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Nigerian banks not using equity to create assets BALA AUGIE

igeria’s problem with leverage is the exact opposite of what emerging markets usually face. There’s too little debt in the banking system, and too much equity. The average financial leverage- which simply divides assets by equity, - for 13 largest banks that have released third quarter results-is 6.18 times. That compares with South Africa ; 12.60, Brazil; 11.20, Malaysia; 10.70, Singapore; 11.30, Hong Kong; 11.70 and China; 15.30. The country’s lenders are holding too much equity, which Continues on page 42

Inside A Fixed income guide for Nigeria in 2019 Pull-out

The curious case of Nigeria’s missing voters T

BUA, CBMI sign agreement to build new 3m TEMITAYO AYETOTO Kalambaina Cement II he first time BabaP. A8 Plant in Sokoto tunde Adebayo witOMS denies allegation of underhand dealings in Nigeria’s oil business P. A8

tingly exercised his franchise, 27 February 1999, he was a 31-year-old man laying his hands on what he could to secure his future.

INSIGHT

Then, Olusegun Obasanjo the People’s Democratic Party (PDP) flag bearer was in a cutthroat race with Alliance for Democracy’s (AD) Olu Falae for the presidential seat. The election which retains

its standing as one of the mostparticipated polls garnered 30,280,052 votes in its entirety, bringing voters turnout to 52.3 percent. Before riding to power on the back of 18,738,154 votes, Obasanjo at a party convention in the city of Jos made it clear in his acceptance speech as the

presidential nominee, that Nigeria had no business with poverty. That with the vast potential in human and material resources, his administration would strive to eradicate poverty. “Nigerians should in the next four years, be assured of, of least, the basic Continues on page 42

2 BUSINESS DAY NEWS

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Apapa: Tough times for businesses, residents as rush to return empty containers heightens gridlock AMAKA ANAGOR-EWUZIE

here are indications that the coming weeks will be very tough for residents and businesses located in Apapa port city, following the rush by importers and their agents to return empty containers after discharging their imported goods. Usually, the first few weeks into the New Year is characterised by surge in business activities at ports following the rush by importers to clear backlog of containers and other spill over consignments from the ones that were not cleared during the festive period. By implications, motorists, port users and commuters are expected to experience man-hour loss on their daily transit to the port city as the traffic gridlock persists. Also, shippers may be forced to pay more to shipping companies as demurrage for the containers and storage charges to terminal operators for occupying space in the terminals as their cargoes spend longer time without clearing them from the ports, and offloading to return empty containers back to the ports. This is coming few days after businesses, residents and commuters enjoyed relief during the one week Christmas and New Year celebrations period, where driving into Apapa became fun and free of traffic. A recent BusinessDay visit to Apapa-Ijora-Wharf through Western Avenue, revealed that few days after the resumption of work from the Christmas and New Year holidays, that gridlock is returning to Apapa roads gradually. Tony Anakebe, managing director of Gold-Link Investment Ltd, a Lagos-based clearing and forwarding company, who confirmed that

Apapa traffic situation is expected to worsen in the coming weeks, said that the number of trucks coming to the ports is expected to increase, thereby providing temporary inconveniences to Apapa road users. “The last quarter of every year usually marks the peak of importation activities at the ports. Judging from past experiences, the 2018 importation peak season is over but the importers and their agents will continue to clear the spillover while those, who were able to clear their consignments during the festive season, would have been able to discharge the goods in their warehouses, and ready to return the empty containers,” Anakebe said. According to Anakebe, the situation means increased business activities as a result of the spillover from Christmas imports, before the volume would be expected to drop especially for the remaining part of the first quarter of this year. Jonathan Nicole, president, Shippers Association of Lagos State, said that the poor condition of the access roads into Apapa and Tin-Can Island ports, have been a major challenge to doing business at the ports. This, according to him, has been pushing up the cost of doing business for shippers and manufacturers, whose goods and raw materials spend days and weeks before getting to their warehouses. Emma Nwabunwanne, a Lagos based importer said: “If traffic returns, trucks coming to evacuate cargoes will find it difficult to access the ports because they will be trapped on the road. This will be dangerous for port business and for the economy because the situation could lead to port congestion. It could also compel shipping companies to impose congestion surcharge on Nigerian ports.”

Consumer firms to sidestep FX losses from naira volatility in 2019 BALA AUGIE

onsumer firms are set to sidestep any loss due to naira volatility in 2019. Also, experts added that some of these firms had embarked on backward integration to reduce reliance on imported raw materials, but there are downside risks for those that have not hedged against financial risk. “Not all firms have exposure to foreign exchange risk. A lot of them have reduced Foreign exchange borrowing in the last two years. We may not see the magnitude of the hit of 2016 that nearly crippled businesses,” said Christian Orajekwe, equity research analyst at Cordros Capital Ltd. “Nestle has gone far in the area of backward integration as it sources material locally,” said Orajekwe. Foreign exchange losses for the 10 largest consumer goods firms quoted on the floor of the Nigerian Stock Exchange (NSE) stood at N396.05 million as at September 2018, this compares with N15.07 billion and N39.88 billion incurred in the corresponding period of 2017 and 2016. The Naira traded at around N364.41 per dollar in the Investors and Exporters (I&E) window on Friday, Data from FMDQ shows. Firms have reduced burden on operating profit as combined interest expense fell by 49.08 percent to

N25.13 billion in September 2018 from N49.37 billion in 2017. That compares with an 86.65 percent increase in finance cost recorded in 2016 financial year. Oil prices have slumped in recent weeks, as concerns mount about a glut of crude supply and fears that global economic headwinds could lessen demand. After reaching a high of more than $86 a barrel in early October, which prompted warnings that it would climb further to $100, the oil price has since plunged by more than 30 percent. Analysts at Vetiva Capital Ltd forecast a +50 basis points rise in benchmark borrowing costs and upend in money market rates in 2019 will dive a modest rise in finance expenses. “This comes in contrast to the notable moderation recorded in net finance costs in 2018, supported by declining market rates for most of the year and benefits from the significant deleveraging exercises in 2017 to early 2018,” said analysts at Vetiva Capital. “In tune with this, most consumer goods companies will continue to enjoy relief from any debt burden despite the mild uptick in rates on borrowing,” summed analysts at Vetiva Capital.

FINANCE

•Continues online at www.businessday.ng

President Muhammadu Buhari (m), receives in audience Governor Ibikunle Amosun of Ogun State (r), and Adekunle Akinlade, Ogun State governorship candidate of Allied People Movement (APM), at the State House.

Why Nigeria’s oil production cost of $22 per barrel is no cheer DIPO OLADEHINDE

he New Year day news of Africa’s largest producing country reducing its cost of producing oil leaves little to cheer as further investigation shows it’s much cheaper to produce crude oil in war torn Iraq, Saudi Arabia and Iran than in Nigeria. At first glance it all seems like good news when group managing director of Nigerian National Petroleum Corporation (NNPC) Maikanti Baru said in 2018 Nigeria has been able to reduce production cost from $27 barrel to $22 barrel while listing milestones achieved by his team in 2018. However at second glance, Nigeria’s cost of producing oil of $22 is still far higher than Iran and Iraq and OPEC’s kingpin Saudi Arabia. According to data from energy industry consultant Rystad Energy, on average it cost Saudi Arabia less than $9 to produce a barrel of oil last year while other OPEC countries like Iran and Iraq can produce for around $10 per barrel. Drilling down into what makes Saudi oil so cheap; Rystad Energy explained that Saudi Arabia only spends $3.50 in capital to pull a barrel of oil out of the ground. This amount includes money invested in drilling new wells as well as the associated

ANALYSIS equipment while production cost and administrative and transport cost stood at $3 and $2.49 respectively. Luqman Agboola, head of energy and Infrastructure at Sofidam Capital said after making much money from crude oil in the past Nigeria got carried away with corruption, inefficiency and security challenges while other countries were consciously reducing cost of production. “One major factor affecting Nigeria’s situation is the Niger Delta security condition which naturally increases cost of producing a barrel by nothing less than $5,” Agboola told BusinessDay by phone. “If we become very efficient Nigeria should be having a cost of production of between $12 and $15.” Agboola explained that the second factor affecting cost of production is the Terrain. “The likes of Iran, Saudi Arabia and Iraq produce in the desert which is naturally cheaper so they don’t need elaborate preparations to drill a well.” An oil expert who pleaded anonymity told BusinessDay that the main problem facing Nigeria are issues concerning multiple taxes, government policies and insecurity. “Even Ghana and Tunisia are pro-

ducing at $15 and $10 respectively.” “Government needs to put the right fiscal policies in place and stop playing politics with the implementation just like the PIGB,” the expert told BusinessDay. “Until we get this out of the way we would not get a favourable pricing mechanism.” Rystad Energy explained that Saudi Arabia also has low capital costs due to the fact that the country’s oil is located near the surface of the desert and pooled in vast fields, so it doesn’t need to invest that much in drawing it out of the ground. Contrast this with countries that have large offshore production bases like Nigeria, Norway and the United Kingdom, which incur significantly higher CAPEX costs of around $13.76 to $22.67, respectively, due to the need to build large offshore production platforms. Agboola admitted that it’s a bit complex when calculating cost of production because factors such as production per day or capacity to produce per day are always considered, while the size of a country’s oil reserves cannot also be taken into isolation. “This is why we can easily see that a country with higher oil reserves have cheaper production costs,” Agboola said.

•Continues online at www.businessday.ng

Cautious trading intensifies on Customs Street

… Stock investors lose N300bn in first trading week into 2019 … Early rally seen in J/Berger, Vitafoam, Union Bank, others IHEANYI NWACHUKWU

n the absence of near-term positive catalysts that could entice bulls on Customs Street, the now amplified political worries ahead of February general election occupies topmost the mind of investors’. Rising from varied degrees of stock related bruises witnessed last year, some investors are now approaching the Nigerian Stock Exchange (NSE) with their eyes on this near-term concern while other discerning investors are taking advantage of low valuation of stocks and strong market fundamentals to beef up their portfolio. Analysts at Lagos-based Cordros Capital said their outlook for equities in the near-to-medium term is negative. “We guide investors to trade cautiously, amidst absence of a near term positive catalyst and political jitters

ahead of the upcoming 2019 elections. However,macroeconomicfundamentals remain stable and supportive of recoveryinthelongterm,”Cordrosadded. From a year-open high of N11.721 trillion, the value of listed stocks moved lower on Friday January 4, 2019 at N11.425trillion; it implies investors have lost approximately N300billion in three days. Also, the NSE All Share Index has declined by 2.52percent this year to 30,638.90 points. It opened the year 2019 at 31,430.50 points. “In the year ahead, we expect a subdued performance in the earlier part of the year (pre-election period) and depending on the outcome of the election and smoothness of transition period, we expect a post-election equity recovery,” said research analysts at United Capital Plc in their January 2 note.

“With positive sentiment due to end-of-year activities over, we anticipate a resumption of investor apathy and foresee this driving the market in the coming weeks. Therefore, we expect another relatively quiet session on the NSE with continued negative trading”, Vetiva analysts said in their January 4 note to investors. Despite analysts maintaining their bearish short-term outlook for the stock market this year, some stocks still kicked-off the first trading week on a positive note. Some of the stocks that have achieved over 5 percent gain in their share price this year are Julius Berger Nigeria Plc (15.67percent); Union Bank of Nigeria Plc (7.14percent); Custodian Investment Plc (7.96percent); Cutix Plc (6.71percent); and Union Dicon Plc (8percent).

•Continues online at www.businessday.ng

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2019: Ondo signage agency threatens to remove illegal posters, billboards YOMI AYELESO, Akure

ndo State Signage and Advertisement Agency (OSSAA) has threatened to remove all illegal posters, banners and billboards across the 18 local government areas of the state. OSAA in a statement by its chairman Akinwande Akinrodoye notes that the law establishing the agency prescribed that corporate organisations, political parties and individuals to obtain permit before erecting them. Akinrodoye urges all affected individuals or groups concerned to remove all the billboards, banners and posters, adding that law enforcement agencies would be moving across the state to ensure compliance. The OSAA boss reveals that the measure deployed is not in any way to intimidate political parties but to enhance internally generated revenue of the state. he statement read in part: “It has come to the atten-

EU seeks to extend protective steel tariffs to 2021

uropean Commission on Friday pressed ahead with protective steel tariffs aimed at shielding European manufacturers against a surge in imports from around the world, due in part to metals tariffs imposed by the United States. According to the findings of a commission investigation, in 2018, President Donald Trump imposed 25 percent tariffs on steel imports, a move that has seen global manufacturers divert goods to the European market instead. “The EU’s steel manufacturing industry, which is still reeling from a global glut that brought down prices, has been faced with an increase in imports in recent years, a situation that has been aggravated by the U.S. decision to raise tariffs,’’ the commission found. Following Trump’s decision, the EU imposed provisional 25-per-cent tariffs on 23 categories of steel products in July, to be applied across the board once overall imports exceed the average of the previous three years. The commission has now proposed extending these measures for three years, until mid-July 2021. On Friday it notified the World Trade Organisation of the move, which still requires the backing of EU member states.

tion of the state government that across the state there are many outdoor advertisement and signs without compliance with the provisions of the extant law on same, which is, OSSAA law. “The law empowers the agency to enter into any property or premises for the purposes of carrying out inspection necessary for the proper administration of the law. “Equally, owners and operators of existing outdoor structures are required to regularise their signage and advertisement structures with the agency and if not done, the agency shall with or without notice as it deems fit, direct the removal of same at the expense of the owner. “It is important to stress here that any person who violates any of the provisions of the signage & advertisement law or does anything in order to stultify the application of the law or continue to be in breach of the law by displaying or permitting the display of unauthorised outdoor structures”.

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Nigeria internet users jumped 14% in year to November 2018 ENDURANCE OKAFOR

igeria internet users rose 14 percent in the year to November 2018, according to figures available from the Nigeria Communications Commission (NCC), regulator of the industry. The number of internet subscribers in the country rose to 108.46 million last November, from 94.82 million a year earlier, according to NCC figures. Active subscribers for data (internet) services on each of the licensed service providers utilising the different technologies showed that MTN reported 41.68 million internet users, while Globacom has 27.76 million subscribers. Airtel and 9mobile (formerly Etisalat) have 28.96 million and 10.6 million, respectively. Among the mobile network operators, MTN and Airtel recorded the highest month-on-month increases in internet subscription with 1.7 percent and 1.5 percent

… analysts link subscription rate to phone penetration

increase respectively. For 9mobile total internet subscription of 10.1 million in October remained unchanged in November. Omotola Abimbola, a research analyst at Ecobank, said the increase reflected smartphone penetration in the country. “Cheaper smartphones from Asia have been a boon to internet penetration in Africa in general and created a new and fast growing income line for telecommunications companies who are now recording doubledigit growth in data revenue,” Abimbola said. He said the increase in the number of internet users in Nigeria “could also be positive for the economy as internet penetration typically aids productivity and ecommerce.” FBNQuest, a subsidary of the FBN group, said in its GoodMorning Nigeria publication on Thursday, January 3, 2019, that the increase in Nigeria’s internet users could

have been due to the fact that “subscribers usually patronise dual-SIM mobile phones and stay connected via separate data packages on multiple networks, in order to “achieve uninterrupted internet access.” FBNQuest said the increase in internet users “implies a density of 58 percent in a population estimated at 185 million, placing Nigeria well above the African average of around 16 percent as indicated by McKinsey.” Data compiled from the NCC website show that the contribution of the telecommunications industry to Nigeria’s Gross Domestic Product (GDP) rose by 0.98 percentage points to 8.39 percent in Q3 2018, from7.41 percent in Q3 2017. However, last year’s third-quarter contribution was less than the 10.43 percent contribution to the country’s GDP in the second quarter of the same year. Nigeria’s GDP grew by 1.81 percent (year-on-year)

in real terms in the third quarter of 2018, driven by the non- oil sector, the country’s statistical agency said. The non-oil sector contributed 98.62 percent of the growth in that quarter, with the oil sector contributing the remaining 9.38 percent, the National Bureau of Statistics said in a report released recently. The number of active subscribers for telephony services on each of the licensed service providers utilising different technologies including GSM, CDMA, Fixed Wireless and landline, show that MTN had 66.97 million subscribers, which is 40 percent of the total market share, followed by Globacom with 43.27 million (26 percent) and Airtel having 43.12 million (25 percent). 9mobile, the telecommunication company, which has Teology as it highest bidder has a market share of 9 percent with 15.36million active customers.

court. He, however, pledged the commitment of the judges, who assumed duty in August 2018, to faithfully discharge their responsibilities. Asante added that they would ensure that justice was done in a timely manner in spite of the reduction as well as the insufficient facilities. “We have already lined up a host of cases to deliver judgments in January when the judges return from their

Christmas vacation to demonstrate the resolve to make a difference,” he said. He further assured of the court’s determination to work with member states to resolve the issue of the enforcement of its decisions. He further said the court was considering options for engaging with member states and the relevant authorities to address the concerns to enable the court’s effectiveness towards regional integration, peace and security.

ECOWAS Court filed 60 cases in 2018 - official

ver 60 cases were filed with ECOWAS Community Court of Justice in 2018, the highest number of cases filed in a single year in the Court’s history. This was contained in a statement by the President of the Court, Justice Edward Asante on Friday in Abuja. Asante, who spoke in a New Year message, said this was compared to the 47 cases filed in 2017 and 45 in 2016. The court’s president said that a total of 115 cases

were pending, by the end of 2018, compared to 89 in 2017 and 63 in 2016. He added that this represented an increase in the number of pending cases before the court, saying the number of judgments delivered by the court also increased to 31 in 2018, higher than the 19 delivered in 2017 and the 29 delivered in 2016. He also said there was an improvement in the number of court sessions held in 2018, which increased to 85

from 79 in 2017. “Although much lower than the 105 held in 2016, which was a historic high in the court’s history.” Asante further added that the new threshold was evidence of the “increasing confidence in the court” by citizens in addressing their human rights violation. He decried the decision to reduce the number of judges of the Court from seven to five at a time of increases in the number of cases pending before the

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XKPMG (In English, Latin and Greek) Bashorun J.K Randle Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

• Continued from last week

t the IMF/World Bank meeting, the lingering matter of the unpaid gratuity and pension of retired partners of KPMG was listed under “AOB” (Any Other Business). Unfortunately, there was no time to do justice to the issue. It was “The Punch” newspaper which took the wind out of our sail with the following front-page report: “Nigeria servicing debt with more than 50% revenue – IMF” (Federal Government of Nigeria proposes to borrow N1.5 Trillion in 2019) “The International Monetary Fund on Thursday painted the precarious situation of the nation’s economy in particular and SubSaharan Africa’s, in general, going by how much the country and the region spend on debt servicing. According to the Breton Woods financial institution, Nigeria spends more than 50 per cent of its revenues on servicing debts, a situation that does not give room for other necessary expenses. Speaking at the presentation of

Benedict Elujoba Elujoba is of the Centre for Promotion of Enterprise and Business Best Practices

frica is a continent in dire need of growth. The continent’s GDP of $2.18trillion in 2017 as estimated by the International Monetary Fund is less than the GDP of Germany ($3.677trillion), a country of fewer than 83 million citizens and a land mass that is only slightly larger than one-third of Nigeria’s. In the meantime, Africa’s output is generated by 1.3billion inhabitants. It can thus be easily averred that the continent’s poor economic state is a result of the extremely low levels of productivity that are pervasive in most African countries. A major factor for Africa’s low productivity and consequent deplorable economic conditions is the low level of industrialization across the continent and a seeming lack of urgency among African leaders, which is evidenced by a slow pace of adoption of technology and modern industrial practices and systems. In an op-ed published June 15, 2018 by The East African, a Kenyan weekly journal, Mr Akinwunmi Adesina, president of the African Development Bank, opined that Africa’s manufacturing sector is the weakest link in its ongoing integration into the global economy. He stated that primary products or

the Regional Economic Outlook for Sub-Saharan Africa – Capital Flows and the Future of Work in Abuja on Thursday, Senior Resident Representative and Mission Chief for Nigeria, African Department, Amine Mati, put Nigeria’s growth rate for 2018 at 1.9 per cent. Mati said that although Nigeria’s debt to Gross Domestic Product remained low at between 20 and 25 per cent, the country spent a high proportion of its revenue on debt servicing as a result of low revenue generation. For Nigeria, he added, the debt servicing to revenue ratio was more than 50 per cent while for subSaharan Africa, the rate was about 10 per cent; a figure he said was too high and reminiscent of what the region went through in the period following debt relief at the beginning of the 21st century. Mati said, “Security issues are exacting a significant human toll in a number of countries. Debt to GDP ratio is increasing in the past five years. Public debt is diverting more resources towards debt servicing. “The interest rate has gone up to where they used to be around the year 2000 before the debt relief. The adjustment has relied on spending compression rather than revenues mobilisation. Meeting the Sustainable Development Goals will require stronger growth and more financing.” The IMF top-notch said that the sub-region needed to create 20 million jobs every year and added that the situation was even more precarious with the Fourth Industrial Revolution lurking around. “Policies are needed today to

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Security issues are exacting a significant human toll in a number of countries. Debt to GDP ratio is increasing in the past five years. Public debt is diverting more resources towards debt servicing

’

create more jobs in the coming years. Twenty million jobs are required every year in Sub-Saharan Africa to meet the SDGs. Job creation is complicated by uncertainty to which technology replaces labour,” he said. Speaking at the event, Director General of the Debt Management Office, Patience Oniha, stated that it was important for the government to borrow especially given the nation’s low revenue generating capacity. She contended that without sufficient revenue and with the recession that the country found itself between 2016 and 2017, the government had no option but to borrow and spend the country out of recession. Oniha said, “We are borrowing to be able to increase forex availability. The government needed to borrow in order to spend the country out of recession.” She disclosed that the government

had proposed to borrow N1.5tn in the 2019 fiscal year, adding that borrowing had reduced as the nation was now out of recession. Justifying this viewpoint, Oniha said that in 2016, the Federal Government borrowed N2.5tn which was approved by the National Assembly while it proposed to borrow N1.64tn in the current financial year. In 2019, she added, the proposed debt of N1.5tn had gone further down. She added that the government had taken steps to diversify the economy and increase tax collection which she said was lower than in most countries of the Economic Community of West African States. The DMO boss differed with the opinion of a questioner who argued that the infrastructure in the country had been decaying despite increased borrowing in the last three years. However, a Non-Governmental Organisation, Social Action, has berated the government for its inclination towards borrowing. In a statement made available to our correspondent in Abuja on Thursday, Head, National Advocacy Centre, Social Action, Nigeria, Vivian Bellonwu-Okafor, said that the inclination to borrow by the government showed cluelessness. Bellonwu-Okafor said the recent statement made by the Minister of Works, Power and Housing, BabatundeFashola that ‘those who complain that we (FG) borrow too much should tell us where else to find funds’ was not only unfortunate but also a glaring admission of cluelessness. She said, “While it is distressing to watch the country’s debt profile balloon into pre-2006 levels – before

the debt buyback deal when the Olusegun Obasanjo administration paid $12bn to eliminate over $30bn then owed to the Paris Club of creditors – it is disheartening that the Buhari government seems to be bereft of ideas on what to do to generate revenue without resorting to excessive borrowing.” Perhaps it was this precarious state of affairs as a prelude to anarchy and fragmentation that provoked the late Apostle HayfordAlile the pioneer Director-General and Chief Executive Officer of the Nigerian Stock Exchange to issue a “fatwah” on his 80th birthday (24th April, 2018) interview which was published on the front page of the “Vanguard” newspaper of November 9, 2018. Headline: “If I were God, I’d cut Zimboda’s blessing” “God says I can’t come from heaven above to come and help you, but if He identifies you as a good instrument, He will pump his goodness through you to others.” It is always a huge task to ascertain who is on the side of the angels. A case in point is the fierce contest between XKPMG and KPMG over the sponsorship of “The Match”(Golf ) Tournament. KPMG outbid XKPMG by depositing the princely sum of U.S. $9 million. Alas, according to the report by The Sunday Times, it was money down the drain. It would have been better spent on retired partners of KPMG who are still awaiting their gratuity and pension.

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Stemming Africa’s industrialisation gap raw materials make up 62% of the continent’s total exports. According to him, it explains (among other things) why a region that produces about 75 per cent of the world’s cocoa accounts for just 5% per cent of the nearly $100 billion annual chocolate market. According to the Economist Intelligence Unit, a British research group, Africa accounted for more than 3% of global manufacturing output in the 1970’s but this percentage has since halved. This is a clear indicator of the urgency the continent needs to catch up with the rest of the world. The United Nations, as part of its efforts to redress this situation set aside 20 November of every year as Africa Industrialisation Day. The year 2018 theme, “Promoting Regional Value Chain in Africa: A Pathway for Accelerating Africa’s Structural Transformation, Industrialisation and Pharmaceutical Production,’’ is very appropriate considering the low level of integration and economic cooperation within Africa’s regions or among its nations. Take Nigeria, Africa’s largest economy for instance, in 2017 only two of its top 15 export destinations were African countries (South Africa and Togo accounting for 4.5% and 2.4% of exports, respectively) The low level of industrialization is the reason much of Africa’s exports are still commodities (raw

materials) with very little value-add as the continent is unable to compete with other more established economies on quality, cost and scale. Consequently, Africa accounts for a paltry 2.6% of total world exports and exports account for only 7.3% of the continent’s economic output. Many economic experts agree that a major reason for Africa’s slow industrialization is that its leaders have failed to pursue bold economic policies out of fear of antagonizing donors. In spite of suboptimal policy direction and implementation in many parts of the continent, some multinationals and other manufacturing concerns are leading the charge for industrialization and regional integration. Taking another look at Nigeria that has struggled to find ways to increase non-oil revenues to counter the fall in commodity prices in the near term and achieve sustainable growth in the long term, the annual report of the nation’s central bank for 2017 revealed that the top three contributors to Nigeria’s non-oil exports in 2017 were British American Tobacco Nigeria (BATN), Olam and Indorama Eleme Fertiliser Company. While BATN led the top 100 companies with $145.48million (about N52.37B) worth of exports, it also brings the added value of having exported manufactured goods as a result of its investments in processing and manufacturing (across Africa and particularly in Nigeria) and its

integration of local farmers into its operations such that rather than tobacco leaves, cigarettes were exported to Liberia, Cameroon, Ghana, Niger and Cote D’Ivoire. Olam International was second with $110.892 million (about N39.92billion) worth of Sesame seeds and fermented cocoa beans while Indorama exported $69.815million (about N25.13billion) worth of granular urea in bulk to Uruguay Brazil and Argentina. Other companies that contributed to the volume of manufactured exports include De-united foods with $30.568million (about N11billion) on indomie and mini me exports as well as Dangote with $21.496million (about N7.74billion) from export of cement. Dangote also continues to improve Africa’s industrialization drive with the establishment of manufacturing plants in industries including flour, sugar and cement across African countries and notably the multibillion dollar refinery in Lagos, Nigeria. Data from the National Bureau of Statistics put Nigeria’s total exports for 2017 at N13.59trillion. Though an improvement on 2016 figure N8.53trillion, it still leaves a massive and daunting industrialization and productivity gap especially when it is noted that crude oil exports accounted for N11.03trillion (81.1%). In commemoration of Africa Industrialisation Day 2018, the

UN Secretary-General Antonio Guterres, in a message, called for inclusive and sustainable industrial development in Africa, saying it is critical for achieving the 2030 Agenda for Sustainable Development. Meanwhile in Lagos, Governor Akinwunmi Ambode pledged to continue formulating and implementing policies and programmes that would consolidate the state’s position as the industrial and commercial hub of Nigeria. In his address delivered by Mrs Olayinka Oladunjoye, the State Commissioner for Commerce, Industry and Cooperatives, Ambode said that sundry projects in the areas of security, environment, infrastructural renewal and upgrade were designed to create an enabling environment that would promote industrialisation and sustain the state’s status as prime investment destination in Africa. His Edo State counterpart Governor Godwin Obaseki said that his administration’s commitment to the development of an industrial park, a modular refinery and the Benin River Port in the state, will help accelerate Africa’s industrialisation drive. It is hoped that governments at all levels across Africa will improve on policy formulation and implementation to urgently close the gap in Africa’s industrialization.

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Unlocking value in the Access Bank - Diamond merger

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

t’s the start of the New Year, Nigerian stock are still falling, the feel good vibe around this time of the year is yet to ebb and yet I’m still thinking about the announcement made late last year about a merger between Access Bank and Diamond bank, with the potential to shake up Nigeria’s financial services sector. Whenever I think of the Nigerian Banking sector one thought always gets me excited. This is the pre provision operating profits levels for the industry. The thinking goes that if only the banks can clean up their books there could be potential upside for investors in financials. However there is always the fear of falling into a ‘value trap’, or by definition a stock that appears to be cheap because the stock has been trading at low valuation metrics such as earnings multiple, or book valuefor an extended time period. The trap springs when investors buy into the company at low prices and the stock continues to languish or drop further. The recent Access Bank – Diamond Bank merger has made the new entity to emerge to become the largest lender in Nigeria by assets and other metrics. With its huge bad loan portfolio which would need writing off, there is some similarity the new entity bears with FBN Holdings which used to be the largest bank by assets and is also dealing with bad loans for which impairment charges of N76.1 billion was taken

in Q3, 2018. Naturally the question for investors would be, is this new entity a buy? I decided to run some numbers comparing all three banks (FBNH, Access and Diamond), separately and then the combined Access and Diamond to see where they stood as at Q3. Basically plugging in the same valuation for FBNH for the combined Access and Diamond gives a share price of N11.38 and market value of N403.9 bn. Note that FBNH bad loan portfolio (NPLs at 14%) is probably much worse that what it would be for the combined Access/

‘

Investors should instead be asking themselves what kind of Nigerian banking/ financial services sector will emerge from 2020 (just 1 year from now), and who will be in the dominant position then to drive profitability Diamond entity. Access Bank has signaled they would write off all bad loans in Diamond and no legacy NPLs will be coming into the new entity. Positives for the merged (Access/

The table below tells the tale: Fig 1

’

Diamond) entity Low valuation If you believe that Nigerian banks or at least the largest banks should trade close to their book value then you could argue that N20 per share is closer to fair value for the combined name. Currently Zenith Bank (another bank which we believe will be closer to the new combined Access/Diamond) is trading at 0.92x book value. Scale Total assets of over N6trillion, and 29 million customers should give the new Access – Diamond entity enough levers to pull to drive profitability. Mobile money The coming mobile money, digital financial inclusion is an opportunity for the new bank given Access adoption of technology and the CBNs mandate to Telcos to partner with banks. Together, the two companies will have 29 million customers, including more than 13 million mobile customers, as well as 3,100 ATMs, 15.9 million cards and around 32,000 PoS terminals. Given how ambitious the Access Bank team driving the merger is, a MTN/Access Bank-Diamond Bank mobile money roll out would not be out of place and the impact on the bottom-line could be huge. Backward looking negative Sentiment Most of the negative sentiment that has followed this merger announcement is backwards looking and in our opinion misses the point completely. Investors should instead be asking themselves what kind of Nigerian banking/financial services

sector will emerge from 2020 (just 1 year from now), and who will be in the dominant position then to drive profitability. We think Access – Diamond will be a major winner in the evolving financial services landscape. Nominal growth/unbanked population The Banking sector (assets) has grown at circa 10% per annum on average since 2010 in Naira terms. This should provide steady lift to profits assuming more financially excluded are gradually being lifted into the formal space using digital financial services DFS. Profit levers Looking at the table above, the combined Access/Diamond has a lot of profit levers to pull including operating expenses of N130 billion and Personnel expenses of N58 billion. We expect these to come down with direct impact on topline. Experience from Intercontinental acquisition We think the Access Bank team has learnt a lot from the experience of swallowing Intercontinental Bank. One sign of this is reports that the Diamond Bank LOGO will survive the merger. This is a symbolic but effective way to keep a lot of the Diamond Bank customers from porting. Access Bank has absorbed six institutions in the past 15 years. According to management, the same team who led the past successful integration will be responsible for delivering the merger with Diamond Bank and overseeing the transition to the enlarged entity. Unknowns We believe that any unknowns from this deal (still awaiting more clarity) will be an upside surprise for Access Bank + Diamond Bank. Risks The major risk to our assumptions are execution and possibility of another recession in Nigeria. Also interest expense should increase in the near term as Access plans a $250m Tier 2 capital raising exercise.

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Vice presidential debate: Beyond the political rhetoric

Dapo Oguntade

watched with keen interest the Vice Presidential candidates’ debate organised ahead of the forthcoming elections in Nigeria. Obviously, the current government, to be candid, has not performed to the level of my initial expectations when it came into office. This is not to say they have done nothing worthy of commendation. At least, some of our rail lines are working again. There are many other initiatives such as the N-power and soft loan programmes as well as the conscientious efforts to develop other infrastructure projects to which the government deserves some credit. If anything, the level of waste and profligacy of the penultimate

government has been curtailed to a great extent. However, as many would agree, the process of change is moving at snail pace and while the good intentions of current actors cannot be denied, the speed we are running at is way too slow for (i) where Nigeria currently stands and where we want to be (ii) the rate of expansion of our burgeoning population now forecast to exceed 250 million by 2030 and (iii) the speed at which the rest of the world is moving at. I am not a particularly strong supporter of some of the government’s policies including those on infrastructure. I ask myself if the government can really bankroll the infrastructural needs of Nigeria by taking on various loans from international finance institutions. The Vice President, Professor Yemi Osinbajo recently estimated Nigeria needs about $1 trillion to modernise its energy infrastructure alone. The country is estimated to require $450 trillion to execute on the National Integrated Infrastructure Master Plan (NIIMP). In my own estimations, there is only so much government

can do and given the requirements, Nigeria needs to be moving with urgency. I am aware some measures have been taken to create certain structures through the Nigeria Infrastructure Fund and the resuscitation of the Infrastructure Bank. But these measures are just not enough. If we are looking to attract capital, we need to create the right legal framework and other measures necessary to guarantee attractive returns on investment. However what we truly need is a holistic infrastructure development strategy with creative policies as to limit our dependence on foreign capital to finance our infrastructure needs. This is a long term plan which cannot be done overnight. Our policies on agriculture and development of local industries are not robust enough. Our agricultural policies are at best disjointed and we lack the necessary support industries such as steel and petrochemical industries, to mention a few, which are the essential requirements to drive a modern industrialised economy. It is only when the essential industries are in place, then the resulting multiplier effects could lead to the creation of an

even larger service driven economy. However, this is a matter for another day. There is a glaring absence, at this time, of any holistic, strategic and interconnected national development plan which accounts for all elements of monetary, fiscal, trade, foreign exchange, industrial, and capital formation and labour policies. Not to forget the legal, regulatory, constitutional and institutional framework necessary to achieve our aspirations. If those policies exist today in some form – maybe the national industrial revolution plan - then execution is lacking. There is need for joint concerted effort across all sectors, government levels and the private sector. Why was I so keen on the debate? I was interested in knowing if there is truly an alternative in this election cycle. While I am mindful that perfection might just be a pipe dream or a mirage, it is important to at least assess and critically analyse our options albeit from the limited scope of a time bound debate. Given my doubts on what difference Atiku Abubakar can make as the President, I was more

interested in knowing what his running mate, Peter Obi, could offer. I could hear a lot of numbers and statistics coming forth during the time he presented. However, beyond the numbers, which should be expected ahead of such a debate. I felt the comments shared were light on details and short of any concrete plan in place to make a change. It sounded all too familiar – back to 2015 again – the numbers game. The arguments in my mind felt somewhat peripheral, on-the-surface and lacking depth. Further, I thought the comments on fuel subsidy was being in some ways economical with the truth and maybe playing to the gallery. It is true a more efficient system will provide additional savings but that distracts from the substance of the matter. Can Nigerians really bear a situation where subsidies are taken away? Let’s be factual, our refineries are at present not working.

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Monday 07 January 2019

The illogic and irrationality of Operation Python Dance 3

gainst the backdrop of reported setbacks in its war with terr o r i s t s o f B o ko Haram and Islamic State West Africa, the Nigerian Army on January 1 commenced a nationwide troop deployment ostensibly to tackle “observed upsurge” in security challenges ahead of the February 2019 elections. Exercise Egwu Eke 111, the codename for the operation python dance, will supposedly enable the Army to identify and stop any attempts by groups and individuals to cause problems through stockpiling of arms and similar infractions. On the contrary, it is needless, illogical and lacks rationality. Chief of Army Staff, Lt General Tukur Burutai, said Egwu Eke 111 would run from January 1 to February 28. It seeks to stop threats such as the formation of ethnic militia and violence induced by political activities. The Army now claims there is a proliferation of such activities and groups that its deployment would stop. It sent out troops to the five states of the South East in 2016 and 2017, claiming a multiplicity of threats in the area during the Yuletide. OhanezeNdigbo and other groups in the region dismiss claims of any unrest or threats requiring military intervention. There is only an increase in population in the Yuletide as indigenes return home from all over the world to

celebrate with their kin. Instead, the military invasion served as an excuse to brutalise the populace. The Nigerian Army now claims the threats are nationwide. “These challenges coupled with other security threats across the country such as terrorism, militancy, kidnapping and banditry portend that dissident group and criminal elements could cash in on the situation to perpetrate largescale violence before, during and after the 2019 general elections,” the Army Chief stated through a spokesman. He added, “Even in the desert of Borno, don’t forget, the Lake Chad basin is there, python can also dance within the desert.We have desert python. So, python will dance all over the country this time around.’’ What is the situation across the country? Boko Haram and other insurgencies have grown in intensity, making Nigerialose men and equipment on a weekly basis. Men are refusing mobilisation, claiming that the enemy has better ammo and therefore too dangerous to tackle. Expectedly, both the Nigerian Army and the Nigeria Police deny this. Despite the denial, the Nigerian Police sacked more than 100 of its men for refusing mobilisation to the warfront. Furthermore, the governors of Borno, Katsinaand Zamfara have cried out about insecurity in their domains. Gov Aminu Masari of Katsina State lamented: “Our state is currently under serious siege by armed robbers, kidnappers and armed bandits who

arrest rural people at the grassroots at will and demand ransom which, if not paid, they kill their victims. Zamfara has been in a state of siege for longer.” Nationwide deployment of soldiers such as Operation Python Dance usually happens in a state of emergency. The Governor of Zamfara State has called for a state of emergency in his state given the terror of banditry and low-intensity war by cattle rustlers. Danger walks on both legs in that part of the country. Operation Python Dance 3 is troubling on many grounds. It sends the wrong signals to citizens. It was a colossal failure in the South East, compelling the Nigerian Army to effect social responsibility actions that were also misunderstood. Now it is going nationwide. First, the rationale for this action defies logic and rationality. Internal security is the primary responsibility of the Nigerian Police, not of the Army. Banditry, kidnapping and cattle rustling are within the province of police duties. Only a busybody armed forces would reduce itself to undertaking tasks reserved for the Police and other paramilitary forces. While Section 217 c of the Constitution empowers the President to involve the Nigerian Army in “suppressing insurrection and acting in aid of civil authorities to restore order when called upon to do so by the President”, we are not aware of the conditions “prescribed by an Act of the National

Assembly” as the law also requires. Nationwide deployment of soldiers sends the signal of a state of emergency or even a declaration of war. The measure comes at a time when the armed forces face increasing questions about the efficacy of their operations with the many strikes of the allegedly technically defeated Boko Haram. Is it realistic to open many war fronts simultaneously? More importantly, Operation Python Dance 3 continues the militarization of civilian space in a democracy. It is extremely disturbing to have soldiers line the streets and highways of Nigeria, starting from the South East when the country is not at war. The background of a coming election makes it even more curious and incongruous. Nigeria does not need military supervision of the elections. That era ended as long ago as 1998. There are enough structures, from the Independent National Electoral Commission through the Nigerian Police and paramilitary organs such as Civil Defence, to handle elections. The insertion of the military into a strictly civilian matter such as elections is neither logical nor warranted. We will not join the conspiracy theorists on the real intendment of military deployment and the expected beneficiaries. We call on the Nigerian Army and the Government to end Operation Python Dance 3 immediately and send the soldiers to where the nation needs them. They have no role to play in the forthcoming elections.

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Monday 07 January 2019

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Monday 07 January 2019 In Association With

The Trump Show, season two

Too many challengers Bruised, not broken

What to expect from the second half of Donald Trump’s first term

Israel’s opposition could defeat Binyamin Netanyahu—if they united

Thus far the president has been lucky. It may not last

O NA L D T RU M P ’S nerve-jangling presidential term began its second half with a federal-government shut down, seesawing markets and the ejection of reassuring cabinet members like Generals John Kelly and James Mattis. As Mr Trump’s opponents called this a disaster, his supporters lambasted their criticism as hysterical—wasn’t everybody saying a year ago that it was sinister to have so many generals in the cabinet? A calm assessment of the Trump era requires those who admire America to unplug themselves from the news cycle for a minute. As the next phase of the president’s four-year term begins, three questions need answering. How bad is it really? How bad could it get? And how should Americans, and foreign governments, prepare for the Trump Show’s second season? Mr Trump is so polarising that his critics brush off anything that might count as an achievement. Shortly before Christmas he signed a useful, bipartisan criminal-justice reform into law. Some of the regulatory changes to schools and companies have been helpful. In foreign affairs the attempt to change the terms of America’s economic relations with China is welcome, too. But any orthodox Republican president enjoying the backing of both houses of Congress might have achieved as much—or more. What marks out Mr Trump’s first two years is his irrepressible instinct to act as a wrecker. His destructive tactics were supposed to topple a self-serving Washington elite, but the president’s bullying, lying and sleaze have filled the swamp faster than it has drained. Where he has been at his most Trumpish—on immigration, North Korea, NATO—the knocking down has yet to lead to much renewal. Mr Trump came to office with a mandate to rewrite America’s immigration rules and make them meritbased, as in Canada. Yet because he and his staff are ham-fisted with Congress, that chance is now gone. Kim Jong Un still has his weapons programme and, having conceded nothing, now demands a reward from America. Europeans may pay

But nobody wants to be number two

more into their defence budgets at the president’s urging. But America has spent half a century and billions of dollars building its relations with Europe. In just two years Mr Trump has taken a sledgehammer to them. The next two years could be worse. For a start, Mr Trump’s luck may be about to turn. In the first half of his term he has been fortunate. He was not faced by any shock of the sort his two predecessors had to deal with: 9/11, Afghanistan, Iraq, the financial crisis, Syria. Electoral triumph, a roaring economy and surging financial markets gave him an air of invulnerability. Even without a shock, the weather has changed. Although the economy is still fairly strong, the sugar-high from the tax cut is fading and growth is slowing in China and Europe. Markets, which Mr Trump heralds as a proxy for economic success, are volatile (see article). Republicans were trounced in the House in the mid-terms. The new Democratic majority will investigate the president’s conduct, and at some point Robert Mueller, the special counsel, will complete his report on links between Russia and the Trump campaign. Over the past two years, Mr Trump has shown that he reacts to any adversity by lashing out without regard to the consequences. Neither the magnitude nor target of his response need bear on the provocation. In the past few weeks he has announced troop withdrawals from Syria and Afghanistan. Seemingly, this was partly because he was be-

ing criticised by pundits for failing to build a southern border-wall. The Afghanistan withdrawal was later walked back and the Syrian one blurred, with the result that nobody can say what America’s policy is (though the harm will remain). Now that his cabinet has lost its steadying generals, expect even more such destructive ambiguity. Moreover, when Mr Trump acts, he does not recognise boundaries, legal or ethical. He has already been implicated in two felonies and several of his former advisers are in or heading for prison. As his troubles mount, he will become less bound by institutional machinery. If Mr Mueller indicts a member of Mr Trump’s family, the president may instruct his attorney-general to end the whole thing and then make egregious use of his pardon powers. House Democrats might unearth documents suggesting that the Trump Organisation was used to launder Russian money. What then? Confusion, chaos and normbreaking are how Mr Trump operates. If the federal government really were a business, the turnover of senior jobs in the White House would have investors dumping the stock. Mr Trump’s interventions often accomplish the opposite of what he intends. His criticism of the Federal Reserve chairman, Jerome Powell, for being too hawkish will, if anything, only make an independentminded Fed more hawkish still. His own negotiators fear that he might undermine them if the mood takes him. Most of the senior staff who

have left the administration have said that he is selfabsorbed, distracted and ill-informed. He demands absolute loyalty and, when he gets it, offers none in return. How should Congress and the world prepare for what is coming? Foreign allies should engage and hedge; work with Mr Trump when they can, but have a plan B in case he lets them down. Democrats in control of the House have a fine line to tread. Some are calling for Mr Trump to be impeached but, as of now, the Republican-controlled Senate will not convict him. As things stand, it would be better if the verdict comes at the ballot box. Instead, they must hold him to account, but not play into his desire that they serve as props in his permanent campaign. Many Republicans in the Senate find themselves in a now familiar dilemma. Speak out and risk losing their seats in a primary; stay silent and risk losing their party and their consciences. More should follow Mitt Romney, who marked his arrival in the Senate this week by criticising Mr Trump’s conduct. His return to politics is welcome, as is the vibrant opposition to Mr Trump by activists and civil society evident in the midterms. Assailed by his presidency, American democracy is fighting back. After two chaotic years, it is clear that the Trump Show is something to be endured. Perhaps the luck will hold and America and the world will muddle through. But luck is a slender hope on which to build prosperity and peace.

CCORDING TO POLLS, most Israelis do not want Binyamin Netanyahu, their prime minister, to serve another term. Many are fed up with the corruption allegations that have been swirling around him for months. He may soon be indicted on charges of bribery and breach of trust. Yet Mr Netanyahu’s Likud party is still on track to win the next election, which he has called for April 9th (seven months earlier than originally scheduled), in part to head off the charges. Mr Netanyahu can boast of peace and prosperity on his watch, but if he remains prime minister it will be in large part because the opposition is hopelessly divided. Since the election was announced on December

24th, five new opposition parties have been formed. They join an already crowded field. The new party leaders include disaffected ministers, two former army commanders and a rabble-rousing activist. All speak of replacing Mr Netanyahu. Not one of them has a real shot. Under Mr Netanyahu, Likud has never received more than a quarter of the national vote. Yet it has dominated Israeli politics with the help of smaller nationalist and religious parties. Moderates, meanwhile, spread their votes more evenly and widely. In this election they can choose between no fewer than six vaguely centrist parties, none of which gets more than 13% in the polls. Were they running as one they would probably gather 40% of the vote, overtaking Likud. But none of the party leaders is prepared to serve as number two. That is the case even though the leaders seem to have few discernible differences over policy—or much of an agenda at all. They offer no new solutions to Israel’s intractable conContinues on page 15

Monday 07 January 2019

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Israel’s opposition could defeat Binyamin...

EUR not safe yet

The euro still needs fixing

How to make the single currency’s next 20 years better than the first 20

HE BIRTH of the euro on January 1st 1999 was at once unifying and divisive. It united Europe’s leaders, who hailed a new era of tighter integration, easier trade and faster growth, thinking they were building a currency to rival the dollar. But the euro divided economists, some of whom warned that binding Europe’s disparate economies to a single monetary policy was an act of historic folly. They preferred a comparison with emerging markets, whose dependence on distant central banks fosters frequent crises. Milton Friedman predicted that a downturn in the global economy could pull the new currency apart. For years the sovereign-debt crisis that engulfed Europe after 2010 seemed close to fulfilling Friedman’s prediction. But the euro did not collapse. It stumbled on, often thanks to last-minute fixes by leaders who, though deeply divided, showed a steely commitment to saving the single currency. Public support for the project remains strong. Over three in five euro-zone residents say the single currency is good for their country. Three-quarters say it is good for the EU. However, that support does not reflect economic or policy success. Euro-zone countries

have never looked as if they all belong in one currency union, stripped of independent monetary policies and the ability to devalue their exchange rates. Italy’s living standards are barely higher than they were in 1999. Spain and Ireland have recently enjoyed decent growth following laudable structural reforms, but their adjustments have been long and hard, and remain incomplete. In Spain the youth unemployment rate is 35%. Wage growth is slow almost everywhere. The euro’s history is littered with errors by technocrats. The worst was to fail to recognise quickly in 2010 that Greece’s debts were unpayable and that its bondholders would have to bear losses. Greece has endured a prolonged depression and its economy is almost a quarter smaller than it was a decade ago. The European Central Bank has an ignominious history of setting monetary policy that is too restrictive for the euro zone as a whole, let alone its depressed areas. It was slow to react to the financial crash in 2008, arrogantly viewing it as an American problem. In 2011 it helped to tip Europe back into recession by raising interest rates too early. The ECB’s finest hour—Mario Draghi’s promise in 2012 to do “whatever it takes” to save the euro—was an impromptu act. Leaders may be committed to

the euro, but they cannot agree on how to fix it (see Briefing). The crisis exposed the depth of the divide between creditor and debtor countries: northern voters simply will not pay for fecklessness elsewhere. Economic stagnation helped populists to power in Greece and Italy. Because reform has been slow, the crisis could flare up again. If so, Europe will have to withstand it in a political environment that is much more divided than it was in 2010. Technically, the path to a stable euro is clear. The first step is ensuring that banks and sovereigns are less liable to drag each other down in a crisis. Europe’s banks are parochial, preferring to hold the sovereign debt of their respective home countries. Instead, they should be encouraged to hold a new safe asset, composed of the debt of many member states. Otherwise, when a country gets into debt trouble, its banks will face a simultaneous crisis, damaging the economy. Similarly, sovereigns must be shielded from banking crises. A central fund to recapitalise distressed banks is already being beefed up, but deposit insurance should also be pooled. This has been more or less agreed on in principle, but countries disagree over the speed of the transition. Other necessary reforms are still more contentious. If the

euro zone’s disparate economies are to see off local economic shocks, like collapsing housing bubbles, they need a replacement for their lost monetary independence. Were countries to run a tight ship during booms, in line with the EU’s rules, they would have more leeway for fiscal stimulus in crunches. But that advice is of no use to countries like Italy that are hemmed in by decades-old debts. Residents of indebted states cannot be expected to endure perpetual stagnation. Instead, the euro zone should have some centralised counter-cyclical fiscal policy, as Emmanuel Macron, France’s president, has called for. This does not mean letting countries off reform; it should not mean paying off their creditors. But it might include targeted investment spending, say, or shared unemployment insurance, to shield against deep economic downturns. The aim should be to avoid a repeat of the selfdefeating fiscal contractions after the latest crisis. This degree of risk-sharing may involve more transfers than northern voters can bear. But without it, the euro’s next 20 years will be little better than the last 20. And when crisis strikes, Europe’s leaders may find that political will, however substantial it was last time, is not enough.

Continued from page 14

flict with the Palestinians. The most popular new party, Israel Resilience, is led by Benny Gantz (pictured), a decorated former general. He has so far refused interview requests, saying his party’s aim is “to strengthen the state of Israel as a Jewish and democratic state in the spirit of the Zionist vision”. Other party leaders offer similar bromides on the need for unity and re-ordering national priorities. The Labour Party has long dominated Israeli politics, espousing a socialist ideology. In recent years, though, it has tacked towards the centre and formed an alliance with Hatnuah, another centrist party, re-branding themselves the “Zionist Union”. On January 1st the allies split. Labour, which has had a series of lacklustre leaders, has lost most of its support. It has not led a government since 2001 and now attracts under 10% of the vote, according to polls. The other centrist parties are younger and built around ambitious leaders, such as Moshe Kahlon, the finance minister, who heads the Kulanu party, and Orly Levi-Abekasis, a three-term Knesset member, who leads the Gesher party. They hope to create their own power base. Many of Mr Netanyahu’s opponents seem to be waiting, not for the election, but for the legal system to bring him down. In the coming months the attorney-general is expected to hold pre-trial hearings over whether to charge the prime minister. Mr Netanyahu says he will not step down if indicted. An election victory would give him some political cover to stay on. But his opponents believe this is the beginning of the end of his time in office, which in July would surpass the record set by David Ben-Gurion, Israel’s first prime minister. Some on the right spy an opportunity. On December 29th Naftali Bennett and Ayelet Shaked, the education and justice ministers, announced the formation of a new party, called the New Right, which will field religious and secular candidates. Mr Bennett, at least, thinks that Mr Netanyahu’s job is up for grabs.

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Monday 07 January 2019 In Association With

Blue Christmas

On January 7th, Egypt’s Copts celebrate a sad Christmas The largest Christian community in the Arab world faces bombs, bullets and neglect

OMETIMES, THE simplest of gestures carries weight. In 2015 AbdelFattah al-Sisi became the first president of Egypt to attend a Christmas mass. He has done so each year since, and will probably do so again on January 7th, the date on which Egypt’s Coptic Christians celebrate the birth of Jesus. The long-persecuted Copts are glad that the Muslim president of their mostly Muslim homeland offers them this token of respect. But Mr Sisi has done little else to improve their plight. The Copts are the largest Christian community in the Arab world, numbering about 10m. Successive governments have ignored laws promising them equality. Copts are frozen out of senior government jobs, particularly in the security services. Textbooks gloss over the history of the church, one of the oldest branches of Christianity. After Mr Sisi’s coup against Muhammad Morsi, Egypt’s first elected president, in 2013, Copts suffered vicious attacks by Mr Morsi’s Islamist supporters. Even the Copts’ right to worship is circumscribed. For most of its modern history Egypt re-

stricted church-building under decrees written by the Ottomans and the short-lived monarchy of 1922-53. Security services had to approve new houses of worship. Permission was rarely granted. In 2011, the last year for which data are available, there was one church for every 2,780 Christians. Per person, Muslims had about four times as many mosques,

which are not subject to onerous restrictions. In 2016, to great fanfare, Mr Sisi’s government passed a law to replace these antiquated regulations. It established a formal process for requesting construction permits and a committee to review them. If governors wish to refuse a new church, they must provide a written explanation

within four months. But the law has done little to ease the burden, in part because the intelligence services still have an outsized role in the process. Since the law was passed just eight permits have been issued for new churches, a slower pace than before 2016. The 2,500 Copts in Kom elRaheb, 200km south of Cairo, must drive 40 minutes to the

nearest church. Since 2001 they have sought permission to open one in their village. In December they celebrated mass in a building owned by the archdiocese, which they hope will soon receive a licence. Muslim villagers attacked them, pelting their homes with stones. Police rarely bother to investigate such cases. Instead they round up both Christian and Muslim villagers until local leaders agree to a “reconciliation session”. After one such meeting in Kom el-Raheb, Copts agreed to suspend further prayers. The state views churches as a security issue—because terrorists attack them and the police fail to stop the attacks. Seven Copts were shot dead near a Minya monastery in November, on the same road where 28 Copts were killed the previous year. The jihadists of Islamic State claimed responsibility for both attacks. In December a policeman shot two men outside a church in Minya. The victims were not militants. They were local Copts, a father and son who had a dispute with the cop over a parking space. Even where Mr Sisi’s government has deployed more church guards, their presence may not be a comfort.

Knocking Gnassingbé

Togo’s president suffers an electoral setback Despite an opposition boycott, his party still lost seats

T IS NO mean feat for a ruling party to lose seats in an election boycotted by 14 opposition parties. Yet such is the depth of unhappiness with Faure Gnassingbé, the president of Togo, that his party’s majority shrank in parliamentary elections on December 20th, even though almost no one was standing against it. The opposition coalition shunned the vote, accusing the government of rigging the voters’ register. It also complained that the police and army shot at protesters. On a video circulated on social media in December, a uniformed man in a pickup truck drove up to demonstrators and pointed a rifle at them. The gunman’s face was not visible, and no shots were seen fired on the video. But activists claimed that two people (one a 12-year-old) were shot dead by soldiers that day. Provisional results showed the ruling Union pour la République losing three of its 62 seats. The loss may be crucial. Mr Gnassingbé (pictured), who has run the country since 2005 following the death of his father (who had been in charge for 38 years) wants to be allowed to

to get a four-fifths majority (or 73 of 91 votes). If the changes are rammed through parliament, or if another referendum is called, the result would probably be more protests. Politically speaking, no one expects to hear Faure’s requiem soon.

run again in 2020. Under pressure to stand down, he proposed a constitutional amendment that would limit presidents to only two terms, but insisted that the count should only start at the next election. That could allow him to remain in power

until 2030. A referendum on his constitutional amendment was meant to be held on December 16th. But it was called off after a wave of opposition protests by activists demanding that the two-term limit be applied

retroactively, which would bar Mr Gnassingbé from running again. Without a referendum Mr Gnassingbé may try to push his constitutional amendments through parliament. But to do so he would need to muster the support of allied parties

Monday 07 January 2019

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BUSINESS DAY

CITYFile

NSCDC official charged with murder in Lagos

Nigeria Security and Civil Defence Corps personnel, Kehinde Osho, who allegedly shot and killed a man, has been charged before an Ebute Meta Chief Magistrates’ Court in Lagos. Osho is facing a count charge of murder, but he pleaded not guilty. He was brought to the court on Friday. The prosecutor, Oladele Adebayo, had told the court that the accused committed the offence on November 18, 2018, at 9.00p.m., on Pipeline Way, Oke-Ado, Lagos. Adebayo said that the accused shot Taofeek Andulqadir, 31, with a gun on the head in contravention of Section 223 of the Criminal Law of Lagos State, 2015. The chief magistrate O.O. Olatunji, however, granted the accused bail in the sum of N200,000 with two sureties in like sum, and ordered that the case file should be sent to the state Director of Public Prosecutions (DPP) for advice. He adjourned the case until February 7, for mention.

Obaseki settles medical bills of patients at UBTH Where are the Trucks?

overnor Godwin Obaseki of Edo has paid the medical bills of some patients at the University of Benin Teaching Hospital (UBTH) and the Central Hospital, in Benin, the state capital. Charles Idahosa, a former commissioner in the state, who disclosed this, said the governor also recently flew three patients from UBTH to Israel for Kidney transplant and the operations were successful. According to him, Obaseki delegated some doctors who visited the various hospitals in the state to recommend patients suffering from severe ailments and are unable to afford their medical bills for consideration by the state government.

6 suspected cultists docked in Ogun

ix suspected secret cult members are standing trial before an Ota Chief Magistrate Court in Ogun State. The accused are Olanilekan Abass, 22; Rasheed Nurudeen, 18; Rafiu Sholola, 37; Fatai Abiodun, 30; Lateef Abiodun, 30; and Atiba Olarigbigbe, 30. They are facing trial on a two-count charge of membership of unlawful society and conspiracy to which they pleaded not guilty. The accused, who were in court on Friday, and others still at large, allegedly committed the offences on December 26 at 11.30 pm. in Owode-Ijako area of Ota. Police prosecutor, Abdulkareem Mustapha told the court that the accused and others belong to a society identified as “Aiye Confraternity”. The offences contravened Sections 3, 5 and 516 of the Criminal Code, Laws of Ogun, 2006. Chief magistrate, Mathew Akinyemi, in his ruling, granted each of the accused bail of N300, 000 with two sureties in like sum and fixed further hearing on the case for February 11. NAN

The Ijora- Apapa Bridges in Lagos, dreaded for their notorious traffic jam look empty; sanity that motorists and residents wish will continue when activities return in full swing in Apapa, Lagos. Pic by Pius Okeosisi

FG to reclaim land, communities ravaged by erosion JOSHUA BASSEY

he Federal Government says it is working to reclaim all land lost to gully erosion and assist floodravaged communities regain their means of livelihood. The assurance was contained in a statement issued by the Federal Ministry of Science and Technology (FMST) at the weekend. Abdul Aminu, head, public relations unit of the ministry, in the statement quoted the minister of science and technology, Obgonnaya Onu, as giving the assurance at the launch of gully erosion control works at Okwohia, Obowo/Ihitte Uboma local government area of Imo. According to him, the intervention of Federal Government would usher a huge relief to the Okwohia community which

had for long been devastated by ecological challenges. Onu said: “The approval of the project is a testimony to the present administration’s resolve to ensure that no part of the country will be allowed to suffer any neglect due to geographical location. “To further consolidate on the gains of this stride, the Federal Government’s execution of projects across the country also demonstrates the sincerity of purpose of APC-led administration toward promoting equity and fair play to all and sundry.” The minister believed that the project would improve the standard of living of the community and its environs. He said that the project would additionally reduce the danger posed to lives and property associated with erosion and persistent flooding experienced in recent times. He affirmed that Federal Government

would continue to implement genuine government policies, agreements and contracts at both national and international levels that were aimed at laying solid foundation for virile and prosperous nation. The permanent secretary, Ecological fund Office, Habiba Lawal, said that the project was initiated through a request for an urgent intervention forwarded to the Ecological Fund Office. She explained that the request was forwarded by Benjamin Uwajumobi, who represents the Imo North District at the upper chamber of the National Assembly. Lawal, who was represented by Mathias Eluma, said that the launch and hand over of the project to the benefiting community would enable the people to take over and ensure its maintenance and sustainability.

A’Ibom procures N5bn equipment for specialist hospital ANIEFIOK UDONQUAK, Uyo

kwa Ibom government has purchased medical equipment worth N5 billion for Ibom Specialist Hospital to boost healthcare delivery in the state. Dominic Ukpong, the commissioner for health, disclosed this when members of the Divine Mandate Campaign Team visited the paramount ruler of Eket, Etim Abia, on Friday in Eket. According to him, the state has been paying N400 million quarterly to offset

bills for the medical equipment in the hospital. Ukpong, however, said that the hospital was not completed before it was inaugurated the previous administration. “We are paying the money now and the hospital had been inaugurated but not yet completed. It was supposed to be ground floor, first, second and third floors. “The previous administration did the ground and first floors and left the second and third floors uncompleted. It is not yet plastered but was inaugurated,” he said. He noted that Ibom Specialist Hospital was on August 8, 2018 given out to Clinotech Turnkey to manage for the state,

adding that Governor Emmanuel was passionate about improving healthcare delivery in the state. He said some other hospitals in the state, such as Ituk Mbang, Immanuel hospital, Etinan General Hospital, Ikono Hospital and Awa Hospital had been rehabilitated, upgraded and equipped. “We are trying to train people who will manage the hospitals. We have gotten ambulance for emergency medical response such that if you are sick and you cannot leave your home, you will call a certain number and an ambulance will come and pick you up for treatment,” he said.

18 BUSINESS DAY

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Monday 07 January 2019

Live @ The Exchanges Top Gainers/Losers as at Friday 04 January 2019 GAINERS

Market Statistics as at Friday 04 January 2019

LOSERS

Company

Opening

Closing

Change

OKOMUOIL NB

N76.2

N80

3.8

N78.7

N79.5

0.8

GUARANTY

N32.95

N33.5

0.55

STANBIC

N46

N46.5

UPL

N1.97

N2.14

Company

Opening

Closing

Change

CAP

N34

N31.5

-2.5

BETAGLAS

N68.3

N67

-1.3

N30.7

N29.6

-1.1

0.5

ZENITHBANK

N22.7

N21.7

-1

0.17

GLAXOSMITH

N13.05

N12.2

-0.85

ASI (Points)

30,638.90

DEALS (Numbers)

4,082.00

VOLUME (Numbers)

334,316,959.00

VALUE (N billion)

1.771

MARKET CAP (N Trn

11.425

NSE-30 Index: Sterling Bank replaces Beta Glass Stories by Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) has reviewed the NSE-30 Index and the eight sectoral indices of the exchange, which are NSE Consumer Goods, NSE Banking, NSE Insurance, NSE Industrial, NSE Oil & Gas, NSE Pension, NSE Lotus Islamic and NSE Corporate Governance Indices. The composition of these indices became effective on January 1, 2019 after the completion of the year-end review and index rebalancing exercise. This resulted to entry of some major companies and the exit of others from the various indices. On the NSE-30 Index, Sterling Bank Plc has replaced Beta

Glass Company Plc. MRS Oil Nig Plc has replaced Eterna Plc in the NSE Oil/ Gas Index. There were no changes in the NSE Consumer Goods Index and that of NSE Industrial Index, but in the NSE Banking Index, Jaiz Bank Plc replaced Diamond Bank Plc. In the NSE Insurance Index, Consolidated Hallmark Insurance Plc, Sovereign Trust Insurance Plc, Regency Assurance Plc replaced Continental Reinsurance Plc, Staco Insurance Plc, and Standard Alliance Insurance Plc. NSE Pension Index has new entrants like CCNN Plc, Beta Glass Co. Plc, Julius Berger Plc while Diamond Bank Plc, Continental Reinsurance Plc, Ecobank International Incorporated have exited. Jaiz Bank Plc has replaced Nigeria Aviation

Handling Company Plc in the Lotus Islamic Index. Meanwhile, while there were no new entrants into the Corporate Governance Index, the likes of NEM Insurance Plc, Diamond Bank Plc, and Continental Reinsurance Plc have all exited the Index. The indices, which were developed using the market capitalization

methodology, are rebalanced on a biannual basis, the first business day in January and in July. The Stocks are selected based on market capitalization and liquidity. The liquidity is based on the number of days the stock is traded during the preceding two quarters. To be included in the index, the stock must have traded

for at least 70 percent of the number of trading days in the preceding two quarters. The Nigerian bourse began publishing the NSE 30 Index in February 2009 with index values available from January 1, 2007. On July 1, 2008, The NSE developed four sectoral indices and one index in 2013, with a base value of 1,000 points, designed to provide investable benchmarks to capture the performance of specific sectors. The Insurance and Consumer Goods sector index, comprises the 15 most capitalized and liquid companies; Banking and Industrial Goods sector index, comprised of 10 most capitalised and liquid companies, while the Oil & Gas sector index, is composed of the seven most capitalized and liquid companies.

Strong earnings put Vitafoam shares on high demand

mpressive corporate earnings and expectation of high return on investment have put shares of Vitafoam Nigeria Plc on the league of the most sought after by discerning investors on The Nigerian Stock Exchange as they scramble to beef up their portfolio with the stock despite the bearish trend. Vitafoam’s impressive performance in the third quarter which ended on September 30, 2018 indicated that the its net profit stood at N601.923million from a loss of N127.690million in the preceding year while its basic Earnings Per Share (EPS) hit N57 kobo in the review period as against a loss of N15 kobo in the preceding year. As a reward for its numerous shareholders, the company announced a dividend of 25 kobo per share. This is in addition to declaration of bonus

share of one for five ordinary shares. The announcement of Vitafoam’s strong earnings prompted many investors to place buy order on the stock to take advantage of its current low price relative to the company’s intrinsic value on stock market. On Monday, December 31st, 2018, the last trading day for the year, Vitafoam led the gainers’ chart on The Exchange, followed by Stambic IBTC as Vitafoam’s share price appreciated by 10 percent, from N4 to N4. 40, following transaction of 2, 687,190 shares, worth N11,823, 096 on the company’s shares. Market watchers were quick to commend the company’s performance, saying demand for its shares may continue despite the general lull in the market. Network Capital’s Managing Director and

Chief Executive Officer, Oluropo Dada, promptly ascribed the rally created by Vitafoam’s result to the associated value for both existing and potential shareholders: “The Stock market is information - driven. It responds to every information from quoted companies, regardless of the type of information. This is the beauty of the market in aggregating investors’ reaction to every bit of information or market hearsay. The 25k dividend and one for five bonus is the fundamental factor driving Vitafoam’s share price. This is real. Everyone

knows that the company’s current performance is far better than that of last year”, Dada said. Vitafoam’s Group Managing Director and Chief Executive Officer, Vitafoam Nigeria Plc, Taiwo Adeniyi attributed the company’s recent opportunity performance to a range of factors including access to finance and availability of raw materials and putting customers at the center of all the company’s activities among others. “ We are enjoying Improved funding through Bank of Industry’s (BOI’s) intervention, deliberate cost management, improved efficiency, customer centric approach to selling, innnovative thinking, market differentiation, Government’s deliberate policy on forex trading and availability which has helped in sourcing of input materials at cheaper rates and

also planning”, Adeniyi said. As part of its Corporate Social Responsibility (CSR), annually, Vitafoam donates its products to Lagos Island Marternity Hospital to ensue availability of good equipment and identify with the Baby of the year. Speaking at this year’s edition in Lagos, Adeniyi said it was consistent with the company’s CSR policy as its products cut across diverse age groups and status. “Vitafoam has been known over the years for good quality products. It believes in being part of the child’s life from cradle. We have always been known to provide for the home, every age set you find in the home. We have products that meets the needs of the baby up to when it becomes a toddler and then, when he eventually grows up to become an adult.

Continental Reinsurance incorporates CIMA subsidiary, appoints Oumar BA as its CEO

ontinental Reinsurance Plc has completed the incorporation of a subsidiary office in Douala, Cameroon. This status is a key milestone in its strategy of operating through a network of wellcapitalized subsidiaries across Africa. “This development reinforces our commitment to the CIMA region and our valued partners,” said Oyetunji, Group Managing Director of Continental Reinsurance Plc. “We already have a strong local team on the ground, and our goal is to utilize our new status to maximize value.” The move is in line with the new CIMA Code in the Francophone region which requires a reinsurance company based in a Member State to be established as a limited liability company and further permits a reinsurance company with its head office in a Member State to install a branch in another Member State. The Company started its operations in Douala in 2004 as a branch office and later opened its Abidjan office in 2012 to diversify its activities in the CIMA region. Oyetunji added: “At the same time, we are delighted to announce that we have appointed Oumar BA as the Chief Executive Officer of the newly established subsidiary, effective immediately. Given our new status, we believe he will be able to leverage on his expertise and track record to capitalize on the current demand for localized service and we look forward to Oumar helping us develop that further in the CIMA region.” Oumar brings over two decades of experience to the Company. Most previously, he served at Swiss Re as Regional Manager (West Africa – Anglophone). Prior to that, he held roles as Senior Client Manager (Swiss Re Africa / Swiss Re Zurich), Property Underwriter (Swiss Re Africa / Johannesburg) and also worked with Salama Assurances (Senegal).

Monday 07 January 2019

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BUSINESS DAY

Equity funds count losses as stock market rout takes toll

Pg. 20

C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

ANALYSIS

Companies face higher borrowing costs in 2019 LOLADE AKINMURELE

gain, the private sector is at risk of being crowded out by government borrowing in 2019 in bad news for an economy still sruggling to find its feet after a scathing recession. Expectations for a higher yield environment this year implies higher borrowing costs for corporates. The yield expectations are being driven by rising interest rates in developed markets which could force the hand of the Central Bank of Nigeria (CBN) to raise interest rates in order to compete favourably for capital. Yields are also tipped to rise if the federal government fails to meet its revenue target for the third straight year as that will widen the budget financing gap which would in turn boost local bond supply and bid yields higher. The Federal government’s 2019 budget has a N2.3 trillion deficit and is predicated on revenues of N7 trillion. Both scenarios are threatened by disappointing revenues which naturally feeds into a wider deficit that will leave the government with limited options than to borrow. Capital expenditure bore the brunt of disappointing revenues in the past two years but 2019 will give the government less wriggle room given

the spike in recurrent expenditure which cannot be easily made away with like capital spending. Non-debt recurrent expenditure alone will hit N4 trillion this year. If government revenue is to perform as it did in 2017 or 2018 where only 50 percent of the target was met, then worker salaries, overhead costs and statutory transfers will be higher than total revenue, before considering capital expenditure and debt servicing. The total non-debt recurrent expenditure will equate to 128 percent of the government’s projected N3.5 trillion revenue for the year. N3.5 trillion is half of the N7 trillion 2019 revenue projection. What that implies is that the government w ou l d have t o b o r row just to maintain an over bloated bureaucracy. Add capital expenditure as well as debt servicing obligations and the government will need to borrow even more, thereby crowding out the private sector. After a record breaking 2017 for government bond yields which peaked at 18 percent, 2018 saw yields fall to 14 percent on average amid lower inflation rate and reduced bond supply from the federal government which tweaked its debt strategy to borrow less domestically in favour of external debt. H o w e v e r, t h e r e a r e signs of a higher yield environment in 2019 and those signs started flash-

L-R: Aniekan Joseph, Area Sales Manager, Lagos; Dr. Soji Adetona, Consultant Pathologist; Olanrewaju Bolawe, Medical Scientist, all of SYNLAB Nigeria (formerly PathCare) at the recently held Health Writers Association of Nigeria (HEWAN) Awards and Symposium, where SYNLAB Nigeria was awarded “Best Laboratory of the Year”.

ing as early as late 2018. Rising global interest rates which sparked selloffs in emerging markets and political uncertainty that coloured the second half of the year, saw the Central Bank of Nigeria push yields higher in the fourth quarter of 2018 using Open Market Operations (OMO) auctions, to attract foreign portfolio investors and tame inflation ahead of the system liquidity that accompanies campaign spending in an election year. The OMO auctions laid down a marker for fixed income yields, with one-year government

Treasury Bills rising as high as 17 percent while average bond yields rose nearly 200 basis points to 15 percent. The aggressive monetary tightening adopted by the CBN is expected to continue this year on the back of higher inflation expectations and rising interest rates in the United States and other developed markets. The price stability mandate of the CBN means if inflation rises, interest rates are likely to be raised. The apex bank relied heavily on raising interest rates in the latter par t of 2016

when inflation soared to a high of 18 percent. The CBN hiked benchmark rates to 14 percent from 11 percent over that period and that’s where it has stayed for nearly two years now. The outlook for higher interest rates in the United States and sustained foreign capital outflow this year will only pile more pressure to the CBN to tighten even further. The consensus forecast for interest rates in 2019 is a 50-basis hike to 14.5 percent. The Monetary Policy Committee is scheduled to hold their first meeting of 2019 this

January. The IMF tips the Nigerian economy to expand 2.3 percent this year. Although still in a tepid posture, the economy is gradually recovering from recession. The e co n o my e x pa n d e d by 1.81 percent in the third quarter of 2018, up from 1.5 percent in previous quarter, but still below 1 . 9 1 p e rc e nt re c o rd e d in the first quarter. The country’s growth rate still falls short of population growth rate of 2.6 percent, implying that the economy needs stimulus policies to make growth sustainable and inclusive.

MARKETS

Vitafoam recommends N260.51m dividend, approves bonus issues for shareholders OLUWASEGUN OLAKOYENIKAN

he Board of Vitafoam Nigeria Plc, one of Nigeria’s leading manufacturers of foam and flexible/rigid polyurethane products, has recommended a dividend of N260.51 million to the company’s shareholders. In a notice filed at the Nigerian Stock Exchange (NSE) Friday by the foam maker, the recommendation was made at a meeting of its Board of Directors held on December

18, 2018. The dividend represents 25 kobo per share for the financial year ended September 30, 2018 and it is subject to shareholders’ approval at Vitafoam’s Annual General Meeting scheduled to hold on March 7, 2019 in Lagos, and withholding tax, according to the firm. “If approved at the Annual General Meeting, the dividend will be paid on 8th March, 2019, to members whose names appear in the Register of members at the close of business on Friday, 15th February, 2019,” Vita-

foam said. Besides, the Board also approved a bonus issue of 1 new share for every 5 existing ordinary shares to shareholders whose names appear on the register of members at the close of business on Friday, February 15, 2018. Vitafoam explained that “the new shares shall rank equally in all respects with the existing ordinary shares except that they shall not rank for the dividend recommendation of the year ended 30th September, 2018.” This implies Vitafoam’s

outstanding shares in the market would increase from its current 1.04 billion shares, a development that would have resultant effect on the firm’s earnings per share which stood at 57 kobo in 2018, according to Aluko Paul, a research analyst at MBC Securities Limited. Vitafoam posted 46.67 percent return to emerge the seventh-best performing stock on the floor of NSE in 2018. This was triggered by a 10 percent gain to N4.40 recorded by the consumer goods firm on Monday,

December 31, 2018 after it declared a whooping profit of N601.92 million for the year ended September 30, 2018. The stock rallied to N4.99 on Thursday, January 3, it highest in over two years. Part of the gains was however reversed Friday, January 4 after it shed 9.82 percent to N4.50 per share on profit-taking activity. In spite of this, Paul said “in the coming days, we might see more activities on the stock as it has not been very liquid in the past and we expect long-term investors to key into it at this price which

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

might likely push up.” BusinessDay check shows that Vitafoam recorded unimpressive financial performance in 2016 and 2017, posting a loss of N127.69 million in 2017 down from a loss after tax of N32.03 million in 2016. However, the company bounced back in 2018 with a ballooned profit of N601.92 million despite paying N191.03 million as tax. Also, revenue surged 10.38 percent to N19.53 billion as against N17.69 billion recorded in the previous year.

20 BUSINESS DAY

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Monday 07 January 2019

COMPANIES & MARKETS MARKETS

Equity funds count losses as stock market rout takes toll usinessDay yearto-date analysis of the performance of 10 equity funds in Nigeria between January and November 2nd 2018, shows United Capital Equity Fund topping the losers chart with - 26.04 percent decrease in its unit price, for the period, according to SEC Nigeria data. Other top losers include; Meristem Equity Market Fund (- 25.96%), AXA Mansard Equity Income Fund (14.85%), Stanbic IBTC Aggressive Fund (Sub Fund) with -14.14 percent return and Stanbic IBTC Nigerian Equity Fund (12.94 percent). Meanwhile the benchmark of the Nigerian Stock Exchange (NSE) All Share Index return for the period stood at – 17.47 percent. Responding to the analysis, Johnson Chuckwu, MD of Cowry Asset said the stocks that the mutual funds invested in suffered losses beyond the market return. ”The stocks that gained in 2018 are those that are not qualified as investment instruments by mutual funds and this stocks are called outliners and they moderated the loss in the All Share Index and also because the stocks the mutual funds invested in recorded losses, the return on investments therefore is definitely going to be worst that the bench-

mark NSE return,” Chuckwu told BusinessDay. In 2018, Nigeria equities lost 18 percent as foreign capital fled emerging markets on the back of rising interest rates in the United States and slower global growth concerns. Other equity funds that outperformed the benchmark although reported negative return include; FBN Nigeria Smart Beta Equity Fund (-12.64%) ARM Aggressive Growth Fund (-11.42%), Legacy Equity Fund (-7.46%), Paramount Equity Fund (-7.24%) and Frontier Fund (-6.61%). Omotola Abimbola, a research analyst at Ecobank, said “delivering a positive return in an equity portfolio in a year the market was down double digits would have meant outperforming the benchmark by over 15 percentage point, and that’s a tall order.” Another analyst who spoke to BusinessDay on the condition of anonymity said any fund manager that underperforms the entire market index can be rated as being very weak because there is no fund that includes all stocks on the exchange in its funds or investment portfolio. “Ordinarily, any good fund manager should outperform the market index because it is a basket of good performers and the lagers will weigh down the entire market index because

COMPANY RELEASE

BANKING

MRS Oil gets Directors’ approval for relocation of corporate headquarters to Apapa

Afemai MFB raises share capital to N500m

GTB announces closed period ahead audited financial statement release

ADAMS SEGUN

ENDURANCE OKAFOR

RS, an indigenous downstream oil company has notified investors and the general public of its Board’s approval to relocate its corporate headquarters. The statement which was signed by the company secretary, advised the Nigerian stock Exchange that it has received the green light to move its base from the current address at Onikan in Lagos, to Apapa, which is located close to the city’s lagoon and famous for its sea ports and terminals. ‘’MRS Oil Nigeria Plc. hereby notifies The Nigerian Stock Exchange that its Board of Directors has approved the relocation of the Company’s Head Office from No. 8,Macarthy Street, Onikan, Lagos to No. 2, Tin Can Island, Apapa, Lagos. Dealing Members and the general public are hereby notified’’ the statement read.

IDRIS UMAR MOMOH, Benin

femai Microfinance Bank’s shareholders have approved a fivefold increase of the mortgage bank’s share capital to N500 million from N100 million. The shareholders gave the approval dur ing the bank’s 23rd annual general meeting which took place at its corporate headquarters in Jattu-Uzuaire in Etsako West local government area. The capital raise comes on the heels of the new Central Bank of Nigeria (CBN) newly revised recapitalization’s guidelines. Under the new guidelines state Microfinance banks require a minimum capital of N1 billion, N200 million for Unit Microfinance banks and N5 billion for National Microfinance banks. Pius Akpaibor, chairman, board of directors of the financial institution, in his welcome address said, the

L-R: Mo Abudu, CEO EbonyLife Tv / executive producer the movie ‘Chief Daddy’; Jimi Agbaje, Peoples Democratic Party, Lagos State Governorship Candidate, his wife, Abiola, during the Grand Premiere of the Movie ‘’Chief Daddy’’ held at Oriental Hotel, Lekki, Lagos

a portfolio investor will first identify the instrument that qualifies for investment in their portfolio, that is those instruments that have very good fundamentals,” the stock market expert said. From a high position of third best performing market in 2017 with 42 percent rally, Nigeria bourse All Share Index dropped 0.24 percent in December 2018 pushing year to day return to -20.07 percent. This earned the NSE the sixth worst perform-

bank needed to inject fresh fund of N900 million to be able to sustain the bank’s current status as a State Microfinance Bank latest by April 1, 2019. “As a first step we intend to raise the authorized capital from N100 million to N500 million. To sustain your bank’s current status as a State Microfinance bank, fresh funds to the tune of N900 million will be injected into it. This is no mean requirement which should be met in the next 16 months- latest April 1, 2019”, he said. A f e m a i ’s t o t a l a s s e t s increased 4.9 percent to N562.11 million from N535.74 million in 2017. The bank’s gross earnings grew from N150.79 million to N162. 10million, representing a 7.50 percent increase. However, profit before tax decreased from N28.66 million to N8.84 million representing 69.16 percent while profit after tax also

ing market in the world. Rafiq Raji, chief economist at Macroafricaintel said “equities performed poorly both globally and domestically in 2018.” As at the close of the market yesterday, Nigerian equities fell by 1.15 percent led by declines in cement, banks and brewers. An equity fund is a mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. Eq-

decreased from N27.74 million in 2016 to N7.74 million in 2017, representing a 73.07 percent decline. Akpaibor said that clients’ deposit increased by 6.98 percent from N295.53 million to N316.15 million in the year under review. The board chairman also explained that the shareholders’ funds grew from N224.79 million to N232.25 m i l l i o n , re p re s e n t i n g a growth of 3.32 percent, capital adequacy ratio was 50.43 percent while the liquidity ratio was 44.12 percent, which are both above the statutory minimum of 10 percent and 20 percent respectively. He posited that the bank’s loans and advances decreased 2 percent from N385.23 million to N377.14 million. Akpaibor said that the bank plans to establish a branch in Benin-City in addition to those already established in Afuze, Igarra and Okpilla.

uity funds are also known as stock funds. Stock mutual funds are principally categorized according to company size, the investment style of the holdings in the portfolio and geography. The sizes of an equity fund is determined by a market capitalization, while the investment style, reflected in the fund’s stock holdings, is also used to categorize equity mutual funds. A further analysis by BusinessDay revealed that

SEGUN ADAMS

n two news releases sent to the Nigerian Stock Exchange January 4, 2019, Guaranty Trust Bank Plc. (GTB) a tier- one lender announced its closed period ahead of the release of its full year audited financial report. ‘’Pursuant to the postlisting requirements of the Nigerian Stock Exchange for quoted companies, we hereby inform you of the scheduled commencement of the closed period for trading in the Bank’s shares on January 8, 2019 in respect of the Audited Financial Statement for the year ended December 31, 2018’’ The tier-one bank also notified the public of its Board Meeting to consider the financial reports ahead its release. ‘’The Board of Directors of our Bank is scheduled to meet on Wednesday, January 30, 2019, to consider the Audited Financial Statements

the Net Asset Value (NAV) of the Equity Based Funds declined by 14.66 percent from 14.32 billion in January 5th 2018 to 12.22 billion in November 2 2018, data on available on SEC website showed. “Valuations during the period were not really reflective of fundamentals as a significant number of listed firms actually produced decent earnings, Raji mentioned.

for the year ended December 31, 2018. Issues relating to full year dividend may also be discussed at the meeting’’ The Bank gave the assurance that conclusions reached would be related to the public in due course. ‘’We shall notify you of the decisions reached after the approval of the CBN is obtained.’’ the statement read. GTB closed 1.67 percent higher, gaining 55k to close at N33.50 per share at the end of the first trading week in 2019. The performance is against the backdrop of a bearish run in 2018, which saw the bank’s share price alongside many other stocks shed value as the market fell 18 percent in the year. Experts expect the performance of GTB to surpass its previous earnings guidance on PAT as N189.6 billion has been estimated to be reported for full year 2018 compared to N174.3 billion, it’s most recent.

Monday 07 January 2019

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COMPANIES & MARKETS Business Event

L-R: Tobi Oyewole, corporate social responsibility analyst, The Nigerian Stock Exchange (NSE); Temitayo Ade-Peters, team lead, CSR, NSE, presenting Cheque and Food items donated by Employees of The NSE to Chioma Ohakwe representing the Staff and students of Bethesda Home for the Blind as part of NSE Employee Give-Back Initiative aimed at extending a hand of care to the less privileged during festive seasons in Lagos

L-R: Sunday Okereke, regional sales manager, East, PZ Cussons Consumer; Mercy Johnson-Okojie, celebrity brand influencer; P. O. Konyeha, active distributor, Port Harcourt Territory; Ahusimere Ejiroghene, brand manager, Morning Fresh, PZ Cussons Consumer, and Sunday Ekpo, area sales manager, PZ Cussons Consumer, at the official Morning Fresh trade launch in Port Harcourt, recently.

L-R: Elizabeth Omolade, Ibe New President of the Club; Tajudeen Adegboyega Akande, Chairman of the occasion and President Lagos Country Club; Dupe Dada District Governor of the Association of Lions Clubs International, 404B2, Nigeria, and Asiwaju Olasunkade Azeez, a one time President of llupeju Lions Club under the district and the Vice Chairman, Badminton Section, during the formal presentation of new President and other Officers of Ikeja Metro Lions Club at Ikeja recently.

L-R: Chuks Enwereji, Vice-chairman IADC Nigeria; Marvelyn Ehika, Treasurer IADC Nigeria; Juliet Adesunloye, Administrator IADC Nigeria; Ote Enaibe, chairman IADC Nigeria, at the Annual General Meeting held on the 7th of December 2018 at VCP hotel, Victoria Island Lagos.

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Access Bank Rateswatch Market Analysis and Outlook: January 4th – January 11th, 2019

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.81

Q3 2018 — Higher by 0.31% compared to 1.50% in Q2 2018

Broad Money Supply (M2) (N’ trillion)

31.79

Decreased by 0.007% in Nov’ 2018 from N32.03 trillion in Oct’ 2018

Credit to Private Sector (N’ trillion)

23.08

Decreased by 0.002% in Nov’ 2018 from N23.14 trillion in Oct’ 2018

Currency in Circulation (N’ trillion)

2.1

Increased by 0.074% in Nov’ 2018 from N1.93 trillion in Oct’ 2018

Inflation rate (%) (y-o-y)

11.28

Increased to 11.28% in November 2018 from 11.26% in October’ 2018

Monetary Policy Rate (%)

Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor)

14 (+2/-5)

Lending rate changed to 16% & Deposit rate 9%

External Reserves (US$ million)

43.08

January 2, 2018 figure — an increase of 1.76% from December start

Oil Price (US$/Barrel)

52.42

January 4, 2019 figure— no change from the prior week

Oil Production mbpd (OPEC)

1.736

November 2018 figure — a decrease of 1.64% from October 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Change(%)

04/01/19

28/12/18

30,638.90

31,037.72

(1.28)

Market Cap(N’tr)

11.43

11.34

0.78

Volume (bn)

0.33

0.20

70.39

Value (N’bn)

1.77

6.54

(72.94)

Friday Rate

Change

(%)

(Basis Point)

04/01/19

28/12/18

NSE ASI

MONEY MARKET NIBOR Tenor

Indicators

04/01/19

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

1-week Change

YTD Change

(%)

52.42 3.01

0.00 (9.88)

(18.68) (1.51)

2,378.00 102.55 71.48 11.83 518.00

(0.71) 0.98 (1.01) (3.19) 1.07

22.83 (21.24) (7.77) (22.83) 19.49

1,291.10 15.71 262.15

1.00 2.35 (2.18)

(2.01) (8.61) (20.03)

OBB

20.0000

17.1667

283

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N

23.7500

18.4167

533

Tenor

Friday

Change

CALL

15.2857

15.0000

(%)

(Basis Point)

30 Days

15.8389

12.7500

309

04/01/19

28/12/18

90 Days

13.8439

12.6250

122

FOREIGN EXCHANGE MARKET Market

1 Mnth

14.94

14.95

(1)

3 Mnths

12.62

14.49

(187)

6 Mnths

13.52

13.46

Friday

1 Month

9 Mnths

16.54

16.55

(1)

(N/$)

Rate (N/$)

12 Mnths

17.29

17.31

(3)

04/01/18

28/12/18

04/12/18

Friday

Official (N)

306.95

307.00

306.85

Inter-Bank (N)

364.50

364.33

359.47

BDC (N)

364.50

Parallel (N)

361.00

364.00

370.00

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Change

(%)

(Basis Point)

04/01/19

28/12/18

2,704.19

2,716.56

(0.46)

Mkt Cap Gross (N'tr)

8.49

8.52

(0.46)

BOND MARKET AVERAGE YIELDS Tenor

Friday

Change

(%)

(Basis Point)

04/01/18

28/12/18

3-Year

0.00

Mkt Cap Net (N'tr)

5.27

5.29

(0.52)

5-Year

15.40

15.32

YTD return (%)

10.09

10.59

(0.50)

7-Year

15.54

15.58

(4)

YTD return (%)(US $)

-45.73

-45.25

(0.48)

10-Year

15.39

15.19

20-Year

15.49

15.34

Rate (%)

Date

Index

TREASURY BILLS (MATURITIES) Tenor

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

91 Day 182 Day 364 Day

Amount (N' million) 10,000.00 20,000.00 44,837.72

11.1939 14.0155 16.9512

2-Jan-2019 2-Jan-2019 2-Jan-2019

Global Economy In the US, the Purchasing Managers Index (PMI) came in 53.8 in December 2018, a decline from 55.3 reported the previous month. IHS Markit which measures this index reported that it is the weakest pace of expansion in the manufacturing sector since September 2017. This came on the back of weaker overall rise in new orders which led to a drop in business confidence among manufacturing firms in December. The level of optimism was strong, but well below the long-run series average. Positive sentiment was diminished by concerns surrounding the longevity of new business growth. In a separate development, the Ministry of Development, Industry and Foreign trade revealed that Brazil trade surplus expanded to $6.64 billion in December 2018 from $5 billion in December 2017. It is the largest trade surplus since June 2017. Exports jumped to 11.1% from a year ago to $19.56 billion in December, while imports advanced at a softer pace of 2.5% to $12.92 billion. Among major trading partners, exports rose to China (46.5%), ASEAN countries (43.3%), the EU (18.2%) and the US (6.2%), but fell to Argentina (-55.2 %). Imports increased from the US (27%) and Argentina (29.3%), but fell from China (-3.6%), ASEAN countries (-17.1%) and the EU (-16%). Local Economy In a recent circular published, the Central Bank of Nigeria announced the development of the Consumer Complaints Management System (CCMS). The apex bank stated that this is an automated system aimed at easing complaints management and thus bolster public confidence in the financial system. Banks and other financial institutions have been instructed to assign tracking numbers for every complaints received from customers, issue an acknowledgement which shall contain the assigned tracking number to the customer and commence upload of complaints to the CCMS on a daily basis. This will take effect from 2nd of January 2019. Failure to comply, it said, will attract sanctions on the erring institution. In a separate development, the Manufacturing Purchasing Managers' Index stood at 61.1 index points in December 2018, the latest PMI report of the Central Bank of Nigeria (CBN) showed. This indicates an expansion in the manufacturing sector for the twenty-first consecutive month. The index grew at a slightly slower pace when compared to the previous month (57.9 points). Thirteen of the fourteen sub-sectors surveyed reported growth during the month. However, the Primary metal subsectors declined in the month under review. Elsewhere, recently published data by the National Bureau of Statistics (NBS), revealed that the Federation Accounts Allocation Committee (FAAC) disbursed the sum of N788.14 billion among Federal, States and Local Governments in November 2018 from the revenue generated in October 2018. The amount distributed was from the statutory account, value added tax (VAT) and exchange gain allocation, comprising of N682.16billion, N105.17 billion and N806.39 billion, respectively. A breakdown of the sum disbursed among the three tiers, revealed that the Federal Government received N299.19 billion, states received N194.92 billion and the local governments received N146.69 billion. The oil producing states received N58.19 billion as the 13% derivation fund and N70 billion was transferred to Excess Crude Account (ECA). Revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received N4.99 billion, N7.59 billion and N5.82 billion respectively as cost of revenue collections. Stock Market Indicators at the stock market sustained the bullish momentum seen at the close of last year in

the fist week of the New Year. Market capitalization increased by N90 billion to end the week at N11.43 trillion as investors took position in bellwether counters. This week, we expect market volatility to continue as investors and fund managers rebalance their portfolios, while watching the political space and ahead of full year company earnings position and post-election market dynamics. Money Market Money market rates ticked up across all placement tenors following retail Secondary Market Intervention Sales (SMIS) auction by the Central Bank of Nigeria CBN. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates rose to 20% and 23.75% from 17.17% and 18.42% respectively the previous week. The 30-day and 90-day NIBOR edged up to 15.84% and 13.84% the prior week from 12.75% and 12.63% respectively. This week, we expect rates to taper on the back of Open Market Operation (OMO) maturity of N375 billion hitting the system. Foreign Exchange Market Last week, the local unit strengthened slightly against the green back in most segments supported by intervention of the Central Bank of Nigeria (CBN). At the Official market, the naira appreciated by 0.02% to close at N306.95/$. Also, the naira strengthened at the parallel market segment by 0.82% to close N361 to a dollar last week from N364 the week earlier. This week, we expect the naira to continue trading within current rates in all markets as the CBN continues to supply FX. Bond Market Bond yields inched higher across most maturities owing to sell-off on the MAR 2024 and FEB 2028 maturities. Specifically, yields on the 5-, 10- and 20-year bonds finished at 15.40%, 15.39%, and 15.49% respectively from 15.32%, 15.19% and 15.34% in that order the previous week. The Access Bank bond index fell by 12.37points to close at 2,704.19 points from 2,716.56 in the prior week. This week, the bond space may see similar sentiments should weak demand persist at the long end of the curve. Commodities Market Oil prices dipped last week on concerns that an economic slowdown in 2019 will cut into fuel demand just as crude supplies are surging. U.S. crude production stood at a record 11.7 million barrels per day (bpd) in late 2018, making America the world’s biggest oil producer. The Organization of Petroleum Exporting Countries (OPEC) basket price, lost 97 cents to close at $52.95 a barrel, a 2% loss from the previous week. In contrast, precious metals continued its upward trajectory as prices increased for the third consecutive week. Worries about a global economic slowdown and volatility in equities boosted safe-haven buying. Gold prices notched up 1% to $1,291.10 per ounce last week, while silver prices closed 36 cents, or 2.3%, higher at $15.71 per ounce. This week, oil prices might likely go upwards boosted by optimism over trade talks between the U.S.A and China expected to hold during the week. We expect precious metals prices to remain supported by safe-haven demand as the US government shutdown persists. MONTHLY MACRO ECONOMIC FORECASTS Variables

Jan’19

Feb’19

Mar’19

Exchange Rate (NAFEX) (N/$)

364

365

Inflation Rate (%)

11.30

11.61

11.45

58.00

62.00

Crude Oil Price (US$/Barrel)

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

BUSINESS DAY

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26 BUSINESS DAY

real sector watch

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Monday 07 January 2019

Key issues facing manufacturers in 2019 ODINAKA ANUDU

ver y year has its own package and 2019 is no exception. This year, like other years, will likely see Nigerian manufacturers battling with policy to infrastructure challenges. One major issue that confronts Nigerian manufacturers this year is election. The Manufacturers Association of Nigeria (MAN) has recognised this point by tying the performance of the economy in 2019 to the conduct of the election. “Being an election year, performance of the economy in 2019 would to a large extent depend on the transparency and credibility of the election,” MAN said while analysing the 2019 budget. More than this, there will be implications no matter who wins the presidential election. If the incumbent President Muhammadu Buhari wins a second term, there will likely be policy consistency. However, there may also be lethargy that follows politicians that win their second term. Again, there may not be significant changes in the sector because there is currently more attention to agriculture than the value chain where light manufacturing belongs. Should the opposition win, there will likely be policy inconsistency, as the new government will do away with certain policies they are not comfortable with. This has consistently been a challenge over the years and remains one big reason why manufacturing is always a troubled sector. Two, constituting a government and appointment of ministers may take time. The new appointees will spend some time to get themselves attuned to the new realities in their ministries. Analysts expect that challenges will continue to hit the automotive industry because the current National Automotive Policy is encouraging the importation of rickety cars. The 2013 National Automotive Policy imposes 35 percent levy and 35 percent duty on imported vehicles, amounting to a total of 70 percent.

Even with 70 percent fees paid on imported vehicles, importers of damaged or ‘accidented’ vehicles officially enjoy a rebate of 30 percent. What this has done is to encourage the importation of rickety vehicles, which make up 70 percent of imported cars today. Today, the age of most imported used cars in Nigeria is 15 years, whereas that of Algeria, Angola, Chad, Mauritius and Seychelles is three, according to a research done by PwC. The prohibitive levy and duty paid on imported cars have encouraged smuggling of vehicles into Nigeria. Officially, market for cars in the country is just 6,999 as against 555,716 in South Africa; 181,001 in Egypt; 168,913 in Morocco, and 94,408 in Algeria. “There is no market for even the investors,” said Thomas Pelletier Thomas Pelletier, managing director, CFAO Nigeria. Next is cost of production, which will continue to rise. New state governors could come up with their revenue strategies to increase the Internally Generated Revenue (IGR), and they may impose more taxes, levies and fees on businesses. Tax experts told BusinessDay that the number of taxes payable by businesses across the country is now 54

as against 37 in 2014. They project that this may rise further, considering that oil price is trending around $55 and may fall more, thereby reducing federal allocations to states and pushing states into desperate revenue drive. This is not an alarm but a possibility. Vivian Chigozie-Nmonwu, tax expert and lead partner at Vi-M Professional Solution, said these taxes need to be amalgamated into one or a few, since the whole tax cycle is a multiple chain of taxes on the same income stream. Forty percent of manufacturing expenditure goes to alternative energy. Manufacturers have spent N212.85 billion on alternative energy sources between the second half of 2016 and the first half of 2018. This is over 100 percent higher than what was incurred in the previous four halves. There is no possibility that power supply will be readily available for manufacturers no matter who wins. This means that production costs will continue to remain the way they are or rise. Firms bringing in raw materials into Apapa ports and those exporting commodities abroad may continue to battle with rising dwell time, which results in high demurrage charges except a new government does something meaningful.Only 10 percent

of cargoes are cleared within the set timeline of 48 hours now while the majority of cargoes take between five and 14 days to clear, according to a maritime report conducted by the Lagos Chamber of Commerce and Industry (LCCI).The report notes that some cargoes take as many as 20 days to be cleared at the ports. Manufacturers could also embark on job cut in order to protect slim margins as they can no longer pass cost onto consumers already distressed following constantly falling disposable income. “We will see some layoffs but it will be worse for companies at the lower segment that do not have a large market share or competitive advantage,” said Christian Orajekwe, equity research analyst at Cordros Capital Ltd. Manufacturers were unable to sell goods worth N149.23 billion in the first half of 2018 after producing goods worth N4.6 trillion. Incidentally, they are selling to a population whose disposable income and spending are shrinking. Real household consumption and government consumption expenditures declined in 2017 (at –0.99 percent) while national disposable income fell by 1.52 percent, according to the National Bureau of Statistics (NBS).

According to a recent World Bank data, 92.10 percent of Nigerians live at below $5.50 a day. Nigeria, with a population of 180 million people, has 87 million people, nearly half its population, in extreme poverty as high inflation environment continues to erode discretionary income. Job layoffs due to mounting wage bills and macroeconomic headwinds are a double whammy for a country where the vast majority of people are wallowing in abject poverty. More so, the country’s manufacturers will likely continue to face high logistics costs as roads remain in decrepit conditions and railways are still work in progress. Manufacturers told BusinessDay that logistics costs have risen by 50 to 100 percent in the last two years, owing to poor state of roads and lack of a good transport system. There is yet no respite in sight for low-cost-seeking manufacturers who would have seen their logistics costs fall, had GE not exited a railway contract linking Apapa ports to Lagos mainland. Manufacturers may not finding borrowing easy as interest rate charged them by banks in the first half of 2018 stood at 22.9 percent, 0.25 percentage point

higher than 22.65 percent recorded in the same half of 2017. Nigeria’s monetary policy rate (MPR), which is a benchmark interest rate in the country, is 14 percent. Deposit money banks lend as high as 30 to 35 percent, according to BusinessDay checks. The monetary policy committee (MPC) of the South Africa’s Reserve Bank met in March this year and cut interest rates by 25 basis points. The current repo rate (central bank lending rate to commercial banks) in South Africa is now 6.5 percent, and the prime lending rate (lending rate to customers) is 10 percent. The Reserve Bank’s MPC had earlier cut the repo rate in July 2017 by 25 basis points from 7 percent to 6.75 percent. Similarly, Kenya Central Bank’s monetary policy committee cut the determining bank rate in late July to 9 per cent from 9.5 per cent. BusinessDay gathered that Kenyans now borrow at an interest of 13 per cent (as against from 13.5 percent earlier) in line with the interest rate capping rule that limits lending rates to 4 percentage points above the CBR. Zambia is one of the emerging countries in SSA and its central bank cut benchmark lending rate by 50 basis points to 9.75 percent in February this year, citing lower consumer inflation and weaker economic growth, according to Reuters. In October 2017, the central of Ethiopia raised its benchmark interest rate to 7 percent from 5 percent. But these things are not happening in Africa’s most populous country, with 37 million small and medium businesses. Babatunde Paul Ruwase, president of the LCCI, said the current state of the economy shows the government must prioritise stimulation of investment and growth. “The proposition is that low interest rate will stimulate investment, impact positively on growth, create more jobs, increase income, and boost output. This would ultimately have a moderating effect on inflation,” Ruwase said.

Monday 07 January 2019

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real sector watch

No new grounds were explored in 2019 budget—MAN

various ports outside Lagos State to decongest Tin Can and Wharf ports and reduce the cost of moving goods from ports to the factories.” MAN said while recognising and deeply appreciating government’s efforts at carrying the private sector along on the issue of African Continental Free Trade Area (AfCTA), it is important to pay adequate and unwavering attention to the emerging issues on AfCFTA in 2019 and ensure that Nigeria’s economic interests, especially the private sector,

are not only projected. “As a necessary part of the readiness assessment and the resulting action plan, government should put in place the necessary framework to protect and boost the capacity of the manufacturing sector to thrive in the continental free trade area.” While also acknowledging government’s recognition of the need to develop a digital economy and 4th Industrial Revolution in order to enhance productivity, MAN said safety nets were not captured in the budget and neither was a statement directed at it during the president’s budget speech. “Nigeria’s production base faces future risks due to its weak performance in developing productivity drivers such as innovation and human capital, and this calls for closer examination and immediate action,” MAN added. “As articulated in a World Bank report on innovation policy, governments should instead be like a good gardener — one that prepares the ground by building up human resources, fertilises the soil by boosting R&D, waters the plants through providing financial support for innovation, and removes weeds and pests by removing obstacles to innovation,” MAN stated.

if properly privatised. BusinessDay checks show that Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal , manganese and limestone, among others. Due to lack of operations at Ajaokuta Steel, Nigeria today imports steel valued at $3.3 billion every year. Frank Udemba Jacobs, immediate past president of the Manufacturers Association of Nigeria (MAN), said recently that over 50 percent of raw materials used in the sector would have been locally available had Ajaokuta been working. Up till now, the Aluminium Smelter Company, located in Akwa Ibom State, is not in operation due to the tussle

between Bancorp Financial Investment Group Divino Corporation (BFIG), a consortium of U.S.-based Nigerian investors led by Reuben Jaja, and the United Company RUSAL, a Russian firm. Kayode Fayemi, former minister of solid minerals development, had stated that the government was resolving this crisis, but long after his departure, the plant is still under lock and key. “We need that resolved. Aluminium Smelter Company needs to be re-started so that we can get ingots for local roofing sheets manufacturers,” Oluyinka Kufile, chairman, Basic Metal, Iron and Steel Group of the Manufacturers Association of Nigeria (MAN), told BusinessDay earlier in an interview.

ODINAKA ANUDU

he proposed 2019 budget appears to be an extension of 2018, as no new grounds were explored, the Manufacturers Association of Nigeria (MAN) has said. The body said there is a need to properly align the assumptions of the budget with economic realities. It, however, said some of the provisions of the budget would be very important in supporting economic activities in the coming year, adding that huge emphasis on infrastructure development, especially power, road and rail, is encouraging. “As the budget stands, MAN opines that a lot of work still needs to be done while hoping that it will be passed with dispatch,” MAN said, in its analysis of the 2019 budget. “In broad terms, the manufacturing sector could be in for a tough operating environment in 2019, seeing that the needed supporting policies and infrastructure have not been given sufficient priority. MAN is, however, hopeful that the capital expenditure component of the budget will be conscientiously implemented.” The body said the N80.29 billion allocation to agriculture and rural development,

Oluwatoyin Akomolafe, national president, Nigerian-American Chamber of Commerce (2nd L); Oba Otudeko, chairman, Honeywell Group (R); W. Stuart Symington, U.S. ambassador to Nigeria (L); Olusegun Osunkeye, former chairman, Nestle Nigeria Plc at the NACC 2018 Annual Dinner & Presidential Inauguration held in Lagos recently

which is 32.5 percent lower than N118.98 billion allocation of 2018, should have been higher. “Agriculture development is very critical to the growth and development of any country. Agriculture is critical to industry rawmaterials supply and food security in the country. It is, therefore, important to pay significant attention to the agricultural development through better budget allocation while leveraging on backward integration.” MAN said without a

better agriculture performance, it will be very difficult to achieve the economic growth and inflationary assumptions made in the 2019 budget. It, however, commended the N15.66 billion allocation for the promotion and development of agriculture value chain across more than 30 different commodities and N2.69 billion for extension services, including other projects identified in the budget, as commendable. The body said the N80.22

billion allocation for counterpart funding for railway projects (Lagos-Kano; Calabar-Lagos; Ajaokuta-ItakpeAladja; Port Harcourt-Maiduguri, among others) and the N27.12 billion allocation for rehabilitation of rail tracts and general maintenance/running of the rails system are critical. “Global evidence has shown that no country in the world had ever fully industrialised without a robust railway system. However, no mention is made of the need to dredge the

Why manufacturing sector needs policy consistency ODINAKA ANUDU

igeria’s manufacturing sector needs an urgent attention from whoever will become the next president. The reasons are obvious. First, former President Goodluck Jonathan introduced Automotive Policy in 2013 with a target to produce 50,000 cars annually at N1.5 million each, while creating 700,000 jobs. Five years down the line, prices of new cars have risen by over 200 percent as nairadollar exchange rate doubles by more than 100 percent since 2013. The federal government imposed 35 percent levy and another 35 percent duty on

imported cars, hiking cost of imported cars. While the National Automotive Design and Development Council (NADDC), the body responsible for implementation of the auto policy, has issued 54 licenses to intending car assemblers, the policy seems to have raised car smuggling from Benin Republic into Nigeria. The combined capacity of the 54 assembly plants is 410,000 vehicles, while annual car importation into the country is between 250,000 and 300,000 vehicles. “We are driving a policy that is encouraging companies to continue assembling combustion engine cars when the Original equipment manufacturers (OEMs), who own these com-

bustion engines themselves, have already announced they will phase them out. Are we sure we are not setting ourselves up to being a dumping ground?” Bambo Adebowale, chairman, Lagos Chamber of Commerce and Industry (LCCI) Automobile and Allied Products Sectoral Group, asked. Adebowale explained that even with Automotive Policy, car import has not slowed down, wondering how the car assemblers will be able to compete with up to 300,000 cheap vehicles imported into the country. “If we want to develop a market for these 410,000 capacity plants and we import about 250,000 and 300,000 used vehicles, how are they going to support vehicles be-

ing assembled, since the ones being assembled will be more expensive?” he asked. Also, the president is expected to proffer solutions to Ajaokuta Steel, which has gulped $8 billion public funds, according to government records. The Senate has approved $1 billion for the revivification of the plant but this remains a waste of resources, according to analysts. Since 1994, successive governments have claimed that the complex is 98 percent completed. Muhammadu Buhari’s government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the steel, despite an earlier business case in the last administration showing that the complex could only work

28 BUSINESS DAY

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Monday 07 January 2019

Kingsley Moghalu has most coherent economic vision for Nigeria — PwC chief economist DIPO OLADEHINDE

head of 2019 elections, Andrew N e v i n , N i g e r i a’s chief economist for PricewaterhouseCoopers (P wC), has chosen Young Progressive Party (YPP) presidential candidate Kingsley Moghalu as the candidate with the most credible economic plan. Nevin said the e conomic manifesto of YPP presidential candidate Kingsley Moghalu is superior because of its detailed look at the range of capitalist models, arguing precisely what will work in Nigeria. “Dr K (referring to Kingsley Moghalu) has the most incisive analysis of the unsustainable fiscal regime and is willing to face up to our looming debt crisis,” Nevin said on his LinkedIn page. The chief economist at PwC noted that Moghalu r ightly recognises that there is a need for rural Nigeria to prosper if the country is going to succeed. “Fifty-three percent of Nigerians live in rural areas and it is not sufficient for just Lagos do to well or even Lagos, Kano, Port Harcourt, and Kaduna we need all of Nigeria to do well.” “Dr K faces up squarely to the federal/state restructuring issue - he is courageous enough to say not only do we need restructuring, but also that at least 30 of 36 states are economically unviable, so only a restructuring

Kingsley Moghalu

that reduces the economic units (back to 6 in Dr K’s case) can work for us,” Nevin said. Nevin noted that the five critical policies from the YPP manifesto that will have a particularly positive impact on reversing the country’s decline include: Partial privatisation

of the NNPC, with a listing on the NSE, abolition of the Land Use Act, elimination of the fuel subsidy, engagement of the Diaspora, and real restructuring. Before arriving at the conclusion, Andrew Nevin reviewed the economic plans of four presidential candidates com-

prising of ruling All Progressives Congress (APC) by incumbent, President Muhammed Buhari using Economic, Recovery and Growth (ERGP), People’s Democratic Party (PDP) by former vice president Atiku Abubakar using Let’s Get Nigeria Working Again, Allied Congress Party

of Nigeria (ACPN) under Obi Ezekwesili using Project Rescue Nigeria plan and Young Progressive Party (YPP) by its presidential candidate Kingsley Moghalu using Build, Innovate, and Grow - My Vision for our Country. “So of the manifestos of the APC, PDP, ACPN, and YPP, only the YPP’s Manifesto has the coherence and boldness to reverse our current economic path,” Nevin said. Nevin noted that the analysis was purely from a purely economic perspective (not a political perspective) and do not consider other critical issues Nigeria faces (corruption and security being the most important), noting that the views he expressed do not represent the views of any organisation associated with him. “Let me say on a positive note that all candidates recognise that we cannot continue to get poorer and poorer, as they have put considerable effort in their economic policies. All at least state that we need to have a vibrant private sector if we are to succeed, ” Nevin said. Nevin urged all Nigerians to exercise their hard-won democratic rights, noting that what the nation has accomplished during the short time since the military rule has been astonishing and wonderful. “Let me re-iterate again that these are my personal views and do not represent any of the organisation with which I am affiliated,” Nevin said.

Next president must focus on infrastructure to attract investments— Oshinowo JOSHUA BASSEY

lusegun Oshinowo, former director-general of the Nigeria Employers’ Consultative Association (NECA), says whoever becomes the next president must pay a closer attention to infrastructure in order to attract new investments. Oshinowo pointed out that the Nigerian economy is bleeding from over-regulation, as multiple regulatory agencies created by the government— most of which have duplicated functions— see themselves as existing only for revenue drive. He said rather than support and aide enterprise, the agencies have become a cog in the

wheel of economic growth, as businesses in many respects are hounded, thereby discouraging investments. The consequence of this, according to Oshinowo, is that business expansion is hampered by negative impact on employment generation. The DG spoke during a valedictory press conference, saying in other climes regulatory agencies play critical roles in the encouragement of growth and sustenance of enterprise. Oshinowo retired from NECA last month after 19 years of service in the association. “Unlike in other environment where regulation is used to encourage and aide the growth of enterprise, regulatory agencies

in Nigeria have actually become killers of businesses” said Oshinowo. The former DG also made a case for the restructuring of Nigeria to allow states take full responsibility for their resources and manage same to create wealth for their citizens. According to him, the continued dependence of the federating states on the monthly federal allocations makes nonsense of the idea of a federal structure that Nigeria had set out to operate. “Nigeria must restructure to allow states take responsibility for certain aspects of this economy. Even if you have zerolevel corruption, best economic policies, if you don’t restructure

to allow state create wealth for the people, those policies won’t work.” Oshinowo said that a situation where only Lagos and Abuja are the centres of attraction is not good for the country. “Today, it is only Lagos and Abuja that things seem to be happening. There are no economic opportunities for the citizens in other states. So, what you find is a situation where Nigerians are moving out of those states to Lagos to find means of livelihood. This is not good for the economy. The federating states must be able to create opportunities to engage their citizens and fight poverty.” Citing the gridlock around the ports and Apapa, Oshinowo

said there was the strong need for government to take the issue of infrastructure more seriously. “Any president in the 2019 must focus on infrastructure development to attract new investments and strengthen the economy,” said Oshinowo. Timothy Olawale, the D G designate who takes over from January 2019, said he would build on the successes recorded by his predecessor. Olawale said the association under his leadership would continue to pursue his core mandate of protecting the interests and rights of member companies as well as sustain its human capacity building programme, weaved into a five-year strategic plan which starts from 2019 to 2023.

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Why the electorate need to turn out and vote with conscience AMAKA ANAGOR-EWUZIE

epeated tales of pain about the state of the nation have become the order of day with Nigerians. This indicates that many Nigerians are hard hit by the poor state of the economy and lack of respite in sight. For them, the government of the day has done little or nothing to improve the standard of living of the poor masses. The economic hardship is characterised by prevailing national poverty and a high rate of unemployment. As companies’ profit margins con-

tinue to shrink, majority resort to staff lay-offs to cut cost and manage margins. Basic necessities are beyond the reach of many Nigerians as the cost of foreign exchange, especially the rate of the naira to the dollar skyrocketed from N200 per dollar in 2015 to over N360 per dollar in 2018. This not only fueled inflation, but also reduced the purchasing power of Nigerians, whose monthly expenditure increased without corresponding increase in income earned. In all of this, one thing is certain, and this is the fact that the electorate are the real kingmakers because they are the people that choose who will lead them at different levels of government. Therefore, if an elected government fails to enthrone good governance while in power, it means that the electorate also failed to choose the right leader. Abraham Lincoln, former A m e r i ca n P re s i d e nt, w h o preached the importance of

government of, for, and by the people, said that voters played the most important role in making sure the government reflects their desires and function according to the guidelines of the constitution. This is why the right to vote should not by any means be taken for granted. The outcome of elections plays a very important role in the voters’ personal freedoms, taxes, and other aspects of daily life that people take for granted. Because of the far reaching impact election can have, it is the civic responsibility of citizens to not only cast their votes if they want a say in how their futures play out, but to also vote in the right person. According to the Electoral Act 2010, the most important responsibility as citizens involves registering to vote and voting during elections. “A person shall be qualified to be registered as a voter if such a person – (a) is a citizen of Nigeria; (b) has attained the age of 18 years; (c)

is ordinarily resident, works in, originates from the Local Government Area Council, or Ward, covered by the registration centre; (d) presents himself to the Registration Officer of the Commission for registration as a voter; and (e) is not subject to any legal incapacity to vote under any law, rule or regulation in force in Nigeria.” Alarmingly, many Nigerians today have failed to acknowledge their role in shaping the government. Many dismiss the responsibility of voting during elections by not caring about the issues on the ballot. However, by failing to use their privilege to vote, people essentially allow other voters to make decisions for them, to let their voices be heard over voters who make no effort to go to the polls. This is why the electorate need to vote. Meanwhile, some Nigerians go to the polling centre without a clear decision of whom to vote for. This group of people ends

up mortgaging their future by collecting inducement such as money and gift items from politicians in order to vote. As Nigeria moves closer to the next general elections slated for the first quarter of 2019, there is need for every Nigerian up to the eligible voting age, to note that exercising their right to vote is essential to being a good citizen. The past four years in Nigeria have been lived in lamentation but to put an end to this and avoid reoccurrence, Nigerians must join forces to enthrone ‘real change’. They must show interest in the electoral process starting from party primaries, through campaigns and voting at the elections. In doing this, there is need to get it right by coming out enmass to vote for the right candidates with the pedigree required to turn Nigerian economy in the right direction. We need to enthrone the right economic managers in accordance to their competences and capabilities, if Nigeria will grow in the next four years.

NEWS

Police Recruitment: 232,000 excess applicants CBN makes first New Year entry forex market with $210m underscore Nigeria’s unemployment problem into ... as external reserves decline to $43.05bn MICHEAL ANI

he recent announcement by the Nigeria Police on the excessive turn out of people applying for recruitment into the law enforcement agency, affirms the critical state of the nation’s unemployment crisis, analysts say. As at 1:00pm, 2nd Jan 2018, the Police Service Commission (PSC) said it had received applications from 242,455 persons in its on-going recruitment exercise, even though it plans to enlist only 10,000 of these numbers into the Nigeria Police Force. This figure shows an excess of more than 232,000 applicants vowing for the positions, a number analysts say is a tip of an iceberg of how Nigerians jostle for jobs as falling infrastructural development and slowdown in economic activities have forced companies turn off the tap of recruitment. This number of applications that the police received as at that date implies that for each successful applicant, 24 others will be rejected. That is, assuming that the applications stop at this number, which is unlikely. Data from the National Bureau of Statistics (NBS) has shown that the rate of unemployment has been on a consistent increase in the past three

years, settling as high as 23.1 percent in the third quarter of 2018 from 18.8 percent recorded in the same quarter of the previous year. In nominal terms, a total of 20.9 million Nigerians are unemployed, signalling that about 3.1 million people have entered into the unemployment trap in less than a year. The NBS had earlier in Q4 2017 reported the number to be 17.8 million. “I am not surprised at the statistics released by the Nigerian police with regards to the number of participants that signified interest as against those that are required as it is an indication of the massive unemployment in the society,” says Timothy Olawale, Director-General, Nigerian Employers Consultative association. “There is no way that the government despite all its efforts in creating jobs, is going to succeed if the focus is on white-collar job creation alone, which is what they are throwing up,” Olawale said. An average university student in Nigeria spends about 4 years in the university, if and only if the Academic Staff Union of Universities and / or the Non Academic staff union does not embark upon any strike whatsoever. For about two months now, teachers in public universities in Nigeria have been on an indefinite strike designed to compel the

federal government to meet their complaints on issues including poor funding, poor remuneration and low infrastructural developments in school. “It is not as if there are no jobs in the country, but the skills required to match these jobs are not there. That is why we say the government should identify what those skills are and make concerted efforts to develop capacity in those skills; that way our youth will fit into those jobs that are available,” Olawale said. “Furthermore, there is the need to imbibe in our youths the entrepreneurial spirit so that they can be self-employed,” he added. President Muhammadu Buhari, in November last year, announced the approval of a new salary package for police personnel “with a view to restoring its lost primacy in the internal security framework of the country”. A statement by the PSC’s acting Head, Press and Public Relations, Aaron Kaase, shows that of the total applicants, Niger State led with 15, 633 applications, followed by Kano State with 15, 079, Katsina State, 14, 582, Bauchi State, 12, 652, Kaduna State, 13, 882 and Adamawa State with 11, 449 applicants. Bayelsa State had the lowest applications of 1, 258, followed by Lagos State, 1, 358, Ebonyi State, 1, 659 and Anambra State, 1,618.

HOPE MOSES-ASHIKE

he Central Bank of Nigeria (CBN) on Friday, January 4, 2019, made its first intervention in the inter-bank sector of the foreign exchange market for 2019 with a total sum of $210 million injected into the wholesale segment and other sectors of the market. A breakdown of the figures obtained from the CBN on Friday showed that customers in the Wholesale sector of the market received the sum of $100 million with the Small and Medium Enterprises (SMEs) and invisibles sectors each getting $55 million to meet the needs of customers. The dollar supply has helped to boost liquidity in the market strengthened the value of the local currency. Consequently, naira gained N1.00k on Friday to close at N361 per dollar at the parallel market from N362 traded the previous day. However, naira depreciated marginally by N0.05k to close at N365.35k on Friday from N365.30k per dollar traded on Thursday, data from FMDQ indicated. External reserves last week declined to $43.0 billion as at Friday, January 4, 2019from$43.28billionasatDecember 24, 2018, data from CBN revealed. Isaac Okorafor, CBN’s director in charge of corporate communications,

said the CBN continued from where it stoppedin2018inordertomaintainthe stability being enjoyed in the market. While noting that the Bank had made commendable effort in keeping the exchange rates at the current levels, Okorafor re-echoed the Bank’s Governor, Godwin Emefiele saying that the current capital flow reversals from the emerging markets were expected to bring out pressures on the market rates. He, however, assured that, in spite of the anticipated pressures, coupled with the forthcoming elections, the Bank was committed to maintaining the current exchange rate policy, given the level of reserves. Quoting the Governor, Okorafor said that the CBN was determined to sustain a stable exchange rate as it continuestoputinplacerelevantmeasures to shore up the country’s reserves. Meanwhile, one United States Dollar (US$1) exchanged for N357 in the Bureau De Change (BDC) segment of the market on Friday, January 4, 2019. “We expect activity level to improve as Christmas festivities wrap up; and further anticipate that the central bank will continue in its pursuit to stabilize the value of the Naira should any market volatility occur, possibly owing to pre-election uncertainties”, analysts at Afrinvest Securities limited said.

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This is M NEY A daily guide to your Personal Finance

Grace Agada

o the average Nigerian, the problems of wealthy children are unimaginable. A wealthy child’s life is supposed to be perfect. But within the quiet, peaceful, luxurious and rich neighborhood of the wealthy are children who suffer the most from the two most common stigma of wealth; Anxiety and depression. Although these children are surrounded with wealth and the good things of life, they often fight many internal battles, one of which is the unreasonable expectation they are made to live up to. Not only do regular people expect so much from them, their own parents and extended family members also do so. They are, thus, under immense pressure to make decisions that make the family name ‘look good’. A closer look at these wealthy children will reveal the pain, confusion, internal struggles and doubt they deal with on a day-to-day basis. They usually cannot disclose these internal battles to their parents or friends because no one expects them to have

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving.

Monday 07 January 2019

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

The internal battles wealthy children fight that their parents don’t know about any cause to worry – especially after being given so much. However, the worries of these wealthy children have nothing to do with having a roof over their heads or worrying about the source of their next meals. Their worries are emotional and because they belong to a world that is supposed to be perfect, they deny themselves peace and happiness in order to please everyone. Three things have been found to be major contributors to the stress and internal struggles of the wealthy child: The first is their expectation of themselves. Being born into wealth places a natural demand on you to do more than others. This demand requires that you use the resources at your disposal to better yourself and do greater things in the world. Unfortunately, the capacity to be better, successful and attain wealth does not come naturally to an individual who is born into wealth. These children go to the most prestigious schools where they are taught everything but wealth, money and how to succeed. Their parents who should also help sometimes have no idea how to go about it or are preoccupied with making more money. The discussion about money and wealth in most wealthy homes has become a taboo almost as much as the topic of sex. As such, the weight of wanting to succeed without the corresponding help and education weigh these children down and reduces their overall selfesteem. The children of the wealthy suffer in their own ways. They might not be in need of money, but they are burdened from the weight of their internal mind battles. The second cause of internal battle for wealthy children is their parent’s expectations. The pressure to make their parents proud of them, the constant war and emotional divide over family business succession, the conditional inheritance hinging on special kind of relationships, parental

approval over certain key life decisions and having to constantly live in the shadow of their successful parents are all borne out of this same heavy parental expectation. Worse of all is that these expectations show up late in their lives when the cost of changing their life’s direction becomes too disruptive and painful. Below are some of the raw feedbacks we got from children born into wealthy homes; “When you are born into a wealthy family, your parents will forever lord over you. However, if you could prove yourself, by succeeding outside the family business, you will be able to call the shots. My dad uses his money to manipulate us. He has the money; he makes the rules and he

‘

When you are born into a wealthy family, your parents will forever lord over you. However, if you could prove yourself, by succeeding outside the family business, you will be able to call the shots

‘

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made that very clear.” “I think my parents genuinely view me as an investment and it’s pretty flawed. I have to be who my father wants me to be,

because he’s put so much money towards crafting me into that person. I might as well be broke and free“ “I desperately want the label of my family name to

come off. I do not want my family labels to define who I am. I want to live life on my own terms. I think that one of the ways to find happiness in life is to figure out your own goals, and forget about the goals your parents set for you“ The third source of stress for wealthy children comes from the society at large. It is almost like being wealthy attracts a lot of hate from the society. People are constantly trying to get at you and take advantage of you. “You are hated by the media. Somehow, you don’t deserve your money; you didn’t work hard for it, you need to give more, or you are to be blamed for income inequality. If you post anything you have on social media, you are bragging. They have never been such an organized attempt to vilify and defame the wealthy kid like it is today. The key question for parents is, ‘what are your children not telling you that they are telling a total stranger?’ This is where the need for a wealth advisor comes in. Perhaps the most important role of a wealth advisor is to serve as a catalyst for starting these very vital conversations about you, money, your wealth and how your children feel about it. The focus is to address the fundamental issues and not the symptoms. Your children need help and you should get them the help that they need because the preservation of your wealth depends on it. We have compiled 38 of the most insightful feedback we have gotten from children born into wealthy homes concerning their fears, concerns and the internal battles. If you are interested in getting a free copy, kindly send an SMS “Send me the Wealthy kid Infographic” to 08101860042. Keep preparing your children for success.

Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

Monday 07 January 2018

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economy

Consumer firms to maintain dividend payment momentum despite tough 2018 … Paid N78.33 billion in 2017 ….Dangote Sugar, Nascon records higher yields compared to peers BALA AUGIE

nvestors in consumer goods firms shouldn’t fret as the companies are set to maintain dividend payment momentum even as tough and unpredictable environment undermined profit while share prices were beaten down last year. Eight largest consumer good firms quoted on the floor of the bourse paid N78.33 billion for the year financial year ended December 2017. Analysts are of the view that payout ratio will not reduce even though some have embarked on aggressive expansion plans with a view to increasing the share of the market. “It was a tough year for firms but not significant as to force them to reduce payout. I don’t think the numbers are that bad,” said Christian Orajekwe, equity research analyst at Cordros Capital. “In 2016 we saw a reduction in payout ratio of Unilever but 2018 is not as tough for them like the recession period. This is because a lot them have reduced dollar denominated debts and foreign exchange losses,” said Orajekwe. Nigerian Breweries, with a track record of 100 percent payout, paid total dividend of

N29.89 billion for 2017 financial year. Nestle Nigeria Plc paid a final dividend of N21.79 billion for 2017 financial year. Dangote Sugar Refinery paid total dividend of N15 billion for 2017 financial year. Dwindling purchasing power among consumers, insecurity in the northern part of the country, decrepit infrastructure, high incidence of smuggling, counterfeiting locally manufactured products, and the menacing grid lock at the Apapa Ports have made it difficult for manufacturers to bolster margins. Nigeria’s economy remains fragile as GDP grew by 1.80 percent in the third quarter of 2018, a downturn from 1.95 percent and 2.10 percent in the first quarter and fourth quarter of 2018 and 2017. While inflation for month of November 2018 is in double digits, below the central bank’s target range of 6 percent and 9 percent. “Some of the firms that are still investing heavily on new projects will maintain a 50 percent and 60 percent pay-out. For instance Dangote Sugar is investing in the Sugar for Nigeria Master Plan,” said Ifedayo Olowoporoku, consumer goods analysts with Vetiva Capital Management Ltd. Nacon Allied’s and Danogte

he top 10 largest companies by market capitalization listed on the Nigerian Stock Exchange are set to earn a combined N1.021 trillion in profits by year end 2018 according to data compiled by BusinessDay. “The outlook for business is more positive this year than in previous years. This year, the economy is going to grow at its fastest rate since 2015 so it’s not such a big sur-

P.E

SHORT TAKES N22.429 Trillion Nigeria’s total public debt stock comprising external and domestic debts of the Federal Government, 36 States and the Federal Capital Territory (FCT) stood at N22.429 trillion (or US$ 73.213 billion) in the third quarter of 2018, up from N22.38 trillion (or US$ 73.208 billion) recorded in the previous quarter.

0.52%

Sugar’s dividend yields of 8.33 percent and 12 percent are the highest among peers. This is because their stocks are trading below intrinsic value, which makes it very attractive to investors. Nascon and Dangote Sugar are trading at a price to earnings ratio of 9.39 times and 5.83 times, which is lower than

the consumer goods index P/E ratio of 19.58 times. Analysts at Vetiva Capital Management Ltd see Investors remaining wary of downside factors affecting Nigerian Breweries and Guinness in 2019; albeit they do not expect the stocks, particularly Nigeria Breweries, to fall below multi-

year lows seen in 2018. “Taking from our 2.5% point estimate return for the NSE in 2019, we predict a -5% to 0% return for the CNS sector. The Consumer Goods sector currently trades at a P/E of 19.58 (ASI: 9.27x) with dividend yield of 3.5% (ASI: 5.4%),” said at Vetiva

Analysts forecast top 10 NSE companies to earn N1 trn in profits this year IFEANYI JOHN

prise that we are seeing these companies hit the N1 trillion mark in profits. The economic recovery has remained fragile but with oil prices recovering from its lows, exchange rate becoming stable and treasury yields rising, it is only expected that companies will have a strong financial performance this year,” said Tochukwu Okafor, lecturer in Banking and Finance department at Covenant University. BusinessDay analysis of the consensus projected profits to be earned after taxes by

the ten companies showed Dangote Cement (N158b as at Q3) leading the pack in terms of profits. Africa’s largest cement maker was closely followed by the usual suspects, Zenith Bank (N144b as at Q3) and GTBank (N142b as at Q3). These three firms accounted for 56 percent of the total profits earned by the ten largest companies on the local bourse as at Q3 with a combined profit of N444.63 Continues on page 32

Nigeria’s all-product terms of trade for the third quarter of 2018 grew slightly by 0.52% as the index averaged 99.92 in the quarter. All-product terms of trade settled at 98.85, 99.64 and 99.37 in July, August and September of the quarter respectively.

2.54% Value-added tax (VAT) generated in the third quarter of 2018 expanded by 2.54% to N273.50 billion compared to N266.73 billion recorded in previous quarter. Other manufacturing generated the highest amount for the quarter with N31.483 billion, while the mining sector generated the lowest amount of VAT at N52.701 million.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: samuel iduh )

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com

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Monday 07 January 2018

Markets Intelligence

Bank size wars: Zenith, GTB to remain more profitable than Access in 2019 Powell stokes market rally with … Access set to amass almost twice total assets of GTB after Diamond bank merger … Analysts predict Access will be third most profitable bank next year behind Zenith, GTBank

2018 profit after tax of Zenith Bank and GTBank who are both expected to deliver PAT around N192.2 billion and N189.6 billion respectively. The ability for these two banks to remain significantly more profitable than Access bank despite a smaller asset base is down to “cost efficiency”. The cost to income ratio for GTBank and Zenith bank last year was 38.1 percent and 52.7 percent respectively versus Access bank who reported cost to income ratio of 62.1 percent. “It is very unlikely that the synergy from the merger will start to show in 2019 immediately after the merger, to think that you can benefit from cost management so early on is far too optimistic,” said Maju Eldad, Lecturer in Economics department at Federal University of Kashere, Gombe. “I believe Access bank took the right decision to acquire Diamond

bank. It was significantly undervalued and presented a big growth opportunity for Access bank who will now become Nigeria’s largest bank. I think this merger will help produce significant gains for their shareholders in terms of profitability and cost efficiency over time. It won’t be unlikely that other Tier 1 banks will be looking to acquire either a struggling Tier 3 bank or a significantly undervalued Tier 2 bank now that Access has shown the easy road to growth,” Eldad added. By this acquisition Access bank will become the largest bank in Nigeria with an asset base of N6 trillion. Behind them will be Zenith bank (N5.6 trillion), First bank (N5.3 trillion), UBA (N4.5 trillion) and GTBank (N3.4 trillion). Each of these banks is expected to earn above N56 billion in 2018 full year profit after tax.

This chart show capex to budget ratio is rising OLUWASEGUN OLAKOYENIKAN

he percentage share of capital expenditure to Nigeria’s total budget has been increasing at a faster pace than recurrent expenditure since the inception of the present administration, but in the proposed 2019 budget, the trend was reversed. President Muhammadu Buhari presented a N8.83 trillion budget estimates for the 2019 fiscal year before a joint session of the National Assembly on December 19, with N4.04 trillion proposed for recurrent expenditure and N2.03 trillion earmarked for capital projects. Capital expenditure (CAPEX) as a percentage of total budgets increased to 26.29 percent in 2016 from 15.61 percent in 2015; It moved to 29.17 percent in 2017 and 31.47 percent in 2018, but fell to 23 percent in 2019. Recurrent expenditure as a percent to total budget fell to 43.73 percent in 2016 from 57.46 percent in 2015 while dipped to 40.19 and and 38.49 percent in 2018, but increased to 45.70 percent in 2019. Should federal government capitulate to Labour demand kick in soon, personnel cost will be spike, further raising concerns whether policy holders can sustain the new wage bill amid falling oil prices. The planned spending for the 2019 budget is N294 billion lower than N9.12 trillion approved by the lawmakers in the 2018 budget. This may not be unconnected to falling government revenue largely driven by low production and prices of

Fed chair signals cautious approach to tightening despite very strong US jobs

IFEANYI JOHN

n a recent Monday, Nigeria woke up to the news that Access Bank had agreed to acquire all issued share capital of Diamond Bank in a deal that will see Diamond bank shareholders a consideration of N3.13 per share and puts the total value on the acquisition at around N72 billion. Significant as it seems, the entire value of the transaction is less than the annualized 2018 profit of Access Bank which analysts expect to be around N83.9 billion. This puts the Diamond bank acquisition cost at only about 85.8 percent of the annualized 2018 profit for the year. At completion of the merger between the two banks, Access bank will snatch the crown from Zenith bank as the largest bank in Nigeria by asset in 2019 but will likely (for now) fail to steal the pride from Zenith bank as the most profitable bank in Nigeria based on analyst’s expectation. The average return on asset for Access Bank between 2013 and 2017 was 2.03 percent. Assuming the acquisition of Diamond bank and the expected write-offs in bad debt from the legacy bank does not hurt their ROA performance in 2019, the expected profit for the year in 2019 may likely be around N121.8 billion on an asset base of N6 trillion which is a 97 percent increase from the reported 2017 profit after tax but will be around N56 billion lower than the expected

promise of ‘patience’ on rate rises

ederal Reserve chair Jay Powell offered an upbeat assessment of US economic prospects following a strong jobs report on Friday, easing fears of a 2019 downturn that had spooked investors in recent weeks. Mr Powell said markets had moved “well ahead of the data” in pricing in risks to the US economy, following a sharp sell-off on Thursday and deep losses for equity investors during December. “US data seem to be on track to sustain good momentum into the new year,” the Fed chairman told a conference in Atlanta. Along with his comforting words about the health of the world’s largest economy, Mr Powell said the Fed would take a “patient” approach to monetary policy tightening, contributing to a rally which sent the S&P 500 up by more than 3 per cent in New York. Mr Powell’s reassurance countered fears about the impact of US-China trade tensions and waning corporate profits on the American outlook, highlighted by a shock profit warning by Apple on Wednesday. Markets have also been hit by signs that the global economy is set for a slowdown. The comments also offered some breathing room to the Trump administration as it grapples with new Democratic opposition in the House of Representatives, a government shutdown and internal turmoil that included the departure of John Kelly as chief of staff and Jim Mattis as defence secretary. On Thursday, Kevin Hassett, chairman of the White House council of economic advisers, stoked fears of a slowdown when he warned that “a heck of a lot” of US companies with sales in China were on track to see lower profits. But speaking on Bloomberg TV, Larry Kudlow, Mr Trump’s economic aide, dismissed that view. “It’s a little easy and inaccurate to say all of these American companies are going to crash,” Mr Kudlow said, adding that there was “a much better, more optimistic picture”, with “no recession in sight”. As markets have soured in recent weeks, Mr Trump has lashed out at Mr Powell over the Fed’s plans to increase interest rates. On Friday, Mr Powell

brusquely asserted his independence. Asked if he would quit if asked to by Mr Trump, he replied: “No.” Crucially for markets, Mr Powell also backtracked on previous comments about the Fed’s operation to reduce its balance sheet as part of the unwinding of post-crisis quantitative easing. Mr Powell last month said the shrinking of the Fed’s balance sheet was on autopilot, remarks that helped trigger a sharp downturn in US markets afraid the programme would depress asset prices. But on Friday he said that while he did not think that the turbulence had been caused by concerns over the shrinkage, the Fed “wouldn’t hesitate” to change balance sheet policy if needed. Earlier on Friday, data showed the US economy last month had its strongest job growth since February while wages accelerated at a quicker pace. Non-farm payrolls climbed 312,000 in December, the US labour department said, beating by a wide margin economists’ expectations for a gain of 177,000 jobs, as employment rose sharply in healthcare, food and drinking establishments and manufacturing. Meanwhile, wage growth heated up last month with average hourly earnings up 3.2 per cent year-on-year — the quickest pace since 2009 — and up 0.4 per cent month-on-month, ahead of economists’ expectations. In addition to the jump in the S&P index, the tech-heavy Nasdaq Composite index jumped 3.9 per cent, while the Dow Jones Industrial Average climbed 2.8 per cent. Treasuries sold off as investor nervousness eased, pushing the 10-year US government bond yield up by 9 basis points to 2.65 per cent. “The American economy is booming based on today’s reading of the employment situation, which should go a long way to reassuring nervous nellies in financial markets that the 2019 economic outlook skies will not be turning dark and grey,” said Chris Rupkey, chief financial economist at MUFG. Some investors and analysts had even thought the Fed might be forced to cut rates this year, but those expectations faded on Friday.

Analysts forecast top 10 NSE... Continued from page 31

crude oil which accounts for more than 90 percent of Nigerian government earnings. BusinessDay analysis reveals that despite a 3.18 percent reduction in the total expenditure for the next fiscal year, recurrent expenditure was raised by 15 percent from N3.51 trillion in 2018 even as capital expenditure was cut down by 29.27 percent from N2.87 trillion. Prior to this present dispensation of government, the administration of former President Goodluck Jonathan budgeted a paltry sum of N701 billion for capital expenditure in the 2015 budget, this accounted for 15.61 percent of the entire N4.49 trillion budget estimates for the year, according to data from the Budget Office of the Federation. Recurrent expenditure however

got N2.58 trillion, this represented 57.46 percent of the total budget. This development was reversed in 2016 upon the emergence of President Buhari-led government that pledged to focus on security, while it would implement policies to attract investment and spur competition in critical sectors of the economy for growth and job creation. In achieving this, the 2016 Budget tagged “Budget of Change” allocated N1.59 trillion for capital expenditure, about 126.82 percent increase when compared with the previous year, while recurrent expenditure was elevated slightly by 2.71 percent to N2.65 trillion. This brings the percentage share of capital expenditure and recurrent expenditure to the aggregate budget in 2016 to 26.24 percent and 43.73 percent respectively.

billion. The trend was projected to continue by the end of the year with an additional N146.7 billion expected to be added to the bottom-line of these companies in the last quarter of the year. Banks made up six of the 10 largest companies on the Exchange showing how strong and profitable the banking sector is in Nigeria. The financial sector will contribute 70.3 percent of the N1 trillion at the end of the year with six companies projected to lead the industry with combined earnings of over N734 billion. Ecobank, UBA, Stanbic IBTC Holdings and First Bank are the banks that complete the list with projected earnings of N101 billion, N81 billion, N79 billion and N59 billion respectively. “Banks have enjoyed the high yield environment especially this year. With deposit interest rates remaining flat and risk-free rate ris-

ing, banks are making large spreads without needing to take the risk of lending to the real sector in a slow growth economy. It is very possible that we will see a similar strong performance for banks next year since we expect very little to change in the economic performance,” Okafor added. In 2017, the combined earnings of these companies was N70 billion short of hitting the trillion naira mark. Analysts are of the view that the top ten firms are to grow by 9 percent to make up for the needed funds to hit the mark. Ecobank, First Bank and Stanbic IBTC Holdings are the companies poised to champion the 9 percent increase with the three firms projected to grow earnings by an average of 50 percent. With the N1 trillion projected earnings and current price of these companies, we arrived at a forward price to earnings multiple of 8.13x as opposed to the market P/E of 10.67 at the end of 2018.

BUSINESS DAY

Monday 07 January 2019

Start-Up Digest

In association with

Top 5 business ideas featured in 2018 ODINAKA ANUDU and JOSEPHINE OKOJIE

tart-Up-Digest has ranked entrepreneurs’ interview in 2018 on our weekly section and here are some ideas that we think were outstanding in 2018. Bathkandy Bathkandy was founded by Blondie Okpuzor. Her business idea was unique because she creates soaps, lotions and other beauty, skin care and household products using unconventional raw materials such as jollof rice, goat milk, garri, coffee, and chocolate. Blondie set up the company in December 2014. Her candles are unconventional and look like desserts. The soaps, candles, lotions are regular products but they look differently, like ice cream soups. “We have over 50 different types of soap. We infuse different things. We never had the same soap design twice. Every time you come, things look different. It is the same thing, but it looks different,” she explained to Start-Up Digest in May last year. “We have goat milk lotions, made from goat milk. We have scrubs made from garri, coffee, and chocolate,” she discloses. “They are all manufactured here in Nigeria. I make them by hand and we infuse delicious things like oils, tea, chocolates. “Recently we just made soap from jollof rice. We are using local ingredients to make them. We have found that there are a lot of natural things that are there for you, but if you don’t know or use them, then you don’t get the benefits. So, we merge science with arts,” she asserted. Her products make the skin look better and her packaging products come from locally recycled materials. As a mark of expansion, she set up a second store in Abuja in 2016. She is looking more internationally—to Ghana, Kenya and South Africa, because these are the biggest beauty markets in Africa. Blondie mentors younger entrepreneurs through her Bathkandy University. “We teach people how to make skin care products and start their own business. What we have found is that even though it is easy to start a skin care business, there are so many details that people do not have. Social media is a great thing. I have people who want me to mentor them and I do that. Everything I learnt was literally trial and error, so I won’t like others to go through that.” Madame Coquette/Fula Farms The 35-year-old Bello produces what she calls Madame Coquette (MC), which is a line of handbags and small leather goods. She set up this business 10 years ago. She uses local raw materials like snakes and crocodiles in making these bags. She buys snakes and crocodiles and uses them as raw materials. The entrepreneur also uses locally available leather in

Hoawa Bello

making bags, importing some from other countries. “We use indigenous snake and crocodile skins from Kano and Kaduna. We hand- dye and colour the skins we use in making these products,” she told Start-up Digest in July 2018. Her products have been sold in North America and Europe. “I didn’t start with a lot of capital. I got a N30, 000 loan from my sister to start my business,” she said. She also founded Fula Farms in early 2015. This farm, located in Lekki part of Lagos, boasts of over 50 cows. Hoawa produces milk, cheese and the local ‘fura’. A number of women make both ends meet from Fula Farms. “Most of the women were home makers and their primary objective was to take care of their children. They didn’t have a source of income and most of their time was spent in their homes. A majority of them were nursing mothers. I decided to change the scope of the business and tailor it to empower the women in the community we work in,” she said. “We have 90 percent female workforce. The farm stands as one of the few dairy farms in Lagos and it supplies small businesses and individuals with raw (fresh) milk and locally produced cheese,” she disclosed. X3M Group This business was founded by Steve Babaeko, who is the CEO of X3M Group, made up of X3M Ideas, X3M Music, and Zero Degrees, among others. His business is waxing strong at a time when many of its peers are struggling and going out of business. Babeko is an advertising/ branding/ marketing guru who has also delved into audio-visual production and record label, with clearcut plans to diversify into other countries. Within few years of starting, he has set up offices in Accra, Johannesburg and Lusaka, among others, winning a couple of pan-African awards. “I am really excited because

Abioye Tunde-Anjous

we are the only local agency in the country today operating at that regional level. We are like trailblazers, if you like. We are sort of experimenting and paving the way for other agencies on the continent to be able to go this route,” he told Start-Up Digest last month. Keexs Jide Ipaye is the founder of Keexs Footwear, an African- inspired range of casual footwear such as sneakers and smart shoes. Jide’s Keexs is the first innovative and social footwear brand in Nigeria and the African continent. He is focused on building a world-class footwear brand with manufacturing set-up in Nigeria, with a sole aim of creating economic empowerment opportunities for thousands of Africans, especially Nigerians. A Microbiology graduate of the University of Lagos, Jide was inspired to set-up Keexs by a personal challenge. He hardly found his size of shoes in the market and rarely got the designs he loved. As a result, he thought of making his own shoes to address this challenge and help others facing the same problem. He saw it as an opportunity to make a change rather than a perennial problem without a solution. “Keexs started out as a personal challenge for me. Being a size 48, I hardly got my size and when I eventually did, they were not exactly the style I liked. I have been dealing with this problem for almost 40 years, so I said to myself, ‘Why don’t I start making my own shoes and also helping others?” “I took the first step in conducting a research and went to a school in the Netherlands to learn how to design and manufacture sneakers. I did not want to focus on regular shoes.” After his studies in the Netherlands, he came back to Nigeria and established Keexs in December 2015. Finance was a major challenge for Jide, but he was able to successfully jump the hurdle when he found a website called Kick Starter, a online-based US funding platform

Blondie Okpuzor

for creative projects. Jide put up a video with a writeup that told a story of his challenges, looking at the Nigerian context, saying what the challenges were and how the problem of unemployment in the economy could be solved by looking internally and creating value through manufacturing. And in forty days, Jide was able to raise $20,000 from the website to start his business. “Over a period of 40 days from November 2015 to December, we raised $20,000. The money was paid to the manufacturer to produce the first batch of the sneakers,” he said. When asked if there was any time he wanted to give up on his dreams, Jide said there were lots of time he wanted to give up but the enormous support he got from his wife encouraged him to ride on. When asked what he has done differently to ensure sustainability of the business, Jide stated that he has done a lot of research on the country’s shoe sector and understood why the likes of Bata Shoes, who was producing 10.4 million shoes per annum in the 1990’s failed. Currently, Keexs signed up for a World Bank grant to raise funds to set up the manufacturing arm of the business. Jide is an award-winning entrepreneur. In 2016, he won the Tony Elumelu Young Entrepreneur of the Year award. Abioye and Ladi For Abioye Tunde-Anjous and Ladi Oshinaike, co-founders of SirChefs Food and Beverage, their food inspiration came directly from the personal stories of the employees they found around them. SirChefs Food and Beverage is a real celebration of Nigeria’s food industry, with its essence created from local and traditional ingredients that are unique. Through its Breakfast King brand, Abioye and Ladi provide Nigeria’s Pap (popularly called Ogi or akamu) and Akara (bean cake) in cups. The pack enables employees and people with busy schedules to take breakfast quickly and regularly. “The idea behind our business

came when we were both working with the health insurance industry. As a pharmacist, one of my roles in my former organisation was to talk to employees about their health and each time I asked if they had taken breakfast, I got a ‘no’ response from most of them,” Abioye said. “Living a fast-paced lifestyle is often why workers often skip their breakfast. Knowing that breakfast is the most important meal of the day and how it can make workers productive, I decided to fill the gap by providing them the right meal for breakfast,” Abioye stated. After doing some research on what the ideal breakfast could be, Abioye shared his idea with Ladi, his friend and colleague then, who bought into it and in 2017 they established SirChef Food and Beverage. “We identified that even if there were options available for breakfast, they were not very healthy, and the ones that were healthy, you find them very expensive. So we felt we could make the food available and affordable,” Ladi disclosed. Abioye and Ladi started their business with the money they raised from their personal savings while they were working and also sourced additional capital from family and friends. SirChef Food and Beverage currently has 26 full-time and part-time employees.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

BUSINESS DAY

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Monday 07 January 2019

Start-Up Digest

Owolabi Mercy: Baker, caterer, mixologist Gbemi Faminu

wolabi Merc y is one of Nigeria’s energetic and hardworking young entrepreneurs. She is a baker, caterer, mixologist and chief executive officer (CEO) of Florry Cakes and More. Her business is to bake and cook exquisite meals for events. Although she is a graduate of Yaba College of Technology, also known as YABATECH, she started her business on a part-time basis in August 2012 while undergoing her National Diploma (ND) programme, baking cakes and snacks for her colleagues and those around her. Six years down the line, she has been able to expand her business to event management, catering and making of drinks such as Chapman and Punch. She started this business with N15, 000, which she proudly explains was entirely her savings. She says, “I am proud to have started my business with the sum of N15, 000 which I saved on my own.” Mercy was encouraged to start this business owing to her passion for cooking, baking and planning of events, which she always enjoys doing. “Right from my childhood, my favourite place has always been the kitchen. I have always loved baking, cooking and planning events too. “While growing up, I took it upon myself to always decorate the house during festive seasons and I am grateful that my family encouraged me all the way, which helped me when I wanted to start my business. Now, I am so grateful because I do not have to look for a job anymore.” Owolabi says that she is able to

Owolabi Mercy

remain different from other bakers by using only the best ingredients, establishing a friendly relationship with her clients, with a conscious, continuous effort of self-development, all of which have proved to work well. Speaking on some of the major challenges confronting her business, she complains about poor electricity supply, high cost of ingredients and transport problems, especially in terms of deliveries. She states that although she has been able to manage these issues, there is still a need for the government to intervene and help ease

the business environment, especially for start-ups. “I usually get my ingredients in Lagos major markets. I get them from wholesalers, and some other times I buy in groups with other bakers from wholesalers. Doing this reduces the cost price, and I always ensure that my ingredients are sourced from first-class producers.” The entrepreneur believes her products are always unique because of the way she uses special ingredients. “I also operate under a very clean environment to avoid the risk

of making harmful products, given that my goods are consumables.” When asked about plans to expand her business, the entrepreneur states that she has strong plans in this respect. “Over the last six years, I have been encouraged by the business so far. My clients’ database has grown tremendously, so has my profit margin. I have learnt lessons, and all these have encouraged me greatly. I am working on becoming a strong lady in the catering and event management world, and even establish my own restaurant,” she says.

StartupSouth partners Wish FM on business roundtable discussion

Africa needs to emulate Nigeria’s entrepreneurial drive – Lumumba

tartupSouth, an entrepreneurship ecosystem development proje ct focused on the SouthSouth and South-East region, has partnered Wish FM in Port Harcourt for a roundtable entrepreneurship education programme. The business roundtable radio show is a 30-minute entrepreneurship education programme. Experts in micro, small and medium enterprises from across Nigeria will be invited weekly to discuss Nigeria’s entrepreneurship. Tomi Davies president of ABAN and co-founder, Lagos Angel Network, will be teaching different aspects of starting and running a business on the show. Part of the show will be used to showcase and promote businesses from the StartupSouth network in the forms of quick

Temitayo Ayetoto

interviews. Uche Aniche, convener, StartupSouth and founder Havilah &Hills, said the aim of the partnership is to ensure that people learn how to start and grow their businesses as well as be informed on available financing options. Aniche stated that a dedicated portal will be provided for listeners to ask questions and get feedbacks. He noted that the roundtable discussion will focus on issues and topics which include Introduction to Innovation and Entrepreneurship, Validating Ideas, Team Building, Introduction to Selling, Introduction to Finance and Accounting Tools, Unit Economics and Access to Finance as well as Pitching, among others. The show will initially run for a year and would be aired 9am daily.

atrick Lumumba, a professor, who is also a Kenyan activist and public speaker, has said the African continent looks to Nigeria for direction and inspiration regarding the enterprising drive of the average Nigerian. Lumumba, who was speaking at the event marking this year’s Face of Okija Cultural Festival in Anambra, called for the celebration of serial entrepreneurs like Ernest Azudialu-Obiejesi who built a conglomerate of companies from scratch and employed thousands of people. He said the entrepreneur was much better than politicians who contribute little to the society. Lumumba said companies such as Nestoil, Neconde, White

Dove, B&Q and others that make up the Obijackson Group, would not have sprouted without the daring spirit of Azudialu-obiejesi. Lumumba, once the chairman of Kenya’s anti-corruption commission, said key to Africa’s growth lies in the sustainable support for entrepreneurs through creation of enabling environment for private enterprise to thrive throughout the continent.

Patrick Lumumba

“Although I have been able to acquire certificates from trainings and seminars, I am still hunting for more certificates and trainings to gain more knowledge and expertise that will help my business grow.” The entrepreneur has an employee, but is working on growing her business to bring in more workers. She is also trying to get an official place for her business. “I am sure I will achieve all these in due time, though it will require extra funds and resources. But, hopefully, I can achieve it through financial aids from the government, consumer organisations or financial institutions.” Speaking on the effect of the economic downturn, she says that human beings have the ability to adapt to any situation, meaning that businesses still fare well in such period, though not as fast as before. “My role models are business moguls that started small but have gone far today,” she says. “I try to emulate them while working with my values, which include being hardworking, remaining committed and consistent with high level of patience and tolerance,” she tells Start-Up Digest. She urges the government to ease the business environment, especially for small and medium scale enterprises. Owolabi also wants the authorities to make policies that will aid start-ups, while calling on the government to provide stable electricity and necessary infrastructure for effective and easy production and mobility. On advice to other entrepreneurs, she says, “Remain hard working, make a conscious effort to develop yourself regularly, ensure you grow your people-network and always believe in yourself.”

On democracy, he said Africa will get it right the day Nigeria gets it right, noting that Nigeria stands in a very unique position to resolve the challenges of the continent. He further urged Africa to focus on the things that matter; things that build and grow the continent and things that impact the people. “By February 2019, Nigerians will go to the polls to elect their leaders. And I must state that the day Nigeria gets it right, Africa gets it right,” he said. “Young people in Nigeria and across Africa must identify what is in their best interest and actively participate in the electoral process. They must understand the significance and power of their votes. What are the policies on the table? Are we voting people for what they have done, for what they can do or for the hand-outs they offer before the elections?”

BUSINESS DAY

Monday 07 January 2019

Start-Up Digest

Top 5 funding options available for Nigerian entrepreneurs in 2019 ODINAKA ANUDU

appy New Year to readers of Start-Up Digest in Nigeria and other parts of the world. As our manner is, we usually let entrepreneurs know some of the funding options available for them every new year. This year will not be an exception. Today, we will look at some of these funds and criteria for accessing them. General criteria The general criterion for accessing these funds is to have a business. These firms rarely fund ideas because ideas are untested and untried. You must have a business and ensure that it is providing a solution to a problem in society. Next is to have a bankable and viable business plan. More so, the entrepreneur should be clear on where he/she wants to be in the near future and be able to describe the market he/she plays. The entrepreneur should have good book-keeping in order to accurately know his/her revenue and the expenditure. Tony Elumelu Foundation Tony Elumelu Foundation has $100 million for 10,000 African entrepreneurs. If you are in agriculture, fashion and design, light manufacturing, ICT, and solid minerals, among others, then apply for the on-going Tony Elumemu fund. You can be lucky to be one of 1,000 entrepreneurs to be shortlisted. More than 150,000 Africans from 114 countries worldwide applied to join the 4th cycle of the programme in 2018. The 2018 class, however, included an additional 250 entrepreneurs to the standard selection of 1,000. This was made possible by $1 million partnership with the International Committee of the Red Cross (ICRC), which pledged to support 200 entrepreneurs in conflict and fragile zones of Nigeria, particularly in the North-East where Boko Haram insurgency is rife and the Niger Delta region hard hit by environmental degradation from oil spillage. There was also a $200,000 agreement with the United Nations Development Programme (UNDP) to support 40 pan-African entrepreneurs and a $50,000 partnership with Indorama to support 10 Nigerians. Many entrepreneurs will get $5,000 or more as grants or loans. BoI Funds The Bank of Industry (BoI) provides a number of funds for entrepreneurs at single digit.

Olukayode Pitan

Akintunde Oyebode

Summy Smart Francis, CEO, AYEEN

able to grant loans between seven and 10 per cent per annum for 10 years,” he said during the meeting. AYEEN Financial Grants Africa’s Young Entrepreneurs Empowerment Nigeria (AYEEN) allows entrepreneurs to pitch their business ideas before a panel. The panel assesses each entrepreneur and decides whether to provide financing for the business. Hundreds of entrepreneurs walk away annually with various degrees of business funding and other forms of empowerment from various types of investors.

Tony Elumelu

This development finance institution (DFI) has been rated by many local and international agencies as one of the best managed banks in the world. The BoI has a number of funds that entrepreneurs of all levels can access. First is the Graduate Entrepreneurship Fund (GEF), which is meant for serving members of the National Youth Service Corps (NYSC). Candidates are allowed to submit their business ideas, which are then reviewed by a team of experts. The NYSC members whose ideas are marketable and bankable are then selected, trained for four weeks and then given between N500, 000 and N2 million. There are also the Cottage Agro Processing (CAP) Fund for small and medium agro processors; Nolly Fund for players in the Nollywood industry, as well as Fashion Fund for designers and other players in the value chain. In fact, the bank has other

matching and managed funds, including a fund for the automotive industry. Through 122 business development experts, the bank makes it easy for entrepreneurs to undergo the process of de-risking before approaching the bank for funds. The bank has a N5 billion fund from Africa’s richest man Aliko Dangote to finance SMEs at a single digit rate. In November 2018, Olukayode Pitan, managing director, BoI, said at a meeting with Fahad Obaid AlTaffag, ambassador of the United Arab Emirates to Nigeria, that the bank was ready to support genuine foreign businesses willing to invest in Africa’s biggest market. “We cover the whole industrial sector to ensure that Nigerian companies become competitive. We know that borrowing money between 20 and 30 per cent is a big drag on companies and most of the banks in Nigeria are not able to give long term facilities. We are

LSETF Loans The Lagos State Employment Trust Fund (LSETF) has N25 billion to support SMEs. Though this was started by Akinwumi Ambode, the outgoing Lagos State governor, authorities have assured that the scheme will continue owing to the impact it has made on the people of the state. The fund is divided into two categories; micro and small businesses. Under the micro, businesses can access up to N500, 000 loans with an interest rate of five percent and a tenor of one year. For the small business category, businesses can get up to N5 million for a tenor of three years. The criteria for accessing the funds include: membership of a business organisation, which will recommend the business for the loan; Lagos State tax receipt for at least six months, and Lagos state residency card. This takes three weeks for processing. “It is incredibly fulfilling for me to see small businesses get access to funding without bias, without nepotism, without nepotism,” Akintunde Oyebode, chief executive officer and executive secretary of LSETF, told BusinessDay in an exclusive interview recently. “It has been superb and excit-

ing. We have been able to support thousands of businesses, so it is rewarding and fulfilling to see a lot of our work starting to show signs of delivering some value,” he said. So far, up to 8,000 businesses have got over N6 billion from LSETF. World Bank Grants The World Bank provides millions of dollars for SMEs. The bank has a $160 million Growth and Employment in States (GEMS) funds for small businesses in Nigeria, which is yet to be fully disbursed. As of September 2018, only N3.7 billion of this money had been disbursed. GroFin Fund GroFin, a development financier, has committed over $500 million to funding Nigerian micro, small and medium business (MSMEs) across the country. The firm has five different types of fund: the Aspire Nigeria Fund, the Growth Africa Fund, the Small Growing Business Fund, the Aspire Small Business Fund and the Aspire Growth Fund. The Aspire Nigeria Fund, the Growth Africa Fund and the Small Growing Business Fund cater for all parts of Nigeria except the Niger Delta. The Aspire Small Business Fund provides a minimum of $100,000 and a maximum of $1.5 million to SMEs in Nigeria. The Aspire Small Business Fund and the Aspire Growth Fund cater for the Niger Delta. The Aspire Small Business Fund provides between $10,000 and $100,000 to small business owners in the oil-rich region, while the Aspire Growth Fund frees between $100,000 and $3 million to businesses to stimulate growth in the area. GroFin provides its funds mostly for a maximum of six years.

36 BUSINESS DAY Harvard Business Review

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Learn to ask better questions opposite.

John Baldoni

— BE OPEN-ENDED. Leaders should ask questions that encourage people to reveal not simply what happened, but also what they were thinking. Open-ended questions prevent you from making snap judgments and can elicit some surprising answers. — BE ENGAGED. When you ask questions, act like you care. Yes, act; use affirmative facial expressions and engaged body language to demonstrate interest. This sets up further conversation and gets the individual to reveal potentially important information. — DIG DEEPER. Executives frequently assume all is well if they have not

ll the leaders I know have at least one need in common: to connect honestly with others. One way to foster stronger connections is by asking good questions. Leaders who excel at this are able to cut to the heart of the matter in a way that disarms the other person and facilitates genuine conversation. Let’s look at several ways to ask better questions: — BE CURIOUS. Executives who do all the talking are deaf to the needs of others. Sadly, some managers think that being the first and last person to speak is a sign of strength. In reality, though, it’s the

Engaging the ‘pole vaulters’ on your staff Katie Bailey and Emma Soane

ou may know the five principles for increasing employee engagement, but firms should also tailor engagement programs to reach different types of workers. After studying eight companies with a total of 180,000 employees, we classified workers into four groups and identified effective ways firms have customized programs. Our findings suggest that such efforts lead to more-engaged employees, who in turn perform better, are more loyal and enjoy better health and personal well-being. See if you recognize the types from our study. GRAND PRIX DRIVERS Nearly always strongly engaged with their work, they’re ideal employees much of the time — but they’re also at risk of burn-

ing out. The Challenge: Prevent them from carrying too much of the load, especially in projects they’ve initiated.

Best Practice: South Africa-based Nampak Plastics Europe made a conscious effort to spread work equitably among team members

and established delivery timetables only with input from the people who have to meet the deadlines. A few years ago U.K. supportservices firm Amey began offering workers stress-management workshops, holding sports tournaments and running health campaigns. About a year later, sick leave fell from 9.6 days to 7.1 (below the national average), attrition dropped from 13 to 7% and new hires referred by employees jumped from 5 to 10%. POLE VAULTERS They’re strongly engaged, but their episodes of engagement are less frequent than those of Grand Prix Drivers. Pole Vaulters tend to be energized only by certain aspects of their work — cutting the important deal, for example. The Challenge: Get the most out of their on-again, off-again enthusiasm. Best Practice: Amey ap-

heard bad news. Big mistake. It may mean employees are afraid to offer up anything but good news, even if it means stonewalling. So when revealing information surfaces in your dialogue, dig for details without straying into recrimination. Get the whole story. Remember, problems on your team are, first and foremost, your problems. Asking good questions in the spirit of honest information gathering and eventual collaboration is good practice for leaders. It cultivates an environment where employees feel comfortable discussing issues that affect both their performance and that of the team. And that, in turn, creates a foundation for deepening levels

of trust.

points these workers to its Engagement Champions network of more than 150 employees. Participation in the network, which promotes engagement companywide, encourages Pole Vaulters to deepen and broaden their involvement with all company initiatives.

to employee concerns that the company wasn’t doing enough for the community.

LONG-DISTANCE RUNNERS They’re reliable and consistent, but they’re less engaged than Grand Prix Drivers and Pole Vaulters (when the Pole Vaulters are engaged). The Challenge: Keep them involved, and increase engagement. Best Practice: U.K.-based consulting and construction firm Mace Group focused on the creation of interesting, challenging and varied projects for staff members. Mace has also stepped up its corporate social responsibility activities in response

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(John Baldoni is a leadership keynote speaker, executive coach and executive educator.)

FLATLINERS They’re rarely engaged, and never strongly so. In fact, they can easily become actively disengaged and have a demotivating effect on colleagues. The Challenge: Reverse their negative feelings and foster engagement. Best Practice: Nampak implemented several programs (such as visible recognition systems) to engage this group. Having compared its own survey data with ours, the company believed it reduced its Flatliners from 13 to 7% of its workforce. (Katie Bailey is a professor at King’s College London. Emma Soane is a professor at the London School of Economics.)

Tuesday 08 January 2019

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BUSINESS DAY

With Odunayo Oyasiji

Case Review Gerhard Huebner V. Aeronautical Industrial Engineering and Project Management Company LTD (2017) LPELR-SC.198/2006

hat to note: This is a matter that was decided at t h e S u p re m e Court of Nigeria in 2017. It addresses the issue of trust extensively i.e. meaning and nature of trust, elements of trust, nature of resulting or implied trust and what the doctrine of constructive trust entails. Fact The District Head of Kajuru District in Kachia Local Government Area of Kaduna State (acting on the instruction of the Emir of Zaria) granted permission to the Appellant to build a temporary weekend hospitality resort on a hilltop in Kajuru Village sometimes in 1975. The Appellant built a temporary structure. He later built permanent structure and named it “The Kajuru Castle”. In order to expand the business, the Appellant in 1981 started negotiating through the agency of the District Head to purchase the 70 hectares of land surrounding the hill. He was in the final stage of the negotiation when he was appointed as the Managing Director of the Respondent. The Appellant was advised to to buy the land in the name of the Respondent because it was unlawful for him to hold a legal estate in Kaduna State being a German. He took the advice and purchased the lan in the name of the Respondent. The receipt that serves as the evidence of the purchase was issued in the name of the Appellant and the Respondent. A certificate of occupancy dated January 1, 1997 was issued to the Appellant by Kachia Local Government. The certificate was used to apply for a statutory certificate of occupancy from the Kaduna State Government. The application was successful and a certificate of occupancy dated March 6, 1999 was issued by Kaduna State Government. The two certificates were issued in the name of the Respondent. The issue of the ownership of the property arose between the Appellant and the Respondent. The Appellant being the plaintiff at the High Court instituted the action claiming the ownership of the property and that same was held by the defendant/ respondent upon a resultant trust to the benefit of the plaintiff. The Appellant’s case was dismissed by the trial court. The Court of Appeal also dismissed the appeal that was filed by the Appellant. The Appellant being dissatisfied then appealed to the Supreme Court. Issues for determination The counsel to the Appellant formulated two issues for determination of the Appeal. The issues are – “1. Whether the Court

of Appeal was right to confirm the trial Court’s exclusion of documentary and oral evidence which were adduced by the Appellant before the trial Court to establish circumstances by which it may be implied that the Respondent held the legal estate in the subject property upon a resultant constructive trust in his favour. 2. Whether the Court of Appeal was right to hold that the Appellant was obliged to prove an implied resultant constructive trust by “credible and reliable evidence” showing the “grant” by him and “acceptance” by the defendant of the trust.” Counsel to the Respondent also formulated two issues. The issues are-“1. Whether the Court of Appeal was right to confirm the trial Court’s finding at law and upon the facts and circumstance of the case before the trial Court that the documentary evidence before it (i.e trial Court) as borne out by Exhibits A1, A2 and A3 being the Kachia local Government Certificate of Occupancy and the Kaduna State certificate of Occupancy respectively cannot be varied or altered by oral or extrinsic evidence as sought by the plaintiff/appellant to establish a resultant or implied or constructive trust in his favour. 2. Whether the Court of Appeal was right to hold that the Appellant has the onus of proof as required by law (i.e standard of proof in civil proceedings) to prove an implied resultant/ constructive trust by credible and reliable evidence.” The court adopted only one issue for the purpose of determining the matter i.e. “whether the lower court was right when it dismissed the Appellant’s appeal for failure to adduce sufficient evidence in proof of his claim that the Respondent is holding the legal estate upon an implied trust in respect of the disputed property for his benefit

by implication of law.” Arguments/Submissions The counsel for the Appellant submitted that the evidence before the court clearly shows that the land in dispute was purchased and developed with the Appellant’s private resources and that the certificate of occupancy issued by the state and the local government in the name of the Respondent were meant to establish that the Respondent is just an implied trustee for the benefit of the Appellant. He stated that implied trust is an equitable conversion of the holder of the property into a trustee by operation of law, as such the question of leading evidence to prove a grant and acceptance does not arise. The Respondent’s counsel on the other hand argued that the oral testimony of the Appellant cannot vary the content of the two certificate of occupancy issued in favour of the Respondent. He also argued that the Appellant failed to establish before the lower court the existence of any legal relationship between him and the Respondent. Judgement The Supreme Court dismissed the appeal. The court held on the issue of implied trust that “the nagging issue of whether implied trust on the basis of equity crops up in favour of the appellant. In considering it, the acts of the appellant come into question, firstly assuming he knew he was not qualified to own land in Northern Nigeria, he acted in going ahead to make the purchase wrongfully and illegally and therefore without clean hand which equity cannot encourage or assist. The flip side would be if he made the payments with his funds not being aware that he could not have such ownership, then his ac-

tion would be caught up by the principle that, ignorance of the law is not an excuse. Therefore, either way, he lacked the capacity to enter into the purchasing transaction for land being a foreign national. It follows that whether in law or equity he lost out.” With regards to nature of trust, the court held that “In its legal sense, “a trust” is the relationship, which arises wherever a person called the trustee is compelled in equity to hold property, whether real or personal, and whether by legal or

Conclusion

equitable title, for the benefit of some persons (of whom he may be one and who are termed cestuis que trust) or for some object permitted by law, in such a way that the real benefit of the property accrues, not to the trustee but, to the beneficiaries or other object of the trust. To this end, there are Express Trusts, Implied or Resulting Trusts and Constructive Trusts. Express Trusts arise when the owner declares himself a trustee of the property for the benefit of another person or vests property in another person as trustee for the benefit of another person. Implied or Resulting Trust arise from the presumed intention of the owner, and the presumed intention arises by operation of law not by agreement of parties. Constructive Trusts are trusts imposed by equity regardless of the intention of the owner of the property, where it will be unconscionable for the “apparent beneficial owner” or trustee to hold the property for his benefit-We are concerned with implied or resulting trusts, which may arise in the following circumstances (i) Where an express trusts fails (ii) Where the beneficial interest under an express trust is not fully disposed of or exhausted.(iii) Where there is a purchase in the name of another or where a person makes a voluntary conveyance of his property to another.

I will conclude with the words of Muhammad JSC in the case of Madu V Madu (2008) 6 NWLR (Pt. 1083) 296 where he stated that “Before I drop my pen, I think I should observe that this case, as I see it, should be an eye-opener to many people. Although, it is not illegal or prohibited to make use of another person’s name in transactions that are solely meant to be in favour of a particular individual, I think it carries a lot of risks where there is a failure in achieving goals for which the transaction is meant. I fail to appreciate the wisdom behind the concealment of name or identity of a person, who in actual sense, is the owner of a thing but would prefer to use the name of another person. The presumption is always that if a document for instance, bears the name of Mr. “X” it in law; belongs to Mr. “X” except where same is accompanied by conditions and exceptions. A good example is where a university certificate or a West African School Certificate (WASC) is issued in the name of “X”. The presumption is that it is “X” that is the rightful owner of that certificate. So it is a dangerous practice where people prefer to hide their identities and resort to using the identities of others in transactions, which are from the bottom of their minds. If such transactions are meant to be held in such resulting trust, I think they should be qualified by explanations, exceptions or conditions attached ...”

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makes first New Year entry Operators say oil, gas industry faces uncertainties in 2019 CBN into forex market with $210m OLUSOLA BELLO

... as deficit in refining will continue to hurt Nigeria

perators in the oil and gas industry say 2019 will be uncertain in many dimensions, both for country and industry, and that this year’s election results have the potential for disruption of oil and gas facilities. They say prospects this year will depend on how the actors manage the unfolding uncertainties against emerging global realities, as deficit in refining will continue to hurt Nigeria in 2019. According to them, there will be an election in the country, and for a new government it usually takes time to settle down. The uncertainties over the Petroleum Industry Bill (PIB) will persist, as nobody knows how long it would take. This indicator provides an important signal to investors. The PIB, which would ensure the government

could move forward with new fiscals and make oil and gas attractive for companies to invest, was stalled in November 2018 when President Muhammadu Buhari withheld assent. They hope that the document would be signed after the elections. Victor Eromosele, CEO of ME Consulting Limited, says prospects in 2019 in oil and gas industry is really anybody’s guess even though the 200,000 barrels of crude from Egina field and Dangote Refinery would remain the industry’s bright spots. Bank-Anthony Okorafor, president, Petroleum Technology Association of Nigeria (PETAN), says oil price will hover around $60-70 per barrel in 2019, as top three producers, US, Russia and Saudi Arabia will continue to pump more. “Higher US crude supply to 12 million barrels per day, high production from Russia and

Saudi would weaken the market. “American high production has hurt demand for Nigeria crude oil. Saudi will not want to lose market share to other countries,” he states. He says OPEC will not be able to maintain output cut in production as American production will make OPEC look weak. “Slowing growth in China, India and Europe will slow down the demand for crude oil. China presently consumes 12% of global oil production. So any slow growth in China will impact global crude oil demand. Intensification of US-China trade war will affect china demand for crude oil. “The heightened tension has diminished hopes of a near term resolution to the trade war. This is negative for global oil demand. The 10% us tariff on $200 billion of Chinese goods jumps to

25% at the start of 2019. US intend to slap tariffs on an additional $260 billion of Chinese exports if anticipated meeting in Jan 2019 does not go well. Generally, slower economic growth reduces the outlook for oil demand,” he says. Abiodun Adesanya, former president of Nigerian Association of Petroleum Explorationists (NAPE), says there will be carry over of the 2018 challenges, which have created a lot of volatility in the oil and gas industry worldwide. He states that this year’s election results have the potential for disruption of oil and gas facilities, especially if the Niger Delta militants did not see it favouring them. He also notes that some level of drilling for oil in the North around Gombe and Bauchi trough may take place in the course of the year.

… as external reserves decline to $43.05bn HOPE MOSES-ASHIKE

entral Bank of Nigeria (CBN) weekend, made its first intervention in the interbank sector of the foreign exchange market for 2019 with $210 million injected into the wholesale segment and other sectors of the market. A breakdown of the figures obtained from the CBN weekend showed that customers in the Wholesale sector of the market received $100 million with the Small and Medium Enterprises (SMEs) and invisibles sectors each getting $55 million to meet the needs of customers. The dollar supply has helped to boost liquidity in the market and strengthen the value of the local currency. Consequently, naira gained N1.00k on Friday to close at N361 per dollar at the parallel market from N362 traded the previous day. However, naira depreciated marginally by N0.05k to close at N365.35k on Friday from N365.30k per dollar traded on Thursday, data from FMDQ indicated. External reserves last week declined to $43.0 billion as of Friday, January 4, 2019, from $43.28 billion as of Decem-

ber 24, 2018, data from CBN revealed. Isaac Okorafor, CBN’s director of corporate communications, said the CBN continued from where it stopped in 2018 in order to maintain the stability being enjoyed in the market. While noting that the bank had made commendable effort in keeping the exchange rates at the current levels, Okorafor re-echoed the Bank’s Governor, Godwin Emefiele saying that the current capital flow reversals from the emerging markets were expected to bring out pressures on the market rates. He, however, assured that, in spite of the anticipated pressures, coupled with the forthcoming elections, the bank was committed to maintaining the current exchange rate policy, given the level of reserves. Quoting the Governor, Okorafor said that the CBN was determined to sustain a stable exchange rate as it continues to put in place relevant measures to shore up the country’s reserves. Meanwhile, one United States dollar ($1) exchanged for N357 in the Bureau De Change (BDC) segment of the market on Friday, January 4, 2019.

Manpower threat to 2019 elections tackled as ASUU agrees to work as INEC ad hoc staff JAMES KWEN, Abuja

L-R: Adebode Adefioye, member, Governing Council Bank Directors’ Association of Nigeria (BDAN); Ken Opara, 2nd vice president, Chartered Institute of Bankers (CIBN); Osaretin Demuren, president, governing council, BDAN; Uche Olowu, president/chairman of Council, CIBN; Jude Monye, secretary, governing council, BDAN; Segun Ajibola, past president, CIBN, and Olawale Oyeleke, member, governing council, BDAN, at BDAN’s courtesy visit to CIBN in Lagos, recently.

FG orders CCECC to deliver Lagos-Ibadan rail project in 2 weeks MIKE OCHONMA & STELLA ENENCHE

orried by the slow pace of work on the Lagos-Ibadan standard gauge rail project, the Federal Government has handed down a two-week ultimatum to the contractor - China Civil Engineering Construction Company (CCECC), within which to complete the job. Minister of transportation, Rotimi Amaechi, gave the order in Abeokuta, the Ogun State capital on Thursday, during an inspection of the multi-billion-naira project. Amaechi expressed dissatisfaction over the section between Iju, Lagos and Agbado in Abeokuta. This was even as he explained that it

was his passion to get the project done, necessitated the ultimatum. According to Amaechi, “I want the project delivered. Though, we cannot say that CCECC isn’t trying but, for commercial purposes, they have to complete the section so that, passengers can board train to Abeokuta.” He noted: “Getting to Abeokuta you will see that there’s an improvement but the problem they have now is the civil work between Agbado and Iju which is critical to me because I don’t think passengers will go to Agbado to join the train. “I believe that the closer we are to Lagos the better for the rail and that is why I had to tell them to tell me what they will do about this before the next two weeks,

although there’s a huge improvement up to this point. I want them to speed up the construction from Iju to Agbado.” Meanwhile, the minister was not comfortable with the fact that very critical equipment had yet to be brought into the country the facilitate the project. According to him, the excuse the firm gave, was that the equipment were not offthe-shelf items that could be ferried in easily. In his submission, part of the solution to the congestion around Lagos seaport is an efficient rail line. “You can argue that the narrow gauge is there, but it is not efficient. But the moment you fix this then those goods will be transferred to the rail and then the logjam will disappear.

“The moment we do the section from Iju to the sea port, then most of those goods, especially the ones going to Ibadan will be on the rail lines.” Asked if the government was under pressure to get the project completed, he replied: “Of course, and it is also because of the speed, for it takes you about 30 minutes by rail from Lagos to Ibadan as against over one hour by road. And this is subsidised.” The minister further disclosed, “Though, the focus now is the completion of the project but, we are expecting the deployment of about 30 passenger coaches, 300 wagons and then, two sets of coaches from Agbor, Delta State, for test running of this ongoing project.”

he threat of manpower to the conduct of the 2019 general elections due to ongoing strike by the Academic Staff Union of Universities (ASUU) has been tackled as the Union agrees to work as ad hoc staff in the elections. Biodum Ogunyemi, ASUU national president, made this known at the end of the consultative meeting between the leadership of the Independent National Electoral Commission (INEC) and the Union in Abuja. Ogunyemi stated that ASUU had taken the appeal by INEC to allow its members participate as Collation and Returning Officers for the 2019 general elections, hence the Union could not restrict its members from working as ad hoc staff for the Commission. “We had a good meeting with the INEC team. We placed on record that our relationship with INEC dated back to 2010, when the former president Attahiru Jega was chairman. Even though we are not in the position now to do everything we were doing that time, we have assured them that we

will not stand on the way of our members participating in the election as ad-hoc staff. “The decision of our union as at the last time we met was that our members are free as citizens to participate in the electoral process as ad-hoc staff and we have restated that today that we are not going to stop any of our members who wishes to serve in that capacity,” he said. Mahmood Yakubu, INEC chairman, had at the beginning of the meeting appealed to ASUU to continue with the existing collaboration with the Commission to enhance the credibility of this year’s polls. Yakubu said, “Allow your members to participate as Collation and Returning Officers for the 2019 general elections as doing so will not derogate from the Union’s withdrawal of service in respect of university-based activities such as teaching, supervision and statutory meetings.” He added, “For sometimes now, INEC has relied on the universities for the critical mass of election duty staff. ASUU has collaborated with the Commission in vetting the list of its members engaged as Collation and Returning Officers.

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Adamu current attention Police recruitment: 232,000 excess applicants ‘Adamu to education, not enough’ underscore Nigeria’s unemployment problem KELECHI EWUZIE

MICHEAL ANI

velopment and slowdown in economic activities have forced companies turn off the tap of recruitment. This number of applications that the police received as at that date implies that for each successful applicant, 23 others will be rejected. That is, assuming that the applications stop at this number, which is unlikely. Data from the National Bureau of Statistics (NBS) has shown that the rate of unemployment has been on a consistent increase in the past three years, settling as high as 23.1 percent in the third quarter of 2018 from 18.8 percent recorded in the same quarter of the previous year. In nominal terms, a total of 20.9 million Nigerians are unemployed, signalling that about 3.1 million people have entered into the unemployment trap in less than a

year. The NBS had earlier in Q4 2017 reported the number to be 17.8 million. “I am not surprised at the statistics released by the Nigerian police with regards to the number of participants that signified interest as against those that are required as it is an indication of the massive unemployment in the society,” says Timothy Olawale, DirectorGeneral, Nigerian Employers Consultative association. “There is no way that the government despite all its efforts in creating jobs, is going to succeed if the focus is on white-collar job creation alone, which is what they are throwing up,” Olawale said. An average university student in Nigeria spends about 4 years in the university, if and only if the Academic Staff Union of Universities and /or the Non Academic staff union does not embark

upon any strike whatsoever. For about two months now, teachers in public universities in Nigeria have been on an indefinite strike designed to compel the Federal Government to meet their complaints on issues including poor funding, poor remuneration and low infrastructural developments in school. “It is not as if there are no jobs in the country, but the skills required to match these jobs are not there. That is why we say the government should identify what those skills are and make concerted efforts to develop capacity in those skills; that way our youth will fit into those jobs that are available,” Olawale said. “Furthermore, there is the need to imbibe in our youths the entrepreneurial spirit so that they can be selfemployed,” he added.

L-R: Segun Agbekeye, group head, internal control, risks/compliance, Odu’a Investment Company Limited; Adewale Raji, Odu’a GMD/ CEO; Kayode Fayemi, Ekiti State governor; Tope Arowolo, Odu’a group head, property development and management, and Yinka Tunji-Ojo, Odu’a general manager finance, during Odu’a team’s business meeting with the governor in Ado Ekiti.

Nigeria’s e-payment transactions hit N56.85trn – reports

eports from the Nigerian Interbank Settlement System (NIBSS) have indicated that Nigeria’s electronic payment (e-payment) services recorded transactions worth N56.85 trillion from January to September 2018. The report, obtained by the News Agency of Nigeria on Sunday, showed an increase of N16.4 trillion when compared with the N40.45 trillion that was recorded in the corresponding period of 2017. The report showed that most of the electronic transactions were done through the NIBSS Instant Payment (NIP), Point of Sale (PoS), Automated Transfer Machines (ATMs), Mobile Money, Electronic Bills Payment (E-Bills) and Web payments. A breakdown of the report

showed that ATMs transactions grew from N4.61 trillion in 2017 to N4.76 trillion at the end of the third quarter of 2018. Also, the volume of transactions on ATMs under the period in review grew from 560.86 million in 2017, to 650.06 million in 2018. The report showed a rise of about N635 billion in the use of POS machines to carry out payments by Nigerians. Under the review period, 98.73 million transactions worth N975 billion were carried out using POS in 2017, while in 2018, the volume grew to 196.83 million, valued at N1.61 trillion. Similarly, the volume of transactions carried out by Nigerians, using mobile money rose from N795.18 billion in 2017, to N1.22 trillion as at September 2018.

Also, using the web payment channel, the total value of transactions under the review period rose from N129.24 billion in 2017, to N183.07 billion in 2018. However, the value of such transactions on e-bill payments, which allowed customers to pay utility bills such as power, cable and so on online, declined from N420.73 billion in 2017 to N370 billion in 2018. Meanwhile a financial analyst, Patricia Auta, has said that the NIBSS report showed an increased awareness and use of technology by individuals and businesses in the country. Auta urged the Central Bank of Nigeria (CBN), to intensify efforts on cashless economy, especially in states, to further grow the electronic payment space.

oncerned industry professionals in education sector have described the performance of Adamu Adamu, the minister of education, in the last three years as being pedestrian. They observe that his approach to issues concerning the education sector since his appointment to office leaves much to be desired, as the minister should think deep for solutions to the decay in the sector. In a interview with BusinessDay they feel the minister should recognise the need to strengthen proactive programmes and activities that enhance quality education and offer knowledge, skill and values for Nigerian citizens to enable them compete with any economy in the world. Maurice Onyiriuka says the education sector still struggles with policy gaps and implementation backlog, adding that this issue remains unresolved not because the education minister don’t have ideas as to how to approach the outstanding issues, but because there have not been consensus, the realism and even the courage to confront the challenges. Onyiriuka expects the minister to address the situation in the education sector with gravity instead of the kid gloves he has used to attend to the mountainous problems. Odion and Omofonwan say in their study, ‘Educational System in Nigeria Problems and Prospects’ that the gross under funding of the educational sector in the country in general and the neglect of the maintenance of the physical facilities and instructional and living conditions have deteriorated in many of these schools, classrooms, libraries and labo-

ratories are nothing to write home about, all leading to decline in academic standards. It is the view of stakeholders that the minister must begin to look at ways to source for funds to focus attention on these areas if these educational institutions are to get out of the woods. Comfort Uyo, a university lecturer, is of the opinion that Adamu Adamu can achieve success if he is to implement the correct policies, but doubts the possibility since he is not solely in charge of key decision when it concerns funding. For example, since the introduction of the Universal Basic Education (UBE), the education sector at primary school is still characterised by poor performance and an increasing number of out-of –school children and one of the major explanations for this is the crisis of funding occasioned by inadequate preparation of the extent to which available resources could last. Again, widespread cases of arrears of unpaid teachers’ salaries - of up to six months in many cases, frequent industrial disputes and strike actions by university teachers as well as shameful cases of primary and secondary school pupils using tree shades as their classrooms are some of the manifestations of poor funding of Nigeria’s education. For Babatunde Oguntona, an educationist the greatest investment education the minister can give Nigerians during his term as minister is to encourage human capital development. According to Oguntona, “I strongly believe that only what is required from government and the minister of education is to make available resources that can be used for the development of human capital so we can have good

Nigerian states budget for 2019 so far ISRAEL ODUBOLA s it is now, 33 out of the 36 states of the Federation have presented their budgets to their respective State Houses of Assembly. The states that are yet to present theirs are Adamawa, Cross River and Zamfara. Lagos State, the commercial and financial nerve centre of Nigeria, presented a budget of N852.317 billion, N548 billion lower than the N1.4 trillion presented for 2018. The proposed budget of Lagos State for 2019 is the highest nationwide, though this is not surprising, as the state has the largest internally generated revenue in Nigeria. The states with the sec-

ond and third highest proposed budget for 2019 are Akwa Ibom and Rivers. The two south-southern states earmarked N670.7 billion and N480 billion, respectively. Nasarawa, a state in the North-central zone, presented a budget worth N86.4 billion, the least across the federation. The state has endowment in agriculture, tourism and solid minerals like coal and iron ore. Apart from Nasarawa, eight states proposed a budget less than N150 billion are Abia (N139.5bn), Borno (N125.82bn), Enugu (N109bn), Ekiti (N129.9bn), Gombe (N118.7bn), Kogi (N146.7bn), Plateau (N148bn) and Taraba (N146.7bn). Regional analysis of

the budget of the 33 states shows that the South-West region has the highest cumulative budget of N2.011 trillion, higher than that of South-South, which currently stood at N1.793 trillion, but could be overtaken if Cross River State present a budget of at least N219 billion. The combined budget of South-East, NorthCentral and North-West currently stand at N878 billion, N894.34 billion and N1.053 trillion, respectively. The North-East region has the lowest cumulative budget of N676 billion, although can only exceed that of the SouthEast region if Zamfara State proposes at least N202 budget for 2019.

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Alternatives (CPPA) show that Adebayo’s lack of faith in the the percentage? If of all the process The curious case of Nigeria’s missing voters... Policy the election was particularly different system of governance is an issue ana- we have just about five percent failure, Continued from page 1

necessities of life,” pledged the

former president. But Adebayo had become used to that cliché of promises, even at that time. Nothing around his vicinity instilled the sense of belonging that he had a government to alleviate his standard of living or one that at least, expressed its commitment in the provision of access to good road networks, stable electricity supply, qualitative education, potable water system and wholesome sanitary conditions to begin with. With Nigeria’s GDP at a mere $57.4 billion in 1999, the economy barely expanding, and GDP per capita at $496, his deflated confidence was further exhausted by the scarcity of job opportunities in town. He began clearing his path to London for ‘greener pastures’. As a result, participating in that election was a sheer adventure for him. He didn’t believe in the potency of that vote, especially as elections in that era was sullied in manipulations and conflicts. He only found it fascinating to join the excitement that brewed while maintaining long queues to cast a vote. By the next election in 2003, Adebayo was still in town. He simply went for accreditation but did not return to vote.

“I didn’t go back because I was playing scrabble. Yes, I counted that as more important than going back to waste my time,” he said. “That I have a permanent voter’s card (PVC) does not mean I have a say in the country. The only thing that counts is my family and I. I will only get my PVC because it’s my right. I’ll get my tax identification number (TIN), international passport and driver’s license. Nigeria has a cracked system.” Twenty years later, more Nigerians have increasingly become disenchanted in the affairs of the country like Adebayo and that mien is expressed in their indifference to showing up at polling centres. Perhaps, those in and around the metropolis can point to a thing or two in terms of physical development, most in rural settlements can easily say things have remained the same despite the interrupted experience under democratic dispensations since 1999. In urban hubs, well-heeled citizens express minor interest in rowdy election, since they command individual economies in which government’s impact is next to nothing. Of the 67,422,005 registered voters in Nigeria during the last election (2015), only 31,746,490 (47.08 percent) were accredited. Among that were 29,432,083 of votes cast, of which 28,587,564 (97 percent) were valid. Statistics by the Centre for Public

from the 2011 edition as it reflected more than ever, a population with enfeebled trust in the process electing its representatives. Voter turnout significantly dwindled by 25 percent from a total votes of 38,209,978 in 2011 to 28,587,564 in 2015, despite an increase in the voting age population to 87,784,373. Turnout, derived from the number of registered voters divided by the number of total votes cast was 43.65 percent, marking the lowest in Nigeria’s democratic history since 1999. It moved from 52 percent in 1999 to 69 in 2003, 57 in 2007 and 54 in 2011. In juxtaposition with the 2011 outcome, turnout for the 2015 presidential election dived in all the geopolitical zones, except in the south-west where it appreciated by approximately eight percent, from 32 percent to 40 percent. Goingbyastatebystatebreakdown, only 13 states had 50 percent or more voter turnout. Almost all the Northern states,includingthoseaffectedbyinsurgency had turnout of at least 40 percent, except Borno with 30 percent. Surprisingly, Lagos, a metropolis considered relatively non-violent in terms of pre or post-election violence, had the lowest turnout at 29 percent. In contrast, Rivers state had the highest turnout at 71 percent amid a slew of controversies around electoral malpractice.

L-R: Adedayo Pratt, HNC account officer, Leadway Pensure PFA; Tunde Mumuni, executive director, operations, Nigerian Investigation and Safety Company; Aderonke Adedeji, MD/CEO, Leadway Pensure PFA, and Ogechi Ekwosimba, benefits processing representative, LeadwayPensure PFA, at the opening of the Victoria Island branch office of Leadway Pensure PFA in Lagos, recently.

capital in the country are Tier 1 and Nigerian banks not using equity to create... the notTier2,whichiswhytheydonothave Continued from page 1

they can get away with because

they earn exorbitant net interest margins to meet investors’ return expectations. That hurts both savers and borrowers. Banks benefit from the spread between the risk free rate (Treasury Bills) and interest on deposits, unlike theircounterpartinSouthAfrica,Europe, Asia,andtheUnitedStatesthatoperatein largely low risk environments. Johnson Chukwu, CEO and managing director of Cowry Asset Management Ltd said the economy is not as structured as emerging and advanced markets where customers have excellent credit history. For instance U.S banks will not lend to customers that have history of bad loans. Of course Nigerian banks have been stung in the past, as they are still grappling with Non-Performing Loans (NPLs) and impairment on financial assets brought on by the sudden drop in crude oil prices of mid-2014 that helped throw the economy into recession.

“Net interest Margin is tiny in most advanced countries and you need to ensure that the spread can cover operating cost. To ensure the spread covers cost, you have to create loans. Difference between Treasury Bills (T-bills) and deposit is small; hence you cannot set up a bank in developed economies to trade on T-Bills,” Wale Okunrinboye, Head of research Sigma pensions told BusinessDay on phone. “For Ivorian banks’ leverage is high because interest rates and inflation rates are lower. If interest rates are lower you have to take on more risks to survive,” Okunrinboye said. Indeed the country’s macro environment is fraught with risk as economy has been growing sluggishly since the start of last year and inflation remains in double digits. The economy grew by 1.80 in the third quarter of 2018, lower than 1.95 percent and 2.10 percent in the first and fourth quarter of 2018 and 2017. Kayode Tinuoye, Fund Manager at United Capital Asset Management Ltd, is of the view that Nigerian banks are financed by deposits, and that most of

the capacity to fund longer term projectsbecausetheirfundingisshortterm. “That is why most of them issue Eurobonds to fund long term projects just to match assets with liability,” said Tinuoye. Nigerian banks have some $1.3 billion out of a total of $3.72 billion in outstanding Euro bonds due next year and a rising global interest rate environment expected for the period may lead to higher refinancing costs. A breakdown of financial leverage shows Zenith Banks assets to equity ratioincreasedto7.22timesinSeptember 2018 from 6.68 times the previous year. Guaranty Trust Bank (GTBank) Plc’s leverage ratio moved to 6.42 times in the period under review from 5.36 times the previous year. Access Bank’s leverage increased to 9.63 times in September 2018 from 7.95 times the previous year. First Bank’s holdings’ asset to equity ratio rose to 7.68 times in the period under review, this compares with 7.72 times recorded the previous year.

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lysts agree is rooted in the rife belief that votes don’t count and that election outcomes are predetermined by a minority of elite. Wale Ogunade, a constitutional lawyer and President, Voters Awareness Initiative describes this as the adverse effects of unfulfilled promises. “People are tired of empty of politicians in this country,” Ogunade said. “They would rather be indifferent than expend effort in futility.” Moreover, voters in recent times distance themselves from voting for a pocket of other reasons including the seeming recycling of leaders. There is a global wave of taste for youthful presidents and Nigerians youths desire same. But with slim chances for their preferred candidates, some rather duck the polls. Anothermajorfactorresponsiblefor voters apathy remain electoral violence since election statistics now hardly go without being marred by death tolls. With issue-centred campaigning undermined by politicking, and supporters divided along religious, ethnic and sectional bias, over 160 people across the country had lost their lives already to election related violence as at January 2015 (a few months before the last polls). At least 30 people were killed largely from inter-party conflicts and attacks on election sites, with problems being most pronounced in Rivers and Akwa Ibom states. There might not be significant changes in the narrative, which will no doubt likely bruise voters turnout in 2019. The United States Institute of Peace observed in a report dubbed ‘Nigeria’s 2019 Elections: Change, Continuity and the Risks to Peace,’ that the conflict between farmers and herdsmen within the northern, central, middle-belt states and the apparent failure of government to nip the Boko-Haram insurgency in the bud also strengthens the perception that security remains a challenge. The case of the missing voters also poses a risk to integrity of the votes cast. Cases where people register and fail to turn up created huge opportunity for rigging and manipulations before the introduction of biometric card readers, according to Ade Adebambo, an All Progressive Congress (APC) party agent. When a party with the upper-hand in an area is on the verge of losing an election due to poor turnout, it would begin to mobilise supporters to vote and ensure that the numbers tally in a way that won’t elicit suspicion. To facilitate that, Adebambo says party agents are either bought to look the other way or threatened to succumb. “If for instance 2,000 people registered to vote but during the election, they got 200 where they need 500, the incumbent can mobilise people from another area to close the margin. These were things that happened. This time, things have changed.” Assuring that containment of manipulations would be further deepened in 2019, Femi Adebiyi, the public relations officer at INEC said the commission will adopt simultaneous accreditation and voting to reduce incidence of low turnout. The method, he said, was experimented successfully in the recent gubernatorial elections in Anambra, Ekiti, and Osun, although observers believe those elections were characterised by irregularities. “We understand that this is a machine (card reader) and wherever there is going to be failure, we have back up,” said Akinbiyi who feels the commission (INEC) is being unfairly hammered by critics. “We expect that machines will fail. It fails but what is

people will begin to hold on to that.” Going forward, observers appear positive that the 2019 election could be on track for improvement in turnout as enlightenment of voters has increased as to the dangers of leaving voting decisions in incompetent hands. Through the social media, more youths have been educated about government policies, actions and inactions and “will keep trying their luck because they know how important it is for them to vote,” according to Chidi Okereke a social media influencer with over 68, 000 followers. However, the concern for other observers is that while voter turnout may nudge higher, it will be mostly induced by monetary enticement from politicians, casting shadows on the integrity of elections. That was exemplified in the last election where contending parties dished out money to voters upon proof of voting in their favour. Balarebe Musa, a former Governor of Kaduna state and National Chairman of the Peoples Redemption Party shares this sentiment and believes turnout may increase, not because of voters’ conviction that the candidates can perform but because they need the monies and hand-outs to be offered. He said: “the fate of the election in Nigeria is decided by money. You can see what happened in the party primaries. This will continue even at the national election, people will be bought to vote because they are so poor,” he said. In Nigeria, voting is both a right and obligation once age 18 is attained. But it has not become compulsory like in 22 other countries mostly in Latin America. A citizen can face a fine of $20 (N7, 200) for failing to vote in Australia, while eligible voters who duck the polls for three consecutive elections in Brazil may have their voter identity cancelled. It doesn’t end there. They can be restricted from borrowing from government financial institutions, obtaining a passport or taking public office if approved in a civil service test. Under compulsory voting, democratic election of leaders is treated as the responsibility of citizens, rather than a constitutional right. Just like civil responsibilities such as tax payment, voting in these democracies is regarded as one of the obligations to community noted in the United Nations Universal Declaration of Human Rights. In effect, research says the method appears to have produced governments with more stability, legitimacy and a genuine mandate to govern, a situation which in turn benefits all individuals. The idea that compulsory voting results in a higher degree of political legitimacy is based on higher voter turnout. Voluntary voting, for instance, prior to 1924 accounted for between 47 percent and 78percent turnoutof eligible voters in Australia. But with the introduction of compulsory federal voting in 1924, this figure soared to between 91 and 96 percent, with only 5 percent of eligible voters accounted as not enrolled. In contrast, Venezuela and the Netherlands in 1967 shifted from compulsory voting to voluntary participation and turnout in the subsequent national Dutch poll trimmed by about 20 percent while Venezuela saw a drop in attendance of 30 percent in 1993 once compulsion was discarded. Until something similar happens, “People will come out to vote when the dividends of democracy become noticeable; when promises are fulfilled and perhaps when the LagosIbadan expressway, a route that connects the economic nerve of the country to other states is completed,” said Adebambo, the APC party agent.

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Deregulation will unlock investment potential How Nigeria attains 31% broadband penetration target – NCC in downstream sector - stakeholders

takeholders in the oil and gas industry say total deregulation of the downstream sector will unlock huge private investment potential in the sector. The stakeholders, who made the assertion while speaking with the News Agency of Nigeria on Sunday in Lagos, said deregulation would stimulate sustainable growth in the oil sector. They expressed worry over the huge amount of money annually spent by the Federal Government on subsidy payment, saying such sum could be used to develop other sectors of the economy. They urged the Federal Government to liberalise the downstream sector to attract investors and boost the country’s economy. The minster of state, Petroleum Resources, Ibe Kachikwu, had said that subsidy on Premium Motor Spirit (PMS), otherwise known as petrol, stood at over N1.4 trillion. The stakeholders said that became imperative for government to embark on total deregulation of the downstream sector to attract

investors, while the country saved funds. Muda Yusuf, directorgeneral, Lagos State Chambers of Commerce and Industry (LCCI), said the biggest burden on the economy might be regarded as the petroleum subsidy regime. Yusuf said government should encourage private sector players to take over the downstream sector of the petroleum business, saying, “When this is done, most of the challenges we see as regard subsidy, refineries and others will be adequately addressed. “The government should only play the regulator and not an operational role. Government has no business refining petroleum products, retailing or distributing fuel as well as the marketing of these products. We cannot continue to carry that kind of burden in the oil sector.” Yusuf also said subsidy remained a big hole in the finances of government and puts pressure on the foreign exchange market. According to Yusuf, it has downward impact on the foreign reserves, just as it exerts immense stress on the na-

tion’s treasury. He said one of the critical elements of the oil and gas sector reform, particularly the downstream sector, was the complete deregulation of the sector. An energy expert, Felix Andrew, said that continuous payment of subsidy would not be sustainable and urged government to liberalise the market and encourage “free entry, free exit’ to attract investors in the sector. Andrew, who is also the executive director, Blue-Sea Energy Limited, said that currently, Nigeria spent about N1.7’trillion on fuel subsidy annually, while its education and health sector could only access a paltry budget of N300 million and N400 million, respectively. According to Andrew, it is obvious that the fuel subsidy programme is placing a huge financial burden on the nation’s resources. “Hence, there is no better time to deregulate as this initiative is an enabler in freeing up scarce resources. This is to address the concerns clearly expressed by the citizens for which political leadership is unable to find the resources to satisfy.

igerian Communications Commission (NCC) has confirmed that, based on empirical indices, Nigeria attained 31 percent broadband penetration. NCC management said in a statement on Sunday that this was contrary to insinuations in some quarters that the country was far away from the 30 percent target. NCC said by the five-year National Broadband Plan (NBP), 2013 -2018, it was targeted that the country should be able to attain a minimum of 30 percent from the 5 percent it had in 2013. It said expectedly, based on the population of Nigeria, estimate at 190 million, and connected lines of 169 million, those who had access to broadband at a speed of 1.5 megabytes per second cover over 30 percent of the population. NCC said that to realise that, the Federal Government set up the NBP (2013-2018) with a target of 30 per cent by 2018, of which the figures doubled between 21 and 22 percent in the months before November 2018. According to NCC, broadband penetration is typically measured by the percentage of total population with access to broadband networks

out of each hundred. ”According to NCC data, there were a total of 168,729,005 mobile ”GSM” mobile subscribers in Nigeria as at November 2018. Of these 108,457,051 were subscribed to internet access services provided by the major operators. “In terms of broadband services, a total of 58,965,478 connected to the internet through 3G and 4G networks (including those provided by the Long Term Evolution (LTE) only service providers such as Smile and nTel). “This distinction is critical because Nigerians predominantly rely on mobile networks to access the internet, including broadband networks. “The commission said was made possible since the fixed broadband access which was to have been led by the erstwhile State incumbent – NITEL –” is now literally nonexisting.” “So, if we take the total active broadband subscription figure of 58,965,478 and divide by the population figure of 190,886,311 (using the UN’s projection as at December 2017), we come to a penetration percentage of 30.9 percent.” The regulatory body said it used the UN’s figure because of consistency, adding that it appeared to be the

baseline used by the International Telecommunication Union (ITU) in earlier studies. “For instance, if we use the Nigerian Population Commission’s 2006 figure of 140 million, we come to a broadband penetration rate of 42.1 percent. “Also, looking through the ITU Broadband Commission September 2018 Report, one would see that Nigeria’s broadband penetration rate is set at an abysmal 19.9 percent. “This cannot be the case, since that report is based on industry statistics of December 2017, which was clearly outdated as at September 2018 when the report was published. “Clearly therefore, the NCC assertion that Nigeria has attained 30.9 per cent broadband penetration is logical and supported by available data in the commission’s custody. “There are lessons to be learnt from the needless controversy on this matter. To its credit, NCC has been rather transparent with industry data.” It said NCC website was being updated on a monthly basis with data of the subscription, tariff and other industry performance which enabled stakeholders to see a fair picture of overall industry performance.

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Labour insists on strike as meeting SHIN achieves first oil on 200,000bpd Egina FPSO with FG continues today KELECHI EWUZIE

JOSHUA BASSEY & KEHINDE AKINTOLA

ederal Government and organised labour are expected to meet again today in their continuation of effort to resolve the lingering minimum wage crisis and avert the proposed nationwide strike billed to commence tomorrow. A similar meeting held on Friday, January 4, to address the issue was inconclusive and both agreed to continue today. Labour had since commenced mobilisation of members and its civil society allies for what they said would be a long drawn nationwide industrial action to demand for the implementation of the N30,000 new minimum wage recommended by the Ama Pepple-led tripartite National Minimum Wage Committee. Chris Ngige, minister of labour and employment, during the meeting on Friday, said the high level Technical Committee announced by President Muhammadu Buhari would work on the fiscal issues to ensure sustainable payment of the N30,000 new national minimum wage. Labour had insisted there was no need setting up a tech-

nical committee and urged the federal government to transmit a draft bill of the N30,000 recommended by the wage committee to the National Assembly. But Ngige said the technical committee when constituted would also advise state governments who have been complaining and groaning under heavy wage bill on how they should source funds to meet the financial obligations arising from the new minimum wage. According to Ngige, Federal Government and labour negotiating teams would meet again today by 5:00pm to fine tune fiscal issues on the new national minimum wage. “The meeting was not deadlock. We are making progress or we have made substantial progress in terms of the transmission of the national minimum wage bill,” the minister explained. When informed that the National Assembly was presently on recess and expected to resume on Wednesday, January 16, 2019, Ngige said: “Very good that’s the issue we are looking at, they (National Assembly) are on recess as you can see it is a new bill on the National Minimum Wage Act 2019.”

When asked about the hard stance of the state governors on the agreement reached during the tripartite committee meeting, Ngige said: “the issue of the national minimum wage is n the exclusive list,” as stipulated by the 1999 Constitution (as amended). He maintained that if Mr. President is not committed to the implementation of the new minimum wage, he would not have provided the resources for the tripartite committee which worked for one year. “He (Buhari) is ready for it and received the report too. We are now working on the report. The report is in a raw form. It is the milling that we are doing. Now with labour discussing. “The high level technical committee is not a committee that to review the Minimum wage report. It is a committee that is economic. It is about budget and planning and advises Federal Government and even the state governments on sustainable implementation and how we can get the funds. Not a one and off thing not that we can pay in 2019 and cannot pay again. It will advise state governments that have been complaining and groaning under heavy wage bill on certain things they should do.”

SERAP writes Fashola to name contractors that disappeared with power projects funds MICHEAL ANI, with agency report

ocio-Economic Rights and Accountability Project (SERAP) says it has sent a Freedom of Information (FOI) request to Babatunde Fashola, minister of power, works and housing, urging him to use his good offices to “urgently provide information on specific names and details of contractors and companies that allegedly collected money for electricity projects but failed to execute any projects, starting from the return of democracy in 1999 to 2018.” According to SERAP, former Nigeria’s Vice President and Presidential candidate of the People’s Democratic

Party (PDP), Atiku Abubakar, reportedly blew the whistle on Channels TV when he said, “Contractors were given some contracts for power projects and were paid 100 percent upfront yet the money went down the drain. Up till now, we are not holding the contractors responsible. People have collected money upfront 100 percent and have disappeared; and have not even done any work.” SERAP said: “The revelation by Atiku is entirely consistent with SERAP’s recent report titled: From Darkness to Darkness: How Nigerians are Paying the Price for Corruption in the Electricity Sector, which also revealed

how over N11 trillion meant to provide regular electricity supply was allegedly squandered by politicians and contractors under successive governments.” In the FOI request dated January, 4, 2019 and signed by SERAP senior legal adviser Bamisope Adeyanju, the organisation said, “By publishing the names of the contractors and their registration details, if any, Nigerians will be better able to hold them to account for allegedly absconding with public funds meant for electricity projects, thereby throwing the country into perpetual darkness and socio-economic stagnation as well as denying people their human rights.”

Ibom Air acquires three aircraft for operations IFEOMA OKEKE

kwa Ibom State government-owned Ibom Airline Company is gearing up to commence operations after acquiring three aircraft into its fleet, and concluding a recruitment process with 400 direct and indirect jobs for Akwa Ibom unemployed indigenes. The state government says the airline will for the moment operate within Uyo-Lagos-Abuja routes, adding that it ventured into airline operations to add to the capacity of existing airlines. Akan Okon, the state commissioner for special duties

and aviation development, said in Uyo, the state capital, that the recruitment process had been concluded with an Akwa Ibom son as chief pilot. He explained that the heavy traffic witnessed at the Akwa Ibom airport made it imperative for the state government to join the few airlines operating there. “Ibom Air has come to stay. Three aircraft are secured and are ready for commencement of operation. It is completely owned and operated by Akwa Ibom State government and it will provide 400 direct and indirect jobs,” Okon said Okon said though the airline was exclusively owned by the Akwa Ibom State govern-

ment, its management and operations would be benchmarked against international best practices. Staff of the new airline, recruited strictly on merit, are currently undergoing training in their various areas of specialties, and getting set to start operations as soon as required formalities are concluded, he said. On the state of the Victor Attah International Airport, he said was at the moment undergoing work to improve the standard of the airport with the ongoing work on the second runway, new taxiway, a power sub-station, new commercial building and other unique features.

amsung Heavy Industries Nigeria Limited (SHIN) says it has successful achieved the first oil on the 200,000 barrels per day-capacity Egina Floating Production Storage Offloading (FPSO) unit. The FPSO achieved first Oil on December 29, 2018, after the global shipbuilding firm successfully completed the mooring, hook-up and required offshore commissioning of the floating vessel. In a statement by the company, this volume of onshore and offshore work had never been accomplished in Nigeria before now. According to the company, “With all these accomplished, the high-risk portion of the Egina project has now been completed. This achievement have been followed by very good response from Nigerian authorities, international clients and earned major headlines in the press. This leads SHI to gain competitive edge in future offshore project orders in West Africa, of course including Nigeria.” The Egina FPSO, one of the world’s largest FPSO, and indeed the largest FPSO ever deployed by the Total Group, was built for the French oil giant by SHIN.

Production from Egina field of 200,000 barrels per day at peak will increase Nigerian current crude oil production by 10 percent. Since Egina FPSO arrived at its offshore location on August 29 from the fabrication and integration yard in Lagos, SHIN has worked towards successfully achieving this challenging goal of achieving First Oil in 2018, as agreed by all parties. The Korean giant also completed the FPSO mooring well in advance - completed on September 17,2018 against target date of September 23, 2018, riser hook-up activities and required offshore commissioning, putting an exemplary effort in achieving First Oil in 2018. The company had also successfully completed the FPSO work in SHI-MCI yard before it continued its work offshore under strict Nigerian local content regulations with similar safety and quality standards applicable in the company’s Geoje shipyard in Korea. The statement says “We are very proud to announce the successful achievement of First oil in 2018, which is adding another feather in our cap, subsequent to our completion of the first ever

Nigerian Onshore Integration works for EGINA FPSO with thorough preparation in compliance with Nigeria Local Content.” “Samsung is confident of successfully completing the remaining offshore commissioning works and handover of Egina FPSO to our client Total along with its partners (NNPC, CNOOC, SAPETRO and PETROBRAS on schedule, through close co-operation and support from all relevant Nigerian Government Agencies including NNPC, NAPIMS, NCDMB, NPA, NEPZA, NIMASA, NIS, DPR, etc., with Highest levels of Safety and quality control.” SHIN won the order to build the Egina FPSO in 2013 and the facility is currently installed on the offshore field, located 150 km off the coast of Nigeria. The mega facility is 330 metres in length, 61metres in breadth, and 34metres in height. It boasts 200,000 barrels of production per day at the peak and 2.3 million barrels storage capacity with topsides weighing 60,000 tonnes. The new-build FPSO contract was a turnkey project in which SAMSUNG covered the entire engineering, design, procurement, construction, transportation and commissioning.

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OWEDE AGBAJILEKE, Abuja

BUA, CBMI sign agreement to build New 3million Kalambaina Cement II Plant in Sokoto

ess than one week after the listing of shares from the almost $1 billion Merger between BUA Kalambaina Cement Company and Cement Company of Northern Nigeria where it also assumed majority stakes in the enlarged company, BUA Group has announced that it has signed another contract with world’s renowned cement manufacturing company, CBMI, for the construction of a new 3million metric tonnes per annum Kalambaina Cement Line 2 in Sokoto State, North West Nigeria. This comes barely 90 days after the completion of another 3million MTPA BUA Obu Cement line 2 in Okpella, Edo State, Southern Nigeria and 7 months after the commissioning of its 1.5million MTPA Kalambaina Cement Plant line 1 in Sokoto state thus bringing BUA Cement’s total installed

capacity to 11million MTPA by the time the new project Is completed. Speaking at the contract signing ceremony for the plant in Sokoto State, Abdul Samad Rabiu, Executive Chairman/CEO, BUA Group and Chairman of CCNN, disclosed that the construction of the new 3million mtpa kalambaina line was in line with BUA Cement’s strategic midterm expansion programme. According to Abdul Samad, the Nigerian market is still greatly underserved and with the projected growth in major infrastructure projects and spending over the next few years, it is important that local manufacturers are able to scale effectively to meet current and projected demand. Rabiu also added that this partnership between BUA and Sinoma CBMI is not the first as they were responsible for constructing the first BUA Kalambaina plant in Sokoto State. “We are very confident that Sinoma CBMI possesses the necessary technical ex-

pertise given their track records in deploying cement plants across the world. ” Mr. Tong Laigou, Chairman of CBMI, signed on behalf of CBMI construction. On BUA becoming Nigeria’s second largest cement producer by volume, Rabiu said that BUA’s strategic cement expansion programme which focused on key regional and export markets has seen it become the second largest producer of cement by volume in Nigeria this year whilst solidifying BUA Cement’s leadership positions in the North West, South South and South East Markets of Nigeria. “We will continue to deliver quality products which has earned us the ‘King of Strength and King of Cement’ moniker amongst block makers who form the largest users of cement in Nigeria” It would be recalled that the Security and Exchange Commission had recently approved the merger of the Cement Company of

OMS denies allegation of underhand dealings in Nigeria’s oil business

cean Marine Solutions (OMS) Limited, a leading asset protection companies in Nigeria, has denied the alleged allegation of its underhand dealing in the nation’s oil business. The company said in a document seen by BusinessDay that the allegation came after NNPC approached OMS to replicate the achievement it had accomplished on the BonnyPort Harcourt pipeline. OMS said its efforts led to the formal re-commissioning of pipeline in April 22 and 23, 2016 by the minister of state, petroleum resources and the immediate past group managing director, NNPC. “Fearful that we will put an end to their illegal racketeering, vested interested in the Trans Forcados Pipeline (TFP) have engaged in a clumsy smear campaign in

Monday 07 January 2019

‘Amaechi’s leaked audio tape reveals deceit in APC’

L-R: Usman Gur Muhammed, managing director/CEO, Transmission Company of Nigeria (TCN); Gboyega Oyetola, governor Osun State, and his deputy Benedict Olugboyega Alabi, during the courtesy visit by the management of TCN to the governor in Osogbo.

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an effort to harm us and preserve the status quo,” OMS said in the statement. OMS lashed the alleged accusers and it said, “We hold Kola Karim, Shoreline Natural Resources Limited and Eraskorp Limited accountable for spreading these pathetic and malicious falsehoods.” The Marine Company further explained in the document, “if we accept NNPC’s invitation to take over responsibility for the security of the TFP, we will gladly put an end to the criminal abuse of another key part of our strategic national infrastructure. “The decision to assign the TFP surveillance package to OMS was reached after consideration of huge losses on TFP and rigorous appraisal of the company’s impressive record of performance on the Bonny-Port Harcourt and Warri-Escra-

vos Crude Oil evacuation lines,” OMS quoted NNPC to have said. On that basis, OMS said, “The suggestions put in the press that OMS involvement in the TFP is untoward is outrageous.” The company cited that “since April 2016 we have delivered 60.17 million barrels of oil (and counting) to both refineries without any loss to the nation.” It further explained, “OMS did not seek out the TFP security and surveillance contract from NNPC. We were approached and invited to render our services because of the dire security situation and because we have reputation for delivering results.” OMS threatened to take legal step to resolving the accusations. “We will take the necessary legal and other steps to protect our reputation and expose the truth.”

Northern Nigeria Plc with BUA’s Kalambaina Cement Company Limited of Nigeria that saw the enlarged CCNN become Nigeria’s 12th largest company by market capitalisation. BUA Group’s current cement assets include the 6million MTPA Obu Cement I & II plants in Okpella, Edo State, the 500,000mtpa Edo Cement Plant, the 1.5million MTPA Kalambaina Cement Plant and the 500,000 Sokoto Cement Plant. The Group also owns over 90 percent stake in the publicly listed Cement Company of Northern Nigeria Plc and is widely acclaimed for its high capacity utilisation, efficiency and quality of its products.

eople’s Democratic Party (PDP) has reacted to the leaked audio tape by the director-general of APC Presidential Campaign Council, Rotimi Amaechi. Fielding questions from journalists at a press conference on Sunday in Abuja, Kola Ologbondiyan, director, media and publicity, PDP Presidential Campaign Organisation, said the audio tape by the minister of transportation revealed the deceit in the governing party. Amaechi was reported to have been caught on tape criticising President Muhammadu Buhari. The audio clip posted by Reno Omokri, an aide to former President Goodluck Jonathan, on his Twitter handle, echoes a voice he attributed to Amaechi purportedly saying, “Buhari neither reads nor listens to anyone.” However, BusinessDay could not authenticate the voice. In the said audio allegedly attributed to Amaechi was a voice saying, “The President

is not listening to anybody. He doesn’t care. You can write anything you want. The President doesn’t care. Does he read?” Reacting to the development, Ologbondiyan said the tape revealed the lies and deceits the governing party employed in winning the 2015 elections. He said: “PDP’s comments on audio tape of Amaechi talking of the audio tape making the rounds in social media concerning the Minister of Transportation, Rotimi Amaechi, I think he has a huge responsibility to defend himself. “But if his principal, President Buhari, feels that the tape is normal, it is not our business in the PDP. What is out in the public domain is just a demonstration to Nigerians about the lies, deceptions, contrivances and beguilement that APC deployed to win the 2015 election. It shows that they have no plans, no agenda, no vision in whatever form as far as governance is concerned for Nigerians. “And if one member of their own inner Caucus has come out to admit that, it is not within the purview of the PDP.”

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Nigeria suffered high rate of cholera, cerebrospinal meningitis outbreak in 2018 ANTHONIA OBOKOH

espite the dramatic gains in disease outbreak made by Nigeria, major diseases still persist within states across the country, the monitoring the disease surveillance with weekly Epidemiological report of the Nigeria Centre for Disease Control (NCDC) states. Cholera and cerebrospinal meningitis outbreaks recorded the highest death rate in the country follow by Lassa fever, measles and yellow fever in 2018, the report states. “Between the first week and 49 weeks of 2018, cholera outbreak confirmed deaths was 1,135 and 50,500 suspected cases with 934 laboratory confirmed from 244 local government areas in 30 states were reported compared with 3,695 suspected cases and 84 deaths from 73 LGAs of 19 states during the same period in 2017.

tis confirmed that between weeks 1 and 49 in 2018, 4,464 suspected meningitis cases with 318 laboratory confirmed and 360 deaths from 299 LGAs of 35 states were reported compared with 9,939 suspected cases and 607 deaths from 326 LGAs in 34 states during the same period in 2017,” according to the report. The continued spread of these outbreaks across the country is due to suboptimal vaccination coverage in many Nigerian states of all cases reported with known vaccination status, experts say. However, vaccination coverage is still too low in some states in the country to reach elimination, with the latest available figures on coverage, especially for cholera outbreak. Nigeria is currently the most impacted country with some 90 percent of cholera cases, the United Nations Children’s Fund (UNICEF) says. Cholera is a serious bacterial

watery diarrhoea and stomach cramps, which can lead to dehydration and even death. Chikwe Ihekweazu, CEO, NCDC said, “Cholera cases are being treated at designated treatment centres in affected states. We have ramped up our risk communications campaign so that people are better aware of the risk factors and ways to prevent cholera outbreaks. “We are also strengthening the disease surveillance and laboratory systems so that cases are reported early, detected in time and response measures initiated.” Recently, Nigeria was among the countries that benefitted from Gavi’s vaccine alliance against cholera on the continent. Health experts have harped on the need to check and invest heavily in tackling disease outbreaks, stressing that Nigeria must do more to improve the country’s infrastructure, invest in technol-

reduce outbreaks. Muntaqa Umar-Sadiq, CEO, Private Sector Health Alliance of Nigeria (PHN), said Nigeria’s epidemic preparedness and response capacity highlight six priority gaps required to enhance detection, prevention and management of an outbreak. “Priority gaps include infrastructure, logistics, commodities, technology, human resource and communication. “With more outbreaks on the horizon, Nigeria cannot afford to repeat this cycle of uncertain priorities, wasted time and investments. We need strong and clear leadership; effective deployment of new innovations,” he said. Doyin Odubanjo, chairman, Association of Public Health Physicians of Nigeria, Lagos chapter, lamented that despite the long experience with outbreaks in Nigeria, an understanding of the mechanism aiding its persistence in occurrence situations is still lacking.

African Leadership University raises $30m in bid to reinvent graduate education

Monday 07 January 2019

Explainer:

These are the options NERC is proposing to check estimated billings “Cerebrospinal meningi- infection that causes severe ogy and human resource to

L-R: Christopher Adesotu, Commissioner for Science and Technology; Muhammad I. Choudhary, Professor of Organic Chemistry, and Abiodun Falodun, rector, Edo State Polytechnic, Usen, during the Maiden International Symposium of the institution and unveiling of the Muhammad Iqbal Choudhary Centre for Natural Product Research (ICCNPR), at the polytechnic, in Usen, near Benin City.

frican Leadership University, the Mauritius-based institution with an ambitious goal to train the continent’s future leaders, has raised $30 million in a Series B round led by Danish retail billionaire Anders Holch Povlsen. The new funds will be focused on rolling out the organization’s lifelong learning centers program, ALX, which opened in Nairobi last year and is set to open in Johannesburg, Lagos, Cape Town, and Casablanca later this year. The ALX program includes six-month courses designed for university graduates and other experienced workers interested in acquiring important leadership and technical skills from data science to operational management with the goal of making the

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participants “highly employable,” says co-founder Fred Swaniker. Unlike traditional graduate programs the centers can operate out of fairly low-cost set-ups such as co-working spaces and includes career placements and incubator programs for entrepreneurs. “We’ve been moving away from the conventional university programs and focused on unlocking Africa’s leadership talent,” he says. Right from its inception, the African Leadership programs have been focused on reinventing African high school, university and graduate education while attempting to overcome the continent’s many resource limitations. African higher education faces systemic, qualitative and quantitative challenges with

too few universities to absorb the tens of millions of young applicants. This problem is compounded by financial and infrastructure constraints. A 2016 survey also showed only 10 universities in Africa were among the top 1000 schools in the world. But ALU’s disruptive approach has at times been quite radical even for some of its own staff, a few of whom quit last year as it became more clear it was not a traditional academic institution, according to a report by Times Higher Education. The latest funding round was originally agreed back in July, according to a SEC filing. It consists of about $28.2 million in new cash and, according to Swaniker, there’s an additional $2.5 million in convertible debt.

In just over three years, ALU has raised $80 million, says Swaniker. Its long term backers including the Omidyar Network and Silicon Valley investors including Bob King. That total is now made up of $50 million in venture funding to run its education operations, $20 million for its real estate arm to build campus properties (which it leases to the school) and another $10 million for its student finance programme. The student finance program is designed to fund students by “taking an equity stake in their future”. After a student graduates ALU receives a fixed percentage of their income over a five to ten-year period. “Unlike a traditional loan, if they don’t get employed there’s nothing to pay,” says Swaniker.

ISAAC ANYAOGU

ue to incessant complaints from members of the public regarding estimated billing, the Nigerian Electricity Regulatory Commission (NERC) has proposed options cap estimated bills for electricity customers with the overriding objective of assigning maximum energy consumption based on the customer’s property size and usage; dwelling or commercial. In the first option being considered, the Commission is considering a cap on estimated billing based on the projected average monthly consumption of each tariff class in the MYTO model. The Multi Year Tariff Order (MYTO) model and the tariff design by the distribution licensees are based on the recovery of the approved revenue requirement from all classes of consumers in accordance with the estimated annual energy consumption for the tariff class. In this respect, taking into consideration the customer population and customer mix for a distribution licensee, the projected average consumption per tariff class may be computed. It presents a hypothetical example: a distribution licensee with a total load of 400MWhr/hr, 30% of consumption by R2 as per tariff design and comprised of 250,000 R2 customers. Monthly energy off-take: 288 million kWHr Consumption by all R2 customers per tariff design @ 30% = 86.4 million kWhr Average consumption for R2: = 86,400,000/250,000 = 345.60kWhr per customer per month Proposed cap on estimated billing: 345.60units x applicable R2 tariff for the DisCo NERC says this approach is strictly based on projections in the tariff design for the utility and does not take into account the actual level of supply during the period under consideration. However, the computed cap on estimated billing remains constant until a review that alters the structure of the cost recovery model. In the second method, the Commission is considering

the application of the average consumption of each tariff class within a franchise area as the cap for estimated billing of unmetered customers. The justification is that all distribution licensees have aggregated data on the average energy consumption for each tariff class within the franchise area of the utility based on information from prepaid vending platforms. A hypothetical example: a distribution licensee with the following average vending data for its franchise area and extracted over a preceding period of three (3) months: R2 – 250kWhr per month R3 – 780kWHr per month The proposed cap on estimated bills would be 250units x applicable R2 tariff and 780units x applicable R3 tariff, respectively. According to NERC, the third method, it is proposing to consider the option of capping the estimated bill of consumers within a Business Unit to the average vending of the same tariff class within the area. In developing the guidelines for capping estimated billing, the Commission said it is imperative of taking into account the disparity in the availability of supply within franchise area and the customer profile. The third method is presented in an hypothetical example: the vending data on average energy purchase within the Business Unit of a distribution licensee over the preceding three (3) months is as follows: Business Unit A: R2 – 350kWhr per month Business Unit B: R2 – 157kWhr per month The Commission propose, under this model, that Business Unit A will apply a cap of 350kWhr per month while Business Unit B will apply a cap of 157kWhr for unmetered customers within the same tariff class While these options are still proposals, it is calling on the public to provide comment on these options even though many customers argue that the priority should have been to compel DisCos to provide meters for their customers according to their performance agreement.

Obaseki meets contractors on revamp of 230 schools, threatens prosecution over sub-standard job

overnor of Edo State, Godwin Obaseki, has vowed to prosecute any contractor who delivers substandard work on the 230 public primary schools being refurbished by the state government through the State Universal Basic Education Board (SUBEB).

The governor gave the warning when he held a meeting with the contractors handling the school renovation project at Government House in Benin City, on Thursday. He said, “Ordinary, I will not interact with contractors but because of the priority we place on basic education.

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May warns of ‘uncharted territory’ if MPs reject her deal Prime minister refuses to rule out taking Brexit decision to Parliament multiple times Laura Hughes

heresa May has said the UK would be in “uncharted territory” if MPs reject her Brexit deal next week, as she refused to rule out bringing the deal back to Parliament multiple times. A vote on the deal is now earmarked for the week starting January 14, after the prime minister postponed it in December because she risked almost guaranteed defeat. Speaking on Sunday, she was adamant that the Commons vote on her Brexit deal would “definitely” go ahead next week. Questioned on whether she would continue to put the deal back to MPs if it is rejected, Mrs May told the BBC’s Andrew Marr Show: “If the deal is not voted on at this vote that’s coming up, then actually we’re going to be in uncharted territory.” “I don’t think anybody can say exactly what will happen in

terms of the reaction we will see in Parliament.” Mrs May said she would seek to avert defeat in the vote by securing new reassurances for Northern Ireland, a greater role for UK parliamentarians in forging the future relationship with the EU and further pledges from Brussels. Mrs May is seeking legally binding assurances that a socalled backstop plan — intended to avoid a hard Irish border, based on proposals for a temporary UK-EU customs union — will be time-limited. She acknowledged on Sunday that “we are still working on” securing these assurances from the EU. Downing Street will seek to win over critics who have vowed to rebel against Mrs May’s deal this week, by highlighting the dangers posed by a no-deal Brexit or a second referendum. Asked to rule out a second referendum, Mrs appeared to soften her stance, saying it was her personal view that a second

World unprepared for slowdown, says IMF’s Lipton Fund official warns on trade tensions, policy flaws and weakness in China Colby Smith and Brendan Greeley

he leaders of the world’s largest countries are dangerously unprepared for the consequences of a serious global slowdown, a senior executive at the International Monetary Fund has warned. In particular, governments will find it hard to use fiscal or monetary measures to offset the next recession, while the system of cross-border support mechanisms — such as central bank swap lines — has been undermined, warns David Lipton, the first deputy managing director of the IMF. “The next recession is somewhere over the horizon, and we are less prepared to deal with that than we should be . . . [and] less prepared than in the last [crisis in 2008],” Mr Lipton told the Financial Times on the sidelines of the American Economic Association annual meeting in Atlanta. “Given this, countries should be paying attention to keeping their economy on a level trajectory, building buffers and not fighting with each other.” In its most recent forecasts, in October, the IMF projected 3.7 per cent growth in the global economy this year. However, with the IMF set to release updated forecasts later this month, Mr Lipton admitted that the growth outlook is being undermined by trade tensions, policy flaws and weakness in Asia. “China is clearly slowing down — we think China’s growth has to slow, but keeping it from slowing in a dangerous way is an important objective,” he said, noting that a downshift would be “material very broadly, not just in Asia.” Concern about the faltering growth outlook, coupled with rising interest rates, has prompted sharp

falls in equity markets in recent weeks. Jay Powell, chairman of the Federal Reserve, tried to offset this on Friday at the Atlanta conference by saying that “US data seem to be on track to sustain good momentum into the new year”. He pledged that the Fed would take a “patient” approach to monetary policy tightening. Separately Larry Kudlow, White House economic adviser, told the conference — which brings together around 13,000 economists — that “there’s no recession in sight.” He urged economists to ignore the swings on Wall Street. However, some leading economists pointed out that the new gloomy investor “narrative” could become self-reinforcing. “Suddenly, the markets are reacting as if there’s a crisis of interest rate increases,” argued Robert Shiller, the Yale professor and Nobel laureate. He pointed out that, although the Fed had been raising rates for several years, investors were only reacting to this now. “This doesn’t look rational,” he says, drawing parallels with the 1920s in terms of the sudden shift in psychology. “[Then] the earnings were high, the economy was moving well, but suddenly it crashed — and again it was talk, I think. There was a new narrative that developed in 1929, just as there is a new narrative developing today.” The debates in Atlanta revealed widespread pessimism among economists about the chance of any rapid resolution to the current trade wars. “It is always possible that President Trump can wake up one day, reach out to his friend President Xi and decide to take yes for an answer”, said Adam Posen, president of the Peterson Institute for International Economics.

Top congressional Democrats Steny Hoyer, Chuck Schumer and Nancy Pelosi met Donald Trump at the White House on Wednesday to discuss the president’s demand for border wall funding © EPA

vote would divide the country. “In my view there should not be a second referendum”, she told the BBC. In a message to Labour MPs and Conservative Eurosceptics

who have vowed to vote down her deal, Mrs May said: “We have got people who are promoting a second referendum in order to stop Brexit, and we have got people who want to see their

perfect Brexit.” “I would say don’t let the search for the perfect become the enemy of the good because the danger there is that we end up with no Brexit at all.”

Trump tries to sell border ‘barrier’ to Democrats

Government drops demand for concrete wall as shutdown heads into third week Kadhim Shubber

onald Trump said a steel barrier would satisfy his demand for a wall along the US-Mexico border on Sunday, as the partial shutdown of the government look set to continue into its third week. The US president, and his acting chief of staff, reiterated comments that a concrete wall was not strictly necessary as they attempted to reframe Mr Trump’s demands as a call for the sort of border fencing constructed under previous US presidents. “We have to build the wall or we have to build a barrier,” said Mr Trump to reporters before he left the White House for Camp David. “The barrier or the wall can be of steel instead of concrete if that works better,” he added. Mick Mulvaney, the White House acting chief of staff, said on NBC’s Meet the Press that Mr Trump was willing to “take a concrete wall off the table”. “If he has to give up a concrete wall, replace it with a steel fence in order to do that so that Democrats can say, “See? He’s not building a wall any more,” that should help us move in the right direction,” said Mr Mulvaney in comments aired on Sunday morning. Talks between Democrats and the White House to end the shutdown ended on Saturday without visible progress. The two sides are set to continue negotiations on Sunday afternoon, but Mr Trump

said he did not expect a breakthrough. “I don’t expect to have anything happen at that meeting . . . but I think we’re going to have some very serious talks come Monday, Tuesday, Wednesday,” he told reporters. Hundreds of thousands of federal employees have been on leave or working without pay since December 22 after the White House and Congress failed to agree a funding bill to keep the entire government open. Roughly a quarter of federal agencies, including the Department of Justice and Department of Homeland Security, are affected. Mr Trump has demanded $5.6bn in funding for a border wall and has said he would continue the partial shutdown for months, or even years, if his demand was not met. A border wall was Mr Trump’s signature promise during the 2016 presidential campaign. He insisted Mexico would pay for the wall, which the southern neighbour has refused to do. Some 650 miles of the almost 2,000-mile US-Mexico border is already covered by various forms of fencing, much of it built as a result of the Secure Fencing Act of 2006, which was signed by George W Bush. Nancy Pelosi, the Democratic leader in the House, has refused to offer any money for a wall. On Thursday, Democrats, who recently regained control of the lower chamber, passed a bill that

would fund the government but not a wall. Chuck Schumer, the top Democrat in the Senate, has offered funding for border security measures but no money for Mr Trump’s wall, which Democrats regard as an ineffective waste of money. The idea has also been criticised by Republicans. In 2015, Mr Mulvaney dismissed Mr Trump’s calls for a barrier on the US-Mexico border as too simplistic, calling the demand “absurd and almost childish”. He said on Sunday that circumstances on the ground had changed and so had his view. In December, the Republicancontrolled Senate passed a shortterm funding bill that would have kept the government open. The bill did not include money for a wall. Mitch McConnell, the Republican majority leader in the Senate, has said he will not bring another funding bill for a vote until the White House and Democrats have come to an agreement. Mr Trump has said he may announce a national emergency to build the wall if Congress did not grant money for the project, a dramatic step that would probably be challenged in the courts. “Presidents have authority to defend the nation,” said Mr Mulvaney on CNN’s State of the Union on Sunday. The acting chief of staff said Mr Trump had asked his cabinet secretaries “to try and find money that we can legally use to defend the southern border”.

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NATIONAL NEWS

US trade negotiators head to China against gloomy backdrop

Egypt tries to block airing of Sisi’s ‘60 Minutes’ interview

Market volatility and global slowdown concerns raise pressure on both sides to do deal

CBS refuses to stop broadcast, in which president confirms closest ever co-operation with Israel

James Politi and Lucy Hornby

Heba Saleh

n interview with US television channel CBS in which Abdel Fattah al-Sisi, Egypt’s president, spoke of his country’s close co-operation with Israel in fighting Isis militants, has stirred controversy after the broadcaster said Cairo tried to stop it from being aired. The interview on the 60 Minutes news programme was due to air on Sunday evening after CBS said it had refused Egyptian government demands to refrain from broadcasting it. In an excerpt provided by CBS, Mr Sisi is quoted as having said: “That is correct . . . we have a wide range of co-operation with the Israelis,” in response to a question asking him if co-operation with Israel was now the closest ever between the two countries. Egypt has had a peace treaty with Israel since 1978 and the two countries have diplomatic relations, but Egyptian public opinion still regards the Jewish state as an enemy and occupier of Arab lands. Mr Sisi’s unprecedented admission could hand his critics further ammunition to attack him. News of co-operation with Israel against Isis militants in the Sinai has been widely circulated in the past year. A New York Times story in February 2018 cited US officials saying Israel had conducted a covert air campaign including some 100 air strikes against Isis militants in the North Sinai with Cairo’s permission. Egypt denied the story at the time. Egypt has fought four wars against Israel since 1948, the last of which in 1973 was aimed at winning back sovereignty over the Sinai. Cairo has not responded to CBS’s claim that it asked the channel to pull the episode in which Mr Sisi is interviewed by Scott Pelley, the program’s anchor and journalist. CBS has promoted the programme as “the interview Egypt’s government doesn’t want on TV”. CBS said it was contacted by the Egyptian ambassador shortly after the interview was recorded in the US and asked to refrain from airing it, but the broadcaster has not specified what the Egyptians found objectionable. The channel has not said why it has held the broadcasting of the interview since September, when it was recorded during a visit by Mr Sisi to New York to attend the UN General Assembly. Other excerpts of the interview made public by CBS include a denial by Mr Sisi of assertions by Human Rights Watch that the country is holding 60,000 political prisoners. Egypt’s official line is that there are no political detainees in the country and that everyone in prison is there for breaking the law. Mr Sisi, a former defence minister, led a popularly backed coup in 2013 against his elected Islamist predecessor. He has presided over one of the harshest crackdowns in Egypt’s modern history, targeting mainly Islamists but extending to secular critics, bloggers and journalists. “I don’t know where they got this figure [of 60,000 prisoners],” Mr Sisi told CBS. “I said there are no political prisoners in Egypt. Whenever there is a minority trying to impose an extremist ideology we have to intervene regardless of their numbers.”

S and Chinese negotiators are under mounting pressure to compromise in a new round of trade talks this week, as growing financial market volatility and fears of a bruising slowdown hit the global economy. A delegation of American officials will meet Chinese counterparts on Monday in Beijing for two days of discussions — the first face-to-face talks since President Donald Trump and President Xi Jinping agreed a trade truce at the G20 summit in Argentina last month — with a looming March 2 deadline to strike an agreement or see an escalation in tariffs. The mission, led by Jeff Gerrish, the US deputy trade representative, follows a torrid month for global markets, which have been convulsed by concerns of a looming downturn in the world’s two biggest economies. The S&P 500 has fallen 13 per cent since the start of October. Mr Gerrish will be joined by high-ranking officials from the agriculture department, energy department and treasury department in a sign that the talks are becoming more specific than they were when Mr Trump and Mr Xi met in Buenos Aires. For the US, success will hinge on how far China is prepared to go to purchase more American goods in agriculture, manufacturing and energy, as well as curbing intellectual property theft and the forced transfer of technology. “Mutually assured destruction is too strong but the incentives for both China and the US are to work towards some kind of agreement,” said Stephanie Segal, a senior fellow at the Center for Strategic and International Studies, a Washingtonbased think-tank. “They are going to be looking for an outright victory, and if not they will want to declare sufficient progress to kick the can down the road.” “If I were them, I would be looking at the list of US demands that the Chinese said they would be willing to accept, and clarifying those so I can declare victory and it doesn’t look like I capitulated,” said one former US trade official. The Chinese want Washington to commit to not raising tariffs further and removing levies on some items, as it hopes to chip away at the US approach. Senior US officials were comforted by a strong jobs report for December, including a significant jump in manufacturing employment which allayed some concerns about a weakening outlook. They have interpreted last week’s revenue warning from Apple, which the iPhone maker largely blamed on the economic slowdown in China, as a symptom of Beijing’s weakness rather than a worrying sign of spreading economic pain from their trade war. China is grappling with sharply weakening growth, led by lower domestic demand and the trade war, prompting the government to resort to stimulus measures, such as injecting $117bn into the banking system, investing in infrastructure and urging banks to increase lending to small businesses.

Macron condemns ‘extreme violence’ as French protests continue Activists smash through ministry door in eighth weekend of demonstrations Victor Mallet

he latest round of anti-government protests across France at the weekend degenerated in Paris into violent clashes between protesters and the security forces, prompting the beleaguered President Emmanuel Macron to condemn “extreme violence”. For the eighth Saturday in a row, “gilets jaunes” demonstrators — sporting the yellow reflective jackets that French motorists are obliged to carry in their cars — massed in cities around the country to protest against the cost of living and to call for Mr Macron’s resignation, underlining the challenge to the once-popular president’s authority after more than two months of disruption. The interior ministry said there were some 50,000 demonstrators nationwide, compared with 32,000 the previous Saturday during the Christmas-New Year holiday period. There were also clashes in Bordeaux, Caen and other cities. In recent days Mr Macron and his government, sensing that urban shopkeepers and residents are dismayed by the economic impact of the prolonged unrest, as well as by the burning of cars and smashing of shop windows, have decided to take a tough line against the demonstrators, and have suggested that those who continue to protest are extremists

who deserve no mercy. A march of an estimated 4,000 people from the Paris town hall to the national assembly began peacefully, but ended in violence and failed to reach its destination when some of the demonstrators — including a man identified by police as a former professional boxer — attacked a group of gendarmes in riot gear blocking a pedestrian bridge across the River Seine. A riverboat restaurant was set on fire. Nearby, a small group stole a forklift truck from a construction site and smashed down the door to a ministry building containing the office of Benjamin Griveaux, the government spokesman, who was forced to flee under escort. “Once again, extreme violence has come to attack the republic — its security forces, its representatives, its symbols,” Mr Macron said on Twitter. “Those who commit these acts forget the core of our civil pact. Justice will be done. Everyone must pull themselves together to prepare for debate and dialogue.” Christophe Castaner, the interior minister, played down the significance of Saturday’s protests and said that 56,500 members of the security forces, more than one per demonstrator according to the official figures, had been mobilised to quell unrest. “You can see that this movement is not representative of France,” he

told LCI television. Although most of the demonstrations had passed off peacefully, he said, “at the end there were numerous provocations and attacks. Town halls were attacked — those in Rennes and Rouen — and institutions like the high court in Perpignan, and gendarmeries.” Bruno Le Maire, finance minister, said in a television interview on Sunday that he wanted citizens who believed in representative democracy to declare “enough is enough”. He said: “There are forces today that want to bring down democracy.” The “gilets jaunes” protests were triggered by motorists’ anger over fuel prices that have risen as a result of green taxes introduced by the Macron government to reduce emissions, but the movement has since developed into an inchoate series of anti-government and antiestablishment demonstrations. Mr Macron’s U-turn on the taxes and the promise of €10bn of extra government spending to help the poor have not mollified the hardline protesters who continue to take to the streets on Saturdays. Those marching in Paris on Saturday were critical of Mr Macron, a former Rothschild banker, who is seen as a “president of the rich” and has so far failed to convince the majority of the benefits of his economic reforms. But few demonstrators were supportive of any other established French politicians either.

Tension mounts over Congo poll results delay US warns electoral authorities not to distort outcome Tom Wilson and David Pilling

he Democratic Republic of Congo was edging towards crisis on Sunday as the electoral commission postponed the announcement of presidential results and the international community stepped up pressure on Joseph Kabila, the incumbent, to cede power. Tension has increased after the respected Catholic Church said there had been a clear winner of the presidential poll a week ago, in what diplomats said referred to a likely victory for opposition candidate Martin Fayulu. Speaking to the Financial Times, Mr Fayulu warned the electoral commission to publish accurate results, saying “nobody denies that I am leading the polls”. The former ExxonMobil executive, a relative unknown before campaigning began last November, said he backed the call by the Catholic bishops’ conference, known as Cenco. “We completely agree with Cen-

co’s statement because everybody knows the results,” he said. Mr Fayulu also welcomed what he implied was growing international pressure on Mr Kabila to accept that his chosen successor, Emmanuel Shadary, had lost. “It is very encouraging that all over the world they are following closely what is going on in Congo and making some strong statements so that the truth will come out,” he said. Last Thursday, the US state department warned the electoral commission, widely believed to be aligned with the government, not to distort results. “There are moments in every nation’s history when individuals and political leaders step forward and do the right thing. This is one of those moments,” it said. Washington hinted strongly that it accepted Cenco’s verdict that Mr Shadary, known as Mr Kabila’s “dauphin”, had been defeated. Peter Pham, US special envoy for the African Great Lakes region, said: “There is an old dictum that posits

that the voice of the people is the voice of God; here rather we have a case where the ‘vox Dei’ points the way to the true ‘vox populi’.” In expectation of possible popular unrest should Mr Shadary be declared the winner regardless of the true count, both the US and the Congolese government have deployed troops in the past few days. Donald Trump, US president, said he had dispatched 80 soldiers to nearby Gabon to protect US citizens and property should violence break out. In a letter to Congress, Mr Trump said he might deploy additional forces to Gabon or to Congo itself. The Congolese government has also been sending thousands of troops around the country, particularly to opposition strongholds, in what observers say could be a preparation to quash anti-government protests. Last week, the government shut down internet services, ostensibly to prevent the dissemination of false results.

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Former Barclays executives prepare to face fraud trial John Varley, former chief, and 3 others pursued in SFO prosecution Caroline Binham

he UK Serious Fraud Office has made a last-minute personnel change to ensure its flagship case against four former Barclays top brass is properly overseen as one of the biggest tests in its 30-year history comes to trial. Barclays’ former chief executive, John Varley, is one of four defendants whose long-anticipated trial begins this week. They face charges over the bank’s emergency refinancing arrangements with Qatar in 2008, as Barclays struggled to avoid the fate of other high-street rivals bailed out by the UK taxpayer. It is the first jury trial in the world of a major bank’s chief executive over actions taken during the financial crisis more than a decade ago and is scheduled to take at least four months at London’s Southwark Crown Court. The question of who at the SFO is accountable for the case has been in doubt since its general counsel quit for a law firm. The stakes for the SFO, which has spent millions of pounds in ringfenced money from the Treasury investigating the case over more than six years, are high after bloody noses in other trials recently, including the collapse of the retrial of two former Tesco executives late last year. SFO charges against Barclays itself and its operating subsidiary over the Qatari arrangements were also scrubbed in October, sparing the bank from trial. The anti-fraud agency has now named Mark Thompson, its chief operating officer, as the official accountable for the case. The agency’s director, Lisa Osofsky, had to recuse herself from the Barclays case following her arrival at the SFO in late August from private practice, where she was a monitor to banks trying to overhaul their compliance. Alun Milford, the SFO’s former general counsel who had taken the

lead role in the case, has recently left for Kingsley Napley, the law firm. While the firm’s instruction precedes his arrival by many months and he will not be involved, Kingsley Napley has a role acting for some of the witnesses in the case. Mr Thompson is viewed as a safe pair of hands at the agency and also stood in as acting director after the previous director, Sir David Green, left in April and before Ms Osofsky took up the role. But while Mr Thompson is an experienced investigator, he is an accountant by background and not a lawyer. The SFO has shrugged off concerns that there is no senior lawyer acting as a “second pair of eyes” as the landmark case proceeds to trial. Mr Thompson is expected to make any decisions in conjunction with Hannah von Dadelszen, a senior lawyer who jointly heads its fraud team, while the case controller, Rakesh Somaia, has been in place throughout the probe. The agency declined to comment. After six years and interviews with at least 40 individuals, the case is finally heading to trial. As well as Mr Varley, in the dock at Southwark Crown Court will be Roger Jenkins, the rainmaker who negotiated the two 2008 capital raisings; Tom Kalaris, who was a trusted lieutenant in Barclays’ investment banking unit, and Richard Boath, the former European head of the investment bank’s financial institutions group. The case involves issues over what the bankers told the market when Barclays twice turned to Middle Eastern investors in 2008 as part of emergency cash calls worth £11.8bn at the height of the financial crisis. Qatari investors ploughed a total of £6.1bn into Barclays over the two capital raisings. The SFO alleges that the bankers induced the Qataris to invest through side deals worth more than £300m not fully disclosed to the market nor to other investors.

Gold lures investors as gyrating markets take shine off stocks An eruption of volatility has seen the metal re-establish its haven status Neil Hume

nvestors are warming to gold as markets are whipsawed by concerns about slowing global growth. As US equities tumbled in December, the holdings of goldbacked exchange traded funds rose by 2.25m ounces, according to Scotiabank, helping to drive the price of the metal to six-month highs of more than $1,290 a troy ounce. That forced funds that had placed speculative wagers against gold in the US futures market to cover their positions, sending the market from a net short to a net long position — where bullish wagers outnumber bearish bets — for the first time since June last year. Analysts believe there has been a further increase in bullish bets as well as short covering, although this has yet to be reflected in official data. Weekly reports compiled by the US Commodity Futures Trading Commission are not being published because of the partial government shutdown.

“A combination of rising open interest on Comex and the gold price going up tells me that new longs are coming into the market,” said John Reade, chief market strategist at the World Gold Council. For much of 2018 gold was out of favour, hit by the strength of the dollar and interest rate rises in the US, which dented the appeal of assets such as the precious metal that offer no yield. That saw gold trade as low as $1,174 in August in spite of rising geopolitical tensions and the fallout from US-China trade war. Sentiment towards gold began to improve towards the end of the year as US stock markets fell and volatility increased. That has continued into 2019 amid speculation a slowing US economy will ultimately force the Federal Reserve to stop raising interest rates. Analysts say gold can continue to shine as long as markets remain volatile — a fact underlined late last week after a better than expected US jobs report saw equity markets bounce.

John Varley, Barclays’ former chief executive, is one of four defendants facing charges over the bank’s emergency refinancing arrangements with Qatar in 2008 © Getty

RBS admits misleading court to repossess customer’s home Case highlights concerns that banks are struggling to change scandal-hit culture Nicholas Megaw

awyers representing Royal Bank of Scotland falsely denied the existence of a customer complaint in a court hearing to repossess a borrower’s home. The case will fuel concerns that banks continue to mistreat customers despite claiming to have transformed their culture after a series of scandals. Richard, a longtime RBS customer who did not wish to give his full name, initially fell into arrears on a NatWest-branded mortgage when the bank paid some property management fees levied by a third party that he thought were unfair. He complained about his treatment to the Financial Ombudsman Service in May. However the bank initiated court proceedings to repossess the property in June, and its lawyers said on August 15 that it had “no knowledge” of any FOS complaint, according to a witness statement prepared for the hearing. “Consequently, the claimant [RBS] asks that the court will refuse the defendant’s request to dismiss [or] adjourn the hearing”, added the lawyers.

The court agreed and ordered Richard to hand back his property to NatWest. However, the FOS had told NatWest about the complaint by at least early July, according to correspondence seen by the Financial Times. The bank’s claim to have no knowledge of the issue was also directly contradicted by the office of chief executive Ross McEwan one week after the court hearing. A representative from his office told the customer’s local MP that RBS could not discuss his case because of an “ongoing complaint” with the FOS. After being contacted by the FT, RBS acknowledged that there had been an error in its witness statement. “We are aware of [Richard’s] situation, and understand that the Financial Ombudsman Service have reopened their investigation. We will not take any further action against [Richard] at this time and await the outcome of their independent investigation,” said a spokesperson. The case comes as the taxpayerowned bank is battling to improve customers’ perceptions after largely completing its decade-long restruc-

turing. RBS was ranked the country’s least popular bank brand in an official ranking published by competition regulators this year, while NatWest was tenth of 16. Executives have made customer satisfaction a priority after admitting the bank had been “distracted” with internal problems in recent years. It came under particular fire for the behaviour of its Global Restructuring Group, which was accused of “widespread and systematic” mistreatment of struggling small businesses after the financial crisis. RBS has pledged changes to ensure “past mistakes cannot be repeated”, but has nonetheless faced accusations of being overly aggressive towards individual customers. This month, for example, the BBC reported that RBS refused to compensate a customer who was defrauded of £20,000 after a violent mugging until it was contacted by reporters. In addition to the witness statement, Richard said RBS had repeatedly refused to engage with his efforts to arrange a way to repay his arrears, and pushed him into further debt by reneging on agreements to renew the fixed rate on the rest of his mortgage.

Airbus under spotlight with race to hit delivery target European aircraft maker struggling to close orders gap with US rival Boeing Sylvia Pfeifer and Patti Waldmeir

irbus faces a test of its credibility this week when it reveals whether it met its target to deliver around 800 aircraft last year, as the plane maker races to narrow an orders gap with archrival Boeing. The European group’s factories worked overtime during the Christmas holidays to make up for delays because of supplier issues. Guillaume Faury, head of Airbus’s commercial arm, had made sorting out the company’s supply chain a key focus. Mr Faury, who takes the helm from chief executive Tom Enders in April, is understood to have launched a review looking at Airbus’s ways of working, industry executives with knowledge of the move confirmed. The group said in October that it would deliver about 20 fewer aircraft but still hoped to meet its target by including 18 A220 jets, the model acquired through its purchase of the Bombardier C series. Deliveries are watched by investors as a key indicator for cash flow. Airbus had delivered 673 aircraft to

the end of November, leaving it 127 jets short of its target. Analysts at Vertical Research Partners are forecasting 797 deliveries for 2018. Industry sources pointed out that Airbus was in a similar position in 2017 but still managed to close that year with a record 718 deliveries. A spokesman declined to comment on the final tally, which will be announced on Friday, but said “the Airbus team worked flat out until the very last hours of December 31”. Boeing, which will unveil its numbers on Tuesday, had been targeting between 810 and 815 deliveries in 2018, up from 763 in 2017. It had delivered 704 planes by the end of November. In terms of the annual orders race, Boeing was far ahead of its European rival by the end of November with 690 net firm orders, fuelling speculation that it would break Airbus’s five-year winning streak. Airbus had reported 380 net firm orders in the same period but last week said it had firmed up two more deals for another 120 aircraft. In 2017, Airbus secured 1,109 net orders while Boeing netted 912.

“Boeing will end up ahead in 2018 in terms of deliveries and orders, on the back of their wide-body strength, and that’s confirming a trend we saw in 2017,” forecasts Chris Higgins, aerospace analyst at Morningstar Securities. He estimates that Boeing secured around 200 wide-body orders in 2018, nearly four times as many as Airbus. “It’s a structural issue, it’s not a one-year issue, and that has potential implications for Airbus, they may have to refresh their wide-body line-up much sooner than they expected.” Richard Aboulafia, analyst at the Teal Group, said what mattered most was the “book-to-bill ratio”. Based on the end of November figures, Boeing could achieve a ratio of 1.0 — meaning new orders would match the number of aircraft deliveries. Mr Higgins forecasts that the current year could be challenging for both aircraft manufacturers. “Given the economic backdrop, which is to say cautiously pessimistic, there are going to be a lot of airlines sitting on their hands in terms of orders this year. I’d not be surprised if 2019 comes in flat or maybe even down a bit in terms of orders”.

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BD Money

Analysis

Gainers & Losers: A review of mutual funds in 2018 A review of the performance of mutual funds between January and November 2018 showed that Abacus Money Market Fund, Nigeria International Debt Fund and SFS Fixed Income Fund, rewarded investors with the most superior returns.

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OPINION The perilous art of state intervention

Cover Story Investing A Fixed income guide for What you need to know about Nigeria in 2019 bank penny stocks in 2019

It must feel good to be a farmer in Nigeria today, or textile factory owner, airlines operator, power generator or distributor, real sector operator or maybe a small business owner. Page 62

Fixed income investors, from retail to institutional buyers like the banks and pension funds, can look forward to a rewarding year in 2019.

A 16 percent depreciation in banking stocks on the floor of the Nigerian Stock Exchange (NSE) in 2018 puts investors on the edge, especially new stockholders seeking to take positions in penny stocks in 2019 as analysts see performance driven by banking blue-chips.

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Commodities Cocoa investors cheery as 2018 gains lift earnings by 30% Cocoa rounded off 2018 as a resilient and top performing major commodity on the global scene, gaining about 28 percent in the first month of the 2018/2019 season and investors in local cocoa market are cheery as the price appreciation promises at least 30 percent in earnings.

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Analysis

Gainers & Losers: A review of mutual funds in 2018 Endurance Okafor & Oluwasegun Olakoyenikan

review of the performance of mutual funds between January and November 2018 showed that Abacus Money Market Fund, Nigeria International Debt Fund and SFS Fixed Income Fund, rewarded investors with the most superior returns. A mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds therefore afford investors to invest in a portfolio of different forms securities which could help mitigate risks. Investment in mutual funds could be done with any of the licensed mutual fund managers available of NSE website, of which some are owned by banks. BusinessDay did a survey on seventy-four (74) funds dis-

‘

The fixed-income asset class is probably the only one where smart money can demonstrate differential value at this time. Positioning by local portfolio managers ahead of when hot money returns after hopefully peaceful polls might be one strategy

’

tributed over six broad portfolio classes traded on the Security and Exchange Commission (SEC). The survey revealed that majority of the funds suffered losses while a few others reported the same unit price as the year before. The returns posted by some of the mutual funds in 2018 reflect their abilities to withstand the economic headwinds in the global market which negatively impacted emerging economies including Nigeria. Abacus Money Market, a Fund managed by Investment One Fund Management Limited, took the lead among money market funds, posting 9900 percent return in 2018, and its Net Asset Value, which opened the year at N4.1 billion, rose to N8.59 billion. The average return of the class however stood at -0.22 percent. This placed the fund over thirteen others in the asset class with unchanged prices, United Capital Money Market Fund shed 9.50 percent and Kedari Investment Fund grew its return by 6.25 percent. Rafiq Raji, chief economist at Macroafricaintel, said asset management is very difficult in these parts, and as such advised that fund managers should look in direction of fixed-income, blue-chips stocks, and flowspositioning. “The fixed-income asset class is probably the only one where smart money can demonstrate differential value at this time. Positioning by local portfolio managers ahead of when hot money returns after hopefully peaceful polls might be one strategy,” Raji recom-

mended. Omotola Abimbola, a research analyst at Ecobank said “multi assets or balanced funds are likely going to continue to overweight fixed income over equities.” He however explained that “for fixed income, tightening external financing conditions and CBN policy tightening will keep interest rates elevated and sustain investor apathy for duration.” Unlike the money market funds, bond funds recorded an impressive performance for the year as the funds in the class grew their returns. In all, Nigeria International Debt Fund, managed by Afrinvest Asset Management Limited, was the best performing fund in the category with 15.20 percent gain. The fund’s performance was significant when compared to Kedari Investment Fund, its closest rival that grew return by 5.85 percent. Johnson Chukwu, MD of Cowry Assets Limited said ordinarily, any good fund manager should have a good performance, because a portfolio investor will first identify the instrument that qualify for investment in their portfolio, that is those instruments that have very good fundamentals. “The selectiveness of investors in picking instruments into their portfolio is such that any good portfolio or fund manager should ordinarily outperform the market index, because their choices will largely be on the good performers,” Chukwu said. On the way to go for fund managers in 2019, Abimbola

said “for equities, due to the fragility of the economic recovery and external sector pressures styming portfolio capital flows, investors will likely continue to prefer value stocks with strong fundamentals and stable cash flow over cheaply priced speculative stocks.” Data by the stats bureau revealed that Nigeria’s economic expansion remained sluggish in Q3, as it was below analysts’ expectation at 1.81 percent growth rate from 1.50 percent recorded for the previous quarter. In 2018, Nigeria equities lost 18 percent as foreign capital fled emerging markets on the back of rising interest rates in the United States and slower global growth concerns. “Unless we have exciting IPOs like MTN’s during the course of the year, we might have another boring year on the NSE,” Raji mentioned. A further analysis of the asset classes revealed that the performance of the fixed income funds was less impressive compared to the bond funds. However, the fixed income asset class was very competitive in 2018. In spite of the tussle, SFS Fixed Income Fund, managed by SFS Capital Nigeria Limited, emerged the best performer in the class, recording 12.84 percent growth in return from N1.48 per unit to N1.67 per unit as at November 2nd. Just as the names implies, the performance of mixed funds in the year under review reported mixed returns; losses and unchanged prices. Coronation Balanced Fund, under the management of Coronation

Asset Management, gained the most in 2018; this is after posting 12.09 percent return to hit N1.20 per unit. Ayo Akinwunmi, Head of Research at FSDH Merchant Bank said the investment strategy and the investment time of the fund manager are important determinants of their return. “The ability of the fund manager to select stocks of investment instrument is an important factor in determining the return on that fund. Some fund managers are aggressive while some are a little bit conservative,” Akinwunmi said. Ethical funds did not have a great year as performance of funds was generally poor just like the equity based funds. All funds in this asset class declined in 2018 but ARM Ethical Fund, a fund managed by Asset & Resources Management Company Limited, posted the lowest lost, making the fund the best performer for the year. The fund lost marginally by 0.67 percent to N28.20 per unit from N28.39 per unit it opened with at the beginning of the year. “Although stocks are cheap with market valuation multiples at multi year lows and dividend yield at a record high, investor sentiment is likely to remain weak in the short term due to elevated domestic and external sector risks,” Abimbola said. From a high position of third best performing market in 2017 with 42 percent rally, the Nigerian stock market dropped 17.47 percent in 2018 and 0.43 percent as at the close for the week Friday, 04 January 2019, pushing year to date return to -2.52 percent.

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Opinion

The perilous art of state intervention PATRICK ATUANYA Patrick Atuanya is the Editor BusinessDay Media Limited Email : patrick.atuanya@businessday.ng Twitter : @patrick_atuanya

t must feel good to be a farmer in Nigeria today, or textile factory owner, airlines operator, power generator or distributor, real sector operator or maybe a small business owner. The list is endless, as at last count the Federal Government through the Central Bank of Nigeria (CBN), has at least 18 Development Finance Operations across various sectors of the Nigerian economy. These include the Agricultural Credit Guarantee Scheme (ACGS), Interest Drawback Programme (IDP), Commercial Agriculture Credit Scheme (CACS), Paddy Aggregation Scheme (PAS), Micro, Small and Medium Enterprises Development Fund (MSMEDF),

Anchor Borrowers’ Programme (ABP), Presidential Fertilizer Initiative (PFI), National Food Security Programme (NFSP), National Collateral Registry (NCR), SME Credit Guarantee Scheme (SMECGS), Small and Medium Enterprises Restructuring and Refinancing Facility (SMERRF), Real Sector Support Facility (RSSF), Textile Sector Intervention Fund (TSIF), Power and Airline Intervention Fund (PAIF), Nigeria Electricity Market Stabilisation Facility (NEMSF), Nigeria Bulk Electricity Trading Payment Assurance Facility (NBET-PAF), Non-oil Export Stimulation Facility (NESF), and Export Development Facility (EDF). Sadly, the problem with these myriad schemes goes beyond the funny names and weird acronyms. Here are some data from the CBN. In the first half of 2018, a total of 10,420 loans valued at N1.75 billion were guaranteed under the ACGS, a total of 5,929 IDP rebate claims valued at N89.31 million were settled, the sum of N39.34 billion was disbursed to 16 projects for the CACS,

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Nigeria seems to have mastered the art of state interventions. It may be time to begin unwinding these good intention-ed but perilous outlays

’

N4.25 billion was released to three banks for disbursement to three projects under the PAS, N4.77 billion was disbursed under MSMEDF, the ABP saw disbursement of N36.37 billion to 155,732 farmers, a total of N20.0

billion was released to a single obligor under the PFI, through the Nigeria Sovereign Investment Authority (NSIA), the sum of N4.04 billion was disbursed under the NFSP, the sum of N23.91 billion was disbursed to five (5) projects under RSSF, the sum of N19.1 billion was released for two (2) projects under the TSIF, a sum of N18.74 billion was disbursed to four (4) power projects under the PAIF, the sum of N38.53 billion was disbursed to one (1) distribution company (DisCo), seventeen (17) generation companies (GenCos), six (6) gas companies (GasCos) and five (5) service providers, under NEMSF, the sum of N248.4 billion was disbursed to the NBET Plc under NBET – PAF, N19.04 billion to finance six (6) projects under NESF, and a N50.0 billion debenture under the EDF. This all came to a tidy sum of N529 billion just in the first six months of 2018. Beyond the stress this imposes on the CBN balance sheet and distortions to the wider economy, no one seems to be concerned about the inefficiency being encouraged as growth

in most of the sectors government is pumping money into remains lacklustre. According to the National Bureau of Statistics (NBS), in the third quarter of 2018, the agricultural sector grew by 1.91 percent (year-on-year) in real terms, a decrease by –1.16 percent points from the corresponding period of 2017, Real GDP growth in the manufacturing sector (often a target of these interventions) in Q3 2018 was 1.92 percent, Textile, Apparel and Footwear under Manufacturing sector grew by a measly 1.04 percent in Q3 2018, down from 2.73 percent in Q2 2018 and 1.85 percent in Q1 2018. With growth in the targeted sectors still this tepid and unemployment rising, it is fair to assume that the spending has created little jobs, meaning it has been largely inefficient and unproductive. Indeed a member of the monetary policy committee (MPC) of the CBN, Obadan, Mike Idiah, in his personal statements following the 121 MPC meeting of Nov 21-22, 2018, flagged the lacklustre growth in one of the targeted sectors, saying: “Although agriculture was one of the three major drivers of growth during the period, its contribution to growth at 0.27 percent showed highly reduced significance in relation to previous quarters. The sector thus needs to be further stimulated beyond what the Central Bank of Nigeria (CBN) is currently doing.” Obadan also alluded to the Central Bank’s use of non-conventional monetary policy tools being ‘overburdened.’ Nigeria seems to have mastered the art of state interventions. It may be time to begin unwinding these good intention-ed but perilous outlays.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola

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A Fixed income guide for Nigeria in 2019 LOLADE AKINMURELE

ixed income investors, from retail to institutional buyers like the banks and pension funds, can look forward to a rewarding year in 2019. After a record breaking 2017 for government bond yields which peaked at 18 percent, 2018 saw yields fall to 14 percent on average amid lower inflation rate and reduced bond supply from the federal government which tweaked its debt strategy to borrow less domestically in favour of external debt. However, there are signs of a higher yield environment in 2019 and those signs started flashing as early as late 2018. Rising global interest rates which sparked sell-offs in emerging markets and political uncertainty that coloured the second half of the year, saw the Central Bank of Nigeria push yields higher in the fourth quarter of 2018 using Open Market Operations (OMO) auctions, to attract foreign portfolio investors and tame inflation ahead of the system liquidity that accompanies campaign spending in an election year. The OMO auctions laid down a marker for fixed income yields, with one-year government Treasury Bills rising as high as 17 percent while average bond yields rose nearly 200 basis points to 15 percent. Enter 2019 and there are atleast three key reasons why fixed income yields will sustain the upward momentum that started late last year. First is the expectation for higher inflation this year. Consensus forecasts point to an uptick in inflation to 12.8 percent from 12.2 percent average in 2018. The factors that will drive inflation higher in 2019 include the implementation

of a minimum wage hike; expectations for pre-election spending, which will trigger increased system liquidity, and a likely increase in food prices as the lasting effects of flooding and violence in the middle belt take a toll on prices. Yields typically need to stay above inflation if investors must make real returns. Therefore, the higher inflation rate goes the higher fixed income yields climb and vice versa. The second reason why bond investors can expect higher yields this year rides on the back of increased CBN monetary tightening. The price stability mandate of the CBN means if inflation rises, interest rates are likely to be raised. The apex bank relied heavily on raising interest rates in the latter part of 2016 when inflation soared to a high of 18 percent. The CBN hiked benchmark rates to 14 percent from 11 percent over that period and that’s where it has stayed for

nearly two years now. The outlook for higher interest rates in the United States and sustained foreign capital outflow this year will only pile more pressure to the CBN to tighten even further. The consensus forecast for interest rates in 2019 is a 50-basis hike to 14.5 percent. The Monetary Policy Committee is scheduled to hold their first meeting of 2019 this January. The last reason why yields look set to jump in 2019 is the Federal government’s widening budget financing gap which would only boost local bond supply and bid yields higher. The Federal government’s 2019 budget has a N2.3 trillion deficit and is predicated on revenues of N7 trillion. Both scenarios are threatened by disappointing revenues which naturally feeds into a wider deficit that will leave the government with limited options than to borrow. Capital expenditure bore the brunt of disappointing revenues in the past two years but 2019 will give the government less wriggle room given the spike in recurrent expenditure which cannot be easily made away with like capital spending. Non-debt recurrent expenditure alone will hit N4 trillion this year. If government revenue is to perform as it did in 2017 or 2018 where only 50 percent of the target was met, then worker salaries, overhead costs and statutory transfers will be higher than total revenue, before considering capital expenditure and debt servicing. The total non-debt recurrent expenditure will equate to 128 percent of the government’s projected N3.5 trillion revenue for the year. N3.5 trillion is half of the N7 trillion 2019 revenue projection.

What that implies is that the government would have to borrow just to maintain an over bloated bureaucracy. Add capital expenditure as well as debt servicing obligations and there could be a fiscal crisis on the cards for the government in 2019. The fear of a fiscal crisis is why the government will be keeping a keen eye on oil prices which has recently slumped to $55 per barrel, $5 higher than the budget predication of $60 per barrel. Although most oil price forecasts, as off the mark as they have been over the years, point to an average of $70 per barrel, if prices remain sticky at $55 then there is a fair chance of the government missing the oil revenue target. The oil production benchmark gives even more cause for worry. The budget benchmark is N2.3 trillion, but an OPEC-induced cut threatens to restrict production to 1.6 million barrels daily, 30 percent lower than the target. This implies that the expected revenue from oil could be 30 percent lower only from a production perspective. Nonoil revenue will rely largely on company profitability at a time when economic growth has stalled and average incomes are shrinking. When revenues failed to meet up to expectations, the government turned to borrowing, with the debt stock more than doubling since 2014 to N24 trillion as of the end of 2018, according to the Debt Management Office (DMO). Rising debt service cost as a percentage of revenue, which hit a high of 66 percent in 2018, didn’t deter the government, with bond investors emerging big beneficiaries of attractive yields on money lent to the government.

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Cover Story YOUR QUESTIONS

Is my car an asset or liability?

get often confused whether my car is really an asset or just another liability given how much it costs me to maintain it. While some argue that cars are assets because they can put a decent amount of money back into

your pocket once sold, others say the hidden costs of owning a car makes it a liability despite it being a liquefiable investment. These expenses include fuel costs, repair and maintenance, registration, sales tax, insurance and toll fees.

I am torn between both arguments and would like a logical advice on whether to consider my car an asset and if it features in my net worth. I would also like to know how to calculate the worth of my car if I eventually deem it fit to be an asset.

Should I have a joint account with my husband?

ne of the main conversations I have avoided so far with my husband is whether as a couple we should have a joint account. While some couples feel that marriage is a partnership in which everything should

be shared, including bank accounts, others value autonomy more highly. What are the advantages and disadvantages of having joint accounts, and there are any fast rules about the best type of account?

My main fear has always been that if things turn bad in our relationship, my spouse has the ability to clean out the account and take all the money, even if it was deposited by me. I would like to know the thoughts of financial experts.

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Investing

What you need to know about bank penny stocks in 2019

while the other – Wema Bank and Jaiz Bank – had negative returns. This is despite the negative sentiment of investors in the major banking stocks and low patronage of penny stocks in the market. Penny stocks get their name

from the fact that they are cheap and a lot of people when starting out on investment tend to go in for cheaper stocks as their first investment. They do this because they are deemed to have higher returns when things go according to plan. “Penny stocks are like a surgical knife. If used by a doctor (experienced), it could save lives (make money). On the other hand, if used by a goon (amateur) it could kill (make you bankrupt). In my opinion, penny stocks can only be a good lesson rather than a potential earning source,” said Rohit Dalal, a New Delhi-based finance analyst. Meanwhile, some other analysts believe that penny bank stocks could rise on the back of improved financial performance of major stocks in the sector. “Low operational efficiency, poor quality of asset, and lack of

capital buffers are some of the unattractive characteristics of bank penny stocks,” said Gbolahan Ologunro, Research Analyst at CSL Stockbrokers. Gbolahan explained that the period following the elections which coincides with release companies’ full year reports would likely stretch the valuation of big banks that are expected to make profits, causing investors to revalue and buy into penny stocks. Aluko Paul, a Research Analyst at MBC Securities Limited said bank penny stocks in 2019 might be affected by trickledown effect of investor negative sentiment on major stocks in the sector after a gloomy 2018. “The Apex Bank should be ready to rescue dying banks as further collapse of any bank will affect the financial system of the economy,” Paul said.

preceding quarter, reflecting betterment in family income, financial and economic situations. Inflation rate is still in doubledigits, standing at 11.28 percent in November 2018 up from 11.26 percent in the preceding month, and 1.30 percent higher than 9.98 percent benchmark for 2019. However, the rate would rise marginally to 13 percent owing to increased liquidity and higher imported inflation according to analysts at Financial Derivatives Limited, but analysts at FSDH Research pegged inflation rate at the close of 2018 to 11.7 percent because of increased food prices, electioneering spending and implementation of new minimum wage. The year 2019 comes with a lot of expectations and uncertainties as investors and entrepreneurs are of mixed feelings how political conditions and economic activities would affect them. If the MPC decides to raise or cut the rate at its next meeting in January 2019 (probably) will have positive and negative implications on the economy. Loosening the MPR (cut rate) would

create more credit for the real sector and boost economic recovery through increased business investments, higher purchasing power and employment generation, which are the hallmark of the Economic Growth and Recovery Plan (ERGP) but this, would aggravate inflationary pressure in the economy. On the other hand, raising the rate can help to mitigate inflationary pressures and stabilize the foreign exchange market but might slow down growth because higher interest rate would increase the cost of borrowing, thereby discouraging investment as well as consumer spending. Raji Rafiq, chief economist at Macroafricanintel, strongly believed that MPR will most likely be held at 14 percent as inflationary pressures remain heightened despite downward trends. “Inflation expectations are my only consideration. Besides if the minimum wage proposal goes through, there would probably be additional inflationary pressure” Raji added. A research analyst at CSL StockBrokers, Gbolahan Olo-

gunro, opined that MPC would retain the rate at 14% throughout this year. “This is because of heightening in global financing conditions and this is because United States has provided guidance for at least 75 basis points increase in interest rate and we might see the European Central Bank also ending its quantitative easing program. The outcome of these might lead to capital outflow reversal from emerging economies, so the CBN in response to alleviate this impact which would affect exchange rate stability might come under pressure to hike rate” Ologunro explained, adding CBN would continue to use the reserves to ensure stability in the foreign exchange market. In a report released by FSDH Research, a similar position was held that MPC will vote to maintain interest rate at current levels. With inflationary pressure in the economy driven majorly by campaign-related spending and implementation of new minimum wage effective this year, analysts forecast that MPR will be retained at 14%.

OLUWASEGUN OLAKOYENIKAN & SEGUN ADAMS

16 percent depreciation in banking stocks on the floor of the Nigerian Stock Exchange (NSE) in 2018 puts investors on the edge, especially new stockholders seeking to take positions in penny stocks in 2019 as analysts see performance driven by banking blue-chips. Although, the sector outperformed the Nigerian Stock Exchange (NSE) All Share Index which shed 17.81 percent in 2018, the suspension of trading in the shares of Skye Bank over inability of its shareholders to recapitalise the lender which eventually collapsed, and the proposed merger and acquisition deal between

Access Bank and Diamond Bank undermined investor sentiment in the banking stocks. Unity Bank, one of the three penny stocks in the banking sector, was able withstand the rout in the market by gaining 101.89 percent to emerge the secondbest performing stock in 2018,

ANALYSIS

Where are interest rates headed?

Israel Odubola

fter taking into account many factors which includes economic developments in domestic and global markets, the Monetary Policy Committee of the Central Bank of Nigeria maintained the Monetary Policy Rate (MPR) at 14 percent, with the asymmetric corridor at +200 and -500 basis points around the MPR in 2018. Furthermore, deposit money banks are required to keep 30 percent of their funds with the CBN and liquidity ratio was retained at 30%. The last time MPC changed rate was in July 2016 when the MPR was lifted by 200bps. In the communiqué released at the end of the two-day meeting that ended on November 22 2018, the MPR was retained so as to sustain the gradual improvement in both output growth and price stability. The committee noted that keeping the MPR at current level reflects the confidence in the various policies implemented by CBN which

have moderated domestic price level and stabilized the foreign exchange rate. Although still in a tepid posture, the economy is gradually recovering from recession. The economy expanded by 1.81 percent in the third quarter of 2018, up from 1.5 percent in previous quarter, but still below 1.91 percent recorded in the first quarter. Analysts at Financial Derivatives forecast a growth rate of 1.8 percent in Q1 2019. However, growth rate still falls short of population growth rate of 2.6 percent, implying that the economy needs stimulus policies to make growth sustainable and inclusive. The manufacturing purchasing managers’ index has been on the upward trend for twenty-one consecutive months, and moved to 61.1% in December 2018 compared to 56.8% and 57.1% in the July and August 2018 respectively, indicating an improvement in economic activities in the last quarter of 2018. Furthermore, the overall consumer confidence index improved in the last quarter of 2018 to 9.7 points compared in 1.5 points in the

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Week Ahead (January 7 – 11, 2019) BONDS Next week, Open Market Operations (OMO) maturities worth N375.4bn will hit the banking system. The Central Bank of Nigeria (CBN) will continue with its weekly Open Market Operations (OMO) mop ups to keep liquidity levels in check. Yields on corporate Eurobonds are expected to pare in the coming weeks as flight to safety imperative becomes stronger in the face of the impending elections. NAIRA The naira appreciated last week to close at N357 per dollar in the parallel market. Analysts expect the naira to trade fairly stable this week as the CBN continues its usual intervention in the Foreign Exchange market.

EQUITIES MARKET Analysts expect that a bearish performance will dominate the capital market this week, following the poor performance of the All Share index which shed 1.28 percent last week, as sell pressures persist due to pre-election jitters. COMMODITIES Forecasts of increased global wheat supply in the 2018/2019 season would put pressure on prices. Weakening demand coupled with a supply glut would continue to push SUGAR prices down. EVENTS Chartered Institute of Tax of Nigeria (CITN) holds its Annual tax week program at Oriental hotel, Victoria Island Lagos on the 9th to 11th.

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Commodities

Cocoa investors cheery as 2018 gains lift earnings by 30% Temitayo Ayetoto

ocoa rounded off 2018 as a resilient and top performing major commodity on the global scene, gaining about 28 percent in the first month of the 2018/2019 season and investors in local cocoa market are cheery as the price appreciation promises at least 30 percent in earnings. The international boon may ignore some farmers but not investors in contracts, as they are poised to gain more than triple the local price of N750. “Considering the price we bought, and the price in the international market, we are looking at a gain of almost 30 percent from what we aggregated over the Q4 2018 period,” said Obianujwu Okafor, communications executive at AFEX Commodities Exchange limited. “The same will be true of most operators in Nigeria’s cocoa market considering that the crop is mostly cultivated for export.” The local market in 2018 saw a sharp turn from a trend that saw farmers preferring to selloff to international buyers during year end, stirring price fall. For every week in Q4 2018, after AFEX expanded its transactions in cocoa, prices began to appreciate, in the two main producing states: Edo and Ondo. Prices were mostly stable on higher production and better quality of harvest. The fourth quarter started at N550 per kilogramme before rising to N750 on a demand pressure created by farmers bid to redeem contract pledges. At the beginning of the season, buyers made upfront payment on contract prices but some farmers made some side sales, leading supply shortage. On a broader spectrum however, cocoa ended on a poor note owing to the negative impact of flooding on low lands yield. Initial projections were quite bright due to early rain but at the tail end of the year

when farmers expected bumper harvest, the fruiting failed to blossom, leading to a cut in the estimate from 320,000 to 260,000. The bullish position on international prices during the beginning of December came as a new lease of life for prices as front-month cocoa contract had earlier plunged on news that ample arrivals and purchases of cocoa beans were recorded in Côte d’Ivoire and Ghana. Compared to values displayed at the beginning of November, the nearby contract prices weakened by 8 percent from $2,200 to $2,025 per tonne on London futures markets which prices at par African origins, by the end of the month. Concurrently, prices dipped by 7 percent in New York from $2,264 to $2,106 per tonne during the last trading day of November. Before dropping, the front-month contract traded on a positive note in the course of the first trading week of the period and reached its highest level of the month to settle at $2,254 per tonne in London. At the same time, they firmed by 5 percent and reached $2,381 per

tonne in New York. According to the International Cocoa Organisation, the 2018/19 crop year harvest started strongly in Côte d’Ivoire, with cumulative cocoa arriv-

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One of the issues on the front burner of our plan is to increase local consumption. If 20 percent of production is consumed, cocoa prices will go up, farmers will grow more and we will now know that we can never have a glut for prices to crash on our head

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als recorded at ports reached 689,000 tonnes, up by 35 percent from 510,000 tonnes seen in the same period last season. On the demand side, ICCO estimates an increase in world grindings of 3.9 percent during the last crop season. Grindings reached a record 4.570 million tonnes, up by 173,000 tonnes. This estimate reflects the continuous increase in demand which is especially reflected in the steady cocoa processing growth in origin countries. Processing activities grew of 5.1 percent to 1.711 million tonnes in Europe and by 4.3 percent to 1.031 million tonnes in Asia and Oceania whereas Africa’s increase was by 5.7 percent to 951,000 tonnes. In contrast, grindings in the Americas slightly regressed by 0.3 percent from the previous season to 877,000 tonnes. It might take Nigeria 10 years for Nigeria to land itself in the league of these nations, with 500,000 metric tonnes of production under modest estimate, says Sayina Riman president Cocoa Association of Nigeria (CAN). The country had about 27 cocoa processing plant but

is only left with five, producing less than 20 percent capacity. CAN is hoping to lean on the proper implementation of a 10year cocoa plan for a revival in the industry. It is particularly looking to anchor growth on a government-driven increase in consumption rate which is at two percent of production. If Nigerians consume 250 grammes of cocoa every two weeks for instance, the country might be importing 50 percent to augment local output to service demand, says Riman. “One of the issues on the front burner of our plan is to increase local consumption. If 20 percent of production is consumed, cocoa prices will go up, farmers will grow more and we will now know that we can never have a glut for prices to crash on our head. Anytime there is a glut, we will consume it locally,” he said. “That’s why we are advocating that all the beverage industries like Cadbury and Nestle should increase the cocoa content in their beverages because of the health benefits. These companies have five percent cocoa content in their beverage chain.”

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

t every election, newspapers and commentators advocate “issue-based campaign”.They call for messages containing ideas that the candidates want the voters to support.Yet, just about 40 days before Nigeria’s presidential election, the ideas of the two main candidates, President Muhammadu Buhari and former Vice President Atiku Abubakar, are hardly the subject of media analysis or public discussion, despite sharp differences in their messages. For instance, while Buhari focuses his campaign on the narrow issues of corruption, security and the economy,Atiku sets out wide-ranging talking points about political, economic and institutional reforms. Yet, Buhari is getting most of the attention, while Atiku appears to be lacking momentum in the campaign.Why? Let’s start with the contrasts between their ideas. Buhari’s manifesto is essentially promising more of the same. If re-elected, President Buhari would do nothing differently, but instead intensify his current policies, including throwing more government money at tackling poverty and unemployment through the social intervention programmes. To be honest, Buhari’smanifesto simply lacks intellectual depth or “the vision thing”. But not so Atiku’s plan. His economic visionis truly radical, underpinned by extensive programme of deregulation and liberalisation. Equally radical are his proposed political reforms and anti-corruption strategy. Take political reforms. Along standing advocate of political restructuring,Atiku recalls in his manifesto that: “At independence, the various regions were growing at their own pace with the political and economic strategies that suited their individual peculiarities”. But now, he says, “the centre has a pervasive and over-bearing presence and influence on the other tiers of government”, adding that “Nigerian states have been reduced to parastatals of the federal government”. So, what would he do if elected? Well, he would, among other things, “decongest the exclusive and concurrent list in the Constitution”, to devolve powers, responsibilities and resources to Nigeria’s sub-units. What about Atiku’s anticorruption strategy? Well, this is far-reaching too. He outlines an elaborate set of “immediate actions”that he would take, if elected. For instance, Atiku

promises that, within his administration’s “first 100 days in office”, he would: expeditiously pass critical legislation “relating to whistle-blowing, cybercrime, witness protection, electronic evidence, and asset forfeiture”; set up Major Corruption Case Monitoring and Review Committee that would include “NGOs, civil society organisations and media as observers”; and review and expedite action on the passage of all existing and pending new laws or amendments to all anti-corruption laws currently in the National Assembly.Theseare in addition to medium-term commitments on detection of corruption, sanctioning corrupt practices, institutional strengthening and reward system. Which brings me back to my questions. If everyone wants an issue-based campaign, why is the ongoing presidential campaign not about issues?Why are Atiku’s elaborate programmes of economic, political and governance reforms not being discussed and scrutinised? Why are comparisons not being made between Atiku’s and Buhari’s campaign promises? And why does Atiku seem to be struggling in this campaign, lacking momentum, despite the intellectual depth and radical nature of his plans? Last week, one of Buhari’s strong supporters mockingly asked Atiku to throw in the towel now as his campaign was going nowhere.Another tweeted that “Right now @atiku and his running mate @PeterObi are more of a liability 43 days to Presidential election in Nigeria”. But how could a challenger who promises to transform Nigeria politically, economically and institutionally be more of a liability than an incumbent who is focusing his campaign on narrow issues of corruption, security and the economy, in spite of his poor recordon these issues? Well, there are several reasons why Atiku appears to be struggling. The first is that next month’s presidential election will not be about issues. It’s about who has and can inspire a passionately enthusiastic base. Unfortunately,Atiku doesn’t have the fanatical followings that Buhari, a cult figure, has. Despite the fact that youth unemployment rose from 3m in 2015 to 13m in 2018 (a 263% increase over 3½ years) under Buhari, most of the poor still prefer him to Atiku.They see Atiku, a multibillionaire (allegedly), as part of the problem, and Buhari, a “sandalwearing ascetic”, as the solution. In this regard, the 2016 US presidential election holds many lessons for the Nigerian election. Donald Trump, who could wow a strong base, the poor working-class White, most of who could literally die for him, beat Hillary Clinton, who, despite having positive ideas and vision, inspired little passion or enthusiasm among her middle-class and college-educated supporters. Truth is, Atiku’s support base is threadbare, compared with the rural and urban poor who, as someone puts it, “would die for Buhari before they knew why”! Another reason is the integrity or character factor, and

here, again, we can learn from America. In the 2016 election, Donald Trump ceaselessly attacked the integrity of Hillary Clinton, repeatedly calling her “Crooked Hillary”.That fired up Trump’s base, who truly believed Clinton was a “criminal”, but

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Despite the fact that youth unemployment rose from 3m in 2015 to 13m in 2018 (a 263% increase over 3½ years) under Buhari, most of the poor still prefer him to Atiku. They see Atiku, a multibillionaire (allegedly), as part of the problem, and Buhari, a “sandalwearing ascetic”, as the solution.

also dampened the enthusiasm of Clinton supporters. Scholars have shown that an incumbent with a poor record can divert voters’ attention and shape the debate in a more advantageous way.To be sure, the APC cannot win on its record, on corruption, security and the economy. But it is relentlessly playing the integrity card, painting Atiku and the PDP as corrupt. That, of course, is what Buhari’s supporters believe and want to hear, and it is energising them. By contrast, Atiku lacks passionate supporters who believe enough in him to counterbalance Buhari’s fanatical supporters. The truth is that the perception issue is working, or might work, against Atiku in this election. AzuIshiekwene, a Vanguard columnist, wrote last week in the paper that “the indescribable fear of who the real Atiku in power could be – that unknowable quality – makes it a bit easier to forgive Buhari’s shortcomings”. He is right. Atiku, as I wrote recently,“carries a baggage of negative perceptions and is running under a party that still has a serious image problem, a legacy of PDP’s 16 years in power”.And, of course, the APC, despite having its own serious integrity or character issues, with allegations of corruption swirling around the party and the Buhari government, is successfully defining the debate about the issue to its advantage. Now, another reason for Atiku’s seeming lack of momentum is his lukewarm support in the North.The truth is that Atiku can’t win the election unless he can beat Buhari in the North. Yet, he doesn’t seem to have enthused the North with his radical proposals. For instance, unlike the South, the North is not enthusiastic about political

restructuring, some are even hostile to it. Cleverly, if also opportunistically, Buhari has positioned himself as anti-restructuring to appeal to those parts of the North that are hostile to the issue. Of course, Buhari has also warmed himself to the hearts of most of the poor in the North the way that Atiku hasn’t. What’s more, over the past 3½ years, Buhari has cynically, with elections in mind, courted the Fulani herdsmen by refusing to condemn their rampaging and killing of farmers in the Middle Belt and elsewhere in Nigeria. The recent endorsement of Buhari for re-election by Miyetti Allah, the herders’ association, was clearly a reward for his sympathy towards their cause. But, sadly, it bears a similarity tothe endorsement of Donald Trump in the 2016 presidential election by the racist Ku Klux Klan (KKK)! The US example brings us to another reason why Atiku appears to be struggling in this campaign: lack of party unity. Following the bitter presidential primaries between Hillary Clinton and Bernie Sanders, which Sanders’ supporters believed Clinton won with some skulduggery, there was schism in the Democratic Party. Sanders’ supporters refused to campaign wholeheartedly for Clinton and some even probably didn’t vote for her. Some believe that had Clinton made Sanders her running mate, just as Barrack Obama did with Joe Biden, a fellow primaries contestant, she might have won the election. That example has some salience in Atiku’s case.Although he won the PDP’s presidential primaries overwhelmingly, there are many in the party, including influential state governors, who are not enthusiastically supporting him. A recent report in Premier Times in which a PDP governor said Atiku might lose if “he fails to address the concerns of party leaders over a plethora of issues”, including his controversial choice of Peter Obi as his running mate, is enough to dampen enthusiasm of PDP supporters. Atiku certainly can’t gain momentum, let alone win the election, if his party is not solidly behind him. Then, finally, there are doubts about the credibility of Atiku’s manifesto commitments. Few believe he can deliver on his radical manifesto promises.Atiku certainly needs a landslide victory to be able to push through his proposed political, economic and institutional reforms, including large-scale privatisation and political restructuring. Without a landslide, which is near-impossible, or a unity government, which is desirable but unlikely, Atiku’s promises are seen as pies in the sky. So, yes, Atiku has the vision; he also, apparently, has the competence. But he is dogged by several factors undermining his campaign, some created by his desperate opponents, the APC, others by his own party, and yet others by his own controversial personality. But can he turn all these around? Well, we have to wait and see!

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fivethings

Insight 2019 polls: Atiku has the vision but lacks momentum. Why?

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Fascinating business facts

20%

xpectedly, alarm bells are ringing at OPEC capitals around the world as treasury managers of countries making up the cartel watch, almost helplessly, the unstoppable plunge in global oil prices that will have far reaching consequences for social cohesion and peace in especially countries like Nigeria which depend heavily on oil revenues. The price of the global benchmark grade, Brent has fallen from $86 per barrel which it attained on October 3, to below $55 Friday. Analysts say this could wipe out almost 20% from Nigeria’s expected oil revenues which could fall to a mere $49bn in 2019 when the country holds crucial elections.

0.8% There is more than a week left until the new year, but at this point, it’s almost certain European stocks will post the worst year since 2008. The Stoxx Europe 600 dropped 0.8 percent on Friday in London, taking this year’s loss to 14 percent. Meanwhile, the blue-chip Euro Stoxx 50 is less than 1 percent away from entering a bear market after hitting the threshold earlier.It’s a testimony to how fragile sentiment is that even news of Chinese stimulus couldn’t lift the gloom, with U.S. futures pointing to a third day in the red on Wall Street. Tensions between America and China are simmering again after China demanded that the U.S. withdraw espionage charges against Beijing officials. A government shutdown also looms in the U.S.

mbattled South African President Cyril Ramaphosa has asked his finance minister to begin the process to set up a council of economic advisers. South Africa which has just emerged from recession is asking itself if it is “not stuck in a thinking mode which is not relevant to the actual conditions in South Africa?” the finance minister said. Government officials are meeting in Pretoria to present policy proposals to raise the level of economic growth in South Africa’s where annual expansion hasn’t exceeded 2 percent since 2013.

85%

lobal battery prices have fallen 85 percent since 2010, BloombergNEF reports in its annual Lithium-Ion Battery Price Survey, and with storage forecast to grow to 14 times its current level by 2030 as millions of electric vehicles hit the roads. BNEF predicts demand will total 1,851 gigawatt-hours in 2030, up from the current 132. EV batteries are expected to account for 84 percent of that.

$11.7bn

frica’s troubled aviation sector is on the verge of a massive make over after it was announced that Boeing Co and Nigeria based Green Africa Airways have committed for up to 100 737 MAX 8 aircraft, in a deal that carries a list price of $11.7 billion. The deal is the largest aircraft agreement from Africa the commitment is evenly split into 50 firm aircraft and 50 options, it added. The 737 MAX 8 is the fastest-selling airplane in the Boeing fleet, accumulating more than 4,800 orders from over 100 customers worldwide. It is estimated that airlines in Africa will require 1,190 new airplanes as the continent boosts both intra-continental and intercontinental connectivity over the next couple of decades, Boeing said, citing its 20-year Commercial Market Outlook.

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