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fgn bonds

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Cargo imports jump 21% in first half of 2019 …as FX availability boosts airfreight IFEOMA OKEKE

mportation by cargo (perishable and nonperishable products) from Europe, America and

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Inside Rivers taxpayers are our development partners P. A2 – RIRS boss

Cost vs access: SMEs worry over structure of bank funding

See full story on P. 38

Wednesday 07 August 2019

BUSINESS DAY

news Wacot, Olam, Crown Flour Mills granted pioneer tax status in Q2

…as total of 10 firms get approval Endurance Okafor

or the first time since 2017, more companies from the agroallied sector had their applications for Pioneer Status Incentive (PSI) approved due to high local value addition, second quarter figures from the Nigerian Investment Promotion Commission (NIPC) show. NIPC is the agency of the Federal Government established to encourage, promote and coordinate investments in Nigeria. Ten companies were granted three years tax holiday in Q2 2019, out of 24 that applied, and five were from the agroallied industry, the highest recorded for one industry in the review quarter. A dive into the most recent data by NIPC revealed that the agro-allied companies that were granted tax holiday in Q2 2019 were Amarava Agro Processors Limited, Wacot Rice Limited (both into rice processing), Olam Hatcheries Limited (poultry), Solis Agro Limited (crop production) and Crown Flour Mills Limited (animal feeds). Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said Nigeria’s agro-allied sector has high local value addi-

tion, hence the increase in the number of companies granted tax holiday. “Agro-allied is one of the major sectors that strengthen Nigerian economy. In terms of growth and profitability on investment, it has a lot of advantage,” Yusuf told BusinessDay. The record is also the first for the agro-allied industry, at least since August 2017 when the suspension on tax holiday was lifted. Pioneer Status Incentive (PSI) is designed by the Federal Government to reduce the cost of doing business in Nigeria by providing corporate income tax relief to qualifying companies making investments in industries designated as ‘pioneer’. In effect, PSI seeks to enhance the survival, profitability and sustainability of beneficiary companies. While the incentive has been in place since 1971, it was suspended in 2015 by the then minister of finance, Ngozi Okonjo-Iweala, based on perceived abuse and revenue leakages. But in 2017, the Federal Government lifted the administrative suspension on the PSI scheme.

L-R: Bola Adeeko, head, shared services division, The Nigerian Stock Exchange (NSE); Tinuade Awe, executive director, regulation, NSE; Innocent Ujah Idibia (TuBaba), internationally renowned award-winning artist; Oscar N. Onyema, chief executive officer, NSE, and Olumide Bolumole, divisional head, listing business, NSE, during the presentation of certificate at the unveiling Pic by Pius Okeosisi ceremony of TuBaba as NSE Good Cause Ambassador in Lagos, yesterday.

MARKETS

Cost cuts, reduced debts, smaller packaging: How Nestle, PZ, Cadbury are braving the tough economy BALA AUGIE

he macroeconomic environment (slow growth, high inflation) has been menacingly scorching for Fast Moving Consumer Goods Firms (FMCGs) as they are finding it practically difficult to break even, even as the industry is •Continues online at the most susceptible to a slugwww.businessday.ng gish economy. Double taxation, low consumer purchasing power, poor regulations, multiple levies, and decrepit infrastructure like the Apapa gridlock are the monsters tormenting an affidavit deposed to by industry operators. However, amid these myrKungmi Daniel, an operative of the commission, stated iad of challenges, some firms that there was “a huge in- are thriving, thanks to the flow of N9,927,714,443.29” introduction of innovative from the state accounts into products, deleveraging exera commercial bank account cise, cost control mechanism, opened on September 17, 2018 during the administration of the immediate past governor, Ambode, and operated by Adesanya. It was further stated that the schedule of the FCMB ac- ISAAC ANYAOGU, STEPHEN count showed how Adesanya ONYEKWELU & DIPO OLADEHINDE and other signatories to the account made fraudulent ome electricity distransfer from the accounts of tribution companies the Lagos State government (DisCos) are carving and dissipated the funds out portions within housed in the said accounts. their franchise areas to ofIn his submission, coun- fer premium service which sel to the EFCC, Mohammed consists of 18-22 hours of Abbas, said, “The trend in the constant power supply daily account is that the account at a higher cost based on always witnessed huge inflow willing seller/willing buyer from Lagos State Govern- basis. ment in the above scheduled This strategy is helping accounts managed by the these loss-making power respondent (Adesanya).” companies to increase revAbbas, therefore, prayed enue and cope with the inthe court to grant an order to ability of the sector regulator temporarily attach and take to ensure operators charge over the accounts to enable tariffs that will guarantee it conclude its investigations. commercial returns. Eko DisCo was the first •Continues online at utility to begin offering the www.businessday.ng service. Customers in Ba-

N9.9bn fraud: EFCC gets nod to freeze Lagos accounts linked to Ambode’s tenure JOSHUA BASSEY, Lagos, & INNOCENT ODOH, Abuja

conomic and Financial Crimes Commission (EFCC) on Tuesday secured the nod of the Federal High Court to freeze Lagos State accounts to enable it deepen its investigation into an alleged fraud of N9.9 billion linked to a permanent secretary in the Office of Chief of Staff under the immediate past governor, Akinwunmi Ambode. Justice Chuka Obiozor of the Federal High Court, Ikoyi, granted the prayers of the anti-graft agency on Tuesday, August 6. According to a statement by Tony Orilade, acting head of media and publicity of EFCC, the funds are domiciled in three commercial banks. Obiozor gave the order following an ex-parte application filed by the EFCC. The commission had prayed the court to freeze the account pending the conclusion of investigation and possible prosecution of Adewale Adesanya, the permanent secretary. The applicant, EFCC, in

and investment in Research and Development (R&D). For instance, Nestle Nigeria plc, the fourth largest listed firm by market capitalisation, has been leveraging its R&D capacity as it continues to develop a wide range of high quality nutritional offerings to meet consumer needs. These products have continued to contribute to earnings and margin expansion, thanks to strong growth in the beverage business, as the Milo Ready To Drink (RTD) pack and Maggi seasoning continue to gain widespread acceptance in the market place. Last year, the company opened a N4.10 billion RTD factory in Agbara, Ogun State, and it has invested N74.10 billion on its operations in five years. Nestle’s net income jumped 22.34 percent to N26.24 billion

in the second half of 2019 as against N21.45 billion in June 2018, while gross margins moved to 46.57 percent in June 2019 from 41.10 percent the previous year. “Nestle is trying to reduce exposure to foreign exchange risk. The company sources about 80 percent of its raw materials locally, which gives it an edge over competitors that have their goods trapped at the Apapa Port,” said Opeyemi Ani, consumer goods analyst at Cordros Securities Limited. Ani said PZ Cussons has embarked on cost rationalisation whereby segments that are no longer contributing to group revenue are deleted or merged. Cadbury Nigeria plc recorded its best performance in five years, a stellar performance it attributes to costcutting measures, effective

marketing strategy and superlative performance of its product brands. For instance, Cadbury relaunched its iconic cocoa beverage drink, Bournvita, in line with consumer tastes and preferences. The company’s Cadbury Hot Chocolate 3-in-1 brand, its treat portfolio, recorded substantial growth, driven by its unique offering, while the gum and candy brands also recorded success in their respective categories. Cadbury’s gross margins increased to 21.29 percent in June 2019 from 16.02 percent the previous year, while it recorded a profit after tax of N669.93 million as against a loss of N423.67 million the previous year. Flour Mills Nigeria plc,

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Power companies offer select customers premium service at higher cost

…Customers get up to 20hrs daily supply at N50kWh tariff

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nana Island, Ikoyi, Lagos enjoy between 20 and 22 hours of power supply daily and pay around N45 per kilowatt hour. “Power is hardly ever an issue discussed at our resident association meetings, because we are more than satisfied with the arrangement,” one Banana Island resident told BusinessDay regarding the service. Customers say it is better than relying on petrol or diesel generators which cost on average N85-N95 per kWh and pollute the environment. Ikeja Electric is now pushing to expand the service. “Premium power supply of electricity is the provision of electricity supply beyond the existing standards with

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guaranteed performance levels,” the DisCo explained in a letter offering the service to one consumer. It said the “initiative differentiates itself from the grid supply as it bypasses the feeder and grid limitations associated with regular supply”. “It is aimed at providing exclusive services to identified customers who are willing to pay for stable electricity supply at a premium price,” it said. Ikeja DisCo is providing power by entering an alliance with Egbin Power Plant that gives it exclusive access to 100MW of supply from the plant that is not contracted to the national grid. The DisCo will bear the cost of improving infrastructure to take the additional supply. @Businessdayng

Customers who are interested in the service will sign a Power Purchase Agreement with the DisCos and will be provided meters under the Meter Asset Provider (MAPs) regulation. Experts say this is a good move and positive development for the sector. “They are trying to make the best out of a bad situation,” said Dolapo Kukoyi, partner at Detail Commercial Solicitors, a Lagos-based law firm. Kukoyi said the new arrangement provides customers choice because all they really want is constant power supply and they are happy to pay for it.

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NEWS

Lagos begins safety campaign to stem loss of lives on roads

Inflation rate sets for lowest level, FSDH predicts HOPE MOSES-ASHIKE

head of the release of the July 2019 inflation figure on Friday, August 16, 2019, by the National Bureau of Statistics (NBS), FSDH Research expects the July 2019 inflation rate to drop to 11.01 percent from 11.22 percent recorded in June 2019, thanks largely to the harvest season. “If our prediction is correct, this will be the second consecutive month for the inflation rate to have dropped and the lowest inflation rate recorded in Nigeria since February 2016,” analysts at the FSDH Research headed by Ayodele Akinwunmi, state. The inflation rate target of the Central Bank of Nigeria (CBN) is between 6 percent and 9 percent, but the firm notes in its previous inflation reports that it is unlikely that Nigeria will achieve a single-digit rate of inflation in the short-term. “We must also note that an increase in the inflation rate is not entirely bad, as a reasonable increase in general prices is important to encourage production.” A report by FSDH Research states that no manufacturer will be encouraged to produce in an environment when the prices of the goods that are produced are going down. What most countries and central banks are guarding against is an excessive increase in general prices. In the last few years, the apex monetary authority has been initiating several policies to help promote the agricultural sector. The aim of this is to boost

agricultural yields, which would in turn kerb general price increases. The CBN’s focus on the agricultural sector is deliberate, as food prices significantly affect the country’s inflation rate. Looking at the movement of food prices in the international market, the overall price of a basket of certain food items dropped in July relative to June 2019. In its July 2019 Food Price Index, the United Nations Food and Agriculture Organisation (FAO) observed that the prices of food items in the international market decreased during the month. The FAO further noted that the prices of cereal, dairy products and sugar decreased between June and July 2019. The drop offset the increase in the prices of oils and meat recorded during the same period. Despite the expected decrease in the inflation rate in the next few months, FSDH expects increased volatility in the inter-bank rates and a gradual increase in the rates at the Open Market Operations (OMOs) from August through to December 2019. “This is due to huge maturities in excess of N9.62trillion of government securities which we expect to hit the Nigerian financial market during the period. Ordinarily, the expected large inflow of funds into the financial system may lead to inflationary pressure. In this situation, the way to manage the expected high liquidity is for the CBN to increase its ‘moppingup’ activities in the inter-bank market, leading to an increase in the OMO rate.

JOSHUA BASSEY

agos State government has flagged off its 2019 road safety campaign week aimed at creating safety awareness among road users within and outside the state. Taiwo Salaam, the permanent secretary in the state ministry of transportation, who briefed State House journalists at Alausa, Ikeja, Monday, said the bi-annual road safety campaign was necessary to stem the huge human and material resources being lost to avoidable road crashes in the country. According to Salaam, figures from the National Bureau Statistics (NBS) show that about 229,524 road crashes were recorded in the country between 2000 and 2018, about 12,080 annually. And in about a space of three years - 2016 to 2018, about 73,504 lives were lost in road accidents in the country. “This situation has major negative impacts on the socioeconomic health of the country, hence there is need for a more holistic and strategic plans especially as it concerns safer vehicles and road users in line with the UN Decade of Action. “As regards the reduction of road crashes, may I seize this opportunity to urge you to in-

stall standardised C-Caution and retro-reflective tapes on your vehicles to aid motorists visibility at night, especially when there is breakdown of vehicles on the road. I would therefore urge Lagosians to be disciplined and patient,” he said. The safety week being organised by the Vehicle Service (VIS) of the state government, is in tandem with the objectives of the present administration to make traffic management and transportation one of its cardinal focus, he said. Salaam, who said the theme of this year’s event is “employing technology to enhance compliance and safety on Lagos roads,” explained that the safety campaign week would among things, educate on new mode of enforcement in the state, importance of pre-registration inspection, establishment of computerised vehicle Inspection service (LACVIS) centres. Speaking also, Gbolahan Toriola, the state director of Vehicle Inspection Service, urged the public to cooperate with vehicle inspection officials as they would be visiting corporate organisations, schools, motor parks, union secretariats, ministries and departments of government during the safety campaign week to educate on safety measures and tips on vehicle maintenance.

Buhari to swear in ministers Aug. 21 ...ministerial retreat now Aug. 19 TONY AILEMEN, Abuja

resident Muhammadu Buhari has concluded plans to formally inaugurate his cabinet on August 21, 2019. A statement signed by Babatunde Lawal, permanent secretary, cabinet affairs office in the Office of the Secretary to the Government of the Federation (SGF) said the ministerial retreat earlier fixed for August 15-16 has been pushed forward to August 19, 2019. In the statement issued Tuesday, the SGF office invited all top government functionaries to the retreat and swearing-in programme for ministers-designate. “The secretary to the government of the federation, Boss Mustapha, invites all ministers-designate, head of the civil service of the federation, federal permanent secretaries and top government functionaries (specifically invited) to a 2-day induction retreat to be presided over by His Excellency, Muhammadu Buhari, President of the Federal Republic of Nigeria,” the

statement said. The retreat, which is expected to hold at the State House Conference Centre, Presidential Villa, Abuja, will discuss issues such as building a strong platform for synergy and teamwork and sensitising appointees on the status of the implementation of policies, programmes and projects of government from 2015-date. Other issues to be discussed include acquainting the appointees with the roadmap for delivery of government’s priorities and next level agenda (2019-2023), as well as deepening the understanding of participants on best practices in conducting government business. “Swearing-in of all ministers-designate by the president shall hold on Wednesday, 21st August, 2019, at the Council Chambers of the Federal Executive Council, Presidential Villa, Abuja,” the statement said. The SGF had earlier fixed August 15-16 for the retreat, but it had been silent on the inauguration date.

Sahara Group lauds investment opportunities in Angola’s downstream sector DIPO OLADEHINDE

xecutive director of Sahara Group, Wale Ajibade, says there is a new wave of opportunities arising in Africa’s second biggest oil producing country as a result of the collaborative relationship between local and international companies operating in Angola. According to Ajibade, the transformative policies driven by the Minister of Mineral Resources and Petroleum, Diamantino Pedro Azevedo under Angolan President, João Lourenço, is opening a wide range of investment opportunities for the country’s petroleum sector. “ These opportunities exist in local capacity development, infrastructure development as well as funding,” Ajibade said, while discussing African oil and gas market trends with a trade delegation from Southern Africa in Lagos. According to Ajibade, the opportunities include partnerships between International Oil Companies, International Traders, International Banks (especially African companies), and Local Angolan companies which will enhance global best practices, knowledge

transfer into the local industry and ultimately increase the participation of private players in the downstream market. “These opportunities can be exploited with the deployment of international and local private capital in partnership with the Angolan government. With our pedigree, proven expertise and capacity in Africa’s oil and gas sector, Sahara Group is happy to work with Angola in a bid to optimise the growth and development of the sector in Angola,” he said. Although Angola remains a leading oil producer in Africa, with many investors, focused on opportunities in exploration and production, more opportunities in the rest of the value chain, such as the downstream sector could benefit from different business models and further improve the reliability and security of petroleum products supply to the Angolan market, he said. On infrastructure, he argued that “with the right investments in the necessary infrastructure such as storage and logistics, Angola can become the Rotterdam of Africa,” acting as the regional export hub serving Central, Southern and even West Africa. www.businessday.ng

L-R: Moruf Oseni, deputy managing director, Wema Bank plc; Ademola Adebise, MD/CEO, Wema Bank plc; Babajide Sanwo-Olu, governor, Lagos State, and Olufemi Hamzat, deputy governor of Lagos State, during the bank’s courtesy visit to the governor’s office in Lagos.

Banks, OFIs to bear costs of disclosure to consumers, except deposit, withdrawal … as CBN releases consumer protection guidelines HOPE MOSES-ASHIKE

eposit Money Banks and Other Financial Institutions (OFIs) are to bear all costs associated with disclosures to customers except for deposits and withdrawals by or on behalf of the customer. This was contained in the Consumer Protection framework guidelines on Disclosure and Transparency released by the Central Bank of Nigeria (CBN) on Monday. The Guidelines provide minimum Disclosure and Transparency requirements for Financial Institutions under

the regulatory purview of the CBN to ensure they provide consumers with all material and relevant information regarding their business relationship in a clear and transparent manner. According to the CBN, the objective of the Guidelines is to protect consumers against the provision of inadequate, misleading or failure to disclose material and relevant information and generally guard against lack of transparency by Financial Institutions in their dealings with consumers. The Guidelines apply to all transactions by financial institutions licensed and regulated

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by the CBN and their agents, subsidiaries and associates. These include Commercial Banks, Merchant Banks, Specialised Banks, Micro-finance Banks (MFBs), Development Finance Institutions (DFIs), Finance Companies (FCs), Bureaux-de-Change (BDCs), Primary Mortgage Banks (PMBs), Credit Bureaux, Mobile Money Operators, Payment Service Banks, Switching Companies, Payment Solution Service Providers, Payment Terminal Service Providers, Non-bank Acquirer, Super Agents and Mobile Money Operators. These financial institutions are expected to inform @Businessdayng

consumers of applicable and indicative foreign exchange rates through customer engagement points and advise consumers to always check the rates before consummating foreign exchange transactions. They are to ensure that the disclaimer “Terms and Conditions Apply” or any phrase conveying a similar meaning shall only be used if the terms and conditions have been disclosed in the contract document or in other media accessible by the customer. The financial institution shall at all times, draw the consumer’s attention to such disclosure, the Guidelines stated.

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Curbing Social injustice to stem mass poverty Small Business handbook

Emeka Osuji

igeria is currently acting as the engine room of a multinational factory that churns out abjectly poor people for the rest of the world to worry about. Reports say that over 87 million of her citizens live in abject poverty – the highest in the world. This is roughly about half of her population said to be about 200 million people. But that is not the big issue. After all, India was in that position a while ago before Nigeria. Bedevilled by a myriad of problems that have proved too hard for government to resolve, Nigeria has taken over from India. The more frightening thing is that the population of Nigeria is expected to double by 2050, and so will the number of the poor, proportionately at best, grow but in multiples at worst. Besides, we are not really sure how many we are and that increases the uncertainty about the poor in 2050. However, what is almost certain is that they will be more than some very big countries in the world. Nigeria has been engaged in several wars, including the wars against poverty and corruption, and lately the war against Boko Haram and bandits (insecurity). None of these wars seem to have significantly rattled the object of its focus. Both corruption and poverty seem not to take notice of what we claim to be doing, as they progress regardless of us. While the

war against poverty has yielded minimal results, the war against corruption has failed roundly. It has been damaged by politics as corruption suspects have seized vital institutions that ought to hunt them down. It is time for a complete review the strategy adopted so far in both wars – against poverty and corruption. This is because after several years of these wars, more people are hauled into poverty each year than before and more brazen acts of corruption are being openly celebrated. People under investigation for corruption are allegedly being elevated to positions that bring ant-corruption institutions under their control or authority. The President has demonstrated his rejection of the current state of poverty by giving himself, and those coming after him, what looks like a monumental target to reduce poverty. He has promised to push 100 million of us back into the good life we once knew, over the next several years. While some pray for him to succeed, many are wondering how he plans to deal with the role of insecurity in promoting mass poverty in the country. This is because as he brings people out of poverty, insecurity hauls many more back. It is on this basis that some have already written off the plan as inconsistent with reality. Without doubt, the growing unchallenged attacks on innocent rural dwellers, by elements considered to be foreign invaders in the country, will surely unravel any poverty reduction plan. The president needs to deploy an objective strategy to reduce the rate at which Nigerians become abjectly poor on a daily basis. Such a policy must begin by resolving the problem of insecurity through transparently honest policies that do not create suspicion or harbour the seed of bigger national crises in the future. Statistics show that about six Ni-

gerians become abjectly poor every minute. This presupposes that to remain where we are, the president should bring an equivalent number of people out of poverty every day. And that will not be a great achievement, nor will it even be possible, given the palpable fear that has gripped everyone across the country, of being attacked or abducted. Unfortunately, the subnational governments, the mostly failed departments of the federal government, cannot be challenged to help or do anything about poverty and corruption. They are not used to solving any serious problems, nor do they regard the miserable people they continually plunder and deceive. The way the laws stand today and the way the wheel of the criminal justice system has been clamped by vested interests, a review of the whole anti-corruption and poverty reduction architecture is the only way forward. We still run a system in which billions that should have been used to build Social Overhead Capital are wasted on elections that are rigged even before they are held; to elect leaders who steal like common thieves and make no pretences about it. The story of Imo state should make a great movie. The state is trending on the social media for what might pass for some of the worst acts of betrayal of trust ever seen anywhere in the world by government, if the pictures we are seeing are true. Whole household equipment and furnishing are stripped off government buildings, containerized and hidden away, allegedly by top leaders of the outgone government. We still go through the ritual of swearing-in people whom we know have no respect for both the Bible and the Koran. We waste state funds to organize their arrival to government -- one of those senseless activities we

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The President has demonstrated his rejection of the current state of poverty by giving himself, and those coming after him, what looks like a monumental target to reduce poverty

perpetuate in Nigeria that add nothing to the well-being of the people. It is time to try social justice as a cure for the rampaging poverty in Nigeria. Social injustice is at the heart of our present crises, and its reversal is key to our national reconstruction. We run governments that are so unwieldy that it is impossible to be productive or save money to fix the infrastructure that promote growth. The search for nationhood, which has apparently given way to the pursuit of sectional ascendancy, cannot deliver social justice. Yet only social justice can reverse the drift to mass poverty in the country. Given the level at which people are helping themselves to copious portions of state resources, at all levels, and the impunity that reigns in the dispensation of injustice, it has become a thing of pride to cheat one’s countrymen, if possible, to get on the Forbes’ List of the super-rich without qualms. Accordingly, it is not unexpected that those in government have become aliens and a foreign body to the people they swear to serve. As long as public officers are allowed to treat public property as their private holdings, today is still early in our days with social unrest, especially as politicians continually recoil from their commitment to the people. Reversing this state of affairs must be properly thought out and should be supported. It is no longer in doubt that Nigerians hate one another today more than ever before. The hatred among them today is palpable and exceeds that of the Civil War era. They are poorer than their parents and their children, if they still find a country to be called their own when this matter is done, may have much against the society. Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emekaosujii

Changing the nation...one mind at a time

Next Generation Leaders

t is a matter of great importance to think about the qualities of a leader, especially the ones that leaders of the next generation will need to have. Even Pope Francis has thought about this question. In his recent exhortation to young people, he calls for youth programmes that will form and develop young leaders. For our part, we have to think about how the current generation of young people view leadership, and recognize their distrust for those who put themselves forward. This generation, commonly called Generation Z or “iGen”, has many positive qualities: they’re more sincere, more vibrant, have less social preoccupations and less fear of ridicule than previous generations. They also show more solidarity, have travelled around the world, and know many languages. They’re comfortable with technology and the internet, and are concerned about global warming, world hunger and the future of poor countries and people. That said, perhaps there’s room for improvement. There’s a strain of individualism, a certain lack of interpersonal communica-

tion and a tendency to think short-term. The leaders of today and tomorrow should recognize these shortcomings and help young people overcome them. What kind of leadership does Generation Z aspire to? First, their ideal leaders are demanding with themselves and understanding of others. That is, leadership is applauded when it demonstrates exemplarity in personal standards and real concern for others. We no longer admire the leader who makes unreasonable and harsh demands… the aggressive shark or lone wolf who triumphs in business by unscrupulously trampling on others. This all calls to mind what J. K. Rowling said in her 2008 lecture at Harvard, “One of the many things I learned at the end of that Classics corridor down which I ventured at the age of 18, in search of something I could not then define, was this, written by the Greek author Plutarch: What we achieve inwardly will change outer reality.” What Rowling means to say is that she achieved literary success because of her determination in the face of interior bat-

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tles. Leaders need that inner vitality, that personal struggle. This makes it possible for them to overcome failure, weariness, or betrayal. Second, to be a leader is literally to lead, to go forward. Leaders strive to improve themselves and the team entrusted to them. They’re committed not only to their own personal growth, but to the growth of each of the members of their team. Leaders make sure the team is prepared and ready for their tasks. There’s no limit to this kind of formation because there’s always more room for growth. Leaders don’t worry if members of the team quit and do their own thing. That’s not a “lost investment”. On the contrary, a leader cultivates freedom and personal initiative. Their thoughts align with Richard Branson, the founder of the Virgin Group, who famously defined his management style thus: “Train people well enough so they can leave, treat them well enough so they don’t want to.” The third thing is that leadership is not so much a choice as a calling. In this sense,

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Ikechukwu Onuoma Esq

leadership demands not only tenacity in moving things forward, but also humility to recognize mistakes, rectify them and ask forgiveness. Leaders, like everyone else, make mistakes. But they’re also the first to apologize and make good on their errors. Leaders are not supermen or superwomen. If they’re better than their peers in anything, it’s in the recognition of their limitations and their desire to be corrected and improve. In all, they are determined to change the world, to make it better, to make it more human. Onuoma, a lawyer, is the cordinator of Univ Nigeria

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comment When the leaders follow Character Matters with Daps

Dapo Akande

think one major reason why this country is in such a sorry state is not because we don’t see the problem. We do. The issue is, no-one sees himself as part of the problem, so we look to correct the problem “outside” when the problem is actually “inside”. We readily point to those we see as the culprits while presenting ourselves as victims, or helpless onlookers at best. You only need to read the newspapers and you’ll come across those who shamelessly put themselves forward as arbiters of knowledge; ironically proffering solutions to problems they directly or vicariously created. Quite nauseating really. This disconcerting trait of only seeing others as the problem is by no means restricted to the political sphere however. It’s everywhere. You’re just as likely to come across the common man who constantly rues his position in life and the decadent state of society but who sees nothing wrong in “chancing” his compatriot at every given opportunity. It’s a fundamental problem which stems from a propensity to judge others purely by their actions but judging ourselves by our “noble” intentions, even if our actions are

the same. The media was recently awash with the story of the Slapping Senator. Just one of a plethora of oppressive actions the generality of Nigerians experience every day, either from those in “power” or even from one of their own. Forgive me for saying this, but this oppressive mind-set merely reflects our aggregate character. Second thoughts, whether you were ready to forgive me or not, I would have said it anyway. The truth is, the man without a kobo in his pocket, the downtrodden for want of a better word, if he was to fortuitously find himself elevated in status, would do same, if not worse. It’s not enough to just condemn the Senator; he deserves to be prosecuted and made an example of, as a deterrent to the rest of us who are currently enjoying the opportunity to lambast him but who are really not any different. All over the world, it’s expected of people in leadership to set a good example. This case of the Slapping Senator in many ways mirrors that of the alleged rape by Pastor Fatoyinbo of COZA. It reeks of people of position and influence lording it over others; believing they have the right to misbehave and deny others of their right to dignity. I say enough of impunity. The Policeman, employed to uphold and enforce the law is the last person who should be seen to affirm the generally perceived view of “might is right” in our society. By failing to apprehend the culprit turning instead the law on its head by so often apprehending the victim, he unfortunately gives some semblance of justification to those

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who quite disturbingly feel they’re better off taking the law into their own hands. Trust in our law enforcement agencies to do the right thing and to toe the path of justice is perhaps at its lowest, even for our chequered history. Policemen are seen to be anything but your friend, literally preferring to force rather than to serve. From my observation, many of our youths have little interest in us having a more egalitarian society where all benefit. Their desire is for God to “bless” them so they too can occupy positions of power and enjoy what has been generally accepted as the perquisites of power or for God to bless them with billions overnight so they too can operate at a level over and above that of we lesser mortals. Their ambition is to become a “big man” as it were and to automatically join the ranks of the untouchable, which usually comes with the territory. Free to get away with just about anything and a licence to oppress. A question I often ask myself and am still asking is: who actually does the leading, the leader or the supposed follower? I make bold to say that many times, the leader follows the lead of the followers. A little cryptic, yes I know but humour me a little. A man is fortunate to be given a government appointment thereby placing him in a position of leadership. For now, let’s put aside the obvious fact that our country’s problem is not that it lacks leaders. We have plenty of them but that it suffers from an embarrassing dearth of leadership. Like I said, we’ll leave that for now and instead face the

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Before he has even stepped into office, his family, his friends, his acquaintances as well as his clan have made both subtle and not so subtle overtures to him, as to their expectations

issue at hand. So, this new government appointee is both excited and grateful to be given the opportunity to serve his fatherland, at last. But before he has even stepped into office, his family, his friends, his acquaintances as well as his clan have made both subtle and not so subtle overtures to him, as to their expectations. In an environment where people will abuse you and label you a fool if you make the “mistake” of vacating office as broke as when you went in. The appointee may be compelled to fulfil their expectations. An overpowering temptation to follow the lead of their body language may at times prove too much to withstand. It’s my belief that our leaders generally do what they believe most followers expect them to do when they assume positions of power because it’s what they would do given half the chance. So you could say they are merely dancing to the tune they perceive the piper is playing. It was William Wordsworth who said, “The child is the father of the man”. So profound. The value system you deposit in your child is what will determine his character even when he becomes a man. The societal mould that produces the ordinary citizen is the same that produces the leaders So, just as the child is the father of the man, so is the follower the father of the leader. And if that’s true, I’ll leave you to decide who you think is actually leading; the supposed leader or the follower.

Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

The age of wealth accumulation is over

Voters and politicians agree it is time to slice the economic pie more evenly

oughly four decades ago, America kicked off the developed world’s last major economic paradigm shift — the supply side revolution. Capital gains taxes were slashed. President Ronald Reagan and UK prime minister Margaret Thatcher took on air traffic controllers and coal miners. The power of unions faded and that of corporations grew. Some people got very rich. But inequality rose, and eventually, overall trend growth slowed. Watching the Democratic presidential primary debates last week, I couldn’t help but think that we may be witnessing the next great shift, from an era of wealth accumulation to one of wealth distribution. Moderates like Joe Biden and John Delaney tried to argue for middle of the road answers on issues like healthcare and trade. But the pole positions were set by Bernie Sanders and Elizabeth Warren, who hold similar views on everything from shifting Americans on to a national healthcare system and relief for indebted students. Both also seek higher taxes for the wealthy and tougher rules for corporations. While little of this would seem radical in many other parts of the world, in the context of US politics, it was truly something new. The set point for economic debates, even for Democrats, used to be how the government could help the markets work better. Now it’s how the public sector can rein them in, and slicing the economic

pie more fairly. What’s more, it’s not only Democrats. Some Republicans are looking for a paradigm shift as well. Marco Rubio, an influential Republican senator who hopes to be president someday, recently put out a paper on the problems with shareholder capitalism and the merits of industrial policy. The signs of this new post-supply side era are all around us. Witness the rise of the B-corporations, which balance purpose and profit, and the growth of investing based on environmental, social and governance factors. In government, note the growing bipartisan enthusiasm for tougher antitrust scrutiny and calls for trade protection, as well as efforts to politicise the US Federal Reserve. It’s not just President Donald Trump’s tweet seeking rate cuts but also progressive Democrats who see “modern monetary policy” as a way to pay for their priorities without having to fund them through tax rises agreed upon by Congress. These views are increasingly part of the mainstream. Last week, two senators introduced a bipartisan bill that would force the Fed to devalue the dollar in order to boost exports and balance current accounts with China. This isn’t passing populism, but something much bigger, argues Kiril Sokoloff, founder of 13D Global Strategy & Research, who has been ahead on recognising previous turning points,

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from supply side economics and the slowing inflation that began in the early 1980s, to the rise of China and the spread of smartphones. “What we’re about to see is a backlash against the second gilded era, and it will have a massive impact on the world — and the markets.” One likely impact will be fundamental changes in who holds wealth. The Democratic race reflects the growing conflict between two primary US voting groups — the baby boomers, represented by candidates like Mr Biden, and the millennials, who backed Mr Sanders in 2016, and now like him and younger candidates such as Pete Buttigieg. A decade of loose monetary policy has benefited the former, who have seen their assets appreciate, at the expense of the latter, who cannot afford to get on the housing ladder. One of the big political battles will be over who gets what share of what looks to be a slower growing pie in what appears to be a slower growth economy. Another battle will be between capital and labour. Rising wages are taking a bite out of US corporate profit margins and, frankly, they should. When consumer spending makes up 70 per cent of the economy, we need a bit of wage inflation to ensure that people have money to spend. That’s particularly true at a time when governments aren’t investing, and the shift from a tangible to an intangible economy has led to decreased private sector capital expenditure.

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Rana Foroohar But it has taken trillions of dollars in unconventional monetary policy to cook up relatively small wage increases. And for many Americans the gains are immediately eaten up by increases in healthcare premiums or prescription drug prices, two other hot topics on the campaign trail. That’s one of the reasons there’s now broad support for higher taxes on the wealthiest. It remains to be seen when and what form tax rises will take. But the age of wealth distribution is coming and will have major investment consequences. The value of US equities has probably peaked, and hard assets like gold, other commodities, housing, even art — anything in fixed supply — may benefit relative to the equity and debt of multinational companies. This isn’t the end of the world — we’ve been going through cycles of wealth accumulation and distribution forever. But it does mean that the rules of the road for investors are changing. Some asset prices may fall, but it’s possible income growth will be higher. That would come with an upside of its own, economically and politically. rana.foroohar@ft.com

Wednesday 07 August 2019

BUSINESS DAY

Editorial Publisher/CEO

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

The executive-legislative stand-off in Edo

emocracy is, arguably, on holiday in Edo State, South-South region of Nigeria, where the lingering face-off between the executive and legislative arms of government has polarized the legislature into two main camps, creating a vacuum in legislative functions in the state. While one camp is loyal to Godwin Obaseki, the state governor, the other has pitched tent with Adams Oshomhole, a former government of the state and the national chairman of the ruling All Progressives Congress (APC). Since after the declaration and subsequent inauguration of a faction of the state’s legislature by the governor in June this year, Edo has been on edge. This situation has been made worse by the intervention of the National Assembly which seems not to be neutral either in its action or utterance, especially in its 7-day ultimatum to the state governor to

re-issue his declaration for the inauguration of the entire House of Assembly members-elect. Events as they unfold in Edo State call for serious concern. Whose interest does this stand-off between the executive and the legislature serve? If democracy is all about the people, where democracy seizes to exist as it seems in Edo, it means the people are not only deprived, but also marooned in what is, apparently, a troubled and famished political landscape. We believe that Edo State and its people are much larger than just two individuals who may be fighting for personal interests, unknown and unseen interests, or are settling personal scores at the expense of the larger interests which the state and its people represent. Whatever is the case, we share the view of most Nigerians that the interest of Edo people should be put in the front burner, making it imperative for the main actors in this case to sheathe their swords and embrace peace for the sake of democracy which holds

out dividends for the people. Governance needs a peaceful environment to be impactful. So does economy. It may be early days to assess the performance of the present government in the state which has done well by continuing from where the previous governments in the state left off, but the economy is well on positive trajectory. As the situation is in Edo at the moment, no meaningful political or economic activities are taking place in the state, making stakeholders, particularly private sector operators, worry and fear that it could snowball and degenerate to something worse. We agree with the President of Benin Chamber of Commerce, Industry, Mines and Agriculture (BENCCIMA), Atekha Odemwingie, who reasons that the face-off could have negative impact on the state’s economy. We advise that whatever could be done to disperse or diffuse the gathering storm should be done now. Investors who have put their money into the economy of the state, through joint venture ar-

rangements with the government, shouldn’t be put into undue pressure by an unfavourable political climate arising from lack of clarity or certainty in government’s economic policies. These investors need assurance that at the end, they will get returns on their investment. The threat by the National Assembly to take over the state’s House of Assembly, if the governor failed to do its bidding, in our view, will only help to aggravate the already tense situation. Similarly, the decision by Francis Okiye, the Speaker of the Edo House of Assembly to take the National Assembly to the Federal High Court sitting in Abuja, asking to stop it from taking over the state Assembly, will only help to prolong the face-off. It is not lost on any keen follower of Edo politics that Governor Obaseki and Comrade Oshiomhole worked together for eight years. And both mean well for Edo State and its people. They should sink their differences, whatever they are, and save the state from where it is headed: implosion.

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Wednesday 07 August 2019

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Renewable energy is good money, not just good for the earth

Rise of electric vehicles makes solar and wind better long-term investments than oil Mark Lewis

limate change has been framed as an ethical issue for years now, with mixed success. But now the calls for socially responsible investing to save the planet are increasingly being reinforced by cold economic logic. Mainstream institutional investors are recognising that climate change is not just a threat to the health of the planet, but also a threat to the wealth of their clients. The oil industry is on the front lines of rising investor fears about the long-term returns of fossil fuel energy sources. That is partly because of bitter experience. The European utility sector has seen hundreds of billions of euros wiped off its market capitalisation by the roll out of wind and solar power in the past decade. The reason why wind and solar energy pose such a threat to the energy system established over the

past 100 years is simple: they have a short-run marginal cost of zero. In other words, when the wind blows and the sun shines, the energy itself arrives for free. Nearly all of the costs of wind and solar energy are in the infrastructure required to capture it, and these capital costs have been plummeting over the past five years. The same is not true for oil and gas, so those sectors will eventually have to recognise that the economics of renewables are becoming irresistible. BNP Paribas Asset Management’s research into the economics of oil and renewables as competing energy sources hammers home the point. We posited that an investor has $100bn and must decide whether to invest it in oil or renewables, knowing that the energy is destined to power cars and other light vehicles. Our analysis found that for the same capital outlay, wind and solar projects will produce 3 to 4 times more useful energy at the wheels than oil will at $60 a barrel for dieselpowered vehicles. For petrol cars, the ratio is even less favourable — the renewable

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With nearly 40 per cent of current demand for oil coming from sources susceptible to easy electrification, oil companies should think very carefully about investing in new long-term projects that have break-even costs much above $20 a barrel

investment will produce 6 to 7 times more energy. It is therefore increasingly difficult to argue that oil is the superior fuel from an economic standpoint, let alone when environmental issues are considered. As electric vehicles proliferate, the long-term break-even oil price required for gasoline to remain competitive as a source of mobility could fall as low as $9 to $10 a barrel. With nearly 40 per cent of current demand for oil coming from sources susceptible to easy electrification, oil companies should think very carefully about investing in new longterm projects that have break-even costs much above $20 a barrel. This poses a major strategic problem for the oil industry, which has traditionally made its highest returns from finding and extracting crude. Indeed, the oil industry often points to the “profitability gap” between investing in renewables and investing in upstream oil projects, arguing that for as long as the returns are better in oil they have no incentive to invest in renewables. But this is to miss the key point: over time the returns in upstream

oil projects will inevitably decline as oil is forced to compete with an energy source that produces energy at a much lower cost over the lifetime of a project. The oil industry today enjoys massive scale advantages over wind and solar. But this advantage is now one only of incumbency and time limited. The simple truth is that the oil industry has never before faced the kind of threat that renewable electricity and EVs pose to its business model. For the first time there is a competing energy source with a short-run marginal cost of zero, that is much cleaner environmentally and will be able to replace up to 40 per cent of global oil demand once it has the necessary scale. The economics of energy are now on the side of the angels. This should be a flashing red light on the oil industry’s dashboard.

The writer heads sustainability research at BNP Paribas Asset Management

The Asian strategic order is dying

Forty years of prosperity in the region are now under threat

hen somebody is reaching the end of their life, they often suffer from lots of apparently unrelated ailments — fevers, aches-and-pains, unlucky falls. Something similar may happen when a strategic order is dying. Across east Asia, the past month has seen a rash of diplomatic and security incidents that are symptoms of a wider sickness. In late July, the Chinese and Russian air forces staged their first ever joint aerial patrol in the region, causing South Korean warplanes to fire hundreds of warning shots at Russian intruders. The South Koreans are also facing the most serious deterioration in their relations with Japan in decades — with the Japanese imposing trade restrictions last week in a dispute that has its origins in the second world war. North Korea has also just restarted missile tests, endangering US-led peace efforts. All of the other east Asian flashpoints — Taiwan, the South China Sea, Hong Kong and the US-China trade war — are also looking more combustible. Protests and strikes in Hong Kong are still gathering momentum. Chinese officials are now openly discussing military intervention and last week a White House official drew attention to a massing of Chinese troops, just across the border from Hong Kong. For the Trump administration, however, the major preoccupation remains its trade dispute with China, which also intensified last week, with the US imposing a new set of tariffs. July also saw a Chinese oil exploration

vessel enter waters claimed by Vietnam, leading to a stand-off between heavily armed Chinese and Vietnamese ships. The government of the Philippines too sounded the alarm about Chinese naval incursions and called for American assistance. China’s growing assertiveness was underlined by the news that Beijing is developing a military base in Cambodia, its first in south-east Asia. Tensions over Taiwan continue to rise. In late July a US warship sailed through the Taiwan Strait and China released a defence white paper, accusing the Taiwanese government of pursuing independence and threatening a military response. The US meanwhile is talking of soon deploying intermediate-range missiles in east Asia, following its pullout from the IntermediateRange Nuclear Forces Treaty last week. On the surface, many of these incidents seem unconnected. But collectively they point to a regional security order that is coming apart. America’s military pre-eminence and diplomatic predictability can no longer be taken for granted. And China is no longer willing to accept a secondary role in east Asia’s security system. In these new circumstances, other countries — including Russia, Japan and North Korea — are testing the rules. The past 40 years have been a period of unprecedented growth and prosperity across east Asia, which has also transformed the global economy. But Asia’s economic miracle relied on peace and stability. Those conditions were established in the mid-1970s, with

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the end of the Vietnam war and America’s rapprochement with China. Since then, America has tolerated and even facilitated the rise of China. In return, China has tacitly accepted that America would remain the dominant military power in the Asia-Pacific region. You could label these arrangements the “Kissinger order” in east Asia, after Henry Kissinger, the US secretary of state who helped broker the new relationship between America and China in the early 1970s. But both President Xi Jinping of China and President Donald Trump of the US have rejected basic elements of the Kissinger order. Mr Trump has abandoned the idea that US-Chinese ties are mutually beneficial, by launching his trade war, while Mr Xi has set about challenging America’s strategic preeminence. China’s challenge to American power has raised the question of how long the US’s strategic dominance in Asia will last. Rather than offering reassurance, Mr Trump has added to the uncertainty by openly questioning the value of US alliances with Japan and South Korea. As one Asian foreign minister put it recently: “The damage that Trump has done will outlive Trump.” The loss of the US’s regional authority is evident in Washington’s inability to control the feud between Japan and South Korea, its two most important regional allies. Even the Australians are beginning to doubt American leadership, with one senior Australian diplomat telling me recently that, with the

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Gideon Rachman

trade war intensifying, “there will come a point when America and Australia will part company on policy towards China”. But doubts about American leadership are not matched by any desire to embrace a China-dominated region. On the contrary, from Tokyo to Taipei and from Canberra to Hanoi, there is growing anxiety about Beijing’s behaviour. That anxiety is only increased by the growing closeness between China and Russia. From Moscow’s point of view, the recent joint air patrol underlined Russia’s return as a Pacific power — just as military intervention in Syria signalled its re-emergence as a power in the Middle East. The Kissinger order in east Asia did not resolve most of the historic disputes and rivalries in the region. But it helped to freeze regional conflicts in place, buying time for peaceful development. Now the geopolitical climate has changed so frozen conflicts are moving again. As the ice melts, things can move fast in dangerous and unpredictable ways. gideon.rachman@ft.com

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Wednesday 07 August 2019

BUSINESS DAY

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Plantain processing offers investment opportunities for entrepreneurs Josephine Okojie

igeria’s huge demand for plantain flour and snacks has presented an opportunity for e n t re p re n e u r s t o invest in the value addition of the crop. Plantain which produces fruit all year round and cultivated on a variety of soil type, can be process into flour and snacks which is highly consumed by Nigeria’s younger population. Currently, Nigeria’s plantain flour production is put at 25,000 metric tons (MT) and demand is 125,000MT, leaving a gap of 99,800MT, a recent plantain report by the Bill and Melinda Gates Foundation states. The data shows huge potential in the production of plantain flour for investments opportunities, experts say. “Plantain business is booming now in Nigeria because there is a strong demand for the flour,” said Adjarho Oghenekaro, national president, Banana and Plantain Farmers Association of Nigeria (BAPFAN) in a telephone response to BusinessDay. “Processing plantain helps in reducing post-harvest loss of the crop which is currently about 30 percent,” Oghenekaro said. He called for the support of processors of the produce with cheap agro finance to enable them

purchase processing machines and dryers as well as advocacy on health benefits in plantain consumption, noting that some Nigerians still have wrong perception that its consumption is meant for only diabetes patients. Plantain crop can produce for up to 100 years and it is suitable for intercropping. It can be grown in 17 states across the country with major production occurring in the humid forest agroecological zones which aligns with

Pangolin group canvasses research centre for endangered species Josephine Okojie

he Pangolin Conservation Working Group Nigeria (PCWGN) is calling for support from all well-meaning Nigerians for the establishment of a research centre for endangered species in the country. Olajumoke Morenikeji, coordinator, PCWGN said that animals are threatened by habitat destruction and a rising demand for wildlife products that has led to massive poaching and trafficking has drastically reduced the population of endangered species globally. Morenikeji said that the group has created a lot of awareness on pangolins – an endanger specie in Nigeria. “We have rescued, rehabilitated and release some pangolins into protected

forest areas in the country,” she said. “The group is now planning a rescue and rehabilitation centre for the pangolin in Nigeria in order to help address the trading and exploitation of this mammal and we are calling for the support of well-meaning Nigerians for this project,” she said. The insatiable appetite for pangolin meat and parts in Africa and Asia, has led scientists to believe that a pangolin is being poached every five minutes, an entirely unsustainable speed, resulting in pangolin species being listed as vulnerable, endangered or critically endangered on the IUCN Red List, the biggest inventory of the world’s threatened animals. The proposed project will sever as a research centre for pangolins and other endangered species to help preserve the population of these animals, she said.

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the South-South and South-West. Oyo, Bayelsa, Edo, Ondo, Ogun, Taraba, Ekiti, Osun, Cross River and Akwa Ibom accounts for over 60 percent of Nigeria’s total annual production. Besides cocoa, cashew and sesame, plantain is another crop in Nigeria that has huge export potential. The snacks are currently being exported by some entrepreneurs to Europe, United States and Asia to earn foreign exchange.

“There is currently high demand of the plantain snacks both locally and internationally. Lots of small businesses are taking advantage of the opportunity and producing the snacks for export to African’s in the diaspora,” said Adenike Ademola, a plantain snack manufacturer said. “I process over 50 bunches of plantain daily to produce the snacks I supply to my customers. The business does not require a huge capital,” Ademola said. Plantain can be eaten raw when

ripe, processed into flour to make ‘elubo’, a local meal consumed in Nigeria with soup and also serves as industrial raw material in firms producing sanitary pads, fabrics and also for the food and beverage industry for making baby foods, biscuits, bread and cakes. Its nutritional benefits include low-fat, good for blood pressure, a key source of vitamins and minerals, high in fibre and rich in protein. This makes the consumption of plantain a great option for diabetic patients. Currently, one of the major challenges for plantain farmers and processors is the unavailability of cheap agricultural finance for the subsector and the informal nature of activities in the industry. “The country is yet to realise the full potential in the production of plantain because activities in the subsector are still largely informal and unregulated. Also, most farmers and processors cannot easily access cheap credit,” Oghenekaro who is also a processor and was earlier quoted said. He calle d for the proper organisation and coordination of activities in the subsector to explore opportunities in plantain production to create jobs and generate income, adding that the industry has the potential of generating $2.5 billion annually from export. The plantain fruit is an all year crop but its main seasons are August through December.

Dietician highlights investment benefits in orange production, consumption Josephine Okojie

lusola Malomo, an expert in food and nutrition, has said the fruit juice made from 100 percent natural grown oranges provides numerous health benefits to consumers and investment opportunities for investors in the cultivation of the crop. Malomo who made this known in the July edition of his monthly healthy living dialogue, an initiative that is supported by Chivita Limited as part of its ‘no-added sugar’ campaign, said that consumption of orange juice has no hazardous effect on the human body. He added that the Nigerian fruit juice market is estimated to grow by more than 20 percent this year owing to the rising preference among consumers for natural fruit juices and high population growth rate. The dietician said pure orange juice contains some of the richest nutrients the heart and other parts of the body need to perform optimally. “Indeed, what many people know

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about orange juice nutritional value - is a tip of its overall dietary worth”, he said in a statement. According to him, researchers have proved that 100 percent orange juice facilitates free cholesterol transfer to high-density lipoprotein cholesterol - a process that maintains a healthy heart. “There is also substantial evidence from observational studies that the consumption of orange fruit juice has a protective effect against the risk of hypertension and other major heart diseases,” he said “With randomized controlled trials showing an inverse relationship between 100percent fruit juice and hypertension. This is because 100 percent red-orange is high in lycopene that is proven to statistically reduce blood pressure and insulin resistance,” he added. Citing recent research findings, Malomo categorized the gains of consuming orange juice into five broad headings which he listed as: more than just a bag of natural sugar; right amount each day keeps obesity away and ally for a healthy @Businessdayng

heart. Others are: reduces high blood pressure/insulin resistance and improves the body’s glycaemic control. He dismissed the claim that orange juice is just ‘a pack of natural sugar, arguing that it provides a variety of vitamins and minerals such as vitamin C and potassium known to moderate blood pressure while enhancing the wellbeing of the human system. “ Int a ke o f o ra ng e ju i c e i s an important component of the overall health goal, looking at the food pyramid with respect to dietary guidelines, orange fruit, like every other fruit, counts as part of five portions a day.” “Juicing of these fruits has remained a convenient way to help meet the recommended daily servings,” he further said. He noted that studies have shown that the consumption of orange juice is not associated to any adverse health effects. “Consumption of oranges helps to detoxify the body and enhances its ability to fight healthrelated challenges,” he said.

Wednesday 07 August 2019

BUSINESS DAY

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Investing in a poultry business Josephine Okojie

oultry production is the aspect of livestock farming that presents one of the finest opportunities for potential entrepreneurs and investors to make good money within the shortest period of time possible, if well setup and managed. Currently, Nigeria, Africa biggest economy needs more than a million metric tonnes of poultry products annually to meet local demand. Official figure shows that local farmers are only able to produce about 300,000 metric tonnes, leaving a wide gap of more than 1.2 million metric tonnes. This has made smuggling of poultry products ; especially chicken and turkey a big business for importers of these products. As a result of this, the government placed ban on the importation of poultry

products. But most of the bans placed on poultry products have not been effective and have made no real impact on actual foreign imports. Imported poultry products, especially chicken a n d t u rke y , hav e b e e n identified as causative agent in Non- Communicable Diseases (NCDs) and

antibiotics resistance. Some of these health conditions include hypertension, kidney disease, and cancer. This has made the demand for fresh chicken products on the increase especially from Nigeria’s middle growing class which constitute about 60 percent of the total population.

According to industry estimates, Nigerian poultry industry is estimated at over N80 billion ($600 million) and is comprised of approximately 165 million birds. Apart from chicken production, investors and agro entrepreneurs can go into egg production as well.

Boost for palm oil production as Dufil invests in plantations …also in cassava mill to produce HQCF Josephine Okojie

n a bid to boost local palm oil production in the country and also support the Federal Government backward integration policy, De-United Foods Industry Limited (DUFIL) has recently presented the Environmental Impact Assessment (EIA) for its proposed 18,000 hectares palm oil and cassava mill plantation to the Edo state government. The proposed investment by DUFIL is expected to help the country bridge its huge demand –supply gap of palm oil which is estimated at over 1.7 million metric tons (MT) and earn foreign exchange.

As a result, the Edo State government has given a concession of 17,955 hectares of land within Ekiadolor Forest Reserve in Ovia Northeast Local Government Area of the state to DUFIL for pal plantation and a mill to produce high quality cassava flour (HQCF). Fatai Afolabi, consultant to the company on the project, said the two proposed projects would result in economic benefits for the communities in ovia North-east local government in Edo, and Nigeria through employment opportunities at pre-construction, construction and operational stages. Afolabi said that both direct and indirect jobs will be created, revenue will be

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generated and multiplier effects on the economy through the likely improved disposable incomes of the members of the communities and employees would boost the gross domestic products and circle flow of incomes in the country. The entire land is covered by a statutory certificate of occupancy issued in its name and registered. The organisation has applied for an EIA approval and permit from the Federal Ministry of Environment, according to the organisation. To t h i s e n d , t h e organisation organised an EIA scoping workshop involving critical stakeholders, hosts communities, NGOs, agencies and the media. Following the Ministry of Environment initial site inspection and verification, the ministry had placed the project in category-one with a season baseline data gathering exercise to be augmented with relevant and approved valid EIA within a 5km radius of the proposed project location. However, the proponent was requested to conduct a scoping workshop with relevant stakeholders in attendance and regulators from the federal and

state ministries of environment as observers. The EIA scoping workshop report incorporating the critical issues raised and terms of reference are required to proceed to the next stage of the process. Sequel to the foregoing, the EIA scoping workshop was conducted recently at the conference hall of Best western Homeville Hotel, off Sapele Road, Benin City. During the workshop, DUFIL also presented details of its proposed oil palm estate to stakeholders. It disclosed that about 2.3 million palm seedlings would be planted on about 15,000 hectares of the acquired land. According to the organisation, the oil palm estate will comprise a palm seedling nursery and a plantation. The nursery would be used to raise seedlings for the plantations and for other farmers who might demand quality planting materials. Also, another proposed project is a cassava flour milling factory to provide high quality cassava flour. The proposed factory will have a capacity to process 200 tonnes cassava tubers per day.

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With the Nigerian population of over 180 million people, the market for poultry eggs is rather unimaginable. Neighbouring West, East and Northern A f r i ca n C ou nt r i e s a l s o depend on poultry eggs from Nigeria for consumption. This implies that the market is very huge with good return on investment. Also, with the increasing awareness of Nigerians improve their nutrition with at least one egg daily and the recent Federal Government School feeding initiative, the market for poultry table eggs is widening on a daily basis. The cost of setting up a poultry farm depends on the size of the farm and the number of birds intended to start production with. For a poultry investment between 200 and 500 birds, the potential investor requires between two and five million. T h e i nv e s t o r h a s t o first identify the aspect of production desired to start with, either egg production

or meat production. The next step is to obtain day old chicks from reputable hatcheries. The small chicks can be either naturally or artificially b ro o d e d . I f a r t i f i c i a l l y brooded, small chicks must be placed in a separate house from laying chickens and it is necessary to protect the chicks from predators, diseases and cold. This stage of brooding lasts for eight weeks. In the first four weeks of life, small chicks need to be housed in a brooding box first before transferred to the main pen house. Bi rd s d o m e s t i c a t i o n involves feeding with very good feed, supply of clean water and keeping the farm clean always by way of regular disposal of their wastes, disinfecting the pens and restriction of foreign bodies from entering into the pens. The essential inputs are feeds and vaccines. Investors are always advised to consult agricultural experts’ and consultants in the process of planning such project.

Agroyields launches online marketplace to support smallholder farmers Josephine Okojie

groyeilds, a leading agrictech organisation in Nigeria, has recently launched an online commodity marketplace for investors to invest in the farming activities of smallholder farmers across the country. The investment by investors is meant to help smallholder farmers with the needed finance to expand their operations and move from subsistence to commercial agriculture thereby boosting f o o d p ro d u c t i o n i n t h e country. Agroyields provide market for the farmers by off-taking from them during harvest period. “We recently launched our commodity trading platform to help farmers maximise profit for their labour. Our vision is to boost farmers productivity and ensure that the country attain food secur ity,” said Deborah Adesua Ameli, chief operating officer, Agroyields in an interview with BusinessDay. “For us at Agroyields, we are living our dream which is to reduce hunger and @Businessdayng

unemployment by supporting smallholder farmers with the provision of funds and training on global best practice while preventing post-harvest losses,” Ameli said. She noted that investors earn a minimum of 24 percent in 9months as returns on their investment, adding that the organisation funds farmers cultivating different crops such as melon, beans, soybeans and groundnut in different parts of the country and off-take from them. Currently, she says the organisation is working with over 100 farmers in Nassarawa and Niger states. A c c o r d i n g t o h e r, the unique thing ab out Agroyields is that it does not give cash to farmers but rather provide input and enhance materials. “We believe an innovative national agriculture system, that supports smallholder farmers, would grow the e c o n o my a n d e ra d i cate hunger. That is why we are committed to providing support for smallholder farmers in Nigeria” she said. For any interested investors who want to invest any of the listed crops, should visit the website of the organisation to make the investment.

Wednesday 07 August 2019

BUSINESS DAY

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Wednesday 07 August 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

CONSUMER GOODS

Consumer good players see less cash amid sluggish sales ISRAEL ODUBOLA & SEGUN ADAMS

layers in the consumer goods space generated less cash from sales in mid-year 2019 amid a challenging operating environment and in a bid to shore up their revenue base. Analysis of the operating cash of ten players including Nestle, Cadbury and Nigerian Breweries revealed that cash flows to revenue slumped to 6.4 percent in first half of 2019 compared with 17.3 percent a year before. Firms’ worsened cash efficienc y was on the back of weaker cash receipts from operation which dipped some 19 percent to N92.4 billion from N114.8 billion last year. Revenue of 10 consumer goods firms with H1 results grew 1.99 percent in the period. Operating cash margin is cash generated from operating activities as a percentage of sales revenue in a certain period. A higher figure means that a company was able to convert a higher proportion of its sales to cash and a lower

figure implies the converse. Without positive cash flow, a firm may to embark on borrowing, raise additional equity or may have to quit operations as it does not have cash to buy supplies, pay salaries, bills etc. However, having negative operating cash flow margin for a time is not always a bad thing. If a firm is building additional plant for example, this could pay off in the end if the plant generates more cash. The trend among the 10 firms shows that amid a slowly recovering economy which has c o n s t ra i n e d i n d u s t r y growth, manufacturers have settled for ‘halfloaves’ in getting their products off the shelves to households. “This reflects the fact that consumer goods firms are not efficient in the way they get revenue,” said Yinka Ademuwagun, analyst at Lagosbased United Capitals. “The companies spend a lot on advertising, marketing, distribution and logistics,” which burns cash. The analyst however explained that whilst the

nature of their business required spending on the aforementioned, poor state of Nigerian roads, among other reasons, increased their cost. Performance was mixed across sub-sectors. While beer makers saw their cash margin improve, sugar producers and flour millers recorded weaker margin with food product manufacturers lagging peers. Producers of beers generated cash worth N740 for every thousand naira earned in revenue, 64 percent more than

N451 cash realized last year. Combined cash generated by Nigerian Breweries, International Breweries and Champion Breweries nearly tripled to N61.6 billion in the review per iod, from N24.6 billion last year, while sales revenue grew some 6.3 percent to N242.3 billion. The stellar performance was buoyed by betterment in Int’l Breweries’ margin that jerked up to 50 percent from 14 percent last year. In the food and bev-

erage space, players including Nestle, Cadbury, Nascon and Unilever saw margin tanked to 10.83 percent in the first six months from 3 2 . 5 6 p e rc e nt p o s t e d last year, as cash reali ze d f ro m o p e rat i o n s plunged 65 percent to N21.4 percent. A close look at the numbers showed that Unilever’s poor number dragged peers, but notwithstanding individual performance was weaker in the review period. For sugar producers, cash margin slumped

slightly to 21.15 percent half-year 2019, spurred by decline in cash (-14.3%) than revenue (-4.5%). Consumer goods firms, for reasons including the short life-cycle of their products, do not always receive cash in exchange of their products to other participants in the distribution chain as they also enjoy credit from suppliers. However balancing credit sales and purchases is vital in reducing the risk of the business becoming cash-strapped.

CONSUMER GOODS

Olams makes N120 billion revised offer for Dangote Flour Mills SEGUN ADAMS

angote Flour Mills on Monday announced it has received a revised binding offer from Crown Flour Mills Limited and Olam international limited, an addendum to an initial offer by Olam to acquire Dangote Flour Mills. O lam international limited had in April offered N130 billion for the entire 5,000,000,000

issued shares of Dangote Flour Mills but the consideration which represents the enterprise value of Dangote Flour Mills on a debt-free, cash-free basis, payable in cash at the closing of the proposed transaction has been adjusted to N120 billion. This follows the earlier announcement of April 23, 2019, which stated that the N130 billion consideration would be adjusted for among other things, net working capital and net debt as

at 31 March 2019 or any other date agreed upon by board of Olam and Dangote Flour mills. The other consideration was excluding s ha re s h e l d by O l a m through its subsidiary, Crown Flour, in order to arrive at the final price payable to shareholders of Dangote Flour exclusively. The acquisition would be carried out through Crown Flour, already a stakeholder in Dangote Flour, with the finan-

cial backing of its parent company Olams international. B y t h e a d d e n d u m, Crown Flour Mills has now submitted a revised offer with a final recommendation of N120billion amounting to N24 per share following the final adjustment. Fo l l o w i n g t h e a n nouncements analyst at Lagos-based financial services firm, Investment One, advised that whilst considering transaction costs, investors buy the

stock at a price below the consideration of N24 per share. “We believe the offer is still attractive considering the premium of 30% above the closing price as at Friday (N18.50 per share),” the analysts said in a note to investors. S h a re s o f D a n g o t e Flour rallied 10 percent to N20.35 on Monday following the latest development around the acquisition by Olams. Premium is now about 18 percent based on Monday’s clos-

ing price. Shares of the flour mill has risen 197 percent so far in the year while the broad market is down some 12 percent. Dangote Flour in the note said its board has carefully considered the Addendum and Initial Offer (Revised Offer) and will, subject to obtaining regulatory approvals, recommend the Revised Offer to its shareholders at the court-ordered meeting for their consideration and approval.

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

Wednesday 07 August 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

INSURANCE

AIICO Insurance profit after tax grows 52 % in H1 2019 MODESTUS ANAESORONYE

n line with the renewed strategic aspirations for market leadership with focus on profitable growth, AIICO insurance Plc in the half year of 2019 reported a 42 percent increase in profit before tax (PBT) of N3.11 billion, compared to N2.19 billion in half year of 2018; While the profit after tax (PAT) also grew by 52 percent to N2.94 billion, compared to N1.93 billion attained in half year of 2018. The Group also reported a gross written premiums of N25.4 billion, up 32 percent from the same period in 2018, which was: N19.2 billion.. This growth is driven by continued solid performance across the major lines of business of the group, including life and corporate, as well as institutional businesses.

Babatunde Fajemirokun, executive director / COO said “this performance is a demonstration of a focused implementation of our renewed strategy, notwithstanding the challenging operating environment”. Speaking further, Fajemirokun said, “customercentric product innovations, sustained investments and automation of our agency sales force continues to yield dynamic results as we recorded strong growth in our retail life business, which grew by 47 percent to N15.5 billion (H1 2018: N10.6bn); and an increase of 14 percent in our corporate and institutional business to N9.5bn (H1 2018: N8.2bn). Within the period under review, the Group’s balance sheet improved with total assets growing by 24 percent to N135 billion compared to N109 billion in Dec 2018. Also,

noteworthy, is the growth in shareholders’ funds, which rose by 14 percent to N16.6 billion (Dec 2018: N14.5 billion). Commenting on the new capital requirements for the insurance industry,. Fajemirokun said “AIICO has put adequate strategies in place that will ensure we not only meet the new capital requirement for a composite underwriter but also surpass same with sufficient solvency margins”. Going into the second half of the year, we remain committed to the execution of our strategic objectives whilst staying focused on our primary purpose of protecting our customers and delivering superior returns to shareholders. As we look to the future, we remain guided by our mandate to provide shared protection to every family and business, so they can live life with confidence amidst uncertainty, he said.

L-R: Deepak Thakur, CEO Sterling and Wilson; Damilola Ogunbiyi, managing director/CEO, Rural Electrification Agency (REA), , Guest of honour/ Vice-President Yemi Osinbajo; Dave Nweze Umahi, governor of Ebonyi State, and Chinedum Nwajiuba, vice-chancellor, FUNAI, during commissioning of 2.8MW first solar hybrid power plant of Federal Government’s initiative under the Energizing Education Programme (EEP), at Alex Ekwueme Federal University NdufuAlike Ikwo (FUNAI) in Ebonyi State

AWARDS

GAC Motor clinches Automobile of the Year Award at Business Leadership Awards

AC Motor beat off strong competition from other major brands to clinch the Automobile Brand of the Year Award at the Nigerian Business Leadership Awards hosted by BusinessDay which held on the 3rd of August 2019, at the prestigious Lagos Intercontinental Hotel, Victoria Island, Lagos. It was indeed a day of recognition and accolades for the Chinese automobile giant, which made an entry into the Nigerian market in 2014 through CIG Motors Ltd. Ever since the first introduction of its models into the Nigerian market, the brand has continued to grow in leaps and bounds and has become one of major brands in the Nigerian automobile industry. Indeed, the story of GAC Motor is one of success, as the brand has been able grow its market share in the industry and has become one of the most sort after brands for Nigerian corporate organisations, governments and individual, who through various finance options with major Nigerian banks like Access Bank, Heritage Bank and major certified car dealers like Cars45 can purchase their models with ease. At the heart of GAC Motor’s success has been a robust commercial and B2B strategy which has seen the company sign purchase partnerships with several leading Nigerian companies, banks and state governments.

Earlier in the year Dangote foundation had purchased 150 units of the GA3S saloon for the Nigerian police. The brand has equally invested in its own assembly plant in Nigeria. Located at Ojota in Lagos, GAC Motor is one the proud automobile companies helping Nigeria to reposition and revive the automotive industry. The brand also invests heavily in supporting the Nigerian entertainment industry and sports through various partnerships, sponsorships and support programmes. Under the leadership of Diana Chan, the chairman of CIG Motors, signed a distribution agreement with GAC Motor for Nigeria and the rest of Africa. Chief Diana Chan she has singlehandedly changed the automobile industry landscape in Nigeria by building within four years, an automobile company that is now seen as a major competition to beat by other automobile brands in Nigeria. GAC Motor seems poised to increase its market share and become the market leader in the Nigerian auto market with its durable model options. GAC Motor currently offers three unique brands in Nigerian – GS4 SUV, the GS8 SUV and the GA3S saloon car. The company prides itself as one that understands the needs of Nigerians and a brand that offers unique products that soothes Nigerian tastes, hence the slogan ‘Made for

You’. This slogan encapsulates its marketing strategy as a brand that is ‘Made for Nigeria’ and a brand that the average Nigerian man or woman would perceive as a close buddy or ‘My G’ as the company calls it. GAC Motor’s nomination and eventual winning of the Automobile Brand of the Year Award at this year’s Nigerian Business Leadership Awards further lends credence to the fact that GAC Motor has become the brand of choice by Nigerians. The BusinessDay Nigerian Business Leadership Awards recognise remarkable business leaders and organizations in Nigeria for their sustained commitment to excellence in enterprise. The Awards honour private sector leaders who have made significant contributions to the Nigerian economy, shaped the Nigerian economy through major strides in home-grown innovation and the opening new vistas of opportunity, demonstrated visionary capacity and nationalism through their investments, thereby pushing Nigeria’s rise in global competitiveness rankings. The winners exemplify the best in leadership across a wide range of economic sectors: manufacturing to services. Individually and organizationally, they epitomize the core values of a successful leader – strength, innovation, ingenuity, knowledge and foresight.

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L-R: Femi Olushakin, MD, LAC Truck; Philip Edema, special guest; Li yong, MD, Asia-Africa, and Olurotimi Ashely –Dejo, chairman, LAC truck, at the LAC Autos and Spare Ltd opens Iveco-Hongyan Trucks sales outlet in Lagos.

L-R: Brandyopadhyay Kalyan, marketing director PZ Cussons; Leo Babarinde DaSilva, campaign influencer; ; Giannopoulos Christos , CEO, and Joyce Coker, human resources director, PZ Cussons , at the official Premier Cool re-launch in Lagos. Pius Okeosisi

L-R: Segun Ogunleye ,National Marketing Manager, Seven-Up Bottling Company Limited, (SBC); Ziad Maalouf, managing director, SBC; Uzoamaka Anyanwu, 2019 7Up Harvard Business School Scholarship(7UpHBSS) Awardee; Yinka Olufade, head, human resources, SBC, and Norden Thurston, head of marketing, SBC, at the unveiling of 7UpHBSS 2019 Recipient in Lagos.

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Wednesday 07 August 2019

BUSINESS DAY

BANKING Microfinance banks NPLs drop by 5.27% to N24.80bn in 2018 stories by HOPE MOSES-ASHIKE

he Non-Performing Loans (NPLs) of Microfinance Banks (MFBs) decreased by 5.27 percent from N26.18 billion in December 2017 to N24.80 billion in December 2018. Similarly, the NPLs (portfolio-at-risk) ratio improved from 13 percent in 2017 to 11.20 percent in 2018 but still above the regulatory threshold of 5%. The 2018 annual report of the Nigeria Deposit Insurance Corporation (NDIC) stated that the total assets of MFBs stood at N384.50 billion as at December 31, 2018 against N360.59 billion in December 31, 2017. Likewise total loans and advances stood at N221.51 billion in December 2018 against N201.37 billion in December 2017. The MFBs’ sub-sector reported a gross income of N105.00 billion as at December 31, 2018 as against N89.63 billion in 2017. Interest income also recorded an increase of 3.06 percent from N78.98 billion in 2017 to N81.40 billion in 2018. Noninterest income slightly improved by 2.25 percent from N23.08 billion as at December, 2017 to N23.60 billion in December 31, 2018. Profit before tax recorded a marginal increase of 0.06 percent from N16.21 billion in 2017 to N16.22 billion in 2018. But Return

on Asset (ROA) and Return on Equity (ROE) decreased from 4.50 percent and 18.90 percent in 2017 to 4.22 percent and 18.19 percent in 2018, respectively. According to the report, the MFBs’ total deposits increased, by 14.7 percent from N166.88 billion in 2017 to N191.41 billion in 2018. The average liquidity ratio also increased from 72.54 percent in 2017 to 73.95 percent in 2018, and above the minimum regulatory threshold of 20 percent. The

MFBs’ loan to deposits ratio stood at 115.73 percent as at 31st December, 2018 against 120.66 percent as at December31st, 2017. During the year, the CBN granted one year extension to April 2021 for the recapitalization of MFBs. Consequently, two tiers of Unit MFBs were created, namely: Tier 1 (Unit Rural) and Tier 2 (Unit Urban). The capital requirement for Tier 1 Unit Rural MFBs was fixed at N50 million, while Tier 2 Unit Urban MFBs remained at N200 million.

The compliance timeline was reviewed to allow MFBs sufficient time to recapitalize. The Tier 1, Unit-Rural MFBs are expected to raise their capital to N25 million by April 2020 and to N50 million by April 2021. In the same vein, Tier 2 Unit Urban MFBs should meet capital base of N100 million by April 2020 and N200 million by April 2021. The State and National MFBs were given up to April 2021 to meet the new capital requirements. The Bankers’ Committee, in collaboration with the NIPOST and NIRSAL initiated the establishment of a National Microfinance Bank. The Bankers Committee would own 50 percent of the bank’s equity, while the Nigeria Incentive-Based Risk SharingSystem for Agricultural Lending (NIRSAL) and the Nigerian Postal Service (NIPOST) would own 40 percent and 10 percent, respectively. The NIRSAL MFB would leverage on NIPOST’s presence in 774 local government areas of the country to reach its targeted beneficiaries. The sub-sector faced some challenges, which include the adoption of inappropriate business models; poor corporate governance practices and insider abuse; poor asset quality and loan underwriting process; weak capital base; dearth of experienced and skilled staff in microfinance; low financial literacy levels particularly in rural areas; and high operating cost.

Protecting the consumer against unethical practices by banks, OFIs

s part of efforts to protect the rights of consumers and to hold financial institutions accountable as a result of the skewed power imbalance, the Central Bank of Nigeria (CBN) on Monday released the guidelines on ‘Responsible Business Conduct. The objective of the Guidelines is to protect consumers against the unethical and predatory practices that undermine consumer confidence in the use of financial services. The Guidelines therefore sets out the minimum standards expected from Financial Institutions on responsible business conduct. The Guidelines according to the CBN shall apply to all transactions by financial institutions licensed and regulated by the Central Bank and their agents, subsidiaries and associates. These include Commercial Banks, Merchant Banks, Specialized Banks, Microfinance Banks, Development Finance Institutions, Finance Companies, BureauxdeChange, Primary Mortgage Banks, Credit Bureaux, Mobile Money Operators, Payment Service Banks, Switching Companies, Payment Solution Service Providers, Payment Terminal Service Providers, Nonbank Acquirer, Super Agents, Mobile Money Operators, and other licensed providers of digital financial services. Financial Institutions are expected to

ensure that the provisions of the Guidelines form part of any consumer related transaction, product or service agreement they may enter into with any other institutions which are otherwise not regulated by CBN. Under the guideline, Financial Institutions are expected to conduct their businesses in a responsible, professional and ethical manner, in order to promote good business practices. They are to Train their staff to promote

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competence, efficiency and professionalism in the discharge of their duties; provide clear information about products and services, features, terms and conditions and the applicable fees and charges. To help consumers determine their financial needs and ensure proper planning to meet the needs, Financial Institutions are to provide financial advisory services incidental to their business activities such as advising on financing and business strategies and structures, conducting research and

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economic intelligence services, building financial models, writing business plans, conducting private placements, arranging loan syndications and advising on project structures. To ensure that debt recovery processes are courteous and fair, devoid of undue pressure, intimidation, harassment, humiliation or threat, Financial Institutions are expected to inform customers of the debt recovery procedures in loan contracts; proactively engage and give customers early notice of outstanding obligations prior to the commencement of debt collection process. The guideline stated that financial institutions should initiate foreclosures only when other reasonable attempts to reach a resolution have been unsuccessful. Also, they are to give customers a minimum period of 6 months from the date of notice of foreclosure, the option of a private sale before commencing foreclosure, except where the customer waives the right. To ensure that advertisements and promotional materials on products and services are clear and not misleading, financial institutions are expected to prominently display information that could affect consumers’ decisions, as well as carry out incentive-based marketing of products and services in an ethical and professional manner.

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Wednesday 07 August 2019

BUSINESS DAY

Wednesday 07 August 2019

BUSINESS DAY

MACKY SALL

INTERVIEW

His excellency, President of Senegal

Interview with Private Sector Leaders

‘The Dakar-Abuja axis forms a central pivot around which major articulations of the ECOWAS integration process radiate’

The 2019 Tony Elumelu Foundation, entrepreneurship forum themed ‘Empowering African Entrepreneurs, which held in Abuja last week gathered over 5000, policymakers, and business leaders and diplomatic agencies. On this rare occasion, the foundation hosted 4 African presidents to a dialogue moderated by CNN’s Fareed Zakaria. In this exclusive interview with his excellency, President Macky Sall of Senegal, Patrick Atuanya Editor of BusinesDay and Lehle Balde Senior Associate BusinessDay had the opportunity to chat with the president of Senegal and ECOWAS member state, on the ACFTA, financial inclusion, youth empowerment, Senegal- Nigeria relations, the economic relationship many French colonies have with France, the newly discovered oil and gas reserves and much more.

he African Continental Free Trade Area (AfCFTA) will cover a market of 1.2billion people and a gross domestic product (GDP) of $2.5 trillion, across all 55-member States of the African Union. In terms of numbers of participating countries, AfCFTA will be the world’s largest free trade area since the formation of the World Trade Organization. What has Senegal’s role been in this monumental trade agreement? Senegal has held its place during the processes leading to the advent of this historic act, thus confirming our commitment to the achievement of African integration. The Continental Free Trade Area will give, as I recalled at the Niamey Summit, a new impetus to intra-African trade in terms of business opportunities and investment for the private sector and job creation for African youth. Already, during the Dakar Regional Forum on the AfCFTA-West and Central Africa, the Government of Senegal, in collaboration with the United Nations Economic Commission for Africa (UN/ECA), the Commission of the African Union and the European Union, has worked to create a space for regional and multi-stakeholder dialogue on all the issues related to the implementation of the zone in the French-speaking States of ECOWAS and CEEAC. I must commend the leadership of President Paul Kagame of Rwanda in leading the African Union’s important reform agenda to ensure that it responds better to its missions. Similarly, President Mahamadou Issoufou of Niger successfully led negotiations for the creation of the African Continental Free Trade Area, which gives new impetus to the objective of African integration through investment trade and which was launched at the beginning of July this year. Today, it is time to move forward with the implementation of this Agreement and its additional protocols, and Senegal will not be left behind in this regard. You were re-elected in 2019. Congratulations! We are now 3 months into your second term. In what state would you say Senegal is currently and what can the Senegalese people expect in the next 5 years? My re-election in the first round with more than 58% of the votes cast, on 24 February 2019, bears the stamp of a record rich in achievements throughout the country that the Senegalese people have positively sanctioned. It is also an expression of hope, a call to consolidate Senegal’s transformation and to amplify the good performances achieved between 2012 and 2019. For seven years, we have worked to restore our country, to restore socio-economic balances, territorial equity and social justice; thus, reflecting my ambition of a Senegal of all, a Senegal for all. Today, Senegal is in a better state than it was in 2012, thanks to the implementation of the Emerging Senegal Plan, a unique public policy framework. Naturally, beyond the strengthening of governance achievements, the reforms and strategic choices implemented aim to broaden and

strengthen Senegal’s productive capacities and universal access for populations to water, sanitation, electrification, collective mobility, health, sports, culture and education. Moreover, in its Phase II, the Emerging Senegal Plan is being implemented through 5 major initiatives that will enable us to better prepare Senegal for the future, all of which are responses to the challenges of our time and the challenges of human modernity. I am referring to the employment of young Senegalese through the promotion and development of entrepreneurship, the social and solidarity economy for the empowerment of Senegalese women, the strengthening of human capital with a view to the trade skills and competences of the future, the reforestation of the territory to face climate change and improve the living conditions of Senegalese people, industrialization with greater involvement of the national and international private sector in terms of productive investment. Since 2012 you have managed to attract billions of dollars in investment, including from China, for your Emerging Senegal Plan and overseen average annual growth of about 6 percent? In your view, what is the key to effective governance? It is the choice of transparency and my determination to promote a new culture, that of sober and virtuous governance driven by the fight against corruption and all the scourges that could compromise the business environment. It is also an illustration of Senegal’s great tradition of cooperation, marked by the security of transactions and the stability of relations. My vision of an emerging Senegal is supported and shared by the partners who support us in achieving our ambition. It is implemented through projects that contain all the guarantees in terms of diligent execution, economic profitability, and social utility. The first generation of reforms of the ESP has supported the growth of more than 6% of the Senegalese economy for more than three consecutive years. The effectiveness of our governance, the stability of our democratic system and the massive investment in infrastructures are real “magnets” for foreign direct investment, which is now very diversified, with a breakthrough by the the People’s Republic of China, which has chosen to make Senegal a reference partner, given its comparative advantages and its geographical position. What have been the biggest challenges in developing your emerging Senegal vision and executing the Emerging Senegal Plan (ESP)? The first challenge was consensus. The ESP addressed that challenge by taking into account all the strategic documents whose objective was to propose a logical framework for building Senegal’s development and drew a rich and useful synthesis. Then the other challenge is the pursuit of good governance, governance that is both sober and virtuous, which puts the interests of our country first. At the same time, we also needed to build confidence among Senegalese people about our ability www.businessday.ng

and determination to reform Senegal with them, to enable it to regain productivity and competitiveness, and to restore confidence among technical, financial and private sector partners. We have rationalized public spending by increasing its efficiency. Thus, beyond economic imperatives, my vision of an emerging Senegal is supported by programs with a strong social impact, such as the Emergency Community Development Programme (PUDC), the national family security scholarship program, which has enabled 400,000 households to benefit from a quarterly allocation of CFAF 25,000 (approximately USD 50), universal health coverage (CMU) and the emergency program for the modernization of Senegalese access borders (PUMA). This territorial approach to public policies remains, in my opinion, for Senegal and Africa, a development model for creating the conditions for shared economic prosperity, collective development and social justice in both rural and urban areas. Today, this is an approach that Senegalese have made their own and from which they expect a lot, given their impatient demands. With the discovery of oil and gas reserves in Senegal, how prepared is Senegal for this potentially game-changing new revenue-generating economy that could also be disruptive for the Senega-

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lese people? Do you have any concerns? The Government of Senegal, under my leadership, has been proactive and diligent in this regard. Today, Senegal has the advantage of having taken, well before the discoveries were announced, the useful and relevant measures to make the oil sector a reference model in terms of governance and transparency by joining, on my decision, the Extractive Industries Transparency Initiative. In Senegal, natural resources belong to the people and not to the State. I had it enshrined in the Senegalese Constitution following the referendum in March 2016. I have also created a Strategic Orientation Committee on Oil and Gas Issues (COS-Petrogaz) composed of representatives of all the institutions of the Republic, actors in the sector and which will welcome members of the opposition and civil society. I proposed a law which was passed to allow national companies to benefit from the exploitation phase. The oil code has been revised to adapt it to the new Senegalese context with new provisions that better protect the country’s interests. The resources derived from oil and gas will be used to finance Senegal’s socio-economic development and a significant part of those resources will be reserved for future generations, within the framework of an income distribution law. This is the integrity and governance framework for the sector. I have given the Government of Senegal all the instructions required to build a well-functioning oil economy and a viable ecosystem that will be based on the National Oil and Gas Institute that I have created.

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Best practices are being tested and the first results promise good prospects for leading us to emergence before 2035. I am also very pleased with the cooperation between Senegal and the Islamic Republic of Mauritania. With these discoveries, on both sides of our border, we have been able, based on good neighbor relations and the shared destiny of our two peoples, to build an intelligent partnership for the exploitation of these resources. Everyone knows that in Africa, border and resource exploitation issues are essential sources of conflict. Our two countries have joined forces, in partnership with BP, to ensure that the resources straddling this area are an additional link, in addition to the multifaceted and centuries-old relations that unite us, since Senegal, Mauritania, Mali, and Guinea have been jointly exploiting the Senegal River basin for several years through the Organization for the Development of the Senegal River. These examples of partnerships in Africa are to be welcomed. Senegal is widely considered to have always had a stable democracy in a region plagued by military coups, civil wars, and ethnic conflicts. It’s been considered an “exception” in West Africa. Can you speak to how this has been achieved? What can other African neighbors adopt from this unique Senegalese democracy? Senegal is an old democracy. We have been voting since 1848 under colonial rule, particularly in the municipalities of Gorée, Dakar, Rufisque, and Saint-Louis whose citizens were considered

French nationals. The integral multiparty system is a living reality in Senegal since 1974, with its virtues and excesses. We are one and the same people. Senegal has experienced two peaceful democratic changes thanks to the maturity of the people, in a calm and transparent manner. Democratic expression is plural; there is no threat to individual freedoms and institutions function democratically. Our experience is based on the acceptance of the rules of the democratic game, electoral competition and the quality of our electoral system, which can certainly be improved, but has proven its worth. In addition, Senegal is a country of dialogue and I have established dialogue and consultation as a mode of governance to prevent conflicts and to keep together the democratic promise alive. Senegal features a broad and diverse financial landscape, in which people tend to use a combination of different financial institutions, both formal and informal, digital and non-digital. What is your plan to bridge the financial inclusion gap in Senegal? Financial inclusion is a political imperative as part of my vision of a Senegal of all and a Senegal for all. It is at the heart of our economic system and from this point of view, there can be no Senegalese excluded from the traditional financing system. Senegal’s development integrates all components of society and more particularly rural populations. And I have chosen to focus on the social and solidarity economy by creating decentralized financing mechanisms that have made it possible to completely change the national economy. Today, in Senegal, we are talking about solidarity economy and innovative financing to support economic activity through the Delegation for the Rapid Entrepreneurship of Women and Youth. Through the combination of the development of digital technologies and access to finance for young people and women, Senegal is winning the battle for its development through entrepreneurship, which is recognized as essential to the dynamics of growth and job creation. How can Senegal and Nigeria work together and expand the trade, economic relations and investment in roads, transports, agriculture’s, energy and high-tech education within the member states? The Dakar-Abuja axis forms a central pivot around which major articulations of the community integration process radiate. Strengthening our cooperation in all areas and integrating our major infrastructure, education, health, energy, and other projects is an absolute necessity, especially in the perspective of the African common market. The competitiveness of our sub-region in the wider Africa region requires a convergence of our priorities and economic choices. France has been holding a great percentage of the national reserves of fourteen African countries since 1961: Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, Togo, Cameroon, Central African Republic, www.businessday.ng

Chad, Congo-Brazzaville, Equatorial Guinea, and Gabon. Many find this to be a cause for concern. What are your thoughts on this? We have a long tradition of partnership with France and, in view of these historical ties, some people have the impression that France is taking over the Senegalese economy. This is not the case. France is a privileged partner. There is no French exclusivity in Senegal. Our country is open to all partnerships if they are mutually beneficial. China, Turkey, India, Malaysia, Brazil and the United States of America are all partners with whom we maintain friendly cooperation with quite a few concrete achievements. And this cooperation has not affected our relationship with France. ECOWAS Heads of State have agreed to adopt the “ECO” as the new common currency from 2020. Some critics say that it is still the “CFA” under a different name! Would you enlighten our readers on what will be the real advantages of this new currency? In the context of globalization, African economies are expected to undergo extremely important changes. In the ECOWAS (Economic Community of West African States) region, the coexistence of several currencies could constitute an obstacle to the development of intra-country trade. The CFA (Communauté Financière d’Afrique) currency has a singular history, as a link between France and its former colonies in West and Central Africa. The regional integration process can easily be accommodated in a common currency in accordance with the convergence criteria. It is not about creating a currency just because it must be created. The CFA, its fixed parity and convertibility are parameters to be considered in order to move to a common currency in a wider area, as we are already doing within WAEMU (West African Economic and Monetary Union) with bold policies to meet the convergence criteria and deadlines, which I consider essential. Finally, what is your vision and hope for the Senegalese youth who constitute the majority of the population? As part of the political initiative called Emerging Senegal Plan / Youth Priority 2035,

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I have chosen to invest in the future through education and training, employment and entrepreneurship, health and sport as mechanisms for social inclusion, creativity, culture, and citizenship. This means that the Senegalese youth is an absolute priority in the implementation of public policies. As such, education, vocational training and employment are the markers of my youth policy. Between 2012 and 2018, the Public Administration and the private sector created more than 491,000 jobs, not counting the jobs created in the agricultural and informal sectors. I am aware of the opportunities that selfemployment offers both in the fight against unemployment and underemployment. I have therefore created, in December 2017, the General Delegation for Rapid Entrepreneurship of Women and Youth (Der/fj) with a budget of 30 billion CFA francs. The mission of the DER is to help women and young people aged 20 to 40 to find financing throughout the country, to enable them to access decent and sustainable employment. In addition, as part of the employability of young people, I plan to implement, in the next two years, a CFA franc 80 billion program to promote their professional integration by strengthening the availability of training infrastructures through the upgrading and construction of technical and vocational high schools, the establishment of clusters, vocational training and the construction of business training centers. In this same dynamic, I do not forget the young Senegalese engaged in non-formal learning and will support them with a 20 billion CFA francs program. It is about giving them scholarships to help them be trained in their chosen field. My ambition is to ensure, in the medium term, the training of 100,000 young Senegalese to provide our companies with quality human resources that are qualified enough to support them in their investment and job creation programs. From the perspective of the oil and gas exploitation, young Senegalese people will be at the heart of the development of our local content. In addition, an intergenerational fund has been set up to address concerns related to the needs of young people.

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Wednesday 07 August 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Integrated transport policy, decentralise port administration to create an efficient port system - stakeholders amaka Anagor-Ewuzie

orried by the underdeveloped state of the nation’s maritime industry caused by poor leadership, stakeholders have called for integrated transportation policy and decentralisation of port administration to achieve efficiency in the port system. According to them, poor leadership has resulted in complete negligence that has led to the decay of port infrastructure especially roads needed for the movement of cargoes in and out of the ports. Speaking at the second transport leadership lecture organised by Kings Communication, Vicky Haastrup, chairman, Seaport Terminal Operators Association of Nigeria (STOAN), blamed bad leadership for the ills plaguing the sector. She said that despite a huge revenue generated from

the maritime industry, the infrastructure around the port is not getting the needed attention from the government. She added that due to congestion on the port access road occasioned by bad roads, it now takes a longer time for vessels to discharge. Delivering a lecture titled, “Leadership in a Next Level Democracy: Striking a Positive Balance in Transport Sector”, Mfon Usoro, director-general of Abuja MOU, said having an integrated transportation policy was the only way to achieve an efficient transportation system in Nigeria. She urged government agencies not to work in silos but to synergise with in order to achieve the set target of a desirable transport system. “Countries that have recognised the importance of leadership in development, which is to motivate people, gather the best tools and work towards achieving its goals. “Some countries like Ni-

geria, though they have not yet published their integrated transport policy, are on the way to doing it, which will provide a road map for managing all these modes of transport towards a specified target,” she said. Emeka Akabuogu, a maritime lawyer, who said that despite concession, Nigerian ports still have quasi monopoly that compromises efficiency, which does not encourage full benefit of efficient competition called for a decentralised port administration. “Nigeria has different ports and quite a number of terminals that are managed by Nigerian Ports Authority (NPA), and port services are not being optimised under this regime. But, I believe that port services would be optimised if there is increased competition by different ports such that shippers have a different choice based on identifiable empirical standards as which

NIMASA aims for competitive ship registry to attract vessels, offshore funding amaka Anagor-Ewuzie

etermined to attract foreign vessels to fly Nigerian flag, and affordable offshore funds to Nigerian ship owners for vessel acquisition, the Committee on Review of Nigerian Ship Registry, has handed over its preliminary report to the Nigerian Maritime Administration and Safety Agency (NIMASA), for implementation. The committee, which was set up by NIMASA to look into the issues hindering Nigeria from having a competitive ship registry and to make recommendations based on its findings, handed over its report to the agency, on Monday in Lagos. Dakuku Peterside, director general of the NIMASA, who received the report, said that, there are no too many oceangoing vessels that presently fly Nigerian flag such that even the Nigerian LNG carriers fly other countries flag. According to him, a United Kingdom flagged vessel is believed to meet every global standard, man by the right people and will not be involved in illegal activities because there are minimal standards acceptable by the UK

Ship Registry, which cannot be said for a ship from a flag of convenient or pool registry. “Nigerian flag can bring respect and reputation for Nigerian ships if the Nigerian Ship Registry is solid, reputable and business friendly. It will command global respect and attract vessels to register in Nigeria while Nigerian owned vessels leaving the nation’s shores will earn its own respect,” he said. Peterside said that building a competitive registry will mean technical competency and more dispositions by the international community to Nigerian flagged vessels and give access to funding in the international financing space. “The vessels registered in Nigeria can play big, if the nation’s ship registry commands respect. This means that ship owners can now attract funding at competitive and relatively cheap rates. There are funding out there but if the vessels are not registered with a flag that commands respect, people will deal with such ships with caution,” he stated. He further said that this will enhance the status of the Nigerian seafarers and attracts the best hands to work for Nigerian ship owners. “If a ship is UK flagged, it means www.businessday.ng

all the seafarers are found to be competency and any seafarer onboard such vessel can be employed anywhere believing that such seafarer has the needed competency.” Peterside, who disclosed that the agency, will in the next 72-hours set up an implementation and monitoring committee that would implement the recommendations, said that solid registry will help solve the sea time training problems for Nigerian cadets. “A good ship registry will drastically reduce the insurance premium payable by Nigerian flagged ships because Protection and Indemnity Clubs (PIL) in London will treat the ships knowing that it is technically solid with good safety records. He however added that high quality flag will improve turnaround for Nigerian flagged vessels because Port State Control officers will have no reason to neither delay nor detain Nigerian flagged vessel. Earlier, Emmanuel Ilorin, chairman of the committee, said the committee took their research to Norwegian government, UK and American governments, who not only open their doors to the committee members, but also promised to support them building strong registry.

port they should designate their goods,” he said. According to him, this can be achieved if Nigeria has a regime where we have port authorities for specific port. “We have a situation where the moribund or stillborn Ports and Harbours Bill made provision for ports

in the East and ports in the West. This is not to achieve independence of port administrations but to ensure that there is an administrative system, which sees there is competition on the individual ports as being primary, as opposed to a wholesome administration

where there is nothing to encourage,” he explained. The port, Akabuogu said, is still going to be owned by the Federal Government but the mandates would be specific to individual ports to ensure that the relevant indices for the optimisation of the terminals are achieved.

SMEs are engine room for job creation, says De Werd, Maersk executive

nita De Werd, head of Marketing and Business Development, Africa Region of Maersk, has described Small and Medium-sized Enterprises (SMEs) as the engine of innovation and job creation. Speaking as a panellist during the opening session of the fifth edition of the Tony Elumelu Foundation (TEF) Forum held in Abuja, De Werd said 95 percent of all companies in the Organisation for Economic Cooperation and Development (OECD) economies are SMEs and they account for twothirds of formal-sector jobs, despite having less access to the benefits of trade. “If we can empower small businesses in trade, we can help make economies more inclusive,” she said. De Werd said A.P. MollerMaersk Group focuses on working through partnerships to empower entrepreneurs and SMEs through various partners such as the ‘SheTrades Initiative’ of the International Trade Centre (ITC). “The purpose of SheTrades, which seeks to connect

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3 million female entrepreneurs to markets by 2021, is to enable female entrepreneurs to have access to the benefits of trade. This encourages inclusion as well as benefitting business, as WEF research shows that closing the global economic gender gap could add 26 percent to the annual global GDP by 2025. “Together with SheTrades, A.P. Moller-Maersk will help female entrepreneurs in developing countries engage in trade by sharing our expertise on transport and logistics with them,” she assured. According to her, Maersk is passionate about enabling trade for the benefit of the society and its customers. “In 2014, Maersk followed a shipment of avocadoes from Kenya to the Netherlands. We found that this single shipment involved almost 30 different people or organisations and that it generated more than 200 different communication interactions resulting in unnecessary time and costs. This is just one shipment. We then asked ourselves how this cost and complexity impact the entire trade picture,” she said. @Businessdayng

D e We r d c a l l e d f o r open trade as an enabler of economic prosperity and growth, stating that “A.P. Moller-Maersk wants to be a cornerstone of an inclusive and sustainable global trading system that can help eradicate poverty and deliver decent work for all, which are two of the Sustainable Development Goals agreed by the United Nations in 2015.” She said that as a leading global integrator of container logistics, Maersk handles about a fifth of global containerised trade, and is a company with the vision that is based on enabling trade for the benefit of society and our customers. “We develop e-business tools to make booking a container shipment simpler. We have a partnership with IBM where we use blockchain technology to enable logistics to be more transparent. We are enabling true information sharing and collaboration across supply chains, thereby increasing industry innovation, reducing trade friction and ultimately promoting more global trade,” she added.

Wednesday 07 August 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

NIMASA preaches sustainable use of marine resources to aid economic recovery amaka Anagor-Ewuzie

n July 25, Nigeria under the umbrella of the Nigerian Maritime Administration and Safety Agency (NIMASA), joined the rest of maritime nations in Africa, to mark this year’s African Day of Seas and Oceans themed, “Harnessing Nigeria’s Marine Biodiversity for Accelerated Economic Growth.” The event, which hosted many dignitaries from within and outside the nation’s maritime sphere, presented an opportunity for industry stakeholders to review how far Nigeria has failed to sustainably exploit its maritime resources for her economic growth and development. It also created an opportunity for experts to proffer ways Nigeria can harness her marine resources for sustainable economic growth. Femi Gbajabiamila, speaker of the House of Representatives, pointed out that Nigeria’s rich maritime resources present a vital economic vehicle for the successful implementation of the federal government’s Economic Recovery and Growth Plan (ERGP), and actualising its goals. He pledged that the legislature would support efforts by the Executive to ensure sustainable management of the country’s vast marine resources through effective domestication of relevant conventions of the International

Jonathan India Garba, NIMASA Board chairman, exchanging pleasantries with Mfon Usoro, secretary general, Abuja MoU, while Dakuku Peterside, NIMASA DG, looks on during the 2019 celebration of African Day of Seas and Oceans in Lagos.

Maritime Organisation (IMO) on marine environment management. Represented by Linda Ikpeazu, a house member representing Onitsha NorthSouth Federal Constituency in Anambra State, Gbajabiamila said the National Assembly would also work with the Executive arm in putting in place the necessary legal framework for the Blue Economy to engender and protect the Nigerian marine environment and develop the ocean economy. African countries including Nigeria have been losing out of the multibillion-dollar annual

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revenue inherent in harnessing the diverse opportunities in the global ocean economy. This is as countries like China and the United States of America (USA) reported annual revenue of $962 billion and 10 percent contribution to GDP of China in 2014 with 9 million jobs created in the ocean industry the same year. The USA, on the other hand, valued its ocean economy at $258 billion in 2010, contributing 1.8 percent to its GDP. Dakuku Peterside, director general of the NIMAS, said the above-mentioned statistics show the opportunities

which Nigeria can exploit for economic transformation and development. Peterside, who noted that Nigeria has been witnessing growth in population and urbanisation, said the country must develop an interest in conservation, exploration and exploitation of the country’s marine biodiversity. “Nigeria can achieve accelerated economic growth and development through the regulation, exploitation and protection of her marine biodiversity through a comprehensive and articulate approach that would not impact on the

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environment negatively,” he said. He said NIMASA is committed to formulating policies that are in tandem with the development of the nation’s marine biodiversity towards enhancing economic growth in line with the federal government’s economic diversification agenda, improved livelihoods, and job creation. To him, NIMASA has concluded and forwarded six IMO instruments on marine environment management for ratification and they include the Hong Kong Convention for the Sale and Environmentally Sound Recycling of Ships, 2009 and the International Convention on Standards of Training, Certification, and Watchkeeping for Fishing Vessels Personnel. Other instruments sent to the legislature for ratification include the Protocol Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties Intervention), 1973; and Protocol on Limitation of Liability for Maritime Claims (LLMC), 1996, all in an effort to ensure sustainable management of the marine environment in Nigeria. While stating that the agency was undertaking a review of all the marine environment management regulations, he said, NIMASA has made serious efforts towards ensuring the protection of the nation’s waterways. Sabiu Zakari, chief host/ permanent secretary, Federal Ministry of Transportation, said with Nigeria’s over 850

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kilometres coastline, the country was blessed with abundant resources to back its economic diversification and development drive. Zakari, who was represented by director, Maritime Safety and Security in the ministry, Danjuma Dauda, also restated the government’s commitment to the development of the maritime sector. Melekolo Kyari, Group managing director, the Nigerian National Petroleum Corporation (NNPC), said the NNPC as a corporation would always support NIMASA in its efforts to harness the opportunities in the marine environment which ultimately would help accelerate the country’s economic growth. Kyari, who was represented by a general manager, Lamin Ibrahim, said “We should not expect to harness our maritime biodiversity if we cannot curb insecurity in the country. For the last decade, Africa has been the epicentre of international maritime insecurity. Piracy and armed robbery on sea has re-emerged in the modern era, off the east and west coasts of Africa alike, and has caused enormous human and financial damage. But with better and efficient maritime security in the country, economic activities in the maritime sector will flourish. The African Union (AU) has set a 10-year period from 2015 to 2025 as the Decade of African Seas and Oceans, and July 25 as the African Day of seas and oceans.

Wednesday 07 August 2019

BUSINESS DAY

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Wednesday 07 August 2019

BUSINESS DAY

PENSION today

In Association With with contributions from

Want to access your pensions in retirement, go for data recapturing

he expectation of every worker contributing for pensions is to have access to his money upon retirement without having to go through any difficul-

L-R: Susan Oranye, executive secretary, Pension Fund Operators Association of Nigeria; Dapo Akisanya, head, Technical Committee, Dapo Akisanya (Axa Mansard Pensions); Akeeb Akinola (Shell CPFA), vice president; Aderonke Adedeji(Leadway Pension), president; Bayo Yusuf (UBA PFC), treasurer and Wale Odutola (ARM Pensions) head, Branding Committee during a media interaction with journalist in Lagos

holders, she urged contributors not to wait for their PFAs to notify them, but rather, willingly approach their PFAs for the recapturing exercise. “People should go and update their data and should not wait for PFAs to come to them before they subject themselves to this exercise. The process has started, PFAs have invested so much into the project and operators are progres-

‘

People should go and update their data and should not wait for PFAs to come to them before they subject themselves to this exercise

‘

ties. If this is your expectation, go immediately for data recapturing with your Pension Fund Administrator (PFA) to update your records through biometric recapturing. This is an ongoing process now and the essence is to ensure that people are uniquely identified so that they can be paid at retirement. So, it’s an ongoing data clean up that will eliminate all forms of multiple registration that characterised the process during the early part of the Contributory Pension Scheme (CPS). The Pension Fund Operators Association of Nigeria(PenOp) during an interactive session with journalist in Lagos, implored pension contributors under the Contributory Pension Scheme (CPS) to embrace the ongoing data recapturing exercise across the country to enable them fully maximize the benefits of the system. According to operators, the aim of the exercise is to update the existing data of contributors, while also addressing a situation whereby a pension contributor has multiple Personal Identification Numbers (PINs). Aderonke Adedeji, president of PenOp leading other exco management of the association said the ongoing exercise will allow PFAs reconcile the new information collected with the previous ones to enhance the credibility of the pension scheme. She added that the exercise will also protect pension clients against cybercrime as well as other fraudulent intents and activities. The National Pension Commission (PenCom) she had stated are upbeat about data recapturing of pension contributors and streamlining of registration of prospective contributors in a move to have accurate database of contributors. Disclosing that the ongoing data recapturing exercise is compulsory for all Retirement Savings Account (RSA)

sively approaching their customers to recapture their data,” she said. Adedeji stated that, for now, there is no deadline, since the exercise is just starting but that, in future, there could be a deadline, depending on the response of Pension contributors toward this exercise. “What we have in our hand is a big job, but it entails reconciling data acquired in the last twelve years of commencement of the Contributory Pension Scheme (CPS), so it’s not something you can do in a hurry and we are committed to it, the association said. The Exco also observed that the verification exercise is aimed at ensuring quality data of contributors, stating that this is in tandem with modern ICT trends used to synchronise data base for national groups. The exercise, she said, requires RSA holders to provide their respective NIM numbers to their PFAs and answer some questions that were not provided earlier, by the account holders. According the PenOp exco, the experience acquired from the formal sector pensions will enable have smoother registration of participants in the informal sector micro pension scheme. They however noted that the pace of registration of participants in the

micro pension scheme is still very low compared to the Contributory Pension Scheme (CPS), adding that, the nature of micro pension scheme and its voluntary nature mean the pace of growth would be slower than the CPS that was made compulsory by law. She said, though, operators envisaged this but pointed out that as time progresses and more people become aware of its immense benefits through increased awareness, the number of contributors will grow. Pension operators, she pointed out, had already invested heavily in micro pension scheme, by getting the needed information technology infrastructure, as well as manpower to mobilise new pension contributors through the grassroots, noting that, the approach of marketing and persuading Nigerians to join the scheme differs from other schemes. According to her,” We, as operators, knew from the onset that the approach of using agents to market micro pension plan will not work because of its nature. So, don’t expect to see our agents in market places marketing micro pensions. But people are willingly coming to our offices to make enquiry and register even though, the pace is slower and it’s understandable since it’s a new scheme.”

RC634453

Diamond Pension Fund Custodian Limited with contributions from

1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

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Wednesday 07 August 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

NAICOM positive recapitalisation will enhance sector contribution to economy ...promises diligent execution Modestus Anaesoronye

ndustry regulator, the National Insurance Commission (NAICOM) is optimistic the ongoing recapitalisation in the industry will increase its retention capacity and increase the sector’s contribution to economy. Sunday Thomas, deputy commissioner for Insurance, Technical made the remark during insurance seminar for journalist held in Ijebuode. Thomas who stood in for the commissioner for Insurance, explained that the process was meant to enable the sector retain more risks ; turn the image of the insurance market, strengthen financial base of the companies, increase the sector’s contributions to gross domestic product of the country, among other benefits. He noted that the Commission will prosecute the exercise as never before to ensure that the sector is positioned to support economic development of the country. “The whole idea of this recapitalisation exercise is to have an industry that is strong, that is diligent in prosecution of its assignment, that is highly liquid in terms of being responsible and prompts in claims settlement, that is solid in terms of assets, that is visible in terms of retaining businesses in our environment and

L-R: Daniel Font, non-executive Director, Mixta Nigeria; Afoluke Olawuyi, representative of the company secretary, ARM Trustees;Deji Alli, aching chairman, Mixta Nigera; Kola Ashiru- Balogun, managing director; Ugochukwu Ndubisi, executive director at the 11th annual general meeting of Mixta Nigeria in Lagos recently.

at the end of it is able to add value to our economy.” “We have the mandate to ensure that the recapitalization throws up more solid companies. Our hands are open to welcome investors in new companies or existing companies,” he said. He emphasised that NAICOM targets

Mutual Benefits Assurance increases authorised share capital to N15bn Modestus Anaesoronye

n line with its determined to meet the new minimum paid-up share capital set for insurance companies in Nigeria, Mutual Benefits Assurance Plc has increased its authorised share capital from initial N10 billion to N15 billion, by the creation of ten billion ordinary shares of 50 kobo. Besides, the company directors also got the approval of its shareholders to raise additional capital to enable it meet the new capital requirement. Mutual Benefits with a general business and life subsidiary is expected to increase the capital base of the tow companies to a total of N18 billion on or before 30th June 2020 as directed by the National Insurance Commission (NAICOM). Akin Ogunbiyi, chairman of the company who disclosed the plan at its 23rd Annual General Meeting held in Lagos said the board is determined to ensure that your company and its life subsidiary meet the new capital requirement ahead of the deadline. While urging for the support of the shareholders, he thanked them for the success recorded in its last right issue

held in 2018 and concluded in January 2019. He noted that the exercise was successful, as it recorded a 79.3 percent success, amounting to N1.586 billion from the expected N2 billion. On the 2018 financial performance, the underwriter recorded a gross premium written of N15.84 billion, an increase of 13 percent from N14.04 billion in 2017. The Company also during the period under review increased its profit before tax by 3 percent, moving from N1.335 billion to N1,380 billion, while the profit after tax was N1.149 billion as against N1.022 billion, an increase of 12 percent. Total assets of the company also grew by 3 percent, moving from N57.69 billion to N59.26 billion, while shareholders fund appreciated by 10 percent to N8.88 billion from N8.10 billion. Ogunbiyi noted that the company is in the third year of its five years strategic plan, and hopes that it will consolidate on the growth achieved in the first and second year of execution. He said, going into the future the company will continue to adopt effective budgetary controls, improved IT service delivery; increased market penetration, which is critical to actualising the five year plan. www.businessday.ng

at having companies and insurance sector that would support the government to build a viable economy. It said that even though operators may not see the benefit of the recapitalisation at the beginning, it behove on the regulator to set the standards that will strengthen the insurance companies’

Thomas therefore assured that the Commission want to prosecute this recapitalization as one that has never been done before He called on all the stakeholders in the industry to embrace the exercise for growth of the industry, adding that the commission is engaging other regulators for success of the exercise. “We are engaging other regulators for cooperation for the success of the exercise. Our arms are open to welcome investors either to existing companies or a totally new company. Presenting the theme paper, Recapitalization Road Map: Implementation, Expectations and Benefits”, Pius Agboola, director, Policy and Regulation at NAICOM recalled previous attempts at recapitalizing the insurance companies to include that of 2005/2007 as well as the attempt done to introduce the Tier Based Recapitalization process in 2012/2014. Agbola explained the benefits of the recapitalization including the need for capital restructuring, improvement in the liquidity position of the insurance underwriters He noted that insurance industry life cycle is still at early growth stage which needed to be explored; and need for emergence of holding companies, conglomerates and consolidation of businesses.

Stakeholders to discuss on financial inclusion in insurance and pension sectors

s Nigeria seeks to drive financial inclusion with the target of achieving 80 per cent penetration by 2020, stakeholders in the financial service sector will converge soon to discuss implementation framework through micro insurance and pensions. The stakeholders, who will converge at the 4th edition of the National Association of Insurance and Pension Correspondents (NAIPCO) conference billed to hold on 29th of August, 2019 at the Four Points By Sheraton Hotel, VI, Lagos, will explore various ways at which the two sectors have been deepening financial inclusion through micro agendas. With the theme of the conference being “Financial Inclusion: The Micro Agenda For Insurance and Pension Sectors,” experts will discuss the Micro insurance guideline and Micro Pension Plans and how it can be an effective tool to deepen financial inclusion in the country. The Micro Insurance Guideline is a concept launched by the National Insurance Commission (NAICOM), while Micro Pension Plan was recently launched by PenCom. The two concepts are expected to deepen insurance and pension penetration, especially, in the informal sector of the economy where players were largely financially excluded.

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The event, to be chaired by Mohammad Ahmad, former director general of the National Pension Commission (PenCom) have as special dignitaries, the Acting Director General of the National Pension Commission(PenCom), Aisha Dahir-Umar, and the Commissioner for Insurance, while the Managing Director/CEO, Achor Actuarial Services Ltd, Pius Apere is the Guest Speaker. The NAIPCO event also brings together, consumers and other stakeholders of the two industries to discuss issues, challenges and the way forward for economic growth and prosperity. A statement from NAIPCO secretariate, signed by its President, Omobola Tolu-Kusimo, stated that the conference is focusing on financial inclusion, especially, as insurance and pension penetration and are still abysmally low when you consider 190 million population, of which about 30 millions are working class citizens. The two sectors she said, could drive the financial inclusion strategy of the country if relevant stakeholders plays their respective roles effectively. The association, she pointed out, will also confer its award on institutions that have contributed immensely to the growth and development of the two sectors of the nation’s economy.

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Wednesday 07 August 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Nigeria contributes 32.8% of WAICA Re premium in 2018 ....as firm generates $57.97 million Modestus Anaesoronye

igerian Insurance Industry in the 2018 financial year led other countries including Ghana, and Sierra Leone, contributing 32.8 percent of WAICA Re’s total premium. While Nigeria generated $19.04 million into the pool, Ghana contributed 22.23 percent, equal to $12.89 million, while Sierra Leone generated $1.12 million According to the chairman of WAICA Re, the company recorded a gross premium growth of 4 percent from $55.8 million in 2017 to $58.0 million in 2018. He said this subdued growth resulted from the company’s decision to concentrate on profitable businesses and stop business dealings with some brokers who only add negatively to her debt ratio by not paying premiums. “The growth was driven

mainly by our Tunisia, Nigeria and Francophone markets, which grew by134 percent, 52 percent and 51 percent in that order.” According to him, strong growth was also recorded in Sierra Leone 50 percent and Liberia 33 percent. “There was however negative growth in our Ghanaian and our Diaspora markets recording -6 percent and -39 percent respectively.” Its net profit after tax rose to $6.9million in 2018, representing a 28 percent increase from the 2017profit after tax of $5.5 million. According to him, the gross premium remained largely driven by Fire, Engineering and Accident classes, which accounted for a combined 72 percent of premium income in 2018. He however noted that there are continuous efforts to grow other business lines as evidenced by the growth recorded in Special Risk (89 percent) and Marine and Aviation (55 percent) from 2017 to 2018. This helped

Special Risk to contribute 13 percent to the 2018 gross premium whilst Marine and Aviation improved to 8 percent.

which increased the value of new business by almost 11% to €544 million. Slightly offsetting the improvement in its L&H operating profit, Allianz’s P&C insurance segment saw its operating profit decline by 5% in the second-quarter of 2019 to €1.4 billion, when compared with Q2 2018. Allianz states that this was driven by a lower investment result, while the segment’s underwriting return remained stable. At 94.3 percent, the P&C segment’s combined ratio was broadly flat and the insurer says that this includes a lower run-off result that was partially offset by a strong improvement in its expense ratio. Total revenue hit €13.4 billion, which is growth of 7.3 percent on the same period in 2018. For the first-half of the year, the P&C segment recorded total revenues of €32.9 billion, while the operating profit improved by 4 percent to €2.8 billion, due to an improved underwriting result driven by a reduction in claims from natural catastrophes and also a lower expense ratio. At 94 percent, www.businessday.ng

driven by additional interest income from increased financial assets. Having significantly reduced our local currency risk expo-

sures, foreign exchange losses fell from as high as $3.6 million in 2017 to $0.3 in 2018, a whopping 92 percent reduction.

L-R: Paulinus Offorzor, executive director, Technical; Ben Ujoatuonu, managing director/CEO; Tony Okafor, head Retail andTunji Oyebayo, head marketing, all of Universal Insurance Plc at the launch of Passengers Manifest Scheme (PAMS) by the Nigerian Union of Road Transport Workers (NURTW) in Lagos

Allianz reports solid Q2 profitability on improved life, health performance

lobal insurer Allianz has reported total revenue and net income growth for the second-quarter of 2019, as a higher operating result in Life and Health (L&H) more than offset a decline in Property and Casualty (P&C) on the back of a lower investment result. Allianz Total revenues increased by 6.1 percent in the second-quarter of 2019 to €33.2 billion compared with €31.3 billion for the same period in 2018. Net income jumped by more than 13 percent for the insurer to €2.1 billion, while total operating profit reached €3.2 billion, compared with €3 billion in Q2 2019. Allianz attributes the 5.4 percent growth in quarterly operating profit to the solid performance of its L&H segment, which grew from €1.1 billion to €1.2 billion. This was driven by volume growth to €15.2 billion and also the change in the DAC amortization period for the fixed index annuities in the U.S. The L&H segment saw its new business margin increase to 3.6% in the quarter,

The firm, investment income grew from $2.5 million in 2017 to $3.3 million in 2018 representing a 31 percent growth, largely

the P&C combined ratio for H1 2019 strengthened by 0.4 percent. Commenting on the firm’s P&C performance in the second-quarter, Allianz’s Chief Financial Officer (CFO), Giulio Terzariol, said: “We are seeing a solid performance in our PropertyCasualty segment despite a lower investment result. Internal growth, supported by healthy rate changes, shows the strength of our business. Our underwriting remains disciplined while we keep on making progress with our productivity as shown by the improved expense ratio.” Overall, Allianz’s operating profit grew by 6.4% to €6.1 billion in the first-half of 2019 when compared with the same period in 2018. The insurer states that operating profit growth was the main driver of a 7.3 percent increase in net income for the six-month period, to €4.1 billion. Oliver Bäte, chief executive officer (CEO) of Allianz, said: “I am proud that the Allianz team has once again delivered a healthy performance.

Who should take insurance?

hy is insurance meant for everybody, both the rich and the poor? It is for everybody, it is mostly needed by those who do not have the extra resources to replace loss assets. If that is the case, it then means that the poor are most vulnerable because they do not have a fall-back resources as much as the rich. But experts say insurance is for everyone as longer as you have dependants, meaning that whether you are rich or poor, and as longer as you will not be there at a certain time to provide for your dependants, then you need insurance. So, one way or the other, we all need life insurance for either our self or for our dependants. So the first assessment test to actually know where you belong in this divide is to do a risk profile of yourself and your family, and this can be better done with the help of a personal finance consultant. It is also called health check in insurance, and this enables you ascertain once risk profile and what possi-

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ble insurance products will suit the situation. According to experts, the important thing is to first determine whether you need life insurance, which kind is best for you and carefully calculate how much you need. If you have dependents to protect and don’t have enough savings, you definitely need insurance. Then if you want to protect your family against the destruction of your business or estate after your death, whole life or universal life insurance has to be considered. But if your main concern is to protect your family against a loss of your income, term insurance is the way to go. Life insurance is designed to protect your family and other people who may depend on you for financial support. If you die and lose your income, the people that are dependent on your financial support will lose that income, so life insurance can help cover some or all of that loss depending on the policy you choose. But there are instances where life insurance can be beneficial even @Businessdayng

if you have no dependents, such as your desire to cover your own funeral expenses. Here are some guidelines to help you decide if life insurance is the right choice for you: Children: Children do not need life insurance. Yes, there have been cases where life insurance for one’s child has been a blessing, but in the majority of cases, children do not need life insurance since no one depends on income from them. Beginning families: Life insurance should be purchased if you are considering starting a family. Your rates will be cheaper now than when you get older and your future children will be depending on your income. Established families: If you have a family that depends on you, you need life insurance now! This does not include only the spouse or partner working outside the home. Life insurance also needs to be considered for the person working in the home. The costs of replacing someone to do domestic chores, home budgeting, and childcare can cause significant financial problems for the surviving family.

Wednesday 07 August 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

The one thing you need to know about managing functions ROGER L. MARTIN AND JENNIFER RIEL

ost companies accept the notion that corporations and business units need strategies. Leaders might not be great at crafting them, but they do recognize the value of articulating how their businesses will win in a particular way. For corporate functions — shared service organizations such as information technology, human resources, research and development, and finance — the need for strategy is less widely understood. In many firms, functions just exist, serving the company in whatever manner and at whatever scale the business units demand. That is a big mistake, especially given the huge and growing amount of money involved. If functions do not adopt a strategy consciously, they will almost inevitably end up defaulting to one of two unconscious organizational and cultural models, both of which are likely to result in their becoming a drag on corporate performance rather than a driver of it. Every organization has a strategy, whether or not it is the product of an official process. It can be deduced from the actions the organization takes because, essentially, strategy is the logic that determines what you choose to do and not do in service of a particular goal. When IT decides to outsource application development, it is making a strategy choice. It is betting that lowering costs through outsourcing is a more effective way to create value than building applications internally would be. And when HR chooses to standardize hiring practices around the world, it is making a strategy choice. It is choosing to pursue scale advantages from a shared approach rather than benefits of customizing by region. Does it really matter if such choices are made without an explicit strategy? We believe it does, because it means a function has fallen prey to one of the two damaging strategies: — DO EVERYTHING THE BUSINESS UNITS WANT: We call this the “servile strategy,” and it

is predicated on the belief that functions serve at the pleasure of the business units. That view feels instinctively right to many managers. A company exists to create products and services for customers, so the business units, which do the creating and serving, rightly drive corporate strategy. But we should not forget that functions serve customers too: The business units that use their services. Functions that unconsciously adopt the servile strategy try to be all things to all people. As a result, they wind up overworked and underwhelming. — PUT THE FUNCTION FIRST: Many functional leaders, especially in large organizations, adopt an approach that treats functions and business units as equals in terms of power and importance. In this “imperial strategy,” leaders put the function’s work front and center and pay relatively little attention to how it aligns with the needs of the businesses or the overall strategy of the firm. The IT team creates a center of excellence in machine learning and data analytics — because that’s where the action is in IT these days. The finance team builds sophisticated reporting systems that generate mountains of financial data that may or may not be material to the business units’ work. All imperial function leaders we’ve met claim that their initiatives are great for the company

and its businesses, but they can seldom back up this assertion with any evidence. Meanwhile, frustrated line managers complain that functions divert corporate resources from the units toward activities that make little difference to the company’s competitiveness in the market. The result, unsurprisingly, is a function that serves itself rather than its customers. It doesn’t have to be like this. Corporate functions can and often do contribute greatly to a company’s competitive advantage. But they must eschew unconscious strategies and instead make clear, focused choices aimed at strengthening and safeguarding the capabilities that set their company apart in the marketplace. HOW TO CREATE EFFECTIVE FUNCTIONAL STRATEGY The first two questions a functional leader should explore when putting together a strategy relate to defining the problem: First, What is the implicit current strategy of the function, as reflected in the choices that it makes every day? And second, What are the strategic priorities of the rest of the corporation, and is the function critical to them? Asking these questions forces functional leaders to confront what is working about their current strategy and what isn’t. Perhaps there are disconnects between their strategy and that of the company, making the function’s

choices poorly aligned with organizational needs. In trying to serve all parts of the firm the function may be underserving those that are key to its success. Important though the exercise is as a first step, do not dwell too much on these questions. A reasonable expectation is that a group of smart people, using their existing knowledge, should be able to answer the two questions after a few hours of discussion. Once consensus has been reached around the status quo, the next step is to consider alternatives to it. This involves answering another pair of interrelated questions: — WHERE WILL WE PLAY? For functions, this question is relatively straightforward. Leaders must identify their primary customers inside the firm (which should be the units most important to the firm’s overall strategy), the core offering of the function to these customers (which should be closely related to the firm’s competitive advantage) and what part of that offering will be outsourced and what part delivered by the function itself. In determining where to play, different functions may focus on different parts of the corporate strategy. Consider a digital-platform company pursuing aggressive growth in China and Asia. Its HR function should probably focus on that challenge, but its risk and com-

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pliance function might focus more on European Union regulations, where policy changes could threaten the company’s core business. — HOW WILL WE WIN? This question is challenging. It’s not always easy to figure out the relative value to a firm of any given function. Although Verizon can probably do a good job of estimating the value provided by its network function versus T-Mobile’s network function, it would most likely have a harder time differentiating between the relative values of the two firms’ HR functions. What’s more, one company’s functions aren’t really competing directly with other companies’ functions in the same industry. That’s because the competing firms may have very different strategies, requiring different capabilities. HR might be hugely valuable for one company, whereas finance is hugely valuable for another. Often, the appropriate benchmark is an outsourced provider. The functional team should emerge from its inquiries with possible strategies that answer the questions of where to play and how to win differently from the way the existing strategy does. At this point, the team has to make a choice. It cannot know for sure which strategy is the right one. But with the slate of possibilities in mind, functional leaders should ask themselves, What would have to be true for each of the strategies to be successful? They should articulate the capabilities and systems required and ask under what conditions the firm should invest in building these capabilities rather than those. With a clear idea of what the enabling conditions are, they can devise experiments to help narrow their options.

• Roger L. Martin is the director of the Martin Prosperity Institute and a former dean of the Rotman School of Management at the University of Toronto. He is a co-author of “Creating Great Choices: A Leader’s Guide to Integrative Thinking.” Jennifer Riel is the global director of strategy at IDEO and an adjunct professor at the Rotman School of Management at the University of Toronto. She is a co-author of “Creating Great Choices: A Leader’s Guide to Integrative Thinking.”

Wednesday 07 August 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

How to return to work after taking parental leave REBECCA KNIGHT

WORK VS. LIFE oing back to work after parental leave is hard. You’ve been out of the flow of the office for weeks or months, and you’re returning as a different person with new priorities and concerns. It’s jarring and often overwhelming. How can you make the transition as smooth as possible? If you have the choice, is it better to ease back slowly or to jump right in? How should you manage your relationships with your boss and co-workers? And where can you turn to get the emotional support and encouragement you need during this time? Here are some pointers for how to navigate those first weeks back at work: — BE GENTLE WITH YOURSELF: “Try not to take your emotional temperature in the first two to three weeks” that you’re back on the job, says Daisy Wademan Dowling, the founder and CEO of Workparent, a consulting firm. “You will be tired,

frustrated and full of self-doubt.” — CONSIDER YOUR SCHEDULE: If you have the choice, easing back in by working part time at first removes some of the pressure of your new home life, and it helps you focus at work. Going

back full time immediately allows you to “resume the career you had before,” rather than one “with radically reduced expectations,” Dowling says. Whichever you choose, Dowling recommends working only two or three

days in your first week back on the job. — DO A FEW PRACTICE RUNS: Before returning to work, do a few practice drop-offs at day care or ask your sitter to start a week early. If you’re nursing, add a pumping session or two as well. Your goal, says Denise Rousseau, a professor of organizational behavior and public policy at Carnegie Mellon University, is to get “a realistic preview” of what to expect. — BE UPFRONT WITH YOUR BOSS: Acknowledge to your boss that the “next few weeks may be bumpy,” Dowling says, but make it clear that “you are still fully committed to your job and organization.” Think about what you need from your employer. Rousseau recommends asking for your boss’s advice on how to reenter successfully. — SET EXPECTATIONS WITH COLLEAGUES: Be direct about how and when you will work, and make your schedule predictable. If your colleagues know what to expect, they will learn how and when to adjust.

— SEEK SUPPORT: “Join a mom-and-dad network,” Dowling says. “Build connections with people in your neighborhood who also have young children.” Look for an online support community. Find out if your employer has resources for new parents. Seek advice from colleagues who’ve been through the process. — BE DELIBERATE ABOUT YOUR TIME WITH YOUR CHILD: As you’re getting back into the swing of work, think about how and when you’ll spend time with your child. Let your child’s caregivers in on your thinking. — RESET YOUR EXPECTATIONS: In those early days of returning to work, ponder how you can recast yourself professionally. Think about “what makes you special or different,” Dowling says. Then consider how to modify those attributes to suit your new life. Rousseau says, “Be realistic about what you can and should give.”

• Rebecca Knight is a freelance journalist in Boston.

6 reasons we make bad decisions, and what to do about them MIKE ERWIN HAPPINESS he typical person makes about 2,000 decisions every waking hour. Most are minor — what to wear to work in the morning, whether to eat lunch now or in 10 minutes. But many of them require real thought and have serious consequences. Consistently making good decisions is arguably the most important habit we can develop, especially at work. Based on my experiences from three deployments as an Army officer and from researching my book, “Lead Yourself First,” I’ve found certain mindsets to be detrimental to good decisionmaking. When you have to make an important decision, be on the lookout for: — DECISION FATIGUE: Our ability to perform mental tasks and make decisions wears thin when it’s repeatedly exerted. One of the most famous studies on this topic showed that prisoners are more likely to have parole approved in the morning than when their cases are heard in

the afternoon. Identify the most important decisions you need to make, and, as often as possible, prioritize your time so that you make them when your energy levels are highest. — A STEADY STATE OF DISTRACTION: Researchers estimate that our brains process five times as much information today www.businessday.ng

as in 1986. Many of us live in a continuous state of distraction and struggle to focus. Find time each day to unplug and step back from email, social media and news. — LACK OF INPUT: The Kellogg School recently found that in a typical meeting, an average of three people do 70% of the talk-

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ing. Send out a meeting agenda 24 hours in advance to give everyone time to think about their contributions, and work to set a meeting culture that allows people to contribute their ideas after the meeting is over. — MULTITASKING: Research shows that performance, including decision-making effectiveness, suffers by up to 40% when we focus on two cognitive tasks at the same time. When you need to make important decisions, carve out and commit to several blocks of time during the day to focus deeply on the task at hand. — EMOTIONS: You probably don’t need to see the research to know that our emotions, especially during moments of peak anger and happiness, can hinder our ability to make good decisions. Resist the temptation to respond to people or make decisions while you’re emotionally keyed up. Practice walking away from the computer or putting the phone down, and return to the task at hand when you’re able to think more clearly and calmly. — ANALYSIS PARALYSIS: Today there’s no end to the amount of information we can access. @Businessdayng

And the more information we have to consider, the longer we typically take to make a decision. Review the pertinent information you need, set a deadline to make a decision and then stick to it. Inevitably, we all make some poor decisions every day. But if we’re aware of these six enemies of good decision-making and take steps to outmaneuver them, we can make better decisions that have a positive impact on the people we work with and lead.

• Mike Erwin is CEO of the Character and Leadership Center and a co-author of “Lead Yourself First: Inspiring Leadership Through Solitude.”

Wednesday 07 August 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Super-rich and RR Ghost Black Badge hospitality …Inside the exclusive Banana Island

s many local auto assembly plants remain idle and President Muhammadu Buhari declining assent on the automotive policy, while used car dealers are still dominating the automotive market because of the high cost of the few brand new vehicles outrageously high, there are reports that Thailand is set to ban the import of personal used cars, effective from December 10, 2019, in a bid to stop smuggling and curb pollution. Following this development, each importer must proceed with import plans under existing rules until December 9 this year. For any import violations after December 10, the Customs

MIKE OCHONMA Transport Editor

t was indeed an exciting luxury feeling driving the new ‘priceless’ Rolls Royce Ghost Black Badge adorned with all the trappings of luxury and panache recently right inside Banana Island, located on the precincts of the Lagos Lagoon. Banana Island is so revered by outsiders and exclusive and only affordable by the super rich, that any visitor must have the clearance of the host/resident from the security post before access is granted. So you can now understand why the choice of the ride and drive event inside the exclusive preserve of this privileged few, the blue-blooded and select corporate honchos in the society by Rolls Royce Motor Cars and Coscharis Motors, owners of the exclusive franchise in Nigeria which is on one hand to first and foremost underscore the uniqueness and as well as for this iconic British brand to get closer to the target audience. The experience and the nostalgic feeling offered by this limousine is enough to make one forget all his or her problem in the interim and focus on the returns of their investments portfolios and probably how to relish the same level of enjoyment on their next summer vacation. In addition to its bolder presence and a more potent performance, the Black Badge marque driven round the lush terrain roads of Banana Island comes with elegant charisma, darkened chrome elements, carbon fibre accents and enhanced performance. In terms of the target audience, the Black Badge which does not come with any specific price tag due to its customisation according to customers specific tastes appeals to both the young young and emerging billionaires looking for absolute luxury while seeking a more athletic and sportier ride. The Ghost Black Badge edition unleashed with more power, more

Nigeria dithers as Thailand bans used car imports December … To stop smuggling and curb pollution

audacity, more attitude, more fun and more sporting characteristics in a stealth manner. It comes with highest attributes of luxury, supreme ride comfort, automated everything and doors that are hanging imposively on the rear. For the benefit of those with critical minds, it is very instructive to say here that, what differentiates it from the standard Rolls-Royce is the presence of that black spirit of ecstasy, carbon fibre wheels, blacked out front grille, badges, boot lid and exhaust tips as well as an improved performance. The interior is lushed with exquisite wood and exquisite leather that subtly screams and smells like opulence. The test cars have the Purple Silk (in the Ghost) and Cobalto Blue (in the Wraith) interior contrasted with black. Just like every Rolls-Royce, the Black Badge model is easy to fall in

love with. It is heavy but the steering is light, the cabin is very quiet, interior is amazingly plushy and laced with features that is endless. The experience can never be forgotten in a hurry. The instrument cluster comes with a reserve gauge that tells you the power you have left as against the conventional RPM tachometer that tells you the power that’s been used up. The automakers have also taken time to pay attention to details like the mirrors on the C-Pillar that allows the chauffeured vet their looks before they alight from the car. While power is sent to the road through the rear wheels as it glides down the under the effortless power of its monstrous twin turbo 6.6litre V12 engine that produces 624hp and 870Nm of torque in the Black Badge Wraith (70Nm more than the standard Wraith), the Black Badge Ghost gets 603hp and 840Nm of torque (40hp and 60Nm more than

the standard Ghost). The engine is so powerful only 4 of it powers a Bombardier private jet. The high torque is amazing as it sinks occupants into the seats as if they want a quick getaway from a stop light. The moment the doors are closed with the push of a button, the double glazed glass and well insulated body frame immediately isolated the exterior noise and cocooned us in a luxurious cabin with pin drop silence. Clearly, the Black Badge edition just like every Rolls Royce car is actually therapeutic and can lower your blood pressure as the revised cushion and sporting air suspension absorbed all the imperfections on the roads so much so that the occupants would think they are lying on a king size bed in Banana Island while in the real sense, they are actually cruising on the highway headed to Villa for that unique social gathering.

Department will have the right to seize and destroy illicit vehicles. Adul Chotinisakorn, directorgeneral of the Foreign Trade Department, said the Commerce Ministry made an official announcement after the cabinet approved the measure on May 7 and ministerial regulations were published in the Royal Gazette on June 13. “The new rules are meant to Continued on page 31

Toyota offers 60th L/C Heritage Edition at $88,970

ast time when the 2020 Toyota Land Cruiser Heritage Edition was announced, the global market assumed that, Toyota would take the opportunity to charge a ton of money for what is basically a cosmetic package. With this edition which is expected to wear a new price still remaining unchanged, and the structure of this Land Cruiser still looking the same as all the rest, the Heritage Edition is celebrating the 60th anniversary of the model with some cosmetic changes. It comes with no third-row seat, an option of just two colours of Blizzard Pearl, which is a white, or Midnight Black Metallic, copper 18-inch BBS wheels, darkened and blackened accents around the grille, and the all-too-important vintage Land Cruiser badges that customers will immediately fall in love with at first sight.

It would be recalled that Toyota released the Land Cruiser Heritage Edition at the 2019 Chicago Auto Show, but it did so without a price during the period. Today, we learn how much the retro SUV is going to cost for the 1,200 customers that will be lucky to take one home. The starting price is $89,040 according to pricing documents found on the company’s website, initially. Toyota only offered one option on the 2019 Land Cruiser, rear seat entertainment for $2,200, while regular 2020 Edition is set to start at $86,710. In buying the Toyota Heritage Edition, the customers will get the sweet, scripted “Land Cruiser” and “Toyota” logos on the exterior, while the 18-inch bronze BBS wheels with Toyota center caps are added on. Toyota deletes the running boards and lower body side molding for better off-road clearances, www.businessday.ng

as well. There’s a bunch of blacked out trim on the exterior and contrast bronze stitching on the interior including an all-weather floor mats

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and a cargo liner, so you should be ready to get dirty. Toyota previously said they’ll be hitting dealers in late summer,

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so check your local Toyota dealer out soon to see if they were lucky enough to take delivery of the special-edition car.

Wednesday 07 August 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

British Airways debuts new lounge in San Francisco

ritish Airways has unveiled its new lounge in San Francisco.The location becomes the third US lounge to benefit from the airline’s investment plan for its customers, following the recent opening of its first and club lounge at New York JFK’s Terminal 7. The new contemp orar y lounge is spread across 665 square metres with views of the runway, thanks to floor to ceiling glass windows that run along the side of the lounge letting natural light flow in. The airline has created a number of zones throughout the lounge to cater to its customers’ needs.

ing facilities. In the main seating area there is a deli bar where customers can help themselves to a wide range of food and drink options. For the airline’s customers traveling in first, there is a new exclusive boutique dining room, where customers can enjoy fine wines and menus inspired by some of world’s top chefs. Carolina Martinoli, British Airways director of brand and customer experience, said: “We know that lounges form an important part of the journey for some of our customers, so we’re delighted to be able to open this new space in San Francisco, the third lounge in the US to benefit

For those wanting to unwind ahead of their flight, they can do so at the beautifully crafted granite feature bar, that forms the centre piece of the lounge. Customers wishing to catch up on some work ahead of their flight will be able to use a new study area with wireless print-

from our investment program. “We think customers will love the new look and feel. We have had such positive feedback from customers who have experienced our New York lounge and they both follow the same design concept’’. The BA official concluded.

FRSC calls for co-operation during Kara to Berger road works MIKE OCHONMA Transport Editor

he RS 2 Zonal Command of the Federal Roads Safety Corps (FRSC) comprising Lagos and Ogun states has assured motorists plying the Lagos-Ibadan expressway of free flow of traffic during the rehabilitation, reconstruction and expansion of the Lagos-Ibadan dual carriage, section 1 road expansion work between the 1.4 kilometer Kara Cattle market and Berger junction on September 2, 2019. On daily bases, there is an estimated 25,000 vehicles plying the in-bound and out-bound LagosIbadan expressway with over 150,000 passengers using the road. Reconstruction work within the short stretch of road is expected to last for about four months. Samuel Obayemi, an assistant corp marshal (ACM) and zonal commanding officer of FRSC in

charge of Lagos and Ogun RS2 who gave this assurance during a telephone chat with BuisnessDay on Monday, said that there are ongoing consultations between traders and residents living along the axis to ensure everyone is carried along. He assured that that the officials of the FRSC and other concerned stakeholders are fully prepared to ensure a smooth flow of traffic through out the period. Giving details on the scope of work to be carried along the corridor, he explained that, the two lanes both inward and outward Lagos will not be closed at the same time. ACM Samuel Obayemi said that, while motorists coming on opposite directions are diverted to use the two other lanes on a single file traffic, construction work will be ongoing on the other closed two lanes on the opposite direction. He said that, while the finished

two lanes are opened for use to motorists upon completion of work, the single-lane traffic will be diverted to the other side of the 2 lanes highway corridor. While calling for patience on the part of road users, Obayemi advised motorists to put their vehicles in order to avoid breakdown on the only available single lane that may result to gridlock. Recall that Adedamola Kuti, the federal controller of works, Lagos had in a letter dated August 2, 2019 which he personally signed announced that the intended reconstruction and expansion work of the section between Berger Junction and Kara cridge is designed to follow the same way. Kuti noted that, the axis has a high volume of traffic and commercial activities and as a result, the idea to divert traffic at this location to enable construction work to be carried out which begins September 2 has necessitated a review of work plan.

Germany plans €86bn rail investment in 2020-2029

he German government and German Rail (DB) have reached an a g re e m e nt t o i nv e s t €86.2bn in the country’s railway infrastructure over the next decade, the Federal Ministry of Transport (BMVI) confirmed on July 26. Under the Performance and Financing Agreement (LuFV III), the federal government will commit €62bn to infrastructure investment in 2020-2029, an increase of 59% compared with the current

LuFV II, which covers the period 2015-2019, while DB will contribute €24.2bn, a 41% rise over LuFV II levels. Hailing the agreement as the “largest ever” modernisation programme for Germany’s railway network, transport minister Andreas Scheuer said LuFV III will deliver a “high-performance, high-quality rail network as a basis for active climate protection in transport.” The draft agreement is due to be completed next month and www.businessday.ng

will be debated in the Bundestag in the autumn. Last week the federal Monopolies Commission issued a report calling for greater separation between DB’s transport and infrastructure activities, with a more robust system of quality indicators to monitor how federal funding is used. DB set out plans to significantly enhance capacity, improve performance and increase traffic in its Strong Rail strategy, which was published in June.

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Nigeria dithers as Thailand bans used... Continued from page 30

control emissions from vehicles and for road safety,” Adul said. Existing regulations have loopholes for smuggling cases; for example, importers declare finished car imports as vehicle parts to pay fewer customs duties. At present, cars are subjected to an 80% import tax while parts and components enjoy 30% duties. In addition, only new cars are legally imported for commercial purposes, while used cars for sale are prohibited. The Customs Department reported that personal used car imports in 2018 totalled at 100 units. In actuality, there were roughly 1,000 cases of smuggled cars imported for the period and 95 percent of those were luxurious cars and supercars. According to the department, smugglers declared the cars as semi knocked-down units, instead of finished cars or com@Businessdayng

pletely built-up ones to avoid the high tax payment. Some cases are related to money laundering and narcotics and polices and officials had coordinated with the Foreign Trade Department to ask for import details to be submitted. Adul said the department improved the regulations to facilitate trade and cut red tape in line with the government policy and has been working with 15 related agencies towards this since 2015. The new rules exempt imports for special purposes such as government and diplomatic use, R&D, public charity, reassembly and re-export and exhibitions. Used tractors, trailers, ambulances and fire trucks are allowed to be imported, but all exemption cases have to request permission form the relevant ministries, such as commerce, finance, foreign affairs, industry and defence.

Wednesday 07 August 2019

BUSINESS DAY

Feature Fidelity Bank 60:60 initiative to open-up Nigeria’s MSME space The lender intends to collaborate with fund providers within and outside the country to organise a one-day funding initiative for Micro, Small and Medium Enterprises (MSMEs) across three cities in Nigeria that will connect 60 MSME founders to 60 fund providers, writes BALA AUGIE

Nnamdi Okonkwo, chief executive officer/ managing director, Fidelity Bank Nigeria

in major commercial and policy centres in the country featuring 60 founders, 60 fund providers with 3,000 participant’s starting from Lagos on 7 August, Port Harcourt in fourth quarter of 2019 and Kano in first quarter of 2020. “We anticipate that at the end of the fair, SMEs would have received access to funding from local and foreign funders”, said Osaigbovo Omorogbe, the divisional head, managed SMEs of Fidelity Bank while giving an overview of the SME Funding Connect. According to Omorogbe, the event seeks to deepen the conversation around funding for SMEs amongst all of the other issues that

SMEs currently face in the market such as policy inconsistency, poor managerial/entrepreneurial skills, poor record keeping, low technology leverage, and limited access to export markets among others. For many SMEs/MSMEs playing in the Nigerian financial ecosystem, access to cheap and sustainable loan has been the panacea for business sustenance. Chidiebere Nwankwo, a Lagos based entrepreneur that produces a wide variety of plastic products. He recounts his experience and lessons learnt in his entrepreneurial journey and how his business was forced to close for his inability to scale-up after a large

“ We anticipate that at the end

of the fair, SMEs would have received access to funding from local and foreign funders

“

espite the huge potential of the Micro, Small and Medium Enterprises (MSMEs) sector to create employment opportunities for Nigeria’s youth population, the sector remain largely bedeviled by a number of problems with limited financing options being one of the main drawbacks faced by MSMEs. In Nigeria, MSMEs have continued to contribute their fair share to the growth of the economy employing over 80 percent of Nigeria’s 90.5 million working population, which contribute 48 percent to Nigeria’s GDP and constitute over 80 percent of registered exporters in Nigeria. As part of efforts to bridge the funding gap and other attendant issues faced by MSMEs and in continuation of its support for the growth of the sector, Fidelity Bank has reiterated its willingness to collaborate with fund providers within and outside the country to organise a one-day funding initiative for MSMEs across three cities in Nigeria. Therefore, the bank has concluded plans to connect 60 SME founders to 60 fund providers at the forum themed “Entrepreneurship Meet Capital” holding in Lagos today, 7 August. Fidelity Bank will also hold the conference in Port Harcourt, and Kano in the last quarter of the year, and first quarter of next year respectively. Fidelity Bank will be giving out a total of N12 million (across three locations) in grants to MSMEs who will emerge finalists in a competition at the event dubbed ‘Fidelity SME Funding Connect’. “This initiative shows that it is a sector we cannot ignore. The biggest problem of SMEs in the country is funding before other factors like poor infrastructures, multiple taxation, poor capacity, and skills to do what they are supposed to do. Fidelity Bank has over the years provided funding,” said Nnamdi Okonkwo, the MD/CEO of Fidelity Bank Plc, at a recent press conference where he stated that MSMEs are the engine of any growing economy. Okonkwo was represented by Nneka OnyealiIkpe, the executive director, Lagos & South-West, Fidelity Bank, Fidelity Bank SMEs Connect Series will be anchored by PWC, a professional audit and consulting firm. The event is planned to hold

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client placed a major order for his products. Nwankwo needed a loan to purchase an advanced equipment to fulfill the large order, but it was 2017 and the country was still grappling with one of the worst economic recession in 29 years and he could not secure the funds. “I learned firsthand how access to finance can spur a small business and how the lack of funding can kill an entrepreneur’s dream”, said Nwankwo reiterating how access to funding can stand as challenge to the MSMEs sector. In collaborating Nwankwo’s plight of accessing fund, Chijioke Ugochuckwu, the executive director, Shared Services and Products of Fidelity Bank, while featuring on ‘Fidelity SME Forum,’ on Inspiration FM recently, pointed out that apart from well-known infrastructural challenges SMEs face, the number one feedback the bank had received was funding constraints. This according to Ugochuckwu was a critical factor to the success of any business. “Fidelity Bank is driven to help SMEs get capital which is a huge part of what we do. We are clear in our minds that due to the fact that SMEs produce @Businessdayng

50 percent of the country’s GDP and accounting for about a third of the eligible work force; impactful programmes targeted at SMEs would go a long way to improving and sustaining our economy. “We have invested a lot of resources into capacity building as we have had 200 episodes of the Fidelity SME Forum the radio programme, so when we are through in Lagos we are taking it to Uyo and Ibadan in a few months,” said Ugochuckwu. The bank has reiterated its commitment to providing long-term funding for MSMEs through its funding partners including private equity firms, Venture Capitals (VCs) and Angel Investors worth over $1 billion. More importantly, Fidelity Bank has given out loans to Nigerian businesses over and above the latest 60 percent limit Lending to Deposit Ratio (LDR) set by the Central Bank of Nigeria (CBN). Making the revelation on the weekly live radio Fidelity SME Forum, Joshua Gbolahan, the chief operations and information officer (COIO), disclosed that the feat is achieved with minimal NonPerforming Loans (NPLs). According to him, Fidelity Bank’s policy of structured approach under a managed SME team which is driven by strategic capacity building powered financial advisory model to tame incidences of NPLs. “Our NPLs are below six per cent, with our cost of risk below one per cent at 0.5 last year. This is because we do this lending on a very structured manner and evaluate the sector we lend against our defined limits. Currently, we are supporting our risk management framework with a lot of tools from digital perspective,” said Gbolahan. Gbolahan further averred that Fidelity Bank is working with the Development Bank of Nigeria (DBN) in riding on the CBN’s development financing programmes to grow the activities of Small and Medium Enterprises (SMEs). “If you look at the bank in the last five years, every single year, even during the recession, it has grown its loan books. Even in the face of currency devaluation, it has grown its loan books and I can assure you that the bank will never stop lending,” said Gbolahan.

Wednesday 07 August 2019

BUSINESS DAY

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Wednesday 07 August 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

ADFI to give grants to entities with digital financial inclusion facilities Endurance Okafor

he Africa Digital Financial Inclusion Facility (ADFI), a new innovative financing vehicle designed to accelerate digital access to financial services has announced its call for proposals to enable it dish out grants and loans to entities leveraging technology to deepen financial inclusion. Setup by African Development Bank (AfDB) in partnership with the Bill and Melinda Gates Foundation (BMGF), Agence Française de Développement (AfD) and the Government of Luxembourg (the Initial Donors), ADFI was launched in June 2019, at the AfDB’s annual meetings in Malabo, Equatorial Guinea, and comprises a multi-donor trust fund and debt funding from AfDB with a projected ten-year (10) investment horizon. “Through catalytic and strategic investments in digital financial services (DFS) throughout Africa, ADFI will seek to break down barriers to DFS growth and uptake in order to accelerate financial

inclusion in general and reduce the gender gap in financial inclusion in particular,” AfDB said. The design for ADFI was informed by a comprehensive continental study which established that catalytic digital financial inclusion interventions will have the potential to impact a total addressable market (TAM) of 332 million financially excluded adults on the continent, 60 percent of whom would be women.

In keeping with its intent to be catalytic, ADFI will strive to play an additive role to the financial inclusion ecosystem on the continent and will, through investments, give prominence to projects that have the potential to generate maximum impact. According to the AfDB, one of the criteria for the grants and loan is that projects to be funded must demonstrate a positive impact (direct or indirect) on the livelihood

of stakeholders, particularly those at the bottom of the pyramid, namely women as well as vulnerable communities and population groups. Therefore, proposed grants and loans from the ADFI trust fund must be projected to significantly further at least one of the following objectives, with preference given to projects that further several of them; by 2025, 80 percent of the adult population in Africa are financially

included and served by a network aligned with Level One Project (L1P) principles, 100 percent of the total addressable market (TAM) of financially excluded adults on the African continent are within reach and financially included as a result, and Gender gap in financial inclusion is closed. Expecting to stop accepting proposals after 15th September 2019, the targeted areas where ADFI intervention will channel it resources include both the private and public sector and aligned to the following four pillars: infrastructure, policy and regulation, products & innovation, and capacity-building. According to the AfDB, grants and loans may be extended to the following entities: Financial institutions (bank and non-bank), remittance and payment service providers, payment aggregators, mobile network operators, e-money issuers, FinTechs, regulatory bodies (including central banks, telecommunication regulators, consumer protection and competition authorities), government ministries, regional and sub-regional

economic entities. Financial inclusion data: 2017 Global Findex by the World Bank analysed by BusinessDay revealed that mobile money drove financial inclusion in SubSaharan Africa. From 2014 to 2017, the share of adults with a financial institution account remained flat, but the share with a mobile money account almost doubled, to 21 percent, as compiled from the report. “The region is home to all eight economies where 20 percent or more of adults use only a mobile money account: Burkina Faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe,” the World Bank said adding that opportunities abound to increase account ownership. The African Development Bank has therefore invited; companies, joint ventures, consortiums of companies, public & private-sector institutions and associations to share concepts across the four primary pillars of intervention highlighted above that will leverage digital financial services to increase overall financial inclusion and reduce the gender gap.

ReadyCash inks deal with Adara to promote financial literacy, inclusion … agent earns special recognition from SANEF, EFInA Endurance Okafor

eadyCash, an agenc y banking network focused on distributing access to financial services across Nigeria has partnered Adara foundation to promote financial inclusion through literacy. The Adara Foundation is a non-profit social enterprise in Nigeria, which focuses on empowering women and advancing education in Africa, with a emphasis on promoting financial inclusion and literacy. The partnership is geared towards equipping women and youths in business with financial literacy tools, practical tips and resources to empower them with information, knowledge and confidence to make informed financial choices and improve their financial wellbeing. “Women are pivotal to

reducing the financial inclusion gap in Nigeria. We are excited to align with Adara Foundation to develop the capacity of most women so they can provide agency banking services to their communities and earn a huge daily commission,” Chidi Dire, Team Lead, Mobile Money at ReadyCash said. As one of Nigeria’s fastestgrowing financial distribution networks across all 36 states in the country, ReadyCash has been able to reach a population of entrepreneurs (men and women), traders, community leaders and residents of various states who are seeking access to financial services. According to the Lagosbased company, in high traffic areas, most of their agents earn above N100,000 monthly through multifarious agency banking services cutting across; bank account opening, BVN activation, transfer to bank, POS withdrawals,

bills payment and lot more. Recently, one of the ReadyCash’s agent-Ogundeyi Mayowa was recognized by SANEF and EFInA as one of the top-performing agents across Nigeria. The agent was acknowledged during the financial services agent forum organized by Shared Agent Net-

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work Expansion Facility (SANEF) in partnership with EFInA and the Central Bank of Nigeria, brought together all banks’ agents, mobile money agents, super agents and other players in the financial space to reward, train and introduce agents to potential partners and opportunities. The town-hall styled

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forum discussed Nigeria’s agency banking model and its challenges, examined its risks and mitigation, the need for collaboration, new initiatives and the future of agency banking. Recall that in 2012 the Central Bank launched an ambitious National Financial Inclusion Strategy (NFIS) in

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which the CBN had targeted 62 mobile money agents per 100,000 adults. Fast-forward to January 2019, the apex bank unveiled a revised version of the strategy in which it projected that there would be about 500,000 mobile money/bank agents available to serve about 105 million adult Nigerians by the year 2020. The figure translates to about 476 agents per 100,000 adults. Less than six month to the projected deadline, financial institutions in Nigeria have enrolled a joint 65,753 mobile agents, data obtained from the Nigeria Interbank Settlement System (NIBSS) showed. This is 86.85 percent less than the 500,000 mobile agents which are going to serve about 105 million adult Nigerians. If the industry regulator is to meet the target by 2020, it would have to enrol about 434,247 agents in five months.

Wednesday 07 August 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

Singaporean agro-allied company Olam revises offer for Dangote Flour Mills to N120bn MICHAEL ANI

lam International Limited, a Singaporean agro-allied company, on Monday revised downward its offer for the acquisition of Dangote Flour Mill (DFM) Plc. In an August 5th notice to the Nigerian Stock Exchange, Dangote Flour Mills announced it received a binding offer from Olam International Limited on behalf of its subsidiary, Crown Flour mills at an amount of

N120 billion, down from an initial offer of N130 billion . The offer would enable the agro-allied company to acquire all the outstanding and issued shares of Dangote Flour mills that were not currently owned by Olam through the Crown Flour. The firm through its subsidiary Crown Flour Mills currently, owns over five million shares of Dangote Flour Mills. Payment of the transaction would be effected through Olam’s subsidiary, Crown Flour as the firm has confirmed its

unequivocal and irrevocable financial support for the satisfaction of the final consideration and remains primarily responsible for the discharge of the firms obligation under the transaction, Dangote flour Mills said in the notice Olam International limited had in April offered N130 billion for the entire 5,000,000,000 issued shares of Dangote Flour Mills for consideration which represents the enterprise value of Dangote Flour Mills on a debt-free, cash-free basis, payable in cash at the closing of the proposed

transaction has been adjusted to N120 billion. This follows the earlier announcement of April 23, 2019, which stated that the N130 billion consideration would be adjusted for among other things, net working capital and net debt as at 31 March 2019 or any other date agreed upon by board of Olam and Dangote Flour mills. The other consideration was excluding shares held by Olam through its subsidiary, Crown Flour, in order to arrive at the final price payable to shareholders of Dangote Flour exclusively.

The acquisition would be carried out through Crown Flour, already a stakeholder in Dangote Flour, with the financial backing of its parent company Olams international. By t h e a d d e n d u m, Crown Flour Mills has now submitted a revised offer with a final recommendation of N120billion amounting to N24 per share following the final adjustment. Sha re s o f D a n g o t e Flour rallied 10 percent to N20.35 on Monday following the latest development around the acquisition by Olams, according to data

obtained from Bloomberg terminal. Premium is now about 18 percent based on Monday’s closing price. Shares of the flour mill have risen 197 percent so far in the year while the broad market has been down some 12 percent. Dangote Flour in the note said its board has carefully considered the Addendum and Initial Offer (Revised Offer) and will, subject to obtaining regulatory approvals, recommend the Revised Offer to its shareholders at the court-ordered meeting for their consideration and approval.

responsAbility launches $175m impact CLO for financial inclusion in EM MICHAEL ANI

esponsAbility Investments AG, an impact asset manager, has closed a $175m securitization of loans to microfinance and SMEfinance institutions in emerging markets. The underlying pool of assets are 26 newly issued senior bullet loans to fast-growing Microfinance Institutions and SME-Banks in 17 different countries in Latin America, Africa and Asia. The proceeds will be used to fund financial intermediaries providing capital to 30,000 small businesses and 5.6 million microfinance borrowers of which 81 percent are women. Denominated in USD and with an expected maturity of three years, the securitization provides investors a choice of three different risk return profiles (senior, mezzanine, and junior) in a listed, transferable bond format. The senior and mezzanine notes earn fixed interest rates and junior note returns will depend on performance of the underlying loan portfolio. Key investors in this transaction include the

Overseas Private Investment Corporation (OPIC), the US government agenc y, providing the initial capital necessary to mobilize the private institutional investment in the deal, and Alecta, the fifth largest occupational pension provider in Europe, and investing in the essential risk capital. “O P I C i s p ro u d t o partner with responsAbility to expand access to the financing of micro-entrepreneurs and small business owners – especially women – who need to grow their businesses, create jobs, and help their communities thrive,” said Tracey Webb, OPIC Vice President for Structured Finance and Insurance. Impact investing firm Calvert Impact Capital also brings US private capital into the deal. Songbae Lee, Director of Investments for Calvert Impact Capital noted that “this deal has great potential to serve as a template for making microfinance – and other impact investing deals – more accessible to a range of investors in the future. We’re excited to help scale responsAbility’s microfinance platform and ultimately,

get more capital flowing to the communities that need it most.” responsAbility Investments AG is the originator and servicer of the loan portfolio. JP Morgan acted as arranger and placement agent. Latham Watkins and Paul Hastings acted as legal advisors to JPMorgan and responsAbility Investments AG respectively. “This securitization shows that the fast-growing microfinance and SME finance space in emerging markets has now reached a maturity that allows it to access financing from mainstream capital markets,” said Thomas Müller, CoHead Financial Institutions Debt at responsAbility. “This is an area of increasing focus for fund managers globally and applying capital markets technology to traditional impact investing creates the potential to open this sector to a wider range of investors,” added Eric Wragge, Managing Director, Securitised Products Group at J.P. Morgan. “We are very pleased to have helped facilitate this flow of investment to emerging economies,

where financial inclusion can make such a

difference in the lives of small-scale entrepre-

neurs and their communities,” Wragge said.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: OGAR DAVID ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 07 August 2019

BUSINESS DAY

INTERVIEW

Global alliances, leadership development key to quality education in Nigeria – Taiwo Taiwo Taiwo Taiwo is the chairman of Atlantic Hall School, a not for profit coeducational secondary school she said is built on the foundation of excellent staff, outstanding pastoral care, and the holistic approach to teaching each student. In this interview with IFEOMA OKEKE, she speaks on how the school has succeeded in the past 30years and its commitment to develop a world class institution to help shape the next generation of African leaders.

ow did Atlantic Hall actually started? We were five very close friends from the University. After we had our first children, we started to meet in a dinning club and it was an opportunity to get together and we just talked about things around our lives and our children. At that time, our children were between ages 9 to 10, getting ready to go to secondary school. We were all shocked to realise what we had before us. The secondary schools around were disgraceful. I had schooled abroad and I felt so bad about what I was seeing. At the time, my kids were growing up and some of the top schools had degenerated. There was a top school I went to and I peeped into the class room, only to see broken windows. There was a classroom that didn’t have a single chair with its complete four legs. I wondered what the children will learn in that kind of environment. Children from South-South and South-East like our children needed to get extremely high scores to even get into the school in the first place unlike other children because of quota system. So, it was rated so much against our kids. We needed to prepare them so much for the common entrance and the standards didn’t really measure up. So, we said to ourselves that we can do something about it; we can start our own school. It was never in our mind to have a big school of 700 students, with campus of 88 acres; this is what we currently have. We realised that we needed to create a critical mass of people to join us. This was the era of Jakande. He took over Missionary schools and his thinking was that missionary schools should be subsidised and he didn’t see any reason why the schools should be owned by catholic churches. When he took over the missionary schools, he stopped private secondary schools. Despite this major challenge, we were so committed and we were able to look at the format of the legal structure of Grange Primary School, American International Schools and several other international schools. This was an incredible amount of work but we were so determined. We also had a lot of discussions with other people that were like-minded and we made this a council. We met and formed committees. We did not know how we were going to raise the money but we knew there were a lot of people out there that wanted such a school. Our first outing to kick-off the school was an inaugural dinner where we showed people what

Taiwo Taiwo

the idea was all about. We raised funds and started off in Shonibare Estate. My family owned the Mary Land hotel at that time, which was a 50 bed-room hotel and we were about to convert it into a five-star hotel. I convinced my mother to let us use the facility and we converted the hotel into a school. In that premises, we had a swimming pool, a tennis court, a dining room amongst others. We were there for 15 years and from day one, our own children came there. We articulated the kind of school we wanted. What is truly encouraging was the fact that from day one, we set a standard and people wanted to identify with the school. What are the successes the school has recorded over the last 30 years? I can truly say that we are inspirational change agents. From what we did 30 years ago, look at the number of private secondary schools we have now. We inspired other people and I can honestly say that our children are examples of our success stories. The people that come out of our schools have gone to Cambridge, Harvard and they fit effortlessly anywhere they go. Whilst people send their kids to school abroad, we now have Nigerians in America and England who see something lacking in their kids especially in their behaviour and manners and they send them to Atlantic Hall. When they come back, they show good manners and courtesy. They teach them work ethics. What are the future growth plans and succession plan of the school? We are a body of successful www.businessday.ng

business people. We are very much aware of succession; we started thinking about this seven years ago and we set it up. Our succession plan is this: Each one of us pick a successor amongst our children, especially those being to the school that we have identified will be our successor trustee. Having selected them, we now have them join a committee of the governing council, where they learn how to fund-raise and learn the values. They work there for three years consistently, attend meetings, and have workshops for them so they are aware of what our value system is. After three years, we bring them into the board, so they serve on the board as trainee board members. Who are your notable members of alumni? The first 20 years, we had celebration of our alumni and we gave them ambassadorship. We have them across various sectors such as academics, entertainment and sports amongst others. This year again, we

“

are in search of 10 of our ambassadors. We are going to appoint 10 of our ambassadors in the fields of sports, arts and entrepreneurship, amongst others. Some of our notable alumni include Kemi Adetiba, Omilola Oshikoya, Mark Okoye, Seye Ogunlewe, Donna Ogunnaike, Amaka Osakwe, Matthew Otubu, Ijeoma Balogun and Idia Aisien. What makes Atlantic Hall outstanding among the several topflight schools in the country? We are a non-profit school. We do not share our profit, we invest it back into the school. One of our challenges is that once we moved to Ekpe, we have not had one day with a drop of light. It is incredible. So, the school is run on generator and diesel for 15 years. One of the things we want to fund-raise for is to put up a hybrid solar energy that will contribute up to 60 percent of our consumed energy because it cost us so much to run generator. How do you contribute to your host community? We are going to do a medical outreach in September. It is being powered by Emzor and Chike Okolo foundation. This will include checking people’s blood pressure and administrating drugs to patients with cardio-vascular diseases. This will involve the whole community in Ekpe. This year, we have also created a scholarship for the Ekpe indigenes. Tell us about the scholarship programme in place by the school for indigent students who do not have the means. In the last ten years, we have been giving scholarships. We have three types of scholarships. The first is to indigene students selected from Lagos State. We conduct a scholarship exam, and the winner will be on a 100 percent funded scholarship. This year, one of our scholarship students, Williams just graduated and his story is inspirational. The scholarship is worth N30million. We found that students on scholarships are often

I can truly say that we are inspirational change agents. From what we did 30 years ago, look at the number of private secondary schools we have now. We inspired other people and I can honestly say that our children are examples of our success stories

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“

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the best students. Williams who is an orphan is smart and good in sports, so people are naturally attracted to him. His best friend is the son of the governor of Akwa Ibom. The other two scholarships are not necessarily for indigenes but people that scored the highest in common entrance exams and we give the third scholarship to the second best in the common entrance. The second best is given 50 percent scholarship. With this fund-raising, we want to create an endowment fund to increase our scholarship from three to taking in 10 percent of intakes into the school on scholarships. This way, we will be getting very smart children, who are often disadvantaged, thereby creating the right mix. The story of William is an example. After he graduated this year, he sat for an exam for best private university in Ghana and he won a 40,000 dollars scholarship to do his first degree and pay him 300 dollars every month and fly him back and forth into Nigeria. He was also given a scholarship to do his masters in America. What solutions would you proffer to the dwindling quality of education in Nigeria? Education is being revolutionised as we speak. What education was 30 years ago is not what it is now. No one uses chalk board anymore. Atlantic Hall is already moving to the level of artificial intelligence. People are going to be taught by computers, people will be expected to think in a way they have never taught before. We are part of that change. All over the world there is a revolution in education and we are not going to be left behind. We are building up international alliances. We are talking to Canada and some international universities to send us four Canadian teachers for the next change programme so that they can teach our teachers and students. We will also be sending our teachers to Canada, so that there is cross cultural exchange. We are also seeking partnerships with institutions aimed at developing leaders. We recognise leadership development is also essential at an early stage. We are also seeking to partner with an institution in Finland. Finland has an unusual skill set and recognised to have the best educational system in the world. Finland has the vest paying teachers and the smartest in the class are those who are selected to teach. So teaching is well respected there. They have educational tourism as well. So, we are learning from partnerships and alliances with the best institutions in the world.

Wednesday 07 August 2019

BUSINESS DAY

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Wednesday 07 August 2019

BUSINESS DAY

news Cargo imports jump 21% in first ... Continued from page 1

L-R: Fabian Ajogwu, managing partner, Kenna Partners; Femi Falana (SAN), guest of honour; Pat Utomi, author “WHY NOT”; Folashade Jaji, secretary to the state government, Lagos State; Salewa Fajemirokun, founder, R2S/book launcher; Ifeoma Utomi, wife of the author, and Fred Agbeyegbe, guest of honour, at the public presentation of the book titled “WHY NOT” by Pat Utomi in Lagos, yesterday. Pic by Olawale Amoo

Cost vs access: SMEs worry over structure of bank funding ODINAKA ANUDU

sther Menua needed N15 million to expand her small grocery store in Lagos. She went to a tier-two commercial bank but was asked to provide a plot of land valued at N25 million. The bank worker who attended to her also informed her that the cost of the loan was 23 percent per annum, and she must pay back in 12 months. Menua chose to borrow the money to meet the expansion plans, but she was unable to pay back the money, which now amounted to N18.45 million plus interest. Her landed property was eventually sold by the bank after several threats. “For me, access to funds is tough, but cost of funds is tougher,” Menua said, downcast. Like Menua, many micro, small and medium businesses (MSMEs) are going through funding challenges at different levels. BusinessDay sampled the opinions of entrepreneurs to determine between cost and access, what was the bigger problem for MSMEs attempting to get funding for business expansion. The opinions were divided, with the majority thinking that both access and cost of funds have equal weight. “Interest rate is very high,” said Adepeju Jaiyeoba, lawyer and chief executive of Mothers Delivery Kit, which reduces maternal mortality in rural communities. “I have experience in issues around debt recovery due to my capacity as a lawyer and I know that the problem is the seen and unseen costs borne by entrepreneurs like us,” she said, adding that access is also a big issue.

Ibrahim Maigari Ahmadu, chief executive of Liverstock247.com, Nigeria’s first livestock online marketing and listing platform, said interest rate is high just as there are many gridlocks to access to funds. “Nigerian commercial banks are risk-averse. They put so many bottlenecks on the way when you want to access funds,” Ahmadu said. “Interest rates are very high, which is a major inhibiting factor. Collaterisation is structured to knock you out,” he said. He explained that the risk-averse nature of banks prevents them from funding the agriculture sector. Nigeria’s benchmark interest rate is among the highest in Africa at 13.5 percent. Ethiopia’s is 7 percent ; Kenya’s 9 percent ; South Africa 6.75 percent; Zambia 10.25 percent, and Cameroon 4.25 percent. Similarly, Rwanda is 5 percent; Mauritius 3.5 percent; Algeria is 8 percent, and Senegal is 4.5 percent. Interestingly, the National Bureau of Statistics’ recent MSME report shows that 85 percent of businesses could not have access to external financing between 2013 and 2017. In fact, only 5.3 percent of SMEs had access to bank credit, even with 40 percent of them having relationships with banks. “Both access to funds and costs are big issues for me,” said Attah Anzaku, CEO of AgroEknor, exporter to Europe, Asia and the Americas. “Even if you have the access, cost is crippling,” he added. Oladapo Abiodun, chairman, Small and Medium Enterprises Group (SMEG) of the Lagos Chamber of Commerce and Industry (LCCI), said cost and access to funds are intertwined, adding that tenor of funds is an often ignored but important issue. www.businessday.ng

“The funds we have are not suitable for the kind of economic environment we have. The economy requires long-term funds, which are unfortunately not available,” Abiodun, who is also the CEO of an export-oriented firm, Comtrade Foods Limited, said. He explained that most SMEs can hardly afford to provide collateral required by commercials banks. “In many climes, government inter venes to guarantee such funds and even provide the needed mentorship,” he said. Attempting to bridge the gaps are Financial Technology firms or Fintechs, which are growing in Nigeria but also have lending rates that are in doubledigits per annum just like deposit money banks scattered across the country. But the Bank of Industry (BoI) intervenes by providing funds at 9 percent per annum. Businesses told BusinessDay that banks like the BoI and the Bank of Agriculture (BoA) need recapitalisation to enable them to fund more businesses. Muda Yusuf, directorgeneral of LCCI, said access to funding is much more difficult for MSMEs but cost of funding is a much bigger challenge for medium and large enterprises. “For micro and small businesses, because they are perceived as high risk, collateral is tougher and many of them cannot provide such,” Yusuf said. “For them, the big issue is not just the cost but access. If you ask them to pay 30 percent per annum, they will pay, after all some micro and small businesses borrow from microfinance banks at 5 percent per month or more, which amounts to 60 percent per year or more,” he added. He explained that bigger firms can provide collateral due to their size but worry about high funding costs.

other parts of the world through the country’s airports is seeing a significant increase as a result of the relatively relaxed foreign exchange policy, BusinessDay’s findings show. “Since the introduction of investors and exporters window last two years, there has been stability in foreign exchange rate,” a source at Customs said. BusinessDay visited two air cargo handling companies, Nigerian Aviation Handling Company, Nahco Aviance (NAHCO), and Skyway Aviation Handling Company (SAHCO) which handle almost 95 percent of all export and import cargoes going through Nigerian airports. Findings show that total volumes of cargo (from NAHCO and SAHCO) increased by 21 percent to 33,205,954.39kg in June 2019 from 27,239,029.6kg the previous year. On the other hand, exports fell by 25 percent in 2018 to 4,116,243.1kg from 5,524,953.1kg 2019. D a t a g a t h e re d f ro m NAHCO show that air cargo exports fell by 28 percent to 3,696,940.10kg from 5,201,229.10kg in 2018. On the other hand, the volume of air cargo imports increased by 17 percent to 16,906,938.39kg in 2019 from 14,384,540.6kg in 2018. Similar data obtained from SAHCO show that air cargo imports increased by 26.7 percent to 16,299,016kg in 2019 from 12,854,489kg in 2018. However, exports increased by 29.7 percent to 419,303kg in 2019, from 323,724kg in 2018. Godwin Emefiele, governor, Central Bank of Nigeria, last month said since the establishment of the I&E Window in April 2017, CBN recorded about $35 billion in autonomous inflows through this window alone. As a result, exchange rate pressures eased consider-

ably across all markets as the rates converged to about N360/US$ and the distortive premium almost eliminated. Emeka Enenanah, head of operations, NAHCO, said the economy has been a major driver for importation in Nigeria, adding that with stability in dollar rate, importers can forecast and make business decisions. “On the other hand, exporters are majorly small scale business owners and farmers which constitute small players in the economy. This is rainy season and farmers are just harvesting now, so in the next two or three months we expect exports to pick up because Nigerians export mostly agro products,” Enenanah said. Seyi Adewale, chief commercial officer, Nigerian Aviation Handling Company plc, told BusinessDay that some of the commodities being exported are palm oil, vegetables (fresh/dry), melon (egusi), ‘ogbono’ seeds, ‘cashew nut’, ginger and garlic. Others include zobo leaves, yam, plantain, pepper, cocoa, bitter cola, cola nut, garri, dried fish, yam flour, cassava flour, plantain flour, cocoyam, vegetables and various kinds of fruit. Detoun Abbi-Olaniyan, founder and CEO, Thistleberry Natural Farms, said despite the Federal Government’s moves to promote export of agro products, Nigeria still relies a lot more on its major exports of oil and very few agro-allied products. “We are not prepared to airfreight out of Nigeria. Our facilities are not geared towards exports. The first port of call for fresh commodities before it gets to NAHCO or SAHCO is the inspection point, which is the Nigeria Agricultural Quarantine Service (NAQS). You can’t compare facilities in NAQS to what you will find in Ghana. The facilities are 20 years behind. Inspection and test-

ing are still done manually or outsourced. The technical skill still needs to be renewed. “If the first call of export is this way, contamination can come in at any point in time. This is why our products are not accepted in other countries. Even if the product left the farms fresh, the facilities available can’t keep them fresh for so long. When the commodities manage to get to NAHCO or SAHCO, you see confusion around there. It is like an open air space where products go in and different people come into contact with it. This is enough to discourage an exporter who doesn’t know the business. “Apart from air freight being expensive, our products are not produced to standard and we do not package to standard. You cannot produce for yourself and say you want to export. The few people that understand the business are the ones managing to run it. Majority of what we export are what we feed Nigerians in diaspora, who make up less than one percent of the entire population of one nation,” Abbi-Olaniyan explained. Niyi Akenzua, executive director, finance and risk management, Bank of Agriculture, said Nigerian agricultural produce are taken to Ghana for processing so they can meet international standards and this is not good. A manufacturing exporter said cargo export could have been spurred by easier formalities at cargo airports, lower tariffs and cheaper rate of using the medium for export. “The major challenge we face is that the cost of exporting products out of Nigeria is still very high,” said Jon Kachikwu, CEO of Jon Tudy Interbix, an exporter to the US, who is also the chairman of Lagos Chamber of Commerce SME Group. “There is also no policy in place to support exporters,” Kachikwu said.

Cost cuts, reduced debts, smaller packaging: How Nestle, PZ, Cadbury ... Continued from page 2 the largest miller by market capitalisation, had raised rights issue to reduce debt and bolster earnings. The strategy has yielded fruit as finance cost has fallen by 26.51 percent to N4.55 billion in the period under review while net income jumped by 16.08 percent to N4.23 billion as at June 2019. Earnings were also supported by the large food products portfolio. In order to magnify its share of the market and deliver higher returns to shareholders, the management of

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NASCON Allied Industries plans to increase refined salt capacity by 250kMT in 2019. Analysts at Cordros Securities Limited in a recent note to clients said they see a strong opportunity for sector players in the refined salt space following the implementation of higher import duty on refined salt by the Federal Government to 70 percent. NASCON expanded its seasonings production capacity by 1.5kMT (lifting the overall capacity to 5.24kMT/ yr) in the first quarter (Q1) of 2019 to take advantage of the growth potential in that @Businessdayng

segment. While Unilever Nigeria plc has no plan to launch new product, it intends to move into non-saturated market. It launched its “Everyday Essentials” store on the JUMIA platform in order to drive sales. “They can’t compete because of the operating environment and the only way for them to stay afloat is to go retail,” said Yinka Ademuwagun, research analyst at United Capital plc.

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Wednesday 07 August 2019

BUSINESS DAY

news Nigeria Army decries dearth of female snipers, marksmen Solomon Attah, Lafia

n a bid to expose its female folks to be combat ready amid the growing security challenges, the Nigeria Army says the institution lacked female snipers and marksmen who would take the lead at the international level. Acting commander, Nigeria Army Women’s Corps, Preye Fakrogha, a brigadier-general, said this at the opening of a three-day 2019 Nigeria Army Women’s Corps firing competition, held at the 177 Shitu Alao Barracks in Keffi. He acknowledged that despite the achievements of the military authorities, “a major impediment to the success of our operations remains the dearth of female snipers and marksmen” in the force. “We are thus seeking for opportunities to take part more frequently in both local and international firing exercises and competitions, which will greatly assist in building the muchneeded weapon handling skills and proficiency of our women,” Fakrogha said. He hoped that the exercise would improve on its effort to enhance the combat readiness and professional efficiency of the female military personnel.

He said the firing exercise would allow Nigeria Army Women’s Corps to build on their previous experiences in a practical way and to practice the efficiency of her personal, which “has been made compulsory for the female soldiers in and around Abuja to enable those that have not been involved in any of their outings the opportunity to learn.” He explained that, aside from observing and testing the weapon-handling ability of the female soldiers, the exercise would expose them to the fundamentals of marksmanship which included trigger control, follow through and proper breathing. Other areas of focus during the 3-day training are to increase the confidence, abilities, and experience of the personnel, improve well-balanced posture, shooter’s accuracy, speed, mobility, increased stamina, strength and dexterity. He noted that, in order to enhance the effectiveness of its personnel, all these skills are important during an operational engagement, even as he called for the need to build the capacity of, especially female soldiers in areas of weapon handling to keep them abreast with their male counterparts.

Nigerian in Ethiopian prison dies of terminal ailment Innocent Odoh

igerians in Diaspora Commission (NIDCOM) has announced the death of Odemu Efe, a Nigerian who died in Ethiopian prison recently of terminal disease. A statement signed on Tuesday by Abdur-Rahman Balogun, head of media of NIDCOM, commiserated with the family of Odemu Efe. The statement said, however, that contrary to reports on some online blogs that he died of ill treatment and malnourishment, Odemu Efe died of HIV/ AIDS, according to the death certificate issued by Ethiopian

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Health Authorities. “A confirmation from the Nigerian Embassy in Ethiopia revealed that the former inmate had been seriously ill and taken to two different hospitals in Addis Ababa before he passed on. “Also, contrary to a statement credited to one Miss Chika Nwachukwu, who accused Nigerian officials of showing lack of concern about the welfare of Nigerians in prison in Ethiopia, Ambassador Adeoye Bankole, the Nigerian High Commissioner visits inmates regularly. He visited the Kality Prison in January 2019 and plans to visit Nigerian inmates again in August/September,” the statement said. Reacting to the sad event, Abike Dabiri-Erewa, chairman/CEO of NIDCOM, condoled with the family of the late Efe, and prayed God to bless the soul of the departed citizen.

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L-R: Dominic Oladeji, head, marketing and strategy, Berger Paints Nigeria plc; Samuel Ajose, business partner; Abi Ayida, chairman, and Anjan Sircar, managing director, Berger Paints Nigeria plc, during the opening of Berger Colour World in Ikoyi, Lagos, yesterday. Pic by Olawale Amoo

AfDB woos Chinese investors on billions of dollars investments in Nigeria’s agric sector Onyinye Nwachukwu, Abuja

he African Development Bank (AfDB) is holding talks with keen Chinese investors to possibly leverage billions of dollars worth of investments into the Nigeria’s agriculture sector, which holdshugeprospectsforthecountry and the continent. The AfDB hopes ongoing talks that will climax at a meeting, which began on Tuesday in Abuja - could bring in huge investments across Nigeria’s entire value chain from China – even though there are no figures just yet on financial expectations. The AfDB holds about $5 billion active portfolio investments in Nigeria - with almost about $1 billion in the agriculture sector but hopes to expand that to about $16 billion in the next few years, catalysing private investments. The AfDB is now looking to catalyse investments into four major areas including; agriculture production technologies,

joint venture agro-industrial parks with local agribusiness, sole development of agriculture-industrial parks and joint Afro-industrial parks with state governments. Ebrima Faal, AfDB director/CEO in Nigeria, said at the meeting that the bank had been reaching out to global investors on behalf of Nigeria but that the Chinese had now indicated interest to invest in agriculture. “The Chinese has gone through where we are now in terms of crops, mechanical equipment, adequate financing to support that. We think we can leverage that for a win-win situation. “We are not asking for loans or charity but that they should come and invest with us and they have been quite responsive on available opportunities.Ourinterestisprivate sector investments in agriculture and industrialization, not loans or arms,” Faal told BusinessDay at the

meeting, which discussed huge investment opportunities in Nigeria as well as challenges. The AfDB officials had engaged with the local business community, federal and state governments earlier in the year on how to transform agriculture and rural areas. “As you know, we are trying to stepupagro-processinginNigeria,it isgoingtobeabigpartofinvestment programme going forward. “We know what we want to do over the next five years getting the level of investments to $16billion across board. In agriculture, we expect that we should be able to invest close to $1 billion in that space,” Faal stated. “We needed the Chinese, clealry, the bank will invest, but we need partners, global partners that can come in and invest with us. So we areverypleasedthattheChineseare here as part of the global investment community. “China has a vast experience in agro-processing across the value

chain, from production all the way to industrialisation.” Faal said they anticipate investments will come in many forms, includingbetterseedsquality,better fertilizers, equipment, agricultural implementation and of course, financing will be part of it as well. Speaking on whether there could be security threats that could hinder the anticipated Chinese investments, he said insecurity normally comes about due to lack of opportunities. “Whatwearetryingtodoisbring theseeconomicopportunitiestothe communities and then be able to generate employment and reduce poverty and increase access for most people,” he noted, emphasizing strong correlation between the ability to create opportunities and the reduction in security. Faalcouldnotstresstheamount ofinvestmentsthebankcanleverage for the Nigeria’s agriculture sector, saying this is the first engagement with the Chinese.

FG, US to mobilise $300m for investment in agribusiness in Nigeria Innocent Odoh, Abuja

he Federal Government, the United States government and other stakeholders have mapped our out strategies to mobilise $300 million to support investment and boost business in agriculture sector to reach at least 5,000 small and medium enterprises (SMEs) in order to expand opportunities for agribusiness borrowers and lenders in Nigeria. Indication to this development emerged on Tuesday during the launch of the Feed the Future (FTF) Nigeria Activity “Agribusiness Investment,” a programme spearheaded by the United States Agency for International Development (USAID) to promote 5,000 SMEs, in Abuja on. Feed the Future (FTF) Nigeria Agribusiness Investment Activity is also designed to create a businessenabling environment that promotes private sector investment in agriculture. The Agribusiness Investment activity launched simultaneously served as the Agribusiness

Finance and Investment Summit. This five-year programme starting with $15.7 million activity is the first of USAID/Nigeria’s interventions as part of the Feed the Future country plan that was launched on July 18, 2019. The programme focuses on five key pillars: enlisting public and private –sector partners; connecting micro, small and medium enterprises (MSMEs), to agribusiness services; supporting the development of new financial products; linking MSMEs and entrepreneurs with larger firms; and reforming policies that constrain the ease of doing business. The Agribusiness Investment activity aims to facilitate the growth of existing private sector agribusinesses and work with producer organizations in the rice, maize, soybean, aquaculture, and cowpea value chains to increase Nigeria’s food security status and foster job creation opportunities. The states of Kaduna, Niger, Kebbi, Benue, Delta, Ebonyi and Cross River are targeted

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under this initiative. Vice President Yemi Osinbajo, in a speech at the launch, said the federal government was creating an enabling environment and would ensure coordination between the states, the federal government and the US to achieve the target. Represented by Andrew Kwasari, senior policy adviser in the Office of the Vice President, Osinbajo noted, “The synergy between the US, the Federal government and the states is “a way for the future. The agric sector is key because it employs the largest sector of our population especially the youth.” He added that opportunities abound in the sector that can be exploited and translated into reality. US Ambassador to Nigeria, Stuart Symington, said, “Through this initiative, the US government aims to work with the people of Nigeria to improve the ease of doing business in the agriculture sector, mitigate the risks to lending institutions, and promote investment opportunities for agribusiness to expand and scale up their operations.” @Businessdayng

The USAID contractor of the FTF Nigeria Agribusiness Investment Activity, Adam Saffer, noted that Nigeria has tremendous opportunity to take the advantage of the plentiful arable land in the country, abundant water, human resources , fertile soil and many other things that should make Nigeria not only self-sufficient but the food basket for the region. He added that FTF Activity in order to help Nigeria reach the target “is working with financial institutions, investors, agro data, processors and other businesses and producers to create a more enabling environment to attract those finances and investors.” He added that with a more efficient Agribusiness sector, food generation, better income and more inclusiveness of women and youth “we can end up with a better quality food at a lower price. Our activity is trying to activate $300 million from the investors, from the banks and from the finance institutions to make this happen,” he said.

Wednesay 07 August 2019

BUSINESS DAY

Live @ The Exchanges FGN Savings Bond: NSE says DMO raises over N13bn from retail investors

Stories by Iheanyi Nwachukwu

ince the debut issuance of N2.067billion, retail investors from across the six (6) geo-political zones and the diaspora have invested in the FGN Savings Bond with the Debt Management Office (DMO) raising over N13billion from 2-year and 3-year bond maturities as at July 2019, said Oscar Onyema, CEO, Nigerian Stock Exchange (NSE). He noted this on Tuesday August 6 at the Retail Bond workshop organised by the NSE in collaboration with Debt Management Office (DMO) and Stanbic IBTC Stockbrokers. The workshop aimed at promoting awareness on investing in Federal Government of Nigeria (FGN) securities with discussions on investment opportunities in FGN Bonds, trading of FGN securities on the NSE as well as addressing the issues around the purchase of FGN securities, payments of coupons, complaint resolution with

a view to increasing retail participation in FGN securities and Debt Capital Market as a whole. In March 2017, the Exchange in collaboration with the DMO launched the FGN Savings Bond having recognised the opportunity presented by the Nigerian demographic to diversify Government’s funding sources as well as enhance national savings culture. “From our humble beginnings of listing and trading Federal Republic of Nigeria (FGN) Development Stocks in 1961, the Exchange is delighted to have revolutionised into a multi-asset hub with a N12.47trillion debt market providing investors access to a wide range of investment opportunities in the domestic and international capital market through the listing of sovereign, subnational, corporates and supranational debt issues”, the NSE CEO said. “Our partnership with the DMO towards creating investment opportunities for retail investors in the Debt Market dates to the launch of the NSE Retail Bond Market in 2012; when the DMO appointed

a Government Stockbroker to provide liquidity in FGN bonds on our bourse. “With the launch of the NSE Retail Bond Market, the Exchange sought to promote financial inclusion, while stimulating retail investor participation in the Nigerian Debt market. Prior to that time, investing in listed debt instruments had been dominated by institutional investors trading in wholesale denominations”, Onyema said. Despite these teeming efforts, only about 3percent of Nigeria’s adult population currently participate in the Nigerian capital market; an indication that there is need for increased collaborative efforts in promoting higher levels of financial inclusion in Nigeria. “In achieving our strategic vision to become the preferred Exchange hub in Africa, we will continue to pursue initiatives that seeks to increase domestic participation in capital market through increased access to investment solutions, as well as support government to achieve inclusive growth and sustainable development,” he added.

L – R: Kenneth Nwafor, head, market operations, The Nigerian Stock Exchange (NSE); Oscar N. Onyema, chief executive officer, NSE; Patience Oniha, director general, Debt Management Office (DMO) and Afolabi Oladele, director Portfolio Management, DMO during the 2019 Retail Bond Workshop at the Exchange.

NSE unveils Tuface Idibia as Good Cause Ambassador

he Nigerian Stock Exchange (NSE) has announced the appointment of internationally renowned award-winning artist, Innocent Ujah Idibia popularly known as Tuface or 2Baba as its Good Cause Ambassador. This was disclosed at the unveiling ceremony on Tuesday, August 6, 2019 at the Stock Exchange in Lagos. Further to this appointment as NSE Good Cause Ambassador, Tuface will lend his voice to raising awareness and mobilizing support for the Corporate Social Responsibility and Sustainability initiatives of The Nigerian Stock Ex-

change geared toward achieving the United Nations Sustainable Development Goals (SDG) in Nigeria. Commenting on the appointment, Oscar N. Onyema, Chief Executive Officer, NSE, stated that, ‘We are pleased to welcome Tuface Idibia as the first NSE Good Cause Ambassador. His focus on promoting social causes such as raising awareness on peace, the fight against fake drugs, and various other ills that plague the Nigerian society through his music aligns with our commitment to creating sustainable value for our diverse stakeholders as well as increasing impact in line with the

Sustainable Development Goals (SDGs). We run an inclusive Corporate Sustainability strategy that promotes market-based approach to environmental, social and governance imperatives amongst all stakeholders. The appointment of Tuface is aimed at inspiring accelerated progress towards the advancement of the SDGs”. Speaking at the event, Idibia said “I am honoured to join the NSE family as a Good Cause Ambassador. I have always used my music to inspire change in the world and this has been the focus of the campaigns I have supported over the years. I’m indeed delighted to be given the opportunity to serve in this capacity.

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Wednesday 07 August 2019

BUSINESS DAY

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BUSINESS DAY

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Wednesday 07 August 2019

BUSINESS DAY

NEWS #RevolutionNow: DSS seeks court order to detain Sowore for 90 days JOSHUA BASSEY, Lagos, FELIX OMOHOMHION, Abuja, & WAHEED OLAYINKA ADUBI, Kaduna

...as Police arraign 6 in Lagos

he Department of State Security (DSS) has approached a Federal High Court in Abuja seeking an order to detain Omoyele Sowore, publisher of the online medium Sahara Reporters and convener of the #RevolutionNow protest, for 90 days. Sowore, the presidential candidate of the African Action Congress (AAC) in the February 23, 2019 election, had called for a protest to begin August 5, termed Revolution Now, to draw attention of the ruling class to the suffering of the masses. However, he was arrested last weekend in Lagos and moved to the DSS office in Abuja, where he is currently detained. In the application before vacation judge, Justice Taiwo Taiwo, the secret police, which said Sowore was arrested on account of the #RevolutionNow protest which he had spearheaded, is asking for court order to detain him

all pleaded not guilty, BusinessDay gathered. Human rights lawyer, Femi Falana, on Tuesday faulted the continued detention of Sowore by the DSS without trial. Falana, who spoke in Lagos, said the right of Nigerian citizens to protest was guaranteed under the constitution and where any person is perceived to have violated any law, it was expected to be put on trial and not illegal detention which violates his right as a citizen. Equally miffed by the DSS’ action is former Kaduna State governor, Balarabe Musa, who called for the immediate release of Sowore. Musa in an interview with BusinessDay said that the citizens have constitutional rights to embark on legitimate protest where the government is failing in its responsibility of providing good governance.

for 90 days pending the conclusion of its investigation. The ex-parte motion by the DSS marked FHC/ABJ/CS/ 915/19 is seeking the order of the court to detain Sowore beyond the 48 hours of his arrest required by law. However, after listening to the motion which was moved by counsel for the DSS, G. O. Abadua, Justice Taiwo said he needed time to watch the video clips attached to the motion. He, accordingly, adjourned to Thursday, August 8, for ruling. Meanwhile, six persons including a lawyer arrested by the operatives of the Lagos police command on Monday in connection with the “RevolutionNow Protests” were on Tuesday arraigned in court. They were arraigned before an Ebute Metta Chief Magistrate Court on a two-count charge of unlawful assembly and conduct likely to cause breach of the peace, to which they

L-R: Charles Odita, group managing director/CEO, Midwestern Oil & Gas Company Limited, and Mele Kolo Kyari, group managing director, Nigerian National Petroleum Corporation, during a courtesy visit by Midwestern Oil and Gas to the NNPC GMD in Abuja.

‘Nigeria’s protectionism could threaten AfCFTA implementation’ DAVID IBIDAPO

hile the Federal Government of Nigeria showed reluctance in signing the African Continental Free Trade Area (AfCFTA) agreement hinging on the possibility of the deal not being a level playing field for the country, analysts fear that Nigeria’s protectionism could frustrate implementation. Protectionism is an advocate of a government’s protection for domestic producers through restrictions on foreign competitors. Giving the history of Nigeria’s economic protectionism, analysts say the project, said to create a $3.4 trillion economic bloc, may be weakened on Nigeria’s tepid support of the agreement. Speaking with Reuters, Bismark Rewane, CEO of Lagos-based consultancy Financial Derivative Company, said, “If Nigeria, after signing decides not to implement, there will be a problem,” saying, “There are so many waysinwhichNigeriacanfrustratethis agreement.” The largest economy in Africa, with GDP of about $400 billion and a

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population estimated at 200 million, fear the possibility of Nigeria being flooded with cheap goods due to low competitive advantage, hence impeding efforts to revive its local manufacturingandagriculturesectors in a drive to reduce dependency on crude oil exports. In the last four years, the Nigerian monetaryauthorityhasplacedimport controls on about 43 items with FX restrictions on diary products in the bid to protect local producers and boost industry efficiency. One would have expected that in the spirit of the trade agreement signing, which is aimed at boosting trade relationships among countries withintheregion,theNigeriafiscaland monetary authorities would relaxed some of its import controls. However, this is not the case. “This reiterates the lack of coordinationbetweenthefiscalandmonetary authorities,priortogivingassenttothat agreement, one would have expected that there would be deliberations between both authorities to see how they can remove those restrictions,” Gbolahan Ologunro, analyst at CSL Stockbrokers, told BusinessDay. @Businessdayng

Explaining the fallout of the lack of coordination, “as long as you continue to put restrictions that will hinder the free movement of goods, it will hinder extent of trading relationships or gains countriesinthatagreementcanderive,” Gbolahan said. Although the suspension of these restrictions may quicken the woes on local producers due to weak local capacity, operating environment and business conditions still not favourable with low incentives to produce goods locally, however, with the right structures in place the medium to long term is optimistic. “The right structures not FX policy restrictions as this will worsen economic conditions, particularly from inflation perspective, because those products will still get into the market at a higher price,” he said. TheNigerianeconomyhasoverthe yearsseenitsblackmarketthrivehence while restrictions on imported goods is aimed at encouraging local producers, smugglingactivitiesmaybeheightened if border controls are not effective. The resultant effect of this is higher prices of these goods in the market, therefore an upward pressure on inflation.

Wednesday 07 August 2019

BUSINESS DAY

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BUSINESS DAY

NEWS

Keystone Bank appoints 3 executive directors to drive growth HOPE MOSES-ASHIKE

eystone Bank Limited has appointed three executive directors to its board as part of strategy to realign its operations for sustained business growth. The new directors appointed at the 49th yearly general meeting of the bank in Lagos recently, subject to the approval of the Central Bank of Nigeria (CBN), are Tijani Aliyu, Olaniran Olayinka and Lawal Jibrin Ahmed. Umaru Modibbo, chairman of the bank, said the promotion of the three former general managers to the position of executive directors was in line with the bank’s corporate governance and culture of maximising its human capital through consistent leadership development and training. ‘’Since we restructured, we have intentionally and proactively nurtured our talents in readiness for future leadership opportunities that will arise in the organisation. It is, therefore, a major feat for us that we were able to appoint the three new executive directors from our internally groomed executives,’’ Modibbo said. Omobolanle Osotule, divisional head, marketing and corporate communications, said in a statement the appointment of the directors was in line with the strategic business intent and corporate realignment of the bank to sustain continued business growth.

She said the new executive directors would now join the executive management office to pursue and deliver on the bank’s strategic business objectives bringing to bear their in-depth wealth of banking experience garnered over the years across various sectors of the economy. Tijjani Aliyu holds a Bachelor’s Degree in Economics from Bayero University, Kano, and an MBA from the Bangor Business School, United Kingdom.Hisexperience spans more than two decades in both regulatory and top financial institutions in Nigeria. He is a member of various professional bodies and has attended various courses within and outside Nigeria, including INSEAD Business School and the US Federal Reserve Bank in Washington. Olaniran Olayinka holds a first class Bachelor’s degree and a Master’s Degree in Economics from the University of Lagos. He has attended several executive courses and programmes in banking operations, credit, risk management, business process re-engineering and change management, among others. Lawal Jibrin Ahmed holds an LL.B degree from the University of Jos in Plateau State and an LL.M degree from the University of Dundee in the UK. He has more than 19 years postcall experience that cuts across legal practice, banking regulation, process improvement, conflict resolution, project management and regulatory compliance.

Rivers taxpayers are our development partners – RIRS boss ...Rivers a tax-friendly state as Port Harcourt may host ‘National Tax Roundtable’ Ignatius Chukwu

axpayers in Rivers State are regarded and treated as development partners, so declared the Rivers State Internal Revenue Service (RIRS). The Executive Chairman of the Board, Adoage Norteh, who disclosed this in Port Harcourt, said this is the reason why taxpayers were made to be part of the process in the informal sector tax initiative being rolled out in Rivers State this month. Norteh told BusinessDay in an exclusive interview that the regard shown to the taxpayers informed the decision to set up a joint committee of tax paying groups and the RIRS which recently submitted a resolution on taxes that would be paid and applicable rates, a resolution aimed at calming tensions to promote ease of doing business in Rivers State. The RIRS had made the private sector to lead the discourse

as chairman and secretary, thus removing all fears that the committee was rather a rubber stamp. This is expected to send positive signals to the entire taxpaying community in Rivers State that an acceptable and peaceful tax collection system is born. Other states having chaotic informal sector tax collection systems could also borrow a leaf, sources said. The presumptive tax committee consisted of the chairman of the Rivers State Joint Committee on Implementation of Informal Sector Tax Collection, Uba Obasi, who represented the Manufacturers Association of Nigeria (MAN) in the state, backed by the secretary of the committee, representing the Nigeria Bar Association, Port Harcourt Branch and Clement Akanibo from the organized private sector and member of the Port Harcourt Chamber of Commerce. Other members include: National Association of Small

Scale Industrialists, Pillars of Association, Rivers State Drivers Cooperative, National Union of Road Transport Workers, Tricycle Operators and Traders Union, among others. Obasi, representing MAN as chairman of the committee said the objective was to look into how the RIRS could capture the revenue of the informal sector in the state. He told newsmen that it was also to eliminate multiple taxes and usher in peace in the tax collection process. He stated: “We have just endorsed the report we fashioned out and it would be forwarded to the Executive Chairman of the RIRS. If approved, it would bring to an end the problems bedeviling tax collection mechanism in the informal sector tax collection in the state. We need the information to spread to all taxpayers in Rivers State in order to protect the tax process from touts and ensure

that collections made get to the coffers of Government. However, the Revenue Board has agreed on how to collect taxes from the informal sector which is expected to take off this August.” Explaining the significance of the historic resolutions, the RIRS boss reminded taxpayers that the Rivers infrastructural development and facilities can only be sustained through their collaboration and cooperation. It is noteworthy that Rivers IGR did not crash when other aspects of the national economy faced challenges and when many businesses collapsed. Instead, the IGR of the state recorded modest increases. According to sources, IGR rose from an average of 5.5Bn per month in 2016 to about 10Bn monthly in 2017 when the present tax administration took over. This is expected to further rise given these Informal Sector tax initiatives.

UACN names Suzanne Iroche as non-executive director KELECHI EWUZIE

oard of UAC Nigeria plc has announced the appointment of Suzanne Olufunke Iroche to its board as an independent non-executive director. The company discloses this in a statement made available to BusinessDay, adding that Iroche replaces Awuneba Sotonye Ajumogobia, the independent non-executive director who resigns from the board July 31, 2019. Daniel Agbor, chairman, UACN board, expressed the board’s gratitude to Ajumogobia for her nine years of hard work, integrity and meritorious service to the UAC. Iroche until her appointment has several years of broad-based experience in merchant and commercial banking spanning the areas of corporate and institutional banking, marketing,

correspondent and international banking, treasury and regional expansion. She handled back and front office roles at International Merchant Bank after which she moved to Chartered Bank as a pioneer member of staff to set up the treasury division and subsequently moved to the credit and marketing sector. Iroche later joined United Bank for Africa (UBA) where she rose to the position of executive director, wealth management and was responsible for treasury and correspondent banking/ multilateral agency business and UBA subsidiaries (Asset Management, Trustees and Pension Custody). She graduated with a B.Sc. degree in Economics from University of Lagos and a master of Management from the Kellogg Graduate School of Management, Northwestern University, Illinois, USA.

AIICO Pension hosts enlightenment forum

IICOPensionhostedanenlightenment forum on July 18, 2019, at Primrose Event Centre, 1, Akilo Road, Ogba Ikeja, Lagos, for its active and retired customers as well as the pension desk officers of employers that theycurrentlyserveinLagosState. The forum was organised primarily to serve as a platform for the AIICO Pension to educate participants on the current trends in the pension industry as well as getfeedbackfromtheircustomers on how they can be better served. In attendance at the event were Sola Adeseun from the National Pension Commission (PenCom), representatives of Lagos State Pension Commission (LASPEC), representatives from

various Ministries, Departments and Agencies (MDAs), pension desk officers from both the public and private sectors, as well as AIICO Pension retiree and active Retirement Savings Accounts (RSA) holders in the state. In addition to the enlightenment sessions at the event, representatives from Access Pension Custodian Limited (formerly Diamond Pension Custodian Limited) and GTL Trustees Limited were present to talk about their service offerings. A health talk titled, “Your Health and You,” was delivered by medical practitioners at the venue as well as free medical examinations for all attendees. www.businessday.ng

L-R: Emmanuel Ikazoboh, group chairman, Ecobank Transnational Inc; Uju Uzo-Ojinnaka, founder/CEO, Traders of Africa and African Trade Invest, and Olatunde Kunle, a representative from UBA, at the official launch of African Trade Invest App in Lagos.

500,000 homes, 1.5m jobs expected in 5yrs as Fund partners firms, DFIs CHUKA UROKO

n the next five years, the housing market in Nigeria expects about 500,000 homes, that is 100,000 housing units per year, as Family Homes Funds (FHF) continues its interventions in the country’s housing sector through strategic partnership with players in the housing sector and leading Development Finance Institutions (DFIs) in the world. At an average of four persons per housing unit, it means about 2 million persons will have shelter over their head when these housing units are completed and delivered to the market, reducing considerably the country’s over 20 million housing demand-supply gap. FHF is Federal Government of Nigeria’s intervention pro-

gramme in the housing sector. It is expected that the funds housing development activities will create about 1.5 million jobs. Given the multiplier effect of job creation, expectation is that over 3 million households will be empowered economically. Recently, on the sideline of the Abuja International Housing Show, the Fund signed a memorandum of understanding with Construction Skills Training and Empowerment Project Limited (C-STEMP). C-STEMP is an organisation with a vision to build a pool and database of certified artisans with the requisite skills to meet industry needs that translate to better quality of work and life for all stakeholders. This partnership, according to officials of the Fund, is very strategic and critical because it

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will help to provide the needed skill set for the production of the planned 500,000 housing units without recourse to importing labour from neighbouring West African countries like Togo and Benin Republic where most of the artisans for housing construction in Nigeria come from. Currently, FHFL is seeking partnership with developers to create vocational jobs and empowerment programmes and products for low to medium income earners currently in or potentially interested in building a career in construction. In implementing this empowerment programme, the Fund emphasises need to incorporate training, assessment and certification as conditions for beneficiaries to access its programmes and to ensure that only skilled labour are utilized @Businessdayng

on its projects. Its partnership with C-STEMP is also aimed to provide affordable and quality homes while creating jobs for highly qualified persons. FHF is also in partnership with the Central Bank of Nigeria (CBN), Ministry of Finance and international financial institutions, making it a pivotal force in delivering affordable housing to Nigerians through multiple schemes including Help-toown, Rent-to-own, affordable and flexible mortgage plans, among others. “Our role is primarily to meet affordable housing demands in Nigeria,” explained Femi Adewole, the Fund’s managing director, adding, “we are here because it is not enough to supply houses without taking care of the demand side.”

Wednesday 07 August 2019

BUSINESS DAY

POLITICS Ex-council boss calls for dissolution of Edo PDP exco …Threatens court action over alleged plan to extend exco

effrey Osamede Edorodion, a former vice chairman of Ikpoba Okha Local Government Area, has called on the national leadership of the People’s Democratic Party (PDP) to dissolve the Edo State executive before the conduct of the next year’s gubernatorial election in the state. Edorodion, a chieftain of the party, made the call in an interview with newsmen yesterday in Benin City. The two-time vice chairman of the council also called on the party’s candidate in the last Presidential election, Atiku

Abubakar, the South-South PDP governors especially Ifeanyi Okowa and Nysom Wike to prevail on the national leadership of the party to dissolve the Dan Orbih-led state executive and conduct a new state congresses He said the call was occasioned by the expiration of the mandatory eight years of two tenure provided for by the party’s constitution. “I want to use this medium to call on the national chairman of the party, Uche Secondus, the Board of Trustee members and especially the South-South governors particularly the

Rivers State G overnor, Nysom Wike and his Delta State counterpart, Ifeanyi OKowa to look into the tenure of the state executive of the party because it is going to take a different dimension if not urgently addressed before the conduct of the next year’s governorship election in the state. “If they failed to look into the planned tenure elongation by the current executive of the party in the state in a bid to address it urgently before the election, the party will forever remain in opposition in the state. “I am also calling on

the party’s presidential candidate in the last election, Atiku Abubakar to intervene by prevailing on the national leadership to dissolve the present executive and conduct a state-wide congress. “Atiku should also look at the issue unless he doesn’t have the state at heart. If he has the state at heart he should do the needful because we won the state for him. That is why he should have the state at heart to ensure that the problem is really looked into. Our leaders like Chief Anthony Anenih and Samuel Ogbemudia are no more,” he said.

While decrying the alleged plan to extend the tenure of the current state executive, he opined that allowing the executive to midwife the conduct of the next year’s governorship will be a disastrous mistake by the party. “There is nothing like tenure elongation in our party. The constitution only allows for maximum of eight years and minimum of four years. Former president Olusegun Obasanjo and former president Goodluck Jonathan tried tenure elongation but they all failed. If these persons failed, why will a state chairman of the party try

it and succeed? “ The pres ent chairman has been in the office since 2009 after the dead of Samson Ekhabafe. He was brought to complete the tenure of the late Ekhabafe and after completing the tenure he has since been elected for two tenures. If I were him, I would have resigned honourably instead of giving room for people to protest against his continued stay in office”, he added. He however, threatened that some of them would approach the court to seek redress if the party failed to dissolve the executive and conduct congresses.

Release Sowore unconditionally to avoid international repercussions, Buhari told REMI FEYISIPO, Ibadan.

he Presidential candidates and aspirants that participated in the 2019 general election have called for the unconditional release of Omoyele Sowore, presidential candidate of African Action Congress (AAC). The candidates and aspirants under the aegis of ‘Third Force’ said that President Muhammadu Buhari should be reminded that the constitution of Nigeria does not allow violation of human rights. Sowore, who is also the publisher of Sahara Reporters, was arrested in the early hours of Saturday by the men of Department of State Service (DSS), after he announced to lead a nationwide protest code named Revolution now to take place on Monday. In a statement signed by seven of the Presidential candidates and aspirants, a copy of which was made available Tuesday in Ibadan, the Oyo State capital implored Buhari to immediately order the applicable agencies of the state to immediately release Sowore unconditionally, in order to maintain peace in the country, and to deter further national and international repercussions on this matter. The former Presidential candidates and aspirants in the statement signed by Tope Fasua, 2019 Presidential Candidate, Abundant Nigeria Renewal Party (ANRP), Okey Samuel Mbonu, 2019 Presidential Aspirant, Labour Party (LP), SKC Ogbonnia, 2019 Presidential Aspirant, All Progressives Congress (APC), Thomas-Wilson Ikubese, 2019 Presidential Aspirant, Alliance for New Nigeria (ANN), Emmanuel Etim, 2019 Presidential Candidate, Change Nigeria Party (CNP), Ayodele O. Favour, 2019 Presidential aspirant, Young Progressives Party (YPP); Clement Jimbo, 2019 presidential aspirant,

and Social Democratic Party (SDP), said: “We, the Coalition of former 2019 Presidential Aspirants and Candidates, under the aegis of Third Force Forum, hereby demand the unconditional release of one of our compatriots, Omoyele Sowore, who was arrested by an agency of the government on August 2, 2019, pursuant to plans for a protest march across Nigeria; which is within his full constitutional rights toward ‘Freedom of Expression’, pursuant to the Constitution of the Federal Republic of Nigeria. “We must also remind you, Mr. President, that in addition to the Nigerian Constitution, Nigeria also subscribes to other International Treaties, which prohibit violation of human rights of her citizens. “To refrain from adhering to these national and international rights, is to invite anarchy onto the Federal Republic of Nigeria.” The group further said: “As you are fully aware Mr. President, every democratic government that subscribes to the Rule of Law, has timetested methods of containing any breach of the peace during peaceful protests; without clamping down on our fundamental rights of “Freedom of Expression” and to peaceably assembly, in-order to address grievances by the government; even when those views expressed are contrary to the views of the current government. “Therefore, we implore you to immediately order the applicable agencies of the State to immediately release Mr. Omoyele Sowore unconditionally, in-order to maintain peace in our country, and to deter further national and international repercussions on this matter. “Thank you for your cooperation in this matter Mr. President, we look forward to a mutually respectful Nigeria for all Nigerians.”

Picture from the ‘#RevolutionNow’ protesting at the National Stadium in Iganmu, Lagos, recently

Balarabe Musa backs calls for protest, seek release of Sowore … as Uzairue clan endorses Obaseki/Shaibu for second term Waheed Olayinka Adubi

bdulkadir Balarabe Musa, a former governor of the old Kaduna State, has thrown his weight behind the several calls for protest in the country. Musa, who spoke in an interview in reaction to the mass protest by Nigerians against government, said that the citizens have constitutional rights to embark on legitimate protest where the Federal Government is

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failing in its responsibility of providing good governance. According to Musa, the Buhari administration has failed in providing the necessary security, in dealing with security challenges and the poor welfare of Nigerians, just as he said government has no right to arrest anybody protesting on the state of the nation. “It is the fundamental right of the protesters to protest peacefully. The failure of the government is the bane

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of the call for revolution”, he said. Balarabe, who is the leader of the Conference of Nigerian Political Parties (CNPP), condemned the arrest of former Presidential Candidate of the African Action Congress (AAC), Omoyele Sowore for leading #RevolutionNow protest against President Muhammadu Buhari administration, as he called for his immediate release by the Federal Government. “Sowore’s action is @Businessdayng

not treasonable. You cannot arrest any Nigerian who is protesting against the maladministration of Buhari’s government. The right thing must be done to salvage the country,” he emphasised. He further said that the decision by the government to arrest those they think are threat to them cannot be acceptable. “Nigerians have the right to oppose the wrongs of government and poor handling of the country,” he said.

Wednesday 07 August 2019

BUSINESS DAY

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Wednesday 07 August 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

AIME WILLIAMS AND DEMETRI SEVASTOPULO IN WASHINGTON AND GIDEON LONG IN LIMA

S President Donald Trump has announced a near total economic embargo on Venezuela in an effort to force president Nicolás Maduro out of office. Mr Trump on Monday signed an executive order freezing all Venezuelan government assets in the US. It also bars foreign nationals from undertaking financial transactions with the regime as Washington dramatically ratchets up pressure on Mr Maduro. The embargo marks the first time the US has taken such action against a western hemisphere government since 1988, when it imposed a similar measure on Panama. John Bolton, the White House national security adviser, spoke about the embargo at a conference in Lima, Peru’s capital, on Tuesday. Mr Bolton said the order “freezes all of the Venezuelan government’s assets, and prohibits transactions with it, unless specifically exempted” and that it “authorises sanctions on foreign persons who provide support or goods or services to any designated person, including to the government of Venezuela”. “We are taking this step to deny Maduro access to the global financial system, and to further isolate him internationally,” Mr Bolton said. The order will allow case-bycase exemptions under the new sanctions programme that could allow big companies, such as

Trump slaps broad new sanctions on Venezuelan government

Exemptions could permit large companies to continue to operate in country

Chevron, to continue to operate in the country. “It looks like it’s aimed at protecting Venezuelan assets from being sold off by the Maduro government, but if PDVSA and the central

Independent producers and global majors target giant Vaca Muerta formation

ix years ago Miguel Galuccio first brought Chevron to Argentina’s Vaca Muerta, or “Dead Cow”, rock formation. Now, as chief executive of independent producer Vista Oil & Gas, the 51-year-old is blazing a trail for rivals and still pushing Argentina to replicate the success of the US shale boom. Vista last month raised $100m on the New York Stock Exchange, weeks after becoming the first company to export shale oil from Vaca Muerta, billed as the most promising shale oil and gas basin outside the US. “Investors move in packs, and packs always have a leader,” said the petroleum engineer who used to run state-controlled energy company YPF. “We are leading the way [for Argentina] to tap into a new kind of money which was really what created the shale boom in the US,” he added, referring to the key role of independent companies. Moreover, Argentina has

the advantage of “permanently benefiting from lessons learnt in the US”. Argentina has a long way to go before reaching US levels of crude oil production, which recently hit 12m barrels per day having more than doubled in the past decade. However, with about 2bn barrels of oil reserves — and some 27bn barrels of potential resources in Vaca Muerta — and confidence that Argentina’s shale fields are comparable to formations such as Eagle Ford or Bakken in the US, the government aims to double oil production from 500,000 to 1m bpd and natural gas from 1.4tn cubic ft to 3.5 tcf by 2023. “There is a stealth productivity revolution taking hold in Vaca Muerta that could set the course for a major burst in hydrocarbon production in the next five years,” said Walter Stoeppelwerth, the chief investment officer at Portfolio Personal Inversiones in Buenos Aires. He added that this could “revolutionise Argentina’s debt dynamics, balance of payments and fiscal performance”. www.businessday.ng

tighten the screws on the Maduro regime and pave the way for Juan Guaidó, the opposition leader, to come to power. The US had hoped its pressure campaign would bear more fruit more quickly, but Mr

Tencent in talks to buy 10% of Universal Music from Vivendi

Argentina seeks to replicate success of US shale boom BENEDICT MANDER

bank are already sanctioned it is not clear what this does that’s new,” said David Smilde, a Venezuela expert at Tulane University in the US. The executive order is the latest in a series of White House efforts to

Maduro has managed to cling to power. The push on Venezuela is one of several US “maximum pressure” campaigns around the world, including tough sanctions on Iran and North Korea, that are designed to change the behaviour of regimes — or in the case of Venezuela, the regime itself. “With Venezuela . . . it’s gone on longer than most would have predicted,” said one senior US administration official. Other US measures over the past two years have included cutting Venezuela’s access to most of the US financial system, freezing the assets of key Maduro regime officials, and targeting PDVSA, the national oil company. They also include banning transactions with the Venezuelan central bank and prohibiting oil and gold sales. Further, in January the US stopped Caracas from exporting crude oil to the US and from importing diluents needed to process its heavy crude. That same month, the US recognised Mr Guaidó as the country’s interim president in a direct challenge to the Maduro regime.

Deal with Chinese tech group would value world’s biggest music group at €30bn NIC FILDES IN LONDON, MERCEDES RUEHL IN HONG KONG

encent is set to take a 10 per cent stake in Universal Music, the label of artists from Taylor Swift to The Beatles, in a deal that would mark the latest expansion of the Chinese technology group’s footprint in the global music industry. French media conglomerate Vivendi, Universal’s owner, said on Tuesday it was in talks to sell the stake to Tencent in a transaction that would value the world’s largest music group at €30bn. The Chinese company would also have an option to double its stake within a year on the same terms. The sale to the Chinese media group is the latest sign of a sustained recovery in the music industry, which has rebounded from a 15-year slump driven by online piracy and the collapse of the CD market. It follows April’s direct listing of Spotify, in which Tencent also holds a substantial minority stake. Vivendi, whose shares jumped

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6 per cent after the announcement, has shed billions of euros worth of assets in the telecoms and video games sector in the past decade. It has been exploring the sale of a stake in Universal since 2018 as the streaming boom lifted the value of music assets. It said it was discussing “areas of strategic commercial co-operation” with Tencent, including growth opportunities from “the opening of new markets”. Tencent, one of China’s biggest tech groups, emerged as a potential bidder this year when it received a Vivendi delegation in Shenzhen. Other music services it has backed include India’s Gaana, pan-Asian service Joox and singing app Smule. “We are seeing continuous investment from Tencent into the music industry,” said Elsa Hu, a Hong-Kong based executive director at tech-focused investment bank GP Bullhound. She added that the Universal deal was “another investment in the content and intellectual property end of the . . . entertainment industry, in line with [that] strategy”. @Businessdayng

Universal already has an agreement with Tencent to use its streaming platforms and established Abbey Road China alongside its potential investor. However, investment bank Jefferies sounded a note of caution, warning that “US political opposition to Chinese investment in a strategic asset could obstruct” the deal. Thomas Singlehurst, an analyst at Citi, said the proposed investment carried a higher valuation than expected but was short of the 50 per cent stake sale that had been mooted, with the numbers suggesting “just €3bn of buyback potential initially versus expectations of [more than] €10bn”. Vivendi’s first-half results released a fortnight ago showed Universal’s revenue rising 18 per cent to €3.3bn boosted by the success of Billie Eilish, Ariana Grande and the soundtrack to A Star is Born. Earnings before interest, tax and amortisation rose 44 per cent to €481m excluding currency movements. Universal accounted for 67 per cent of Vivendi’s overall earnings in the first half.

Wednesday 07 August 2019

BUSINESS DAY

NATIONAL NEWS

UBS spurs rivals to charge wealthy clients negative rates Swiss banks seek to mitigate pressure on profits from shift in monetary policy ALICE ROSS, WEALTH CORRESPONDENT

egative interest rates have claimed their latest victim : the ultra-rich. It emerged last week that UBS, Switzerland’s largest wealth manager, was planning to levy charges on wealthy clients with substantial pots of cash at the bank. Tidjane Thiam, Credit Suisse’s chief executive, told reporters that it was also considering charging clients who are holding cash with them in Switzerland to “mitigate [the] pressure” of negative interest rates. The moves come as banks around the world steel themselves for low — and, in some cases, negative — interest rates to be one of the defining features of the financial landscape for longer than expected. The European Central Bank is widely expected to cut its deposit rate from minus 0.4 per cent to minus 0.5 per cent in September — with some predicting it could go even further after that. Swiss interest rates have been at -0.75 since January 2015. Then last week, the US Federal Reserve cut interest rates for the first time in a decade. UBS believes its move — as the largest wealth manager in the world — is likely to spur competitors to do the same. Kleinwort Hambros, the UK private bank owned by Société Générale, has been developing the technology required to charge negative interest rates in the event of an influx of clients from competitors — though it currently has no plans to levy negative rates on depositors. Some smaller Swiss banks — including Pictet and Julius Baer — have already been passing on negative interest rates set by the central bank to clients. Lombard Odier plans to charge negative rates on euro deposits over €1m from October for what it says is a small number of clients who do not hold discretionary mandates with the wealth manager. So far, banks have largely only passed on these negative interest rates to their corporate and institutional clients. The move to target wealthy individuals comes as bankers complain that their richest clients are holding too much of their portfolios in cash, amid concerns about the outlook for

equity markets and the global economy. Wealthy clients need to get away from a perspective that cash is less risky, says Mark Haefele, chief investment officer at UBS global wealth management. In a negative interest rate environment, holding assets in cash is an easy way to lose money. And caution on the part of wealthy customers carries another sting for banks. The more clients trade, the more lenders earn in fees, while depositing assets into cash simply costs the bank money. “Negative rates have proved more sticky and endurable than we thought before they were introduced,” says one banker. “Whereas in the past banks have thought this is something we’ll have to mitigate the effects of, they are now under genuine economic pressure to pass the market rates on to their customers.” Some bankers believe that the next steps for banks will be to start penalising customers lower down the wealth curve for holding cash. “The class of clients is going to be surely and slowly increased,” predicts one. The trick will be the balancing act: if they levy charges on retail clients with smaller deposits, they could see withdrawals that would harm their balance sheets. Others believe banks will not venture that far. “It becomes a political and a social issue if you charge a ‘normal’ person negative interest rates,” says Ronit Ghose, an analyst at Citi. Some view the move by UBS to pass on the cost of central bank policy to private clients as simply a bid to signal to shareholders that they are taking steps as negative rates become more entrenched in Switzerland. On that reading, this is less about clawing back money, rather demonstrating that they are addressing the ongoing threat to their profitability. More than anything, banks are hoping that by passing on negative rates, they will finally incentivise both companies and wealthy people to invest more of their money rather than hoard it. As one analyst puts it: “The ECB are ultimately trying to say to companies and individuals: spend it, go and build that factory or buy that yacht, as that’s what we want for the economy.” www.businessday.ng

Idris Elba in Netflix comedy ‘Turn Up Charlie’. Idris Elba in Netflix comedy ‘Turn Up Charlie’. More Americans are rejecting cable’s hefty costs and commercial breaks for streaming services © PA

US ‘cord-cutting’ gathers pace as TV viewers abandon cable A fifth of households set to have ditched contracts by year-end as streaming upends sector ANNA NICOLAOU IN NEW YORK

fifth of US households will have abandoned cable television by the end of next year, according to forecasts that underline the gathering pace of disruption in the entertainment industry. The number of US households that have “cut the cord” by ditching their traditional pay-TV package is set to jump by 19 per cent to 22m this year, research group eMarketer predicts. More and more Americans are rejecting cable’s hefty monthly costs and commercial breaks as they decide on-demand streaming services such as Netflix, YouTube and Amazon Prime can satisfy their viewing desires. The exodus from cable has weighed on the industry for years, as the number of Americans who pay for traditional TV steadily declined from 100.5m in 2014 to

86.5m in 2019. The shift has upended the industry, as traditional media groups race against time to diversify away from the cable and satellite business model that they have relied on for decades. The sector has coped through consolidation, with the biggest groups such as Disney and AT&T splurging on megadeals as they look to build up fortresses of content they can package into their own streaming services. Meanwhile, Comcast and other companies that pipe TV into homes have largely accepted that video subscribers are in long-term decline, and are trying to make up for the loss by selling high-speed internet, an essential for anyone wanting to watch streaming services such as Netflix. However, the plunge in TV customers has been even steeper than these executives expected in the second quarter. Combined, Comcast, AT&T and Charter

have bled 1.3m video subscribers — a sharp acceleration from the 134,000 they lost in the same period last year. Wall Street analysts had expected the three companies to lose about 800,000 pay-TV subscribers. The second quarter is always tough for the pay-TV industry, as families move home and college students disconnect, but analysts at research company MoffettNathanson said the results had been “ugly”. Comcast, like its peers in cable, “is increasingly comfortable letting video find its own level”, they said. Netflix was the first operator to offer a digital streaming video service and in recent years has been joined by competitors both from new and old media companies, who are anxious to claw back consumers. The coming year will bring a battle in streaming as Disney, Apple, AT&T’s WarnerMedia and Comcast’s NBCUniversal all launch new online video services.

Facebook’s cryptocurrency raises privacy questions, say regulators Watchdogs from EU, UK, Canada and Australia issue joint letter highlighting Libra concerns HANNAH MURPHY IN SAN FRANCISCO

ata protection officials in the US, EU, UK, Australia and Canada have raised concerns over the “privacy risks” of Facebook’s plans for a new digital currency, marking the latest blow to the Libra project. In a joint statement on Monday, the regulators said the Libra Network operated by Facebook and 27 partners may “instantly become the custodian of millions of people’s personal information”. But they said they were concerned that this “vast” reserve of personal data, coupled with financial information and the design of

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the cryptocurrency, had amplified their concerns. “To date, while Facebook and Calibra have made broad public statements about privacy, they have failed to specifically address the information-handling practices that will be in place to secure and protect personal information,” the officials said in the statement. “Given the current plans for a rapid implementation of Libra and Calibra, we are surprised and concerned that this further detail is not yet available,” they added. They urged the Libra group to offer more details, such as how customers will be profiled and whether any of their data will be shared among Libra’s 28 founding @Businessdayng

members. Signatories include Elizabeth Denham, the UK’s information commissioner, and Giovanni Buttarelli, the European data protection supervisor. Rohit Chopra, a Democratic commissioner of the US Federal Trade Commission, is among those listed, as well as data commissioners in Canada, Australia, Albania and Burkina Faso. Facebook has faced mounting resistance from regulators, central bankers and politicians since it announced plans to launch a lowcost digital currency alongside 27 other companies — including Visa, Mastercard, Uber and Spotify — by the end of next year.

Wednesday 07 August 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Klarna becomes most valuable EU fintech with $5.5bn valuation Swedish payments company raises new money ahead of IPO

RICHARD MILNE, NORDIC AND BALTIC CORRESPONDENT

larna has become the largest private fintech startup in Europe after a new funding round valued the Swedish payments group at $5.5bn ahead of a potential stock market flotation. The Swedish “buy now and pay later” company raised $460m in equity from investors including Silicon Valley venture capital company Dragoneer, the Commonwealth Bank of Australia, and funds managed by the world’s largest asset management group BlackRock. Klarna’s valuation has risen from $2.5bn at the start of this year to $3.5bn in April when existing shareholders such as Hennes & Mauritz, Sequoia Capital and Permira invested fresh equity to today’s post-money valuation of $5.5bn, ranking it as the eighth most valuable private fintech globally. Sebastian Siemiatkowski, Klarna’s chief executive, said that the Swedish group was edging closer to an IPO. “At this point of time, it’s more likely than it has been previously. I definitely think it will happen. But it’s not like there’s a formal decision. Right now the whole company is just focused on making sure we are growing fast,” he added. Asked if Klarna is ready for an IPO, he replied: “In many ways, we

have most of the things in place that we need. It’s more of a question of timing and focus. We have such high growth in the US. An IPO is a lot of work.” Klarna is the latest in a series of Swedish tech success stories that include the music streaming company Spotify to gaming groups King and Mojang. Stockholm has produced more billion-dollar “unicorn” companies than any other region behind Silicon Valley. Founded in 2005 by a trio of business school friends, Klarna took the idea of customers only paying when they received an invoice and applied it to online shopping. It now processes $29bn of transactions for merchants such as Asos and Ikea, earning fees from them as well as interest from customers who pay late. Last year, it made an operating profit of $19m on revenues of $627m. Mr Siemiatkowski said the new money would help it expand in the US, where it is growing at the rate of 6m users ayear. “We have just seen massive traction in the US market. We have super high growth, both among merchants and consumers. This is a massive market opportunity.” Klarna was one of the first large European fintechs to gain a banking licence in 2017 and has started offering its own payment card. Its shareholders are as diverse as Visa, fashion group Bestseller, and rapper Snoop Dogg.

Barneys New York files for bankruptcy Luxury department store chain plans closures as it secures $75m in emergency funding JAMES FONTANELLA-KHAN AND ALISTAIR GRAY IN NEW YORK AND MYLES MCCORMICK IN LONDON

arneys New York, the luxury department store chain that long epitomised Manhattan style, has filed for bankruptcy in the latest sign of mounting pressures in US retail. The 96-year-old company said on Tuesday it had filed for Chapter 11 bankruptcy protection and secured $75m in emergency financing from affiliates of Hilco Global and the Gordon Brothers Group as it hunts for a buyer. The move is the latest in a series of recent restructurings in retail. Sears filed for Chapter 11 bankruptcy last year and Toys R Us collapsed into liquidation. It comes as a reminder that it is not only retailers in weak shopping malls that are under strain. Some of the best known stores in and around New York’s premier shopping district on Fifth Avenue have closed in recent months,

including Henri Bendel and Lord & Taylor. “Like many in our industry, Barneys New York’s financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand,” said Daniella Vitale, chief executive and president. “In response to these obstacles, the Barneys New York Board and management team have taken decisive action by entering into a court-supervised process, which will provide the company the necessary tools to conduct a sale process, review our current leases and optimise our operations.” The process will see Barneys close its stores in Chicago, Las Vegas and Seattle, along with five smaller “concept” stores and seven warehouses. It will retain operations in Madison Avenue, Downtown NYC, Beverly Hills, San Francisco and Copley Place in Boston, as well as two warehouses. www.businessday.ng

US Treasury officially labels China a currency manipulator Decision comes after Beijing let renminbi fall through key level DEMETRI SEVASTOPULO IN WASHINGTON AND COLBY SMITH IN NEW YORK

he Trump administration has officially labelled China a “currency manipulator” after the Chinese central bank allowed the renminbi to fall below a key threshold, marking a dramatic escalation in the trade war between the two economic powers. The US Treasury announced its decision after financial markets closed on Monday. It came just hours after President Donald Trump again accused China of weakening its currency to create an unfair trade advantage. The Treasury designation was seen by analysts as a largely symbolic move that would serve as a political justification for more tariffs. “The US Treasury’s designation of China as a currency manipulator signals that the trade war is expanding into an all-out and open economic warfare between the two countries,” said Eswar Prasad, a Chinese financial system expert at Cornell University. The Treasury department said China had a “long history of facilitating an undervalued currency” by

intervening in the markets. “In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past,” it said in a statement. The designation came after China let the renminbi weaken to under Rmb7 to the dollar on Monday, shaking markets around the world. US stocks recorded their biggest oneday drop this year and bond yields dropped as investors worried that US-China trade tensions hold back global growth. On Tuesday, Asian stock markets opened sharply lower. Beijing acted after Mr Trump said on Friday the US would impose tariffs on another $300bn worth of Chinese goods next month, shattering a truce that he reached with Chinese president Xi Jinping in June. In further retaliatory measures on Monday, Beijing asked its state-owned enterprises to halt US agricultural goods purchases in retaliation to the US tariff threat. On Tuesday, China’s Ministry of Commerce said the government was “currently not ruling out applying additional tariffs” on imports of US agricultural goods because of Mr Trump’s plan to raise tariffs on

$300bn of Chinese goods. It added that the US president’s plans “seriously violated the consensus reached by the US and China” at the G20 meeting in June. China’s potential tariffs would apply to purchases of agricultural goods made after August 3, the day after Mr Trump announced his tariff increase, it said. Joseph Gagnon of the Peterson Institute for International Economics said the “bombshell” move should be seen as political ploy aimed at giving Mr Trump more ammunition to justify tariffs. He said China had previously resisted weakening its currency when hit with tariffs. “China has resisted doing that, which was doing us a favour. Now they’ve decided not to do us a favour any more,” said Mr Gagnon. Mr Prasad said the designation technically triggered a process whereby the US could ask the IMF to evaluate China’s currency policies. But he said the move had political motivations, as well. “This justification provides political cover since the currency manipulation charge has long been levelled at China by Chuck Schumer, the top Senate Democrat, and other Democrats,” he said.

US credit card interest rates hit 25-year high Consumers unlikely to feel benefit of Federal Reserve rate cuts ROBERT ARMSTRONG IN NEW YORK

S consumers are paying higher interest rates on their credit card balances than they have in more than a quarter-century, and the Federal Reserve’s rate cuts are no guarantee that they will receive much relief. The average rate on interestbearing card accounts topped 17 per cent in May, according to Fed data, the highest in the 25 years that the central bank has been making the calculation. Weekly data based on a Creditcards.com survey of 100 national card issuers found an average rate of 17.8 per cent at the end of July, another

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multi-decade high. Card rates rose from longterm lows as the Fed gradually increased its benchmark interest rate between late 2015 and the end of last year. But card issuers pushed up rates faster than the Fed, with the result that the spread between the Fed benchmark and what card borrowers pay, at just under 15 per cent, has been wider only once: in the third quarter of 2009, with rates on the floor. Analysts point to two groups that have contributed to the aggressive increase in rates by cardissuing banks: lawmakers and customers themselves. The CARD Act of 2009, a US law @Businessdayng

designed to protect card holders from exploitation, put limits on banks’ ability to raise interest rates on existing balances. The card issuers “can’t reprice you once they sell you a card — so they have to price [more risks] in”, said John Hecht of Jefferies, a broker. Another factor, he said, was that customers were not focused on what rates they would pay but instead on what perks, from cashback to airline miles, their cards brought. “When you hear [bank] management teams talking about competition in cards, it doesn’t take place in terms of rates but in terms of rewards,” Mr Hecht said.

Wednesday 07 August 2019

BUSINESS DAY

ANALYSIS

Should you admit you were fired? Being sacked is a humiliation and the desire to save face is strong MICHAEL SKAPINKER

SBC chairman Mark Tucker on Monday said chief executive John Flint was leaving by “unanimous decision of the nonexecutive directors.” But the bank also said Mr Flint had resigned “by mutual agreement”. Last week Iain Conn said he was stepping down as chief executive of Centrica. Although the UK energy supplier’s shares fell to a 22-year low as the company slashed its dividend, Mr Conn said he too was leaving next year by mutual consent. “It wasn’t that the board suggested [I depart] and I agreed, we agreed together,” he said. Steve Bannon also insisted on the BBC’s Today programme that he had quit as Donald Trump’s adviser in 2017 and had not been fired, in spite of a later tweet from the US president that Mr Bannon “cried when he got fired and begged for his job”. By contrast, David Gower, the former England cricket star, did not pretend he was retiring as a Sky Sports cricket commentator after

this year’s series against Australia. “If one was being pedantic, being retired would be more accurate,” he said. “After 20 years, they have decided not to renew my contract.” There is some dissembling when football managers leave but no one assumes the departures are voluntary. Manchester United announced in December that “manager José Mourinho has left the club with immediate effect”, and Mr Mourinho said, “I show my deepest respect and I don’t make any comments about my former colleagues”, but every news report said he had been fired and no one contradicted it. But what should you do when you are fired? Stick to the “mutual consent” or resignation line — or openly admit that you got the chop? Being kicked out of a job is a blow. The room goes a little fuzzy as you receive the news. The pain eventually fades, the scar on your ego shrinks but it never entirely disappears. Being fired is a humiliation and the desire to save face is strong. Avoiding the truth is understandable.

HSBC: the bank in need of a ‘superhero’ chief executive John Flint ousted from top job as the sprawling lender’s challenges multiplied DAVID CROW IN LONDON AND HENNY SENDER IN HONG KONG

ohn Flint spent decades positioning himself as a future chief executive of HSBC. After winning the job, he lasted just 18 months. On Monday, as protests raged on the streets of Hong Kong, HSBC’s most profitable market, the bank’s employees were digesting the news that their 51-year-old boss had been ousted after losing the confidence of the board of directors. The Asia-focused lender, one of the world’s biggest and most complex banks, offered few concrete reasons for the abrupt move beyond the official line: HSBC needed new leadership to respond to “an increasingly complex and challenging global environment”. Several executives briefed on the circumstances surrounding Mr Flint’s unceremonious departure said the board had soured on the chief executive several months ago. “It’s simple: they felt he was not up to the job,” said one. Having determined that Mr Flint had to go, the board decided to wait for an opportune moment. That turned out to be Monday, when the bank reported a relatively solid set of results. HSBC’s London-listed shares closed down 3 per cent following the announcement of Mr Flint’s departure on a day of steep declines across global stock markets. Mr Flint, who has worked for the

bank for 32 years, had been unhappy for some time, according to several people who worked closely with him. He had always been mild mannered and understated, but recently he had become taciturn and withdrawn. He complained that he was having trouble sleeping because of a brutal travel schedule that involved regularly shuttling between London, where the bank is headquartered, and Hong Kong. “He didn’t seem to be enjoying it,” said one executive. “He was tired, worn out and fed up.” Mr Flint had also started to spar regularly with members of his senior team, who had become frustrated at his reluctance to sign off on their decisions, and with the bank’s board, according to several executives. One colleague described him as “isolated” and unwilling to take advice from anyone apart from one or two trusted associates. His relationship with the bank’s chairman, Mark Tucker, a gregarious former insurance executive who is mad about football, had become especially fractious, two executives said, and the pair sometimes struggled to present a united front even in public. “John was making a lot of people unhappy, and Mark was one of them,” said one executive. Another said that Mr Flint would become rude and defensive when Mr Tucker asked probing questions about the bank’s strategy: “They rubbed each other up the wrong way”. www.businessday.ng

Climate change: how the jet stream is changing your weather Northern Atlantic current is shifting course — with implications for crops and sea levels LESLIE HOOK IN ILULISSAT, GREENLAND

t the summit of the Greenland ice cap the temperature rarely rises above zero degrees centigrade — the elevation is 3,200m and the ice below is more than a mile thick. But last Friday, as the sun beat down, a small weather station laden with sensors captured something highly unusual: the temperature crept past zero and up to 3.6C — the highest since records began three decades ago. As temperatures rose across the massive ice sheet, which blankets an area five times the size of Germany, around 60 per cent of the surface started to melt, one of the largest ever recorded. Scientists know of only three prior occasions in the past 800 years when there has been melting at the very top of the ice cap, which is kept chilled by the large volume of ice beneath. But this seems to be getting more frequent — it is now the second time this decade it has happened. “The last time we saw melting at the summit, in 2012, we thought it was the extreme of the extremes, and wouldn’t happen again so quickly,” says Konrad Steffen, a professor of climate and cryosphere at ETH Zurich, who operates a network of 18 monitoring stations across the ice sheet. “But now we are facing more of these extremes.” Prof Steffen’s data shows that between July 30 and August 2 a heatwave in Greenland produced several record highs across the ice sheet, including at East Grip, the second highest monitoring station. “If you start melting at the top of the ice sheet, we are going to lose [the] Greenland ice sheet long-term,” he adds. The immediate trigger for the heatwave was a shift in atmospheric currents high above the earth’s surface: the North Atlantic Jet Stream, a fast current of wind that blows from west to east, had formed a buckle that was trapping warm air over

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Greenland. The same pattern had caused a record-setting heatwave in Europe a few days earlier, before shifting over to sit on top of the Greenland ice sheet. It’s not just Greenland’s weather that is governed by the jet stream. Across Europe and North America, it controls extreme weather conditions of all kinds, from winter cold snaps, to heatwaves, to storms. As the world gets warmer, the behaviour of the jet stream is one of the most studied and hotly debated mysteries of climate change. Scientists are racing to understand how this current of air is changing as the planet heats up, and whether it will get stronger or weaker — which holds big implications for weather patterns, crop yields and rising sea levels. “It is essentially the most important weather phenomenon,” says Tim Woollings, lecturer in physical climate science at Oxford university. “If you had to choose only one piece of information to get a handle on the weather in the northern hemisphere . . . then that would be the jet stream, what it is and where it is going.” July 2019 was the joint hottest month — with July 2016 — ever recorded by modern instruments, according to data released on Monday. This is attributed to the underlying warming of the planet, with burning fossil fuels increasing the level of carbon dioxide in the atmosphere, but also the behaviour of the jet stream, which has brought about some big heatwaves. Even in cool Greenland, it has been uncomfortably warm. “We are not sleeping very well these days, it’s just too hot,” says Flemming Bisgaard, a pilot and entrepreneur in Ilulissat, a town on the coast of West Greenland, which saw highs above 20C during the heatwave. While that might not sound bad to European ears, the persistent heat has been melting the permafrost layer under the soil, causing roads to buckle and house @Businessdayng

foundations to shift, and necessitating expensive repairs. “Thirty years ago, all the engineers said the permafrost would always be there, you can just build straight on the ground,” says Mr Bisgaard. “Now it is a huge problem.” Globally, an even bigger threat is the amount of water pouring off the Greenland ice sheet as it melts. About 200 cubic km of ice disappeared from the surface of the Greenland ice sheet in July alone, according to Martin Stendel, climate scientist at the Danish Meteorological Institute. That volume of water, if spread across an area the size of England, would stand 1.5m deep. “It should result in a measurable difference in sea-level rise,” says Mr Stendel, pointing out that Greenland has already contributed about 1cm to rising seas over the past 15 years. The July melt alone would contribute about half a millimetre, he estimates. The North Atlantic Jet Stream is born high in the atmosphere, more than 7km from the earth’s surface. The temperature difference between the cool Arctic and the warm equator creates a pressure difference, and a narrow band of powerful wind. The turning of the earth makes this strong current — it averages around 170kph — flow from west to east, and helps explain why it is quicker to fly from New York to London than in the opposite direction. The jet stream was first identified around the turn of the 20th century — early research efforts by scientists even included a few ill-fated voyages in air balloons. Technically there are four jet streams that circle the planet — two in each hemisphere — but the most studied is the northern hemisphere polar jet, due to its central role in European weather patterns. but it was not until the 1980s, and the advent of modern satellites, that really good data on the jet stream and other atmospheric currents became available, allowing measurement of its precise speed and direction.

Wednesday 07 August 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 06 August 2019

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 220,380.40 6.20 1.64 201 65,127,051 UNITED BANK FOR AFRICA PLC 201,776.59 5.90 -1.67 173 7,579,047 ZENITH BANK PLC 565,136.89 18.00 -1.37 371 10,936,548 745 83,642,646 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 186,655.52 5.20 -3.70 236 6,429,597 236 6,429,597 981 90,072,243 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,605,377.67 128.00 -0.19 155 1,588,086 155 1,588,086 155 1,588,086 BUILDING MATERIALS DANGOTE CEMENT PLC 2,862,805.24 168.00 -1.18 84 1,502,413 LAFARGE AFRICA PLC. 233,563.03 14.50 1.40 70 845,850 154 2,348,263 154 2,348,263 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 288,337.83 490.00 - 13 3,496 13 3,496 13 3,496 1,303 94,012,088 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 49,603.32 52.00 - 16 5,194 PRESCO PLC 44,800.00 44.80 - 5 15,200 21 20,394 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,350.00 0.45 - 8 73,801 8 73,801 29 94,195 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 767.71 0.29 - 0 0 JOHN HOLT PLC. 179.01 0.46 - 1 3,786 S C O A NIG. PLC. 1,903.99 2.93 - 1 100 TRANSNATIONAL CORPORATION OF NIGERIA PLC 37,396.15 0.92 -1.08 104 5,403,243 U A C N PLC. 16,567.46 5.75 - 77 1,187,282 183 6,594,411 183 6,594,411 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 27,192.00 20.60 - 16 21,844 ROADS NIG PLC. 165.00 6.60 - 0 0 16 21,844 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,222.01 1.24 - 9 2,015,862 9 2,015,862 25 2,037,706 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 - 11 315,842 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 2 580 GUINNESS NIG PLC 100,757.61 46.00 - 14 28,095 INTERNATIONAL BREWERIES PLC. 103,150.34 12.00 - 5 15,879 NIGERIAN BREW. PLC. 399,845.10 50.00 - 61 179,367 93 539,763 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 100,000.00 20.00 -1.72 276 16,159,114 DANGOTE SUGAR REFINERY PLC 117,600.00 9.80 - 51 377,344 FLOUR MILLS NIG. PLC. 63,965.92 15.60 - 61 404,397 HONEYWELL FLOUR MILL PLC 7,533.69 0.95 -5.00 21 723,100 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 37,092.14 14.00 - 20 68,568 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 429 17,732,523 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,345.48 10.30 -9.65 28 295,487 NESTLE NIGERIA PLC. 1,006,673.44 1,270.00 - 95 85,815 123 381,302 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,366.12 4.29 - 22 305,900 22 305,900 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,822.86 6.00 - 17 71,520 UNILEVER NIGERIA PLC. 183,840.17 32.00 - 20 108,094 37 179,614 704 19,139,102 BANKING ECOBANK TRANSNATIONAL INCORPORATED 132,116.77 7.20 2.08 113 3,981,547 FIDELITY BANK PLC 44,910.94 1.55 -3.12 63 2,875,797 GUARANTY TRUST BANK PLC. 815,243.66 27.70 -1.07 220 17,620,572 JAIZ BANK PLC 12,374.98 0.42 - 6 29,519 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 68,521.20 2.38 3.48 58 3,684,488 UNION BANK NIG.PLC. 200,933.19 6.90 - 18 86,749 8,182.54 0.70 -5.41 12 268,361 UNITY BANK PLC 22,373.19 0.58 -3.33 26 841,957 WEMA BANK PLC. 516 29,388,990 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 100 AIICO INSURANCE PLC. 4,435.33 0.64 - 18 269,216 17,325.00 1.65 - 6 30,331 AXAMANSARD INSURANCE PLC CONSOLIDATED HALLMARK INSURANCE PLC 2,682.90 0.33 - 0 0 CONTINENTAL REINSURANCE PLC 16,077.75 1.55 -9.88 1 100,000 CORNERSTONE INSURANCE PLC 3,240.49 0.22 - 4 60,870 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 1,228.00 0.20 - 0 0 GUINEA INSURANCE PLC. INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,489.97 0.34 -5.56 8 3,089,194 LAW UNION AND ROCK INS. PLC. 1,847.42 0.43 -8.51 2 105,493 LINKAGE ASSURANCE PLC 4,160.00 0.52 - 1 30,000 MUTUAL BENEFITS ASSURANCE PLC. 2,681.46 0.24 - 3 10,700 NEM INSURANCE PLC 10,825.03 2.05 - 12 261,507 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,583.62 0.48 - 1 300 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 6 80,420 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 40,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,219.27 0.39 -2.50 39 2,683,178 103 6,761,309

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,698.23 1.18 - 3 9,000 3 9,000 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 1 100 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 1 100 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2 200 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,600.00 3.80 - 51 300,726 CUSTODIAN INVESTMENT PLC 32,350.25 5.50 - 14 883,424 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 31,684.34 1.60 -0.62 59 4,224,740 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 390,165.07 38.10 - 26 4,796 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 12,840.00 2.14 3.88 71 1,116,151 221 6,529,837 845 42,689,336 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 817.22 0.23 - 3 300,100 3 300,100 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,388.62 4.50 - 0 0 GLAXO SMITHKLINE CONSUMER NIG. PLC. 9,925.77 8.30 -3.61 27 501,352 4,140.56 2.40 4.35 20 421,033 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,044.54 0.55 - 5 7,510 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 0 0 52 929,895 55 1,229,995 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 745.92 0.21 - 2 450 2 450 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 1,000 NCR (NIGERIA) PLC. 626.40 5.80 - 3 75,000 346.47 0.70 - 5 5,175 TRIPPLE GEE AND COMPANY PLC. 9 81,175 PROCESSING SYSTEMS CHAMS PLC 1,267.94 0.27 -6.90 7 622,600 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 1 1,900 8 624,500 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 10 837 10 837 29 706,962 BUILDING MATERIALS BERGER PAINTS PLC 1,985.29 6.85 - 7 3,938 17,325.00 24.75 - 10 10,714 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 176,780.09 13.45 3.46 20 550,749 MEYER PLC. 313.43 0.59 - 1 100 1,959.74 2.47 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 38 565,501 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,747.66 1.56 - 9 162,630 9 162,630 PACKAGING/CONTAINERS BETA GLASS PLC. 29,873.33 59.75 -9.95 44 690,015 GREIF NIGERIA PLC 388.02 9.10 - 1 49,298 45 739,313 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 92 1,467,444 CHEMICALS B.O.C. GASES PLC. 2,318.48 5.57 - 9 195,066 9 195,066 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 100 1 100 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 1 1,000 1 1,000 11 196,166 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,377.79 0.22 - 21 395,500 21 395,500 INTEGRATED OIL AND GAS SERVICES OANDO PLC 45,996.23 3.70 -6.33 46 545,350 46 545,350 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 18 19,763 CONOIL PLC 11,519.61 16.60 - 27 24,437 ETERNA PLC. 3,521.19 2.70 - 30 127,837 FORTE OIL PLC. 23,835.40 18.30 -5.91 77 663,360 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 4 555 TOTAL NIGERIA PLC. 38,977.11 114.80 - 29 9,478 185 845,430 252 1,786,280 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 1 100 1 100 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 1 100 1 100 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,112.54 5.28 - 3 53,125 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 2 1,600 5 54,725 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 100 IKEJA HOTEL PLC 3,035.04 1.46 - 3 4,120 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 4 105 TRANSCORP HOTELS PLC 41,042.18 5.40 - 2 2,050 10 6,375 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 3 600 3 600 PRINTING/PUBLISHING ACADEMY PRESS PLC. 211.68 0.35 - 2 1,100 LEARN AFRICA PLC 1,080.03 1.40 - 10 53,200 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 1 100 UNIVERSITY PRESS PLC. 690.26 1.60 - 5 58,500 18 112,900 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 4 53,646

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Wednesday 07 August 2019

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tax issues Tax cost still critical ‘stay awake’ issue for CFOs in Nigeria …as authorities target tax revenue increase Iheanyi Nwachukwu

any Chief Financial Officers (CFOs) are eagerly concerned about their tax cost profiles and are eagerly managing them in order to increase profitability, according to the KPMG annual CFO Outlook Survey for 2019 which provides valuable insight into how CFOs and their organisations view the business environment. This year’s survey report reveals most prominent areas of concern for CFO with respect to the government’s tax policies. They include: ambiguous tax provisions and lengthy tax dispute resolution process; aggressive tax collection drive; and multiplicity of taxes. The CFOs views come on the heels of the Nigerian tax authorities estimating about 50 percent increase in tax revenues in 2019 compared with the previous year (2018) record. The CFOs believe that the various tax and regulatory authorities will also be required to engender a more inclusive engagement model to drive the pro-business agenda of the Government. They noted critical intervention areas such as: policy of using commission-based consultants; apparent absence of a risk-based approach to audits by the tax authorities, particularly the Federal Inland Revenue Service (FIRS); targeted investigation; prolonged tax audit process; lack of accountability on taxes collected or a lack of tax contribution reporting framework, by the Government; and multiple audits and regulatory

over-reach. The survey quoted Sharafadeen Muhammed, CFO, Citi Bank saying, “It is commendable that the government is seeking to drive more tax revenues as our tax to GDP ratio of 4percent is very poor compared to other African countries. However, the approach adopted can be improved by shifting the focus on increasing the tax base.” The survey also quoted Oluseyi Kumapayi, Chief Financial Officer, Access Bank, saying “the amount of inconsistency and lack of clarity on the tax regimes in the different jurisdictions/states makes life difficult for anyone who runs operations nationwide, it makes it hard to prepare”. “Over the last two years, the growing tax collection drive and evolving tax environment have

been major stay awake issues for many CFOs surveyed in the annual KPMG CFO Survey. “This has been largely because of the growing government focus on tax – evidenced by the multiplicity of taxes, multi-agency tax reviews, among others. Not much of that concern seems to have gone away with the turn of a new year”, KPMG noted in the survey. “We obtained the views of CFOs on the outlook for their businesses in 2019, what they believe the Government should prioritize to create an enabling environment and the impact of the finance function in achieving organizational goals,” said Tola Adeyemi, Partner and Head, Audit Services, KPMG in Nigeria. “In comparison to 2018, CFOs are much less optimistic about the

prospects for growth in the Nigerian Economy,” Adeyemi said. He noted that the need to broaden the tax base rather than overburdening existing payers also remains a recurring theme. “Our study revealed that the critical ‘stay awake’ issues for CFOs for 2019 are: profitability and cost management issues; macroeconomic issues, and tax and regulatory policy. In some respects, these are the traditional stay awake issues one would expect within the context of a fragile economy,” he said. The Federal Inland Revenue Service (FIRS) re-wrote Nigeria’s revenue collection history in 2018 when it collected a total of N5.320trillion. Tunde Fowler, Executive Chairman (FIRS) said it is targeting N8trillion for 2019. The ongoing integration of data-

bases will fetch the nation a total of 45million individual and corporate taxpayers, Oseni Elamah, Executive Secretary, Joint Tax Board (JTB) said recently in Abuja. “Government’s sustained focus on increasing revenue through taxation remains a key issue. This is consistent with our survey outcome from 2018. CFOs remain concerned about ambiguous tax laws, the perceived aggressive tax collection drive by government and multiplicity of taxes”, Adeyemi added. As increasing tax burden continues to erode profits of many businesses, KPMG believes that the usefulness of tax technology in achieving tax cost optimisation cannot be over emphasised. It stated that “deliberate adoption of the right tax technology by organisations will significantly help to put the mind of tax managers and CFOs, at rest in terms of their tax compliance and tax planning.” “In adopting tax technology, CFOs would need to first review their businesses and operational framework to determine which areas would most benefit from a tax technology intervention. “Thereafter, the company’s Enterprise Resource Planning (ERP) system would need to be assessed to determine compatibility. Where unique specifications are also required, this may be achieved with the help of the tax technology vendors, working closely with the tax team and in-house IT Unit. “Continuous monitoring and evaluation would also be required to ensure that the technology is fitfor-purpose and effective at meeting its set objectives”, KPMG noted.

Can thinking big keep your tax controversy small?

ncreased global interconnectivity means that tax controversy can spread rapidly among countries, writes EY Global. Tax has become increasingly connected — governments are collecting and sharing taxpayer information, and tax changes in one jurisdiction can now trigger changes across the globe. The result is that tax controversy is evolving from two-sided disagreement in specific countries into a multidimensional, multi-country dynamic. Governments are collecting more information than ever before and are using enhanced data analysis to identify and act on tax issues. Governments are also sharing this information at a record-setting pace. Calafia Franco, EY Latin American Business Center Controversy Leader said, “Governments are sharing information, and tax au-

thorities are collaborating across the border”. “Now that tax authorities have more information, they are getting more aggressive. They have better position to challenge some tax issues,” Franco said. Jeffrey Michalak, EY Global

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International Tax and Transaction Services Co-Leader said, “Historically, global companies treated audits as discrete events. They would settle an audit issue, a cross-border issue, with one or perhaps both sides of a cross-border transaction. That audit issue may come up in a

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very similar transaction somewhere around the globe, and that also would be a discrete settlement.” “Today, with information sharing,” Jeffrey says, “when I settle the one audit, the first audit, other countries around the world where I am doing similar types of transac-

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tions in my business see that audit settlement. That influences the conversations I have with other governments around the world”. Adds Rob Hanson, EY Global Tax Controversy Leader, “We have developed frameworks for companies to track and manage controversy globally. We’ve helped them develop globally integrated structures and policies around managing tax controversy.” “The result,” Rob says, “is that these companies now have centralized repositories of audits. This allows them to have better oversight and control of their audits around the globe. It also allows them to share issues and best practices internally.” The implication is that businesses must act so that their people, policies and systems keep pace with this development. They need a line of sight into the issues and the potential for future tax controversy as well as a centralised global strategy.

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BUSINESS DAY Wednesday 07 2019 www.businessday.ng

Venezuela: The political stand-off fuelling an economic collapse ...the failure of Juan Guaidó to dislodge Nicolás Maduro from power has accelerated the economic implosion Michael Stott in Valera

he man backed by the western world to save Venezuela from dictatorship and economic ruin is running late. A charismatic 36-year-old former student leader with more than a passing resemblance to Barack Obama, Juan Guaidó is rallying support in the rural Andean foothills, his progress slowed by enthusiastic crowds of supporters. Weary of two decades of Hugo Chávez’s Bolivarian Revolution, families line the streets to glimpse the man who is challenging Mr Chávez’s heir, President Nicolás Maduro. As Mr Guaidó’s convoy of armoured SUVs approaches a square in the town of Valera, sirens blaring, the emotion rises. A lanky, whiteshirted Guaidó descends from his car and fights his way through the crowd, aided by a phalanx of bodyguards sporting @juanguaido T-shirts. “If I have to descend to hell to finish off this dictatorship, I will do it with the blessing of you all,” he bellows from the back of a pick-up truck. “Venezuela will be rescued, whatever the cost. I ask you to trust in the route we have set out . . . an end to the usurpation, a transition government and free elections.” Minutes later, Mr Guaidó finishes his speech and his convoy roars off, sirens wailing, to his next appearance in a gruelling 14-hour day. The crowd returns to a daily struggle for survival: queues for petrol, power cuts, intermittent running water and salaries paid in near-worthless currency. That day in Venezuela’s western state of Trujillo was an apt metaphor. Despite strong popular support, ample bravery and international backing, Mr Guaidó’s “people power” revolution is also behind schedule. Having failed so far to dislodge the Maduro regime, both Mr Guaidó and his backers in Washington, Europe and Latin America face difficult questions. Although he remains by far Venezuela’s most popular politician, it is not clear how long Mr Guaidó can keep his fractious opposition coalition together and his supporters enthused. For the Trump administration, the issue is whether it now needs to start thinking about a plan B for Venezuela. And while the political stalemate in Caracas drags on, the implosion in the economy and the humanitarian disaster is only gathering pace. “Venezuela is in a state of perverse equilibrium,” says Luis Vicente León, director of Datanálisis, a polling and market research firm in Caracas. “We are in a catastrophic deadlock where neither side can defeat the other but their conflict can destroy the country.” Hawks in Washington had ini-

tially promised a quick win, portraying the fight against Mr Maduro as part of a wider battle to rid the Americas of socialism. “The Troika of Tyranny in this hemisphere — Cuba, Venezuela and Nicaragua — has finally met its match,” national security adviser John Bolton said in Miami last November. The plan went as follows: newly elected head of the oppositioncontrolled National Assembly, Mr Guaidó would launch a public bid to topple Mr Maduro, a Cubantrained former bus driver with a fearsome reputation for economic mismanagement, corruption and authoritarian rule. Other nations would back him, crowds would mass and the regime would fall. On January 23, before a huge crowd in the streets of Caracas, Mr Guaidó proclaimed himself interim president citing an article in the constitution allowing the head of parliament to take power in the absence of a properly elected president. He was quickly recognised by Washington, then the EU and most Latin American countries. But there was no easy victory. Mr Maduro denounced what he termed a US-inspired coup plot and — publicly backed by senior figures in the military — remained in power. Amid the humanitarian crisis, Mr Guaidó tried a different tack the following month. Addressing Venezuelans from across the border in Colombia, he promised to send in a convoy of mostly US-supplied aid and appealed to the military to allow it in. The troops stood firm and the convoys never entered. By now, excitable talk of a possible US military intervention to overthrow Mr Maduro was fading and Washington had opted for a “maximum pressure” strategy of ever-tighter sanctions. The measures began under Barack Obama, targeting regime officials with travel bans and asset seizures for human rights abuses. They were greatly extended under Mr Trump to hit the Venezuelan economy, progressively

halting trading in Venezuelan debt and securities, gold and oil as well as blocking central bank transactions. With each turn of the screw, the Venezuelan economy was ground down further but the message remained the same: one more push and Mr Maduro would be gone. Following weeks of street protests and rallies and frustrated by the continuing deadlock, Mr Guaidó raised the stakes further at the end of April. At dawn, he appeared outside a military base in Caracas with one of the country’s best-known opposition leaders, Leopoldo López, who had escaped from years of arrest. Guaidó appealed directly to troops in a video message to rise up and remove Mr Maduro. The uprising was over almost as soon as it began. Mr Guaidó’s message sounded improvised and less than clear. Why, Venezuelans asked, was he proclaiming a putsch from outside a military base and not inside? One high-ranking official, Manuel Cristopher Figuera, the head of the feared intelligence service, did defect. But the troops again stood firm behind Mr Maduro, riot police quickly put down scattered protests and Mr López took refuge in the Spanish ambassador’s residence. Now, six months after proclaiming himself interim president, Mr Guaidó is feeling the pressure. Independent polling shows he remains by far Venezuela’s most popular politician but his support has slipped. He has been reluctantly forced into Norwegian-broke While the situation is inherently unstable and could change at any time, analysts say that neither Mr Guaidó nor Mr Maduro seems able to deliver a knockout blow. “Maduro is not popular but he is effective,” says a senior western diplomat in Caracas “He controls an apparatus of repression and while he may not know how to govern, he has one weapon that works — repression.” In the meantime, the stalemate is destroying what is left of Venezuela’s economy. An oil power so wealthy it

boasted a Concorde service to Paris in the late 1970s has deteriorated so dramatically that more than 4m citizens have fled. Twenty years of mismanagement have lent Venezuela’s economic data an outsize, almost absurd dimension. The central bank says inflation hit 130,060 per cent last year. The economy has shrivelled to less than half its former size in the space of a few years. The effect of tightening US sanctions this year has only added to the pain. Ricardo Hausmann, a Venezuelan former minister and Guaidó backer, describes it as the biggest economic collapse in human history outside of war or state failure, more than twice the magnitude of the Depression. Queues for fuel outside the capital can stretch around blocks and along the side of highways. Drivers sleep inside their vehicles during a wait to fill up which can last two days and nights. When they reach the pumps, guarded by armed police, the precious fuel is dispensed free of charge: hyperinflation has rendered the officially fixed fuel price so low that there is not a banknote small enough to pay for a full tank. The Organisation of American States estimates that if the exodus continues at its current rate, 8m Venezuelans will have left their homeland by the end of next year, around a quarter of the population and a larger number than left Syria during its civil war. For those who remain, protest against the Maduro regime is increasingly dangerous. Michelle Bachelet, the UN high commissioner for human rights, reported last month that nearly 7,000 people had been killed in the past 18 months in confrontations with security forces, and said many appeared to be extrajudicial executions. The government flatly rejected the report. Mr Maduro and his ministers rarely appear in public these days, preferring stentorian communiqués in robust revolutionary language.

Interview requests to senior officials were not answered. Amid the crumbling economy, US officials insist that Mr Guaidó’s victory is a question of time. “The pressures keep growing and we are helping that along,” says one senior official. “I don’t see how they can survive. I really cannot believe they make it to the end of the year.” That is not necessarily how it feels on the streets of central Caracas, where special efforts are made to keep fuel, power and water supplies going and a vague semblance of normality endures. Moisés Naím, a writer who was a Venezuelan minister in the 1990s, says there are two scenarios. “One is that the current situation becomes permanent . . . The stalemate continues and you have Libya on the Caribbean, a nation with two rival governments each supported by a different international coalition.” He adds: “The other scenario is some kind of imperfect, hard-to-swallow agreement for elections and the elections taking place.” Asked about the failure of the April uprising, Mr Guaidó smiled and changed the subject. Instead, he stuck closely to a script: the country is behind him and sooner or later, his campaign of non-violent protest will succeed. “If we look at it rationally and do a checklist . . . of all the elements needed to substitute a dictatorship and have a transition: popular support, institutional support, access to resources . . . international support, the state of the armed forces, capability to mobilise . . . well, we have them all, or the majority of them,” he explains. But a lethal combination of repression and daily privation is sapping the will of a once-feisty population. Mr León points to survey numbers indicating the Venezuelan state of mind. Fortynine per cent feel sadness, 41 per cent anxiety, 35 per cent rage, 31 per cent mistrust and 27 per cent frustration. Most of the emotions are passive, he explains: the people are in deep shock. And the Chávez myth dies hard, as evidenced by polls suggesting that up to a fifth of Venezuelans still consider themselves supporters. On a hilltop overlooking central Caracas lies a military fort from which Mr Chávez launched his first attempt at taking power, a failed military coup in 1992. Now it is a mausoleum for his outsized tomb guarded by four soldiers. Daxis Mosquera, a lawyer who volunteers her services to escort visitors, bristled at the suggestion that Mr Chávez, “the greatest man who ever lived” was merely buried there. “The supreme commander is not buried,” she explained. “He is superimposed.” With his legacy still superimposed on Venezuela, there are few immediate signs that Mr Chávez’s heirs will be dislodged from power.

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