BusinessDay 07 Jan 2020 by BusinessDay

UBA rightsizing set to boost productivity, increase value delivery ... bank announces appointments to Group Board and Africa operations SEGUN ADAMS

or Nigeria’s biggest employer of labour in the banking industry, finding the right size to optimise value delivery to its cus-

tomers, shareholders and other stakeholders means a motivated and productive workforce is essential in the very competitive banking industry. United Bank for Africa (UBA) recently announced that it em-

barked on a careful re-jigging of its workforce in the last quarter of 2019 which led to the promotion of more than a fourth of its workforce, easing of mobility through its corporate ranks, and upward review of salaries.

The bank also recruited additional staff and let go of some of its underperforming employees in a carefully planned restructuring aimed at making its workforce one of the most competitive within the industry,

it said. UBA has the largest workforce among Nigerian banks but also generates the lowest profit per employee and gross earnings Continues on page 39

businessday market monitor

Dangcem N142

Foreign Exchange

Biggest Loser

Biggest Gainer

Seplat

+2.82 pc N592.1 27,339.68

Foreign Reserve - $38.5bn Cross Rates GBP-$:1.29 YUANY - 51.96

Commodities -0.44 pc Cocoa US$2,491.00

Gold $1,565.22

news you can trust I ** tuesDAY 07 january 2020 I vol. 19, no 472

Access, UBA, Seplat, Zenith, GTB, Dangote Cement are top stock picks for 2020 … analysts’ base case scenario sees equities returning +5.3% IHEANYI NWACHUKWU

ccess Bank plc, Zenith Bank plc, United Bank for Africa plc, Seplat Petroleum Development Company plc, Guaranty Trust Bank plc, Flourmills Nigeria plc and Dangote Cement plc are among Continues on page 2

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BD Investigative Series

How security agencies hunt, extort local farmers over border closure (1)

From disguising as a National Youth Service Corps (NYSC) member hitching a free ride on a van conveying smuggled tomatoes to fronting as a fruits dealer, CALEB OJEWALE, in this investigative report uncovers how a highly organised racket involving security agencies exploits rural farmers and traders in border communities.

armers across Nigeria were ecstatic when the government announced the closure of the country’s land borders in August 2019. Finally, it was their time to become rich. “Let the borders remain closed,” the farmers echoed. “We can feed Nigeria.” They were joyous that they would no longer suffer headaches over imported agricultural goods. Not in their wildest dreams did farmers in border communities think the border closure would put them on the hit list. But that’s exactly what has happened. This BusinessDay reporter, from disguising as a National Youth Service Corps (NYSC) Continues on page 38

Tuesday 07 January 2020

BUSINESS DAY

news NAICOM looks to annuity for next growth of insurance business

...focuses on market development in 2020 MODESTUS ANAESORONYE & ONYINYE NWACHUKWU, in Kano

he National Insurance (NAICOM) said on Monday that the next big phase of insurance growth would be the annuity business. Annuity business, a product of life companies, the insurance industry regulator said, would benefit significantly from the growing pension assets now at about N10 trillion as more contributors become aware of the benefits of the product. Sunday Thomas, acting commissioner for Insurance/ CEO of NAICOM, made the disclosure in Kano during a seminar for insurance journalists. Thomas said the business was impacting positively on the industry and that the public was becoming more exposed and knowledgeable about the workings of annuity. This, he said, would continue as the future looks bright for the business. He said the Commission would do everything within its powers to prepare the industry for this big future and the tasks that would be associated with managingthefundsastheygrow. “The Commission is committed to ensuring financial soundness and viability of the insurers and the adequate protection of policyholders at all times and these will continue to be part of our regulatory priorities,” Thomas said. Speaking on NAICOM’s plans for 2020, Thomas said the Commission would be working with the relevant security agencies to guarantee effective and efficient monitoring of compliance. Speaking on the ongoing recapitalisation in the industry, he said the essence was to ensure that the industry becomes

more robust in its technical competence and financial base, building confidence, trust and enhancing market value. This is aimed at repositioning the sector for self-actualisation in terms of growth and development, he said. “The financial inclusion strategy has been central to the Federal Government’s developmental plan and the Commission has over the years invested hugely in the development of financial inclusion mechanisms which include the introduction of microinsurance and Takaful insurance products. The introduction of these lines of insurance is intended to deepen the penetration of insurance in the country and bring into the fold majority of the populace that were hitherto excluded,” Thomas said. “So far, some milestones have been recorded in this regard with three standalone microinsurance and four Takaful insurance companies already granted approvals,” he said. He said the Commission would continue to deploy more energy and resources in building public trust and confidence in insurance despite years of poor perception. On claims, he said NAICOM would continue to ensure that genuine claims are promptly paid while also ensuring a reasonable protection of investments of shareholders. He added that in demonstrating its willingness to protect the policyholders, the Commission has further strengthened its Complaint Bureau Unit to respond to public complaints over claims settlement. Available statistics have shown that there have been great improvements in this area.

•Continues online at www.businessday.ng

Access, UBA, Seplat, Zenith, GTB, Dangote... Continued from page 1

notable stocks in analysts’

basket of select equities with potential for increased return in 2020. Other analysts’ stock picks are FBN Holdings, Nigerian Breweries plc, FCMB, Guinness Nigeria, Dangote Sugar Refinery plc, Stanbic IBTC Holdings plc, Nestle Nigeria plc, Cement Company of Northern Nigeria, Julius Berger, Okomu Oil Palm plc, Total Nigeria plc, Mobil Oil Nigeria plc (11 plc), and Forte Oil plc (Ardova plc). Among other notable counters, analysts picked these stocks because they are currently undervalued, but with strong fundamentals. Some of them were picked because they have the potential for return in excess of or equal to 15 percent between their current price and the analysts’ target price. The investment cases for Access Bank are positive because the bank holds the records as Nigeria’s biggest bank

based on asset size and the one with the highest number of retail customers since the merger with Diamond Bank. “It has a current Book Value per share of 17.30x which is above its existing market price. Our target price for Access Bank is N12.50, representing a premium of 23.15 percent returns over the closing market price of N10.15 as of Friday, January 3, 2020,” said GTI Research analysts. “Despite the numerous challenges posed by Nigeria’s unstable macro-environment in the last five to six years, Zenith Bank plc has continued to set the pace in terms of posting strong gains year-in, year-out. Our 12-months target price for Zenith Bank is N24.70, which representsanupsidepotentialof 28.31percenttotheclosingmarket price of N19.25 as at close of the transaction on Friday, January 3, 2020,” the analysts said. Dangote Cement plc re-

Continues on page 39 www.businessday.ng

L-R: Zainab Ahmed, minister of finance; Mary Uduk, acting director-general, Securities and Exchange Commission (SEC), and Abdulkadir Abbas, head, securities and investments services, SEC, during the send-off ceremony of the outgoing permanent secretary, special duties, Ministry of Finance in Abuja. Pic by Tunde Adeniyi

TCN, Market Operator get best deal as NERC reviews tariff … to get 100% settlement of invoices; GenCos, DisCos get a third ISAAC ANYAOGU

igeria’s 11 electricity distribution companies may soon get their wish for a cost-reflective tariff but the biggest beneficiaries of any review appears to be the Transmission Company of Nigeria (TCN) and the Market Operator who will be getting 100 percent of their invoices settled. On December 31, 2019, the Nigerian Electricity Regulatory Commission (NERC) published a minor review of the Multi Year Tariff Order 2015 and minimum remittance order for the year 2020 to reflect the impact of changes in the variables that constitute electricity pricing template including gas prices, inflation rate, exchange rate and generation capacity since 2015.

NERC has struggled to explain that this is not a tariff increase but this minor review will inevitably lead to an increase in end-user tariff estimated between 35 percent and 45 percent across various customer tariff classes. However, the bulk of this money will benefit the government-affiliated agencies – the SystemOperator,anarmofTCN, aswellastheMarketOperator,responsible for the administration of the electricity, market whose invoiceswillbesettledinfulleven thoughoperatorsputsomeofthe blame for inefficient electricity market on them. According to the order published by NERC, the DisCos will be able to earn their revenue requirement only by repaying a loan from the Central Bank, settle 100 percent of tariff by the Market Operator and settle NBET obligations

of between 38 and 45 percent depending on the DisCo. Some analysts berate this policy because it priorities settling technical and administrative cost of providing power far above the actual generation of power without which no section of the value chain can function. “Itisnottherightpolicy,”said Chuks Nwani, a Lagos-based energylawyer.“Thegovernment through NERC is compelling all other operators totake a haircut; it should also be showing the same commitment.” According to the Commission, the Federal Government’s updated Power Sector Recovery Programme does not envisage an immediate increase in end-user tariffs until April 1, 2020 and a transition to full cost-reflectivity by end of 2021. In the interim, NERC said the Federal Government has

committed to funding the revenue gap arising from the difference between cost-reflective tariffs determined by the Commission and the actual end-user tariffs payable by customers, but all DisCos are obligated to settle their market invoices in full as adjusted to net of applicable tariff shortfall. Currently, DisCos remit far less than they collect and it appears generation companies get the short end of the stick. “The level of collection efficiency during the quarter under review indicates that as much as N3.09 out of every N10 worth of energy sold during the second quarter of 2019 still remained uncollected as and when due,” NERC said in its 2019 second quarter report released in December 2019.

•Continues online at www.businessday.ng

Devaluation risk rises as FX reserves slide to 24-month low BUNMI BAILEY & IFEANYI JOHN

igeria’s foreign reserves closed the year 2019 at $38.6 billion, according to Central Bank of Nigeria. This is its lowest level in 24 months. In the last quarter of 2019, the external reserves suffered daily average decline of about $52.5 million, meaning the country was depleting more than $50 million daily from its reserves in the fourth quarter of 2019. The external reserves only saw one day of gain in the entire fourth quarter when they grew by a meagre $5.8 million on November 13, in what could be described as the worst quarter for the country’s external reserves in 2019. The growth in external reserves gradually began to lose steam earlier in the year before

it finally turned negative in the second half of the year. In Q1 2019, the average daily external reserves growth was about $20.8 million, but growth slowed to a daily average of about $11.25 million in Q2, before the depletion began in Q3 when daily reserves loss was about $51 million. The drastic fall in the external reservescouldjumpstartspeculativedemandindollarsasinvestors anticipate the almost inevitable devaluation of the local currency, analysts told BusinessDay. “If this trend (on external reserves) continues to persist, we will begin to see pressure on the naira because investors will begin to speculate in acquiring more dollars – and we are even seeing that a lot. Then for the foreign investors, we will begin to see more outflows from their side,” Ayodeji Ebo, managing

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director, Afrinvest Securities Limited, told BusinessDay. “To solve this problem, we should see how we can begin to encourageForeignDirectInvestments (FDI) so that we can have permanent capital. The FDI can help in further opening some major sectors. For example, the Petroleum Industry Bill (PIB), if it is passed as soon as possible, willattractmuchinvestmentand once you get that much capital, it willcreatesomestabilityintheFX market,” he said. Analysts opine that a speculative frenzy on the dollar could lead to devaluation this year. However, the continued decrease in Nigeria’s exportation could help ensure that the next devaluation is not as deep as it was in 2016. “On the outlook for FX reserves, I feel it may still go down a bit but not significant@Businessdayng

ly because factors like importation of rice and poultry foods have reduced drastically and the demand that comes from these items is going to reduce,” said Ayodele Akinwunmi, corporate banking department at FSDH Merchant Bank Limited. “And if we go into next year, whenDangoterefinerywillcome on stream, you will realise that 25 percent of demand for foreign exchange will reduce and as we begin to ramp up increased local capacity to produce those goods that we used to import before, there will drop in their demand and we can even scale up to a point that we can export them and be able to generate additional foreign exchange which will lead to increase in those foreign reserves,” Akinwunmi said.

•Continues online at www.businessday.ng

Tuesday 07 January 2020

BUSINESS DAY

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Tuesday 07 January 2020

BUSINESS DAY

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Tuesday 07 January 2020

BUSINESS DAY

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Tuesday 07 January 2020

BUSINESS DAY

news

Despite police warning, Shiites in Nigeria protest killing of Iran general James Kwen, Abuja

embers of the Islamic Movement of Nigeria (IMN), also known as the Shiites, on Monday staged a protest in the New Nyanya and Mararaba settlements of Nasarawa State close to the Federal Capital Territory (FCT), Abuja, over the killing of an Iranian General, Qassem Soleimani. This is despite the early warning by the Nigeria Police authorities that all potential troublemakers should steer clear of the streets and territory of Nigeria. Soleimani was killed by the United States on Friday in Baghdad in a drone strike. American officials said the general had ordered assaults on Americans in Iraq and Syria and was planning a wave of imminent attacks. The Inspector-General of Police, Mohammed Adamu, had placed Police Commands and formations nationwide on

red alert, following the killing of the General, who was the head of Iran’s elite Quds Force. According to police, this was a proactive measure sequel to an intelligence report that some domestic interests were planning to embark on massive public disturbances and sabotage as result of the Iranian General’s death. The Islamic State West Africa Province (ISWAP), a faction of the Boko Haram group, showed a video in December in which it claimed to have beheaded 11 Nigerian Christians in revenge for America’s killing of Abu Bakr al-Baghdadi, the former IS leader, in a military attack last October in Syria. ISWAP is an affiliate of the IS. Frank Mba, a deputy commissioner of police and Force Public Relations Officer, in a statement, said consequently, zonal assistant InspectorsGeneral, and Command Commissioners of Police have been directed to ensure maximum surveillance and security of lives and property across the

nation. Mba said the Police Commanders had been directed to ensure strategic deployments of both overt and covert Police operatives to ensure adequate security and safety of citizens, foreigners especially diplomats and diplomatic missions domiciled in Nigeria as well as the protection of critical national assets. However, members of the IMN, which is linked to Iran, trooped out in their numbers protesting en route New Nyanya and Mararaba to converge at the popular AYA Bridge in the nation’s Capital, Abuja, but they were intercepted by officers and men of the Nigeria Police. The protesters blocked the busy Keffi Abuja highway, causing a traffic gridlock up to the AYA Bridge, which impeded movement by commuters. No casualty was recorded at the time of this protest as Police only ensured the protesters did not make further movement into the FCT.

Experts offer insights into what private sector can do in new deal for nature CHUKA UROKO

s a major stakeholder in biodiversity conservation, the private sector plays a critical role in determining how biodiversityisusedandconserved in the new deal for nature and people, experts say. New deal for nature and people means that, as a country, Nigeria needs to adopt new mechanisms, processes and interactions to improve on the current interface as a people with nature. “Globally, the loss of biodiversity is on the increase with devastating consequences and not enough is being done to stem the tide. “In Nigeria, the need to get the private sector involved in the protection and conservation of nature cannot be over-emphasised. Currently, Nigeria ranks as one of the countries with the

highest rate of deforestation with 350,000 to 400,000 hectares lost annually,” noted Muhtari Aminu-Kano, the director general of Nigerian Conservation Foundation (NCF). Aminu-Kano, who spoke at a two-day business forum titled ‘naijabiz4nature,’ noted further that the loss of such habitat was not only detrimental to the well-being of species, but also to people and businesses. According to Aminu-Kano, the private economic sectors of the country – mining,agriculture, fishing, finance and banking, oil and gas, pharmaceuticals, manufacturing, etc—all depended eitherdirectlyorindirectlyonnature ortheservicesprovidedbynature. “It, therefore, makes business sense for the private sector to invest in the conservation and protection of the ecosystem,” he said. The president of NCF BoT, Phillip Asiodu, who was repre-

sented by Marie Fatayi-Williams, explained that the concept of this business forum was premised on the fact that business products, practices, supply chains and business models could have a major impact on critical areas of biodiversity conservation. He affirmed that the private sector could play a critical role in determining how biodiversity is used and conserved. NCF used the forum which wassupportedbyitsinternational partners–WorldWildlifeFundfor Nature (WWF), BirdLife Internationalandin conjunctionwiththe Federal Ministry of Environment to bring together business leaders from different sectors of the Nigerian economy. The forum was aimed to discuss what businesses were doing ascorporateentitiestoprotectand conserve the environment and to shareideasonhowtomainstream conservation in the private sector.

TEF opens application for 2020 entrepreneurship programme BUNMI BAILEY

he Tony Elumelu Foundation (TEF) has opened its application portal for applications from African entrepreneurs across all African countries, for the year 2020 cohort of the Tony Elumelu Entrepreneurship Programme. In 2019, 3,050 African entrepreneurs benefited from the programme, a number that will meaningfully increase in 2020. Speaking at the launch of the 2020 TEF Entrepreneurship Programme, Ifeyinwa Ugochukwu, CEO of the Foundation, said, “The transformation of Africa begins with empowering our young African entrepreneurs. With the recent enhancements made to our programme and our growing list of partners,

the Tony Elumelu Foundation is significantly increasing its impact across the continent. We encourage all start-up African entrepreneurs across the 54 African countries to apply for the Programme, as we continue to empower the very best ideas that will create the much needed employment and revenue on the continent.” The TEF Entrepreneurship Programme is open to start-up entrepreneurs, with innovative business ideas or businesses that have been in existence for less than three years, in any sector, from across Africa. The programme is the $100 million commitment by African investor and philanthropist, Tony Elumelu to empower 10,000 entrepreneurs in 10 years, with the goal of creating millions of jobs and new revenue on the www.businessday.ng

continent. The programme implements Elumelu’s Africapitalism philosophy, which positions the private sector as the catalyst for African economic transformation and an investment approach that values the creation of both social and economic wealth. In commemoration of its 10th year anniversary, the Foundation will announce further enhancements to the Programme, providing additional benefits to Africa’s rapidly growing youth demographic. The changes in the 2020 TEF Entrepreneurship Programme emphasise a personalised entrepreneurship journey for every applicant and opening the platform to ensure a higher number of people trained, amplifying the Programme’s impact and reach. https://www.facebook.com/businessdayng

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Tuesday 07 January 2020

BUSINESS DAY

news

Oil hits $70 as Iran abandons nuclear deal DIPO OLADEHINDE

onday morning, oil price jumped by 2.3 percent to $70 after Iran said it no longer considered itself bound by the 2015 nuclear agreement negotiated with the United States and other world powers. International benchmark Brent Crude gained 2.3 percent to trade at $70.18 per barrel, while US West Texas intermediate climbed 2.1 percent to $64.38 per barrel. Fallout widened from last week’s killing of a top Iranian military commander by a US drone in Baghdad, a development that had made Iranian government said it would no longer abide by any limits on its enrichment of uranium. Tensions between Tehran and Washington have soared following Trump’s withdrawal from the landmark Iran nuclear deal brokered by the Obama administration. The 2015 nuclear agreement lifted sanctions that crippled Iran’s economy and cut its oil exports roughly in half. In exchange for sanctions relief, Iran accepted limits on its nuclear programme and allowed international inspectors into its facilities. On Sunday US President Donald Trump threatened to impose sanctions on Iraq, the second largest producer among the Organisation of the

Petroleum Exporting Countries (OPEC), if US troops were forced to withdraw from the country. Baghdad earlier called on US and other foreign troops to leave Iraq. Trump also said the US would retaliate against Iran if Tehran were to strike back after the killing. “The situation brings lots of uncertainty and geopolitical tea-leaf reading on reactions. While the closure of the Strait of Hormuz remains a very unlikely event, the deterioration in Iraq bears supply risks,” said Norbert Rucker, head of economics at Swiss bank Julius Baer. “Geopolitics tend to be a temporary force on oil markets and we believe this time is no different. We raise our near-term forecast to 65 dollars per barrel, and maintain a neutral view”. Goldman Sachs analysts said the current risk premium embedded in Brent monthly price spreads is already elevated and an actual supply disruption is now necessary to sustain current oil prices. “The precedent set by the Abqaiq attack (on Saudi oil facilities in September 2019) showed that the oil market has significant supply flexibility starting when Brent is at $70 a barrel, even before shale production needs to ramp up, suggesting only moderate upside from here, should an attack on oil assets actually occur,” the bank said

CBN issues framework for management of risks in payment system HOPE MOSES-ASHIKE

s part of efforts to mitigate risks associated with the payment system in the country, the Central Bank of Nigeria (CBN) on Monday issued a framework called the Nigerian Payments System Risk and Information Security Management Framework, to guide the management of risks in this sector. The journey to the Payments System Vision 2020 (PSV 2020) started in 2007 with the objective of making the Nigeria Payments System internationally recognised and nationally utilised. The CBN noted that the phased implementation of the vision and other developments in the financial space including the pursuit of the Financial System Stability Vision 2020 (FSS 2020) has stimulated an exponential growth in financial activities and hence in the volume and value of payment flows both within and across national borders. Total volume and value of transactions through the Nigerian payment system stood at 92 billion and N427.74 billion as at September 2019, according to the data from the CBN. The e-payment channels include Cheques, ACH/NAPS/ PMS, ATM, PoS, Internet (Web), Mobile Money, NIP, EBillsPay, Remita, m-Cash, Central Pay, and Intra-bank e-payment transactions. The rapid growth in the volume and value of financial transactions represents an important source of revenue for the providers of payment services

particularly banks and other stakeholders. The objectives of this framework include to: identify and address sources of systemic risks within the Nigerian Payments System landscape; establish sound governance arrangements to oversee the risk management framework by ensuring that risks are identified, monitored and treated; and among others to establish clear and appropriate rules and procedures to carry out the risk management objectives. According to the regulator, the Framework is designed to guide the operators and users of the payment systems across Nigeria. These systems may be organised, located, or operated within Nigeria (domestic payments), outside Nigeria (offshore payments), or both (crossborder payments) and may involve currencies other than the Naira (non-Naira systems and multi-currency systems). The scope of the Framework also includes any payment system based or operated in Nigeria that engages in the settlement of non-Naira transactions operating within Nigeria and those that operate across the Nigerian borders (cross border payment systems); along with their infrastructure providers and the Payment Service Providers (PSPs) that make up these systems. The frameworks states that Cards shall be produced in accordance with CBN “Guidelines on Card Issuance and Usage in Nigeria” and the Payment Card Industry (PCI) card production security standards; where applicable. www.businessday.ng

Edo APC tasks Oshiomhole on genuine reconciliation

ublicly secretary of the Edo State chapter of the All Progressives Congress (APC), Joseph Osagiede, has urged the National Chairman of the party, Adams Oshiomhole, who has been suspended by the party in his ward and local government area in the state, to seek genuine reconciliation that would be superintended by a neutral body. Osagiede said this during a press briefing with journalists at the State Secretariat of the APC, in Benin City, the Edo State capital. According to Osagiede, “We have already said that we are willing and ready for reconciliation, but you cannot be constituting a reconciliation body when you are an interested party in the case. A neutral body from the presidency or the Benin Traditional Council can set up a committee for such reconciliation.” He expressed optimism that the crisis rocking the APC in Edo State would soon be a thing of the past as the activities of the proscribed Edo Peoples Movement (EPM), were fading out. “I think the APC crisis is already ending because we know that EPM is already folding up.

The members of the proscribed EPM are also reaching out to us,” he said. It is sad that Oshiomhole is yet to heed to the wish of the Oba of Benin who has severally called for peace to reign, he said, noting, “For the Oba of Benin to have led the Benin Traditional Council to meet with President Muhammadu Buhari on the matter, it should be a done deal. Once the Oba expresses a wish about anything, it becomes a command to Edo People. “The Oba’s wish is that there should be peace and for Oshiomhole to still be supporting EPM, he is working against the wish of the Oba.” He noted that Oshiomhole had no option than to toe the path of peace and heed the call of the Oba of Benin who recently called on members of the Edo Traditional Council to pray and fast to resolve the political tension in state. He said those who left the party to form EPM have no bearing in the APC, adding, “The National Chairman should take a cue from the Oba and come home, meet with the governor, so they can go to the Oba and tell him that they have reconciled their differences.”

FG to intervene in Chevron, union dispute Olusola Bello & Joshua Bassey

he Federal Government may intervene in the industrial dispute between the management of Chevron and it workers should the parties fail to resolve issues by Monday evening. The move is part of government’s effort to de-escalate the crisis. Lumumba Okugbawa, general secretary, Petroleum and Natural Gas Senior staff Association of Nigeria (PENGASSAN), in a telephone interview, told BusinessDay that another meeting had been scheduled in Abuja for Tuesday, where the minister of labour and productivity, Chris Ngige, is expected to mediate. H said: “The PENGASSAN unit in Chevron was meeting with the management. We hope that the issue would be resolved. But if not, the minister of labour and productivity will step in.” The workers were said to have taken to protest when they discovered that their allowances were seriously

slashed by the managing directors. According to inside sources, after every agreement reached between the management and workers some allowances are paid to the workers across board. But this time around the managing director was said to have told the workers that the economic situation of the company would not allow him do much in respect of allowances. So, he employed flat rate formula for everybody to the extent that even the people at the lowest level of the salary cadre became so dissatisfied with the development. The PENGASSAN, Chevron branch has called for the removal of the chairman and managing director of Chevron, Jeff Ewing. There was protest in all Chevron facilities across the country, Monday. They said the protest was to express their lack of no confidence with the leadership of Jeff Ewing. According to them, he should be removed and never be re-assigned to another office for his lack of integrity.

Stakeholders decry Discos’ appropriation of consumers’ infrastructure without refund Olusola Bello

takeholdersaswellaselectricity consumers have decried electricity distribution companies’ (Discos) appropriation of consumers’ infrastructure without refund. According to investigation, electricityconsumersinvestheavily in distribution networks and distribution infrastructure in form of line materials, transformers, insulators, which the 11 Discos signed to do when they took over assets of the defunct Power Holding Company of Nigeria (PHCN). This was part of what they signed to do when they took over but have reneged blaming it on lack of reflective cost tariff, the stakeholders state. The Discos should have

invested in this infrastructure through their capital expenditure (CAPEX) but they have refused to do anything, hiding under lack of reflective tariff, they say. Electricity consumers, because of their desperation to have power supply, quickly rally round themselves to get those infrastructures fixed and after they were fixed the Discos take ownership of them and still give consumers an estimated bill or other forms of billing. Yet, consumers don’t get a refund for their investments because such transaction has no contractualagreementbindingon both parties, they note. According to Ayodami Oladosu, a general contractor, if such agreement is to be in place it would have been explicit what is expected from both parties. He

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regrets that many of the infrastructuresputinplacebytheconsumers havebeentakenoverbytheDiscos and no compensations paid for ownership them. Kunle Kola Olubiyo, president, NigeriaConsumerProtectionNetwork,saysitisanegationofglobally acceptable principle of “Freewill Consensusadidem,”whenadistributioncompanyrefusestoprovide necessary investment to fund the much needed technical investments in its distribution network in any given community or forced communities to write an undertaken under undue influence or forced electricity consumers to enter into an undertaken that investment made by the consumers are voluntary donations. He says in terms of meeting of the minds for consensus ad idem, the parties entering agreement

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are expected to be at par and not one party to the contract forcing the other under duress and undue influence. In Nigeria situations, he notes, electricity distribution companies’ watch communities invest in distribution network, buy transformers, concrete poles, feeder pillars, aluminiumconductors,insulators, and also do earthen. “At times, investments in the region of N5 million - N20 million couldbeundertakentodesigneda distributionnetworkwhiletheonly thing the electricity distribution companywilldoistoenergisedthe Network and then it over,” he says. In many cases, consumers are compelled to agree that the infrastructure provided are donations made free of charge if not they would not be energise to supply electricity to them.

Tuesday 07 January 2020

BUSINESS DAY

news

How NERC, Discos can hike tariff without resistance - NECA JOSHUA BASSEY

igerian Employers’ Consultative Association (NECA) on Monday identified three things that would aid the implementation of a resistance-free electricity tariff increase in Nigeria. These are fast-tracking the provision of prepaid metres, ensuring availability of power for the Electricity Distribution Companies (Discos), and government’s support for the Discos to curb the rampant incidence of electricity theft across the nation, Timothy Olawale, NECA’s director-general, said. The Nigerian Electricity Regulatory Commission (NERC) in its ‘December 2019 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for the Year 2020,’ dated December 31, 2019, had indicated there might be new tariffs from April 2020. But torrents of criticisms over the weekend, greeted the proposed hike by NERC, with different groups opposing it and insisting that such a hike would amount to unjustifiable exploitation of consumers. NERC has since recanted on the proposed hike. Reacting to the raging argument on Monday, Olawale explained that a cost-reflective tariff was necessary to get the power sector back on track. He noted however that this could be achieved without resistance with prepaid metering of customers. “The major contention has been estimated and sometimes outrageous billing for power not consumed with implications on cost of living and cost of doing business without a guarantee of

commensurate improvement in quality of service,” he said. He argued that though the proposed increase in tariff might cause a shock from the consumers’ perspective, it was, however, a necessity in order to get the power sector back on track. “The issue of tariff has remained topical in the sector since shortly after privatisation. While the customers have said tariff review should only take place after there has been improvement in service, service providers have said for service to improve, the right amount has to be paid. The argument has always been the chicken and egg argument, a cyclical one.” The director-general argued that the increase would enable the sector realise the “right price for the product” which would then attract the right investment and consequently, improve on the quality of service offered to customers and consumers of electricity. “There had been minor and major reviews to adjust all the variables that make up the tariffs such as generation volumes, foreign exchange price. All these play a role in determining the tariffs. NERC for some reasons has delayed implementation of minor reviews that should normally occur bi-annually by regulation,” he noted. He said the NERC tariff order in June 2019 took all these into account and adjusted the variables to ensure a cost reflective tariff. He noted that a cost-reflective tariff was important to ensure the provider of the commodity or service can cover operational and capital expenses and most importantly stay in business and deliver on service.

Obaseki boosts Edo Security Trust Fund with N2bn

do State governor, Godwin Obaseki, says the state government is committing N2 billion to the Edo Security Trust Fund as part of his administration’s resolve to strengthen security of lives and property in the state. Obaseki, in a statement, says the fund will help strengthen security frameworks in the state ahead of the anticipated upsurge of socio-political activities in the state in 2020. He said, “2020 will be another election year in Edo State. We will ensure that there is peace and security during the contestation. As part of our programme to ensure sustainable security, we have earmarked N2bn for the State’s Security Trust Fund.” The governor said the Security Trust Fund “will also raise funds from businesses and citizens to bolster the state government’s ability to protect and secure you more effectively.” He noted, “Despite the prov-

ocation and hostility from quarters who should be interested and support the progress of our dear state, I solemnly pledge to uphold the people’s trust and continue to stand for our collective interest. As mortals, we will come, play our part and leave, but Edo will remain. My goal at the expiration of my tenure is that Edo State would have been propelled to the league of the best and most efficient sub-national entities not just in Nigeria, but in Africa. “I want to assure you, fellow citizens, that we will not relent on our efforts at infrastructural renewal, industrialisation, and social development programmes which we are currently undertaking across the entire state. We are committed to fixing our roads, rebuilding schools, facilitating expansion of existing businesses and ensuring a vibrant, boisterous state that we will all be proud to be associated with.”

Unity Bank rewards 470 staff, redeploys senior officers

ver 470 employees of Unity Bank plc have received elevation in form of promotions and notch increment in the last performance exercise by the bank in December 2019. In the same vein, the bank has made strategic redeployment of officers at the senior

management cadre. The exercise, which is consistent with the reward and performance management policy, is aimed at boosting morale of staff, job enrichment while optimising efficiency of its workforce for increased performance and productivity. www.businessday.ng

L-R: Rauf Olaniyan, deputy governor of Oyo State; Michael Fajinmi, chairman, Nigerian Legion Oyo State, and Abiodun Fadeyi, deputy speaker, Oyo State House of Assembly, during the launch of Oyo State Emblem Appeal Week as part of activities to mark the 2020 Armed Forces Remembrance Day celebration in Ibadan, yesterday. NAN

Nigeria outshines Kenya, SA as Africa’s biggest recipient of start-up investments in 2019 Bunmi Bailey

igeria has outperformed Kenya and South Africa (SA) its peers by raking in $663.24 million, the highest amount of venture capital fund secured by an African country in 2019, according to the latest 2019 Africa Venture Capital report released at the weekend. Kenya emerged second from its previous third position in 2018, netting 283.6 percent growth over the previous year’s funding amount, and SA slipped to the third position from second in 2018. A further analysis of the report by WeeTracker, a global tech media platform with a marked focus on the African technology and start-up ecosystem, shows that it is the second consecutive time Nigeria has attracted the highest amount of venture capital. “It is a positive development for the economy with regards to digital technology. With this, it is most likely that the Information Communication Technology

… retains top investment country with $663.2m (ICT) sector will continue to be the major driver of growth in the non-oil space,” Damilola Adewale, a Lagos-based economist and independent consultant. African venture investments broke all the previous records to register $1.34 billion in investments through 427 deals in equity and debt financing in 2019, a 79.2 percent increase from $725.6 million invested across 458 deals in 2018. “The Financial services and Information technology (FinTech), which is on a growth path for the fifth year in a row securing $678.73million, witnessed a spectacular growth of 138.5 percent over the previous year. “The ecosystem appears solid for the companies to set their footing as evident from the rise in seed and Series A rounds, which were the most preferred form of deal closures for the investors,” the report stated. “It was also a year when the corporates led investments

into industry shaping ventures that could be game-changers for African infrastructure. The continent did not shy away from the limelight and was in constant focus of the global investors and tech giants. Women entrepreneurs were a vital part of the growth in 2019, bagging a few of the big-ticket rounds of the year,” it further stated. According to a market insight report by Asoko Insight, Africa’s comprehensive corporate information platform that provides market mapping solutions to investment firms, banks, corporates and governments, a total of $204.3 million worth of FinTech investments were secured in disclosed deals between 2010 and 2018 in Nigeria. Also, Nigeria has the largest mobile market in Africa with over 172 million mobile subscribers in 2018, accounting to a penetration rate of 87 percent of its population, and representing a 6.4 percent

growth increase, compared to 162 million subscribers in 2017, according to a report released by Jumia, Africa’s online retailer. And at end of 2018, there were over 36 million smartphone users, representing a penetration of 18.37 percent year-on-year. The availability of lower-price point phones still remains the major driver of smartphone penetration. Gbolahan Ologunro, an equity research analyst at Lagosbased CSL Stockbrokers, said over the past two-three years the Fintech industry had gained significant attention from investors, particularly in Africa where the potential for growth still remained. On the outlook for investments in year 2020, the report is optimistic that with the current market climate, the venture capital market is expected to remain robust, particularly in areas such as fintech, logistics, on-demand services and agritech.

Middle East tensions push gold to highest level since 2013 SEGUN ADAMS

risis in the Middle East stoked price of gold near a seven-year high as news of escalating conflict between the United States and Iran fuelled investors demand for havens. The spot price of bullion surged 2.3 percent on Monday, the most in more than four months, to $1,588.13 per ounce, the highest level since April 2013. The price, however, settled down to $1,577.26 per ounce in later trade but remained higher than Friday’s closing price. The rally gold followed threats of an immediate and “disproportionate” strike by President Donald Trump should Iran attack any US asset or citizen following the killing of the Middle Eastern country’s revered general Qassem Soleimani. US killed Soleimani in an airstrike in Iraqi last Friday to “stop a war, not to start one,” Trump said. Following the assassina-

tion of its top military leader, Iran vowed severe revenge and hoisted a red flag over a mosque in what is said to be a declaration of war. Iran also pulled the plug on a 2015 commitment to limit enrichment of its uranium and placed a bounty on Trump’s head. In solidarity, Iraq’s government, backed by the country’s parliament, has asked US troops to leave its country. Trump, in turn, said in the event of an expulsion, US would charge Iran sanctions “like they’ve never seen before, ever. It’ll make Iranian sanctions look somewhat tame,” he said on Monday. French President Emmanuel Macron, German Chancellor Angela Merkel, and British Prime Minister Boris Johnson have called for calm, asking all parties to show “utmost restraint and responsibility.” “We call on all parties to exercise utmost restraint and responsibility. The current cycle of violence in Iraq must be

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stopped,” the European leaders said in a joint statement. “We stand ready to continue our engagement with all sides in order to contribute to defuse tensions and restore stability to the region.” Gold is usually seen as a safe store of value during periods of uncertainty. The precious metal gained 18.9 percent in 2019, characterised by geopolitical uncertainties, to record its performance in nine years. However, uncertainties like the crisis threatening stability in the Middle East weighs on stock markets. Japanese shares fell sharply on Monday, the year’s first trading session, with the benchmark Nikkei 225 Stock Average losing 451.76 points, or 1.91 percent, to close at 23,204.86 after falling as much as 2.15 percent in early trade. The tensions saw Brent touch the $70 per barrel mark for the first time since May 2019 as the benchmark crude gained 1.9 percent in early trade to as high as $70.67 per barrel. @Businessdayng

Goldman Sachs said it didn’t expect the rally in oil to last unless there was a disruption to supply- a downside risk to global growth that would dampen demand in major oil-consuming economies including that of China and European automobile manufacturers. But Goldman Sachs said it found that spikes in geopolitical tensions lead to higher gold prices when they are severe enough to cause currency debasement. Carsten Menke, an analyst at Julius Baer, told Bloomberg last week that geopolitics typically don’t have a lasting impact unless broader consequences for the economy or financial markets arise. In the broader view, the recent events suggest that expectations of a less-turbulent geopolitical space that would support growth in 2020 might have been a bit idealistic although it is still too early to tell. Faster expansion seen in China, and other economies, have reinforced positive outlook for the New Year.

Tuesday 07 January 2020

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Failure can’t be an option in 2020 and beyond STRATEGY & POLICY

MA JOHNSON

t last, the year 2020 has arrived. It is a brand-new year and undoubtedly, the beginning of the third decade in the Twenty-first Century. Time is moving fast. Whether it is going to be a decade of prosperity and promise for Nigerians will be determined by the commitment of our leaders towards solving pertinent national challenges. By 2030, it is estimated that the population of Nigeria would have increased by 80 million. At that time, what will rapid population growth mean for nutrition levels? What will be the state of the country’s infrastructure and importantly, can Nigeria meet its electricity goals by 2030? One quote attributed to Bill Gates is that people overestimate what will happen in a year and underestimate what will happen in a decade. Proverbially, the eye that would be useful to a man throughout the day must not be infected in the morning. If Nigerians are to realize their dreams at the end of this decade, they must see signs and wonders of growth from the year 2020. This is an important decade for us. A decade in which we must find solutions to our numerous national challenges. In the past, fellow Africans looked up to Nigeria to take the lead in political and socio-economic affairs of the Continent. Then I used to think that Nigeria, being the most populous nation in Africa, must not disappoint the world and specifically Africans. I am wrong as a few African countries have started looking elsewhere for solutions to their problems because Nigeria is not ready to provide leadership. Some of our leaders have made gover-

nance look like rocket science. Interestingly, at the John F. Kennedy Space Centre, Merritt Island, Florida, the phrase ‘failure is not an option’ tells the story of about 500 men and women behind America’s space program Apollo 13 which went to the moon in 1969. These are the men and women of the mission control team who by their distinguished professional calling conceptualized, designed, built, tested and launched the project. They made their country proud as their responsibility also covered, the safety of the crew of Apollo 13 manned moon landing mission. It is this worthy background that must compel us to seize the opportunity provided by this new decade to express Nigeria’s narrative that, failure is not our option in spite of negative predictions earlier made about the nation by global financial institutions. If we do not want negative predictions to manifest, those in authority must ensure that all is done within their powers not to devalue the Naira. A devaluation of the Naira, according to the 2020 Fitch Report, will cause big problems to Nigeria’s macroeconomic environment, and as a result, drag down the economy. It is not desirable to have the economy dragged down further because it has not responded significantly to various prescriptions administered on the fiscal and monetary sides since the last of recession of 2016. We have an economy with rising inflation and unemployment figures. If we want to reduce inflation and unemployment, the government must create the enabling environment for production to thrive. Ease of doing business must be improved if we want this decade to bring in growth with sharp reduction in poverty. Entrepreneurship is the way to go and entrepreneurs must be encouraged and supported by local, state and federal governments. When we look at the factors of production such as land, capital, labour and technology we have a long way to go. All these factors are not well managed and that is why production and productivity are at lowest ebb in the country. In productivity, the country suffers

from a high degree of informal employment which keeps many Nigerians in low-skill, low-paying jobs and deprives the economy of the dynamism that small and medium-size enterprises create. Labour which would have contributed significantly to our national power is highly skewed in favour of those unskilled and not pro-industry. Power supply is epileptic. In fact, the issue of power supply is seen as a scam. And there would likely be no light at the end of the tunnel in the foreseeable future until the policy and strategy on privatization of the power sector are reviewed in the interest of the nation. We have land but how much of our land has been put to productive use. So, in order to increase productivity and earnings in the agricultural sector, the government could pursue land reforms and embark on mechanized farming aimed at improving the contribution of agriculture to the nation’s Gross Domestic Product (GDP). The oil sector must be reformed. We have capital but our foreign reserves may not absorb a shock arising from a fall in price of crude oil in the international market. Government’s borrowing is rising because Nigeria has not sufficiently diversified its economy. The country’s debt profile is at N25. 7 trillion, according to the Debt Management Office. We have been reassured by the Minister of Information that “No cause for alarm over Nigeria’s debt profile.” The reason is that Nigeria has a debt ceiling of 25 percent in the total public debt stock to GDP which it had operated in, according to the honourable minister. This reason seems attractive but it must be treated with suspicion because the country, according to analysts, may have to commit half of its foreign earnings to servicing its current level of indebtedness. Importantly, technology as a factor of production is still not at an advanced level in our country. No nation can be great without developing a science mind, an engineering heart and technological souls. Education is at the heart of this matter. Today, education which is the lifeline of growth in all ramifications and the first step to prosperity is in shambles.

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If we do not want negative predictions to manifest, those in authority must ensure that all is done within their powers not to devalue the Naira

It is therefore not surprising that the Nigerian economy has remained in comatose in spite of countless economic measures by the state and federal governments respectively. As the population increases, medical facilities do not match the needs of the people. For example, Lagos State with a population of over 20 million, harbours only two of Nigeria’s biggest tertiary hospitals, LUTH and LASUTH. These teaching hospitals are ill-equipped as they have a problem of bed space and overstretched capacity. Discussing the corruption in government-owned hospitals will not add flavour to this article. But certainly, the good, bad and ugly in LUTH and LASUTH will not be completely different from what one finds in other tertiary hospitals spread across the country. In order to have a healthy workforce, the health sector at local, state and federal levels throughout the country need complete overhaul. A rise in political uncertainty will continue to affect negatively the growth of the country. Emerging rivalries in the ruling party APC is expected to spark early dissensions over the 2023 succession to President Buhari. The implication is that uncertainty in the political atmosphere could hamper policy decision making. That is why electoral reforms are necessary. Any third term agenda by any politician will not work. A nation that wants its economy to grow rapidly cannot have prolonged security challenges. I am of the view that some of our leaders have the ability to face our challenges and the intellect to find solutions to them. Unfortunately, most of those we could have relied on in leadership positions see the country as a cash cow. Once they are elected or appointed into positions of authority, they go into office with a mindset of how to grab something. The mindset of “let me grab my own” must change if this country is to be of relevance in this decade within the African region and the world at large. Thank you! Johnson is an author and a retired naval engineer who has passion for African development and good governance

Uber and competition regulation in Nigeria’s ride-hailing economy (1)

ber has disrupted traditional taxi services with its innovative, ride-hailing platform which connects independent drivers with customers via the Uber app. Uber has shown novel ways in which technology can be employed in the carriage of persons and thereby brought the efficiency of traditional taxis into question. However, Uber’s business model has attracted several lawsuits across the globe which raise labour law and competition issues. In Nigeria, Uber has faced similar challenges with the latest attack being a class action challenging Uber’s classification of drivers as independent contractors. This article examines some of the competition law issues implicated by Uber’s activities in Nigeria. Are drivers’ employees of Uber? The initial issue relevant to a competition analysis concerns the status of Uber drivers under Nigerian labour law. Uber considers that it is not a transportation company; drivers are not its employees but are “independent firms that are in competition with one another for riders.” Olatunji & Anor. v. Uber presented an opportunity for a Nigerian Court to address the status of Uber drivers under labour law. Here, the claimants brought a class action (on behalf of Uber drivers in Nigeria) inviting the Court to declare that drivers are employees of Uber under section 91 of the Labour Act “by virtue of [the] nature of […Uber’s] control over the[m]…” In seeking to establish control, the claimants relied on the fact that Uber stipulates the conditions of their work

and periodically assigned rides to them for which they were paid wages. Expectedly, Uber argued that “…the claimants signed-up for the use of Uber Services” as independent contractors to “…. seek, receive and fulfil on-demand requests for transportation services….” Uber’s argument that drivers are independent contractors rather than employees has two implications. First, it enables Uber to circumvent obligations applicable to “employees” under labour law, including payment of a minimum wage, pension contributions, employees’ compensation contributions, etc. Second, by showing that it is merely a hosting platform and does not provide transportation services, Uber seeks to avoid compliance with regulations applicable to traditional taxis. Unfortunately, the Court did not make a finding on the merits, but dismissed the suit for claimants’ failure to provide sufficient evidence to inform a substantive determination. The Court did hint, however, that section 91 of the Labour Act provides sufficient scope for the Uberdriver arrangement to qualify as an employment relationship, leaving room for future challenges to Uber’s classification of drivers. Arguably, Uber does not provide transportation services directly; however, its users pay money and drivers provide services for a profit. Specifically, Uber provides the e-platform for both drivers and customers, manages the pricing system, charges the customer, pays the driver and sets guidelines which drivers must comply with. It is therefore arguable that Uber’s model falls www.businessday.ng

somewhere in between direct service providers and purely hosting platforms. If one concludes that drivers are Uber’s employees, Uber would be deemed to be providing a transportation service and therefore subject to applicable taxi regulations and employment obligations. However, if Uber’s argument that drivers are independent contractors is accepted, then its arrangement with drivers, especially its pricing system, may have competition implications. Below, we discuss two competition concerns raised by Uber’s activities in Nigeria – price-fixing and regulatory disparity. Price-fixing Competition law seeks to protect markets from price-fixing, an activity which occurs when companies artificially dictate prices rather than allow market forces to determine prices. The application of competition law to price-fixing is controlled by the notion of undertaking. An undertaking is any entity engaged in an economic activity and includes “any person involved in the production of, or the trade in, goods, or the provision of services.” Section 107 of the Federal Competition and Consumer Protection Act (“FCCPA”) prohibits price-fixing between undertakings; that is, price-fixing may only occur when at least two undertakings are involved. An undertaking must be understood as a ‘single economic entity’ – “the minimum combination of natural and legal persons able to exert a single competitive force on the market”. Entities or individuals who form part of a single economic entity are permitted to coordinate their conduct through price-fixing.

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Ifeanyi Nwankwo The European Court of Justice has ruled that employees form an economic entity with their employer and therefore, do not in themselves constitute undertakings under EU competition law. The idea behind the FCCPA is similar. While the FCCPA prohibits price-fixing between undertakings, it permits price-fixing arrangements between “principal and agent”, understandably because the agent-principal relationship establishes a single economic entity. The FCCPA clearly states that an employee is an agent of the employer. Therefore, if we consider drivers as Uber’s employees, the Uber-driver relationship would yield a single economic entity that can fix prices without infringing section 107. Conversely, if drivers are independent contractors, they do not form a single economic entity with Uber but qualify as separate undertakings under the FCCPA. Prince Nwankwo holds law degrees from Harvard Law School and the University of Nigeria. Currently, he provides legal and technical support to the ECOWAS Regional Competition Authority as a Harvard Orrick Fellow. The author can be reached by email at nwankwokoko@gmail.com.

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Tuesday 07 January 2020

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Democracy & African development (1) Rafiq Raji

hether Africa’s democratic experiment thus far has led to differential economic development is a subject of debate. Many complain the democratic process is expensive and sluggish, with an increasingly number of Africans beginning to question whether western-style or liberal democracy is the development panacea it is touted to be. Nonetheless, there are studies that show democracy has engendered economic growth in Africa. But there is also evidence of democratic decline and disillusionment. According to Cheeseman (2019), Africa’s democratic progress is stalling, with the continent’s countries divided down the middle between autocracies and democracies. Cheeseman (2019) also notes a worrying trend: African autocracies have become more repressive and their democratic counterparts have not shown much progress. With evidence that democracy does engender growth and ample evidence to the contrary, what then should Africa do? Evidence on democracy-development nexus is mixed Acemoglu et al. (2019) show evidence that democracy engenders economic growth by attracting more investment, facilitating in-

creased educational attainment, spurring economic reforms, decreasing social restiveness and thus the security of lives and property, and the provision of public services. Democracy also engenders economic growth by making opportunities available to most of the people as opposed to a powerful few. For instance, Acemoglu & Robinson (2012) argue “inclusive political institutions, vesting power broadly, would tend to uproot economic institutions that expropriate the resources of the many, erect entry barriers and suppress the functioning of markets so that only a few benefit.” In sum, Acemoglu et al. (2019) posit that as democracy encourages economic reforms, increases human capital, raises state capacity, improves public service delivery, increases investment and reduces social unrest, economic growth occurs consequently. Acemoglu

et al. (2019) also find that their results of the beneficial effects of democracy on economic growth are robust across developing and advanced economies. When a country adopts a democratic form of government, Acemoglu, et al. (2019) assert, its GDP per capita rises by at least 20 percent over the subsequent 30 years. Acemoglu et al. (2019) also find this effect to be easily attained in countries with already high level of educational attainment. Conversely, Gerring et al. (2005) argue democracy has no significant effect on economic growth; and if at all, it is negative. Similarly, Gerring, Thacker & Alfaro (2012) do not find substantial human development gains from democratic transitions. Instead, a country’s poor only begin to see substantial gains from democracy when it is long running. To some extent, this corroborates Ross (2006) find-

ings that while democracies tend to spend relatively more on education and health, the main beneficiaries tend to be non-poor groups. There are more nuanced arguments. Baum & Lake (2003) investigate the indirect and direct effects of democracy on growth using a 30-year data set of 128 countries and find no statistically significant direct effect on growth. Instead, they find that democracy’s effect on growth are “largely indirect through increased life expectancy in poor countries and increased secondary education in nonpoor countries.” Varshney (2005) actually argues that relative to dictatorships, democracies have recorded a lacklustre performance with respect to poverty alleviation. They have not failed in the task, but they have also not been spectacularly successful. In fact, Charron & Lapuente (2010) show evidence that poor countries may be better off with dictatorships until they become wealthy when “good bureaucracy and administrative services and lower corruption are better provided by democratic rulers.” Besides, Collier & Rohner (2008) find that democracy actually increases the risk of political violence for countries below the $2,750 income per capita threshold. While they do not altogether discountenance the benefits of democracy, their evidence clearly shows the net benefits of democracy for poor countries are not robust. References available at https://rafiqraji. com/2019/12/27/macroafricaintel-democracy-african-development/ “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @DrRafiqRaji)”

Time is running out

am not here, as what some of you might assume me to be, an elite coming from Abuja to lecture you on a prevalent social ill that you all know of, probably more than I do. I do not belong to that intellectual elite class; I was and I remain a poor Azare boy. I am not here as a public servant coming to white wash the situation to make any one in High Places feel happy that perhaps we don’t have a problem. It has never been in my character to substitute the interests of my people for personal aggrandizement. I am here today as a worried individual, as an angry son of Katagum and a very concerned servant of the people of Bauchi State and Nigeria as a whole. I am here with a message that is very dear to my heart. The message is that time is running out for us. Time is running out for us to find a solution to the ravaging menace of the conditions that are leading many of our youth to turn to drug abuse in search for a meaning to their lives. Time is running out for us to tame the spate of insurgency and banditry that is moving like the harmattan wind and sweeping over our land. Time is running out for us to come out of the cubicle of being the poverty capital of the world, and embrace the shining light of bountiful prosperity that our God given potentials entail. Time is running out for our people in the north to occupy a respective position as citizens of this country with something meaningful to contribute than just being the factories of insecurity and poverty. Time is running out for us if we don’t address the rampaging evil of street children in our society who will eventually be the incubators of every crisis that bedevil the society in the future. As a philosopher once said, if things are calm, time goes, if there is a crisis time goes, if there is calm and crisis, time just continues to go. And for us, time is not just going, but time is already running out and it is not going to wait for you or for me to get ready to fix our houses.

Bello Mustapha

The despicable situation of seeing millions of street children in the north signifies a gathering critical mass of impending explosion that will give birth to, unmanageable poverty and unending insecurity in our society. We are surrounded by an ocean of unquantifiable potentiality of destruction which if the waters are not channelled to useful purpose, they will one day explode with destructive consequences. Today, the statistics, which needs not to be told, as the evidence confronts each and every one of us, everywhere we go, is still deeply scary. There are an estimated 11 million street kids in the north. That means if you can gather all the street kids in the north, they can form the seventh largest country in Africa. What a calamity. Some of us here are under 50, and some like me approaching the 50-age mark. For some of us, we can see how drastically our society has deteriorated just in the last 20 years since the democratic rule came into place. In the last twenty years, from 1999 to date, we have seen a lot of physical changes in our towns and cities which was accompanied by high increase in population but apparently very little gain in human development. During the last twenty years, Nigeria has not made any significant improvement in revenue generation, oil has remained perhaps our sole source of revenue. This is a clear testimony that our leaders are more adept at spending than creating wealth. And we were lucky, that the volatility of oil prices did favour us. We gained huge, indeed unprecedented revenue from oil. At a time, we were selling a barrel at over 100 dollars and lifting over 2 million barrels of oil daily. It meant greater money to the coffers of our government at federal and state levels. Even now that oil has fallen to sometimes below 60 dollars a barrel, which is being used as an excuse for non-performance by some of our executives; we should remember this was something we only prayed to have years back.

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Even at 50 dollars a barrel the revenue that is to accrue to government should be meaningful enough to satisfy the legitimate aspirations of our people. But alas, either by design or default, if I should borrow a word from the dynamic General Murtala Mohamed, Nigerian leaders have failed to meet up to the legitimate aspirations of this generation, the last generation and even future generations to come. Because as revenue increased to the coffers of government, and more beautiful cars are being driven by our chief executives, more beautiful edifices are coming up with tremendous renovation costs, at the same period poverty has more than doubled. It’s so bad that people no longer celebrate any news of rising oil prices, because it is not reflective of what will happen to them. A few months back, the news was announced of oil find in Bauchi, something that would have elicited wide celebrations years ago when we were kids, but today is accepted with gloomy feelings. No one feels we have a resources problem or that more revenue to the government would improve our lives. So, it cannot be a problem of lack of resources. It is a function of lack of focus and priority. Investing in the people of Nigeria in the human development indices column, has not been high on the list of priority of the Nigerian leadership in the past 20 years. Why am I talking of the last 20 years? First, I can see that more than half of Nigerian youths who are soon to handle the mantle of leadership fall within this group. Many Nigerians, perhaps a majority of us, do not know what the June 12 crisis was or a coup speech, because they were not born in that era. Secondly, before the last twenty years, I and many of those in high places today, attended good public schools, I did my primary school here in Nasarawa West and later went to FGC Azare. I am a complete public-school product. We didn’t know what was private school for the high and mighty and public schools for the poor

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back then, because we had a system that catered for all of us. These schools were funded by the government. We had children of the richest people in Bauchi, children of Governors, civil servants and even those whose parents had little to afford all coming together under one roof. All of us were taken under the care of an organized system and educated without any or little expense to our parents. Our generation and that of our leaders are all beneficiaries of this system. Children in the past missed quality education not because they could not afford to pay school fees, but because they might not have wanted to go to school, but today it’s different. The same people that have benefited and enjoyed a workable system, are today presiding over a system that alienates and discriminates against the majority of its people who are in the lower class. So, it is not as if we don’t know what is right or wrong or good and bad, or what we need to give to our people to improve their lives and their future. We all know. We just have a different priority today that says, it is no more for we the people, but it’s for me, myself and mine. If some of us that are leaders today were born in this period of our national life, they might never have attained the height they reached in life or make the contributions they are making.

Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng Paper presented by Mohammed Bello Mustapha on the state of street children and its general implications on the future of the society at Garba Gadi foundation lecture on Sunday 29/12/2019. (Kogunan Katagum) Copied by Jibril Isah

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Tuesday 07 January 2020

BUSINESS DAY

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

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

Bashir Ibrahim Hassan

Can the EAC influence economic policies in 2020?

ast year we asked, what happened to the Economic Advisory Council President Muhammadu Buhari inaugurated on September 16? Likewise we asked, what role did they play in some economic policies that the federal government enacted after the council’s establishment? This year we ask: can the EAC really influence the substance and delivery of economic policies? These “technopols” - technocrats playing in the political space, according to economists Jorge Dominguez and Richard Feinberg - have the sole responsibility to pilot the current administration on an economic growth path for the general good. Nigeria celebrated the arrival of a new year just last week with resounding shouts of “Happy new year!” from its citizens as they hoped for a better and a prosperous year. However, we can’t forget so soon that the end of 2019 didn’t bring an end to threatening economic issues the country faced, instead, we carried over these challenges coupled with

fresh ones the new year may hold. It is thereby imperative for Buhari to give room for economic stimulating suggestions from the EAC, given the calibre of personalities on the team. Industry experts have established the fact that Nigeria only scaled through the year 2019 as outlook for 2020 remains bleak based on some global and domestic economic indicators. The presidential EAC replaced the Economic Management Team hitherto chaired by Vice President Prof Yemi Osinbajo. However, since their inauguration, the country is yet to fill the impact of the team in birthing market moving policies. A significant foundational task President Muhammadu Buhari charged the Presidential Economic Advisory Council with is gathering data on the economy. Mr President alleged that the existing data on Nigeria, particularly those published by multilateral agencies, does not reflect reality. The government believes the data does not speak to what it has contributed in the last four years. PMB said generating and publishing this data is “the most important national

assignment”. The President stated, “Some of the statistics we get relating to Nigeria are wild estimates and bear little relation to the facts on the ground. This is disturbing as it implies we are not fully aware of what is happening in our own country. We can only plan realistically when we have reliable data. As you are aware, as a government, we prioritised agriculture as a critical sector to create jobs and bring prosperity to our rural communities. Our programs covered the entire agricultural value chain from seed to fertiliser to grains and ultimately, our dishes. As you travel in some rural communities, you can see the impact. However, the absence of reliable data is hindering our ability to upgrade these programmes and assure their sustainability.” PEAC ran its first quarter in December last year. One of its key deliverables is generating quarterly reports on the economy in addition to meeting with the President monthly. We wonder how far it has gone with its assignment. Nigerians would like to hear from the PEAC. How has it balanced the con-

flicting mandate of being the primary generator of data on the economy versus the agency with the statutory mandate for economic data, the National Bureau of Statistics? How often has the PEAC met with its principal in the last three months? What are the views and recommendations of the PEAC regarding the direction of the Nigerian economy? For the first time in a long while, the federal government commendably passed the budget in record time. Budget implementation should commence with a return to the January-December cycle by January 2020, a few days hence. The nation would look forward to some guidance from this distinguished body of experts on how to implement the 2020 budget. It is crucial for Nigeria that the Presidential Economic Advisory Council confirms that it is active and carrying out its remit. They should share some information, even snippets, that assures that such a significant body is following an accurate compass. Most importantly, how far has it gone with “the most important national assignment” of generating credible data on the economy?

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan

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

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Tuesday 07 January 2020

BUSINESS DAY

comment Democracies are ill-suited to deal with climate change comment is free

Send 800word comments to comment@businessday.ng

It is tempting to say the problem is too abstract but the focus should be on the economy

Edward Luce

round my parents’ home on England’s south coast, global warming is proceeding so benignly that French champagne houses are buying up tracts of local hillsides. Trends like this have helped to temper the global north’s response to climate change over the last 30 years. “Global warming is a terrible thing,” we tell ourselves. “But its main victims will tragically be in the poorer countries. Canadian mangoes anyone?” Harrowing images of Australian bushfires and Californian wildfires should be blowing a hole in such complacency. But they also crystallise how hard it is for democracies to mobilise public action. If images of Sydney enshrouded in smoke, or Napa Valley in flames, cannot arouse the voter’s imagination, what will?

Those hoping the world’s wealthiest countries will take more of a lead on climate change must confront three hard truths. The first is that politicians struggle to look beyond the electoral cycle. It is hard enough for a government to invest in education, which can take years to show results. It is that much more difficult to take unpopular actions to reduce carbon dioxide output that might take generations to bear fruit, and even then go unrecognised. In contrast to spending on education, investing in carbon reduction poses a free-rider problem. If the US banned coal while Canada went ahead with its transmountain oil pipeline, the former would feel bamboozled. There is enough carbon in Canada’s oil sands to outweigh every virtuous action taken by the rest of the planet. It would take a very special country to do the right thing in the knowledge that selfish actions by its neighbours could render its sacrifices futile. Consider Australia. Even if the Labor party had won last year’s general election, it would have had trouble making the case for radical action on climate change. Australia could cut its emissions to net zero and still suffer decades of record drought and fire. As it happened, the Liberal party led by Scott Morrison, who mocks environmentalists, snatched victory and helped sabotage last month’s climate talks in Madrid. They broke up without agreeing on a global carbon-trading system chiefly because of objections from Australia and the US. The second obstacle to climate change action is uncertainty. It is

impossible to establish that any single disaster is entirely manmade. Despite the summer fires in Siberia, heat deaths in Pakistan and two once-in-a-century storms hitting Houston in two years, natural disasters occurred before the era of climate change. Scientists can give high probabilities that climate change is real but rarely certainty. Even our vocabulary occludes clear thought. In the early 2000s, pollster Frank Luntz advised the Republicans to drop “global warming” in favour of “climate change” to drain it of urgency. The latter sounded more like you were “going from Pittsburgh to Fort Lauderdale”, he wrote. Perhaps green activists should take a leaf out of Mr Luntz’s book and stop saying “natural” before “disaster”. There is nothing natural about rapidly receding polar ice caps. Scientists should also do a better job of explaining that science rarely deals in absolutes. It is not certain that you will fall sick if you drink tap water in a cholera zone. But you would be 100 per cent foolish to forgo the vaccine. Likewise, we should take a pinch of salt every time a politician raises statistical doubts. Climate change denial has largely been replaced with talk about scientific uncertainties. The third obstacle is — how to put it? — human nature. Few people want to confront a massive problem when there are petty scores to settle. This works on a global level as well as a personal one. I have spoken to people who are more exercised by Greta Thunberg’s mannerisms than with the content of her message. They find the fact that a 17-year-

‘

In contrast to spending on education, investing in carbon reduction poses a free-rider problem. If the US banned coal while Canada went ahead with its trans-mountain oil pipeline, the former would feel bamboozled

old girl is lecturing grown-ups on climate change more grating than the likely extinction of the Great Barrier Reef. We filter what we want to see. Fox News viewers hear very little about the science that links climate change to Australia’s bush fires. Had a transgender activist started a fire one-thousandth the size, it would no doubt be dominating conservative airwaves. Yet Fox chairman Rupert Murdoch’s Bel Air home came close to being burnt by one of California’s 2017 fires. How can we stave off fatalism? In The Uninhabitable Earth, David Wallace-Wells says the world has pumped out more carbon dioxide since the 1992 Earth Summit in Rio de Janeiro than in the whole of preceding human histor y. Meanwhile, Donald Trump, the US president, is more concerned about wind energy. Last month he railed against the “tremendous fumes” generated when turbines are manufactured and said they “look like hell”. If we want action, the best response is to talk about the economy. The age of abstract climate change is over. The 2018 fires cost California an estimated $400bn, according to Accuweather. That is more than half the annual US defence budget. Even before the latest fires, Deloitte estimated that the economic costs to Australia of natural disasters would rise to A$39bn ($27bn) a year by 2050, equivalent to 2 per cent of the country’s current gross domestic product. No amount of English champagne could make up for that. FT

100 years as a public company: Celebrating a century of great products and amazing people

popular African proverb suggests that it takes two people to bear a child but an entire village to raise one. This cannot be truer about the success of Coca-Cola. While the journey may have begun with the genius of late John Pemberton who invented this beloved drink, the immense success of Coca-Cola can also be attributed to the people who took the brave step to invest in our first IPO 100 years ago. What has followed has been a century of success for the Coca-Cola brand and its products. This is a testament to the great work of everyone who has invested time, money, and efforts to achieving our long- and short-term goals. We look into the next century with optimism, as we continue to expand and seek out new innovative ways to refresh our millions of consumers in Nigeria. The last few years have seen us acquire some new products as we continue to

expand our value proposition across various categories in the FMCG industry. Beyond our immediate product offerings, however, we as a company are also committed to making the world a better place. Since 1886 when the first bottle of Coca-Cola hit the shelf, the world has undergone some massive cultural and socio-economic changes. Locally in Nigeria, some of the pressing issues that we have identified include women economic empowerment, safe and sustainable water access, proper plastic waste disposal, as well as total wellbeing. With an infant mortality rate of 100.2 per 1000 in Nigeria, our country ranks as 3rd in the list of countries with the worst infant mortality rate. In collaboration with our partners, we have begun work to alleviate such issues. Our Safe birth initiative seeks to equip various hospitals with the equipment and technical knowhow to carry out gynaecology procedures using the best practices.

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Plastic waste disposal is also a persistent issue in the world, and even more so in our country. To this effect, we have kicked off our world without waste program which seeks to not only educate people on proper waste disposal but also to work with relevant stakeholders to improve our plastic waste disposal and recycling procedure. While we look to take on the challenges that the next century will present, we look ahead with great optimism, all whilst remaining focused on our core values as a company. We understand both our role and responsibility as a leading brand in Nigeria. We take great pride in being able to continually deliver great products to our great consumers in the country. We do not take this for granted, and we are committed to continuing this great tradition. Today, however, is a day to celebrate, a day to reflect on the journey so far. Days like these are a reminder of the immense

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CLEM UGORJI

success we can achieve when we work together and are driven by one singular ambition. Despite our evolution and growth as a company, our goals and aspirations still remain the same. Our world view is still as naive and optimistic as the first time we brought smiles to the faces of our consumers when the first bottle of Coca-Cola hit the shelf. Our purpose to refresh the world and make a difference continues. Cheers to another 100 years of success. Clem Ugorji is the Public Affairs & Communications Director for the Coca-Cola West Africa Business Unit

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Tuesday 07 January 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

Agriculture

Notore Chemical deploys Afrexim facility as Turn Around Maintenance of plant commences SEGUN ADAMS

isted fertilizer producer and Agro-allied firm, Notore Chemical has drawn down from a loan facility from the African Export-Import Bank (Afrexim) for the implementation of the Turn Around Maintenance (TAM) of its production plant and equipment, aimed at improving reliability and increase production output of the plant. The TAM, which is

aimed at returning the plant to its 1,500MTPD a n d 5 0 0 , 0 0 0 M T PA name plate Urea production capacity, will also increase reliability index from the current level of 67 percent to 95 percent, the company said in a statement published by the Nigerian Stock Exchange (NSE) on Friday. “Following the drawdown of a N13,320,000,000 (Thirteen Billion, Three Hundred and Twenty Million Naira) loan facility from African

Export-Import Bank (Afrexim) for the implementation of the TAM, the company has started ordering all key components for the TAM,” Notore Chemical said. Notore chemical’s plant is located at Onne sea port in the Niger Delta region of Nigeria for effective shipment and distribution across the Atlantic coast. The company said the TAM project will include the procurement of critical spares required to sustain the

nameplate capacity of the plant and installation of a back-up power supply to the current Gas Turbine Generator. It added that upon procurement of all the key components and critical spares required, the objective is to accomplish the maintenance activities within a period of 30-days production to production. Notore Chemical is a leading fertilizer and Agro-allied companies in Africa with the supply of premium fertilizers, appropriate educa-

tion on best practices for farming and proper deployment of these practices for optimum results as part of its principal activities. Notore Chemical saw its revenue slump 20.1 percent to N21.4bn in its 2019 business year ended 30 September 2019. The company said the decline was mainly due to plant downtime which persisted during the period under review. Given its fixed operating cost, Notore Chemical also saw its

operating profit decline by almost 63 percent from N9.2bn in 2018 to N3.4bn in 2019. Consequently, the group recorded a loss of N5.7bn compared to N1.9bn loss made in the prior year. The loss was exacerbated by a mainly because of a net finance cost of N13.7bn, a 7.2 percent year-on-year increase from 2018. However, the company expects its investment in revamping the plants to translate to improved top-line and bottom-line performance.

SERVICES

Exchange Gain helps John Holt post first profit in 3yrs despite slow revenue SEGUN ADAMS

ohn Holt turned the corner to post its first profit since 2016 after the company announced an exchange gain of N335m which supported a sluggish revenue in 2019 business year. The company said it made a profit of N218m compared to a loss of N31m last year. This would be the first profit since a N97m profit in 2016 since a 2018 profit previously announced was revised to a loss. John Holt in the 2019 business year which ended on 30 September recorded a decline in revenue by almost 39 percent to N1.793bn. The company noted a decline across all its revenue segment in the year except in its property rent and warehousing business which improved by about 21 percent in the period. The property rent and warehousing segment is John Holt’s second-biggest cash spinner although it is around 4.4 times smaller than the sales of finished goods segment which ac-

counts for 70 percent of total sales. Despite a decline in cost of sale, sharper drop in sales resulted in a 13 percent fall in John Holt’s gross profit at N451m in 2019. John Holt suffered a big decline in operating income which more-thanhalved to N76m in the period. However E xchange gain in the period rose to N335m compared to a loss

of N152m in the preceding year. Profit from operating activities was N298m from a loss of N31 in the period. Distribution expenses dropped slightly to N208m from N225m while administrative expenses dropped from N356m to N392m. Meanwhile, net finance loss widened to N65m from N55m, representing an 18 percent increase and

reflecting an increase in finance cost by the same magnitude since there was no finance income in the reported years. Profit before tax was N236m compared to a loss before tax of N86m in 2018 while profit for the year rose to N218m. The profit represents an EPS of 55.9 kobo in 2019 compared to a loss of 20.77 in 2018.

John Holt is active in engineering, leasing, trade and distribution through its business units in Nigeria. The company assembles and sells generator sets, and leases boats, air conditioners and generators. It further offers maintenance, logistic and depot services. Shares of the John Holt has remained flat at 56 kobo since November 2019. Notore Chemical also

said favourable government policies in the fertilizer space will impact business performance positively. Additionally, ongoing market demand for NPK and NPK specialty is expected to boost revenue as well as a newly installed and commissioned NPK blending plant coming online in 2020 full-year, the company said.

Betsy Obaseki (m), group head, business development division, Bank of Industry (BoI); Ubadigbo Okonkwo (4th l), former executive director, BoI, and other BOI representatives along with the Best Performing Business Development Service Providers (BDSP) during the 2019 BOI-BDSP interactive session held in Lagos.

Tuesday 07 January 2020

COMPANIES&MARKETS

BUSINESS DAY

Business Event

MTN to sell tower business in Ghana and Uganda in ongoing divestment plan SEGUN ADAMS

TN Group has agreed to sell its towers businesses in Ghana and Uganda amid plans to shed off some of its ventures and focus on high-growth markets in Africa and in the Middle East, Reuters reports. The sales of the interest will be part of a three-year 15 billion rand ($1.00 billion) divestment plan by MTN which kicked off in March 2019. MTN said it had agreed to sell its 49 percent holdings in Ghana Tower Interco B.V. and Uganda Tower Interco B.V. to AT Sher Netherlands Coöperatief

U.A. for $523 million in Q1 2020 leaving MTN with a profit of 6 billion rand ($425.74 million), Reuters reported. The Telco has late last year said it was in advanced discussions to dispose of its 49 percent stake in ATC Ghana and ATC Uganda which amounts to around 7 billion rand and 8 billion rand each. MTN says it has also finalized the redemption of MTN Nigeria preference shares, raising $315 million which would be used to pay down its US dollar-denominated debt and for general corporate purposes. “We remain focused on continuing to execute on the important strategic priorities of reducing debt,

simplifying the portfolio and reducing risk,” MTN group said in a statement. Concerning its divestment plan, MTN has already raked in $140 million from asset sales in the first half of 2019, some which include a sell down its interest in Jumia Technologies to 18.9 percent from 29.7 percent through an IPO of the e-commerce business in London. MTN Group had in October 2019 said it would no longer be proceeding with plans to sell its stake in Bostwana’s Mascom Wireless after certain conditions to the transaction were not met but it mentioned the possibility of a deal if conditions are met in the future.

L-R: Emma Enukwu, national vice chairman, All Progressive Congress (APC), South-East; Ogbonnaya Onu, representative of the President; Martin Elechi, former governor, Ebonyi State; Benjamin Ani, representative of the permanent secretary, ecological office, and Emmanuel Ogah, chief medical director, Alex Ekwueme Federal Teaching Hospital (AE-FUTHA), during the inauguration and handing over of Flood and Erosion Control Works Project at the Teaching Hospital in Abakaliki, Ebonyi State on Friday.

Passive investing boom reaches Europe as assets hit $1tn Investors ploughed record amount of money into exchange traded funds last year

urope has rushed to join the passive investing boom, with the assets held in exchange traded funds surging beyond the $1tn mark for the first time as disenchantment with stockpickers grows. The industry hit the milestone last month after investors ploughed a record $125.2bn of new cash into European-listed ETFs last year, more than double the $56.8bn in 2018, according to preliminary data from ETFGI, a London-based consultancy. The sector has doubled in size in just four years in Europe, turbocharged by a brutal price war on fees, the patchy performance of active managers and another year of robust returns for many of the big stock markets that passive vehicles replicate. Nine out of 10 actively managed pan-European equity funds underperformed a passive benchmark over the 12 months ending June 30, the latest period for which comprehensive data is available. Active pan-European fund managers could only demonstrate a modest improvement in performance over longer periods up to 10 years, according to S&P Dow Jones Indices. While the US remains the global centre of passive investing, the industry’s biggest participants, including BlackRock and

Vanguard, have all stepped up their efforts to grab a share of the growing European market. The competition has unleashed a cu-throat price war on fees that has drawn in rival European providers such as DWS, Lyxor and Amundi. ETFs listed in Europe have attracted close to $450bn in new cash over the past five years, and most industry observers believe further significant growth is to come. “ETF usage by retail investors in Europe still lags far behind the US but it has started to catch up from a very low base,” said Deborah Fuhr, co-founder of ETFGI. “Some fund platforms also do not offer ETFs, which has slowed adoption among retail investors.” As well as investors’ frustration at the inability of some stockpickers, such as the UK’s Neil Woodford, to outperform major indices, the growth in passive investing has also been aided by regulatory changes in Europe. The UK, the Netherlands and Switzerland have all banned financial advisers from taking commissions for recommending actively managed funds, creating a more level playing field. A wide-ranging set of new European regulations introduced in 2018 and known as Mifid II, have also helped cut trading costs for ETF

providers. BlackRock, the world’s largest asset manager, is already proving a big winner from Europe’s embrace of passive investing. BlackRock’s iShares ETF division in Europe gathered $60bn in new cash last year, up from $23bn in 2018. “ETF growth has accelerated in Europe as more investors shift their processes from traditional security and fund selection to holistic portfolio construction,” said Stephen Cohen, head of BlackRock’s iShares business in Europe. The decision in September by the European Central Bank to restart its vast asset purchase programme, known as quantitative easing, has helped to encourage interest in bond ETFs. Fixed income ETFs attracted a record $61bn in new cash in 2019, outpacing net inflows for equity ETFs for the first time in three years. Asset managers launched about 176 new ETFs in Europe last year, but many funds struggle to achieve profitability. More than 1,000 ETFs — about half of the entire range available in Europe — hold assets of less than $50m, the minimum amount generally required to achieve profitability because of the low fees. More closures seem unavoidable as the biggest participants appear determined to cut fees further to cement their leading positions.

L-R: Oye Hassan-Odukale, managing director/chief executive officer, Leadway Assurance, and Tom Isibor, country head, Association of Chartered Certified Accountants (ACCA), at the presentation of award of ACCA Approved Employer – Trainee Development to Leadway Assurance by the ACCA at the Leadway Corporate Office

L-R: Dolapo Adebowale, trade marketing manager, Nigerian Bottling Company (NBC) Limited; Martins Isah, capability development manager, Nigerian Bottling Company (NBC) Limited; Banjo Olusile, N50,000 beneficiary and Coca-Cola Seller, and Yinka Oletubo, regional operations marketing manager, Coca-Cola Nigeria Limited, during the presentation of gifts to beneficiaries at the just concluded ‘GBE BOTTLE E’ appreciation campaign held in Lagos recently.

L-R: Vivian Ikem, head government relations, NB Plc; Sade Morgan, corporate affairs director, NB Plc; Jordi Borrut Bel, managing director/chief executive officer, NB Plc; Niyi Adebayo, minister of industry, trade and investment, and Wole Bakare, director, industrial development, during the visit of a team from Nigerian Breweries to the minister in Abuja.

Tuesday 07 January 2020

BUSINESS DAY

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BUSINESS DAY

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Tuesday 07 January 2020

BUSINESS DAY

Media business Media rights group tasks government to implement policies on journalists’ safety Daniel Obi

edia Rights Agenda (MRA) has called on the Nigerian government to adopt and implement policies and laws instituting preventive measures aimed at eliminating or reducing attacks against journalists and ensuring routine but diligent prosecution of perpetrators of attacks against journalists. The call was contained in a report by MRA titled “A Profession Endangered: An Analytical Report on the Safety of Journalists in Nigeria” in which it highlighted a variety of attacks faced by Nigerian journalists in the course of carrying out their professional duties, including assault and battery, arrests and detention, shutdown of media outlets, raids on media organizations and facilities, confiscation or destruction of work equipment, and abductions, among others. The project which led to the report is aimed at finding solutions that ensure the safety of journalists at all times, particularly in the face of shrinking civic space in Nigeria manifested in sustained attacks on the right to freedom of expression and media freedom and in the light of the failure of successive governments, law enforcement and security agencies to take meaningful steps to address the problem which has significantly affected the

ability of the media to provide the public with accurate and reliable information. The report documents cases of attacks on journalists and the media in Nigeria between January 2017 to May 2019. MRA said: “in all cases of attacks against journalists in Nigeria, there is no evidence of any diligent effort made by security and law enforcement agencies to investigate and prosecute perpetrators; the perpetrators invariably commit these crimes with impunity as they go scot-free without any repercussion for their actions.” Ayode Longe, MRA’s programme director, said: “It has become imperative that we call attention to this ugly trend of attacks against the media because of the nega-

tive effect especially when government is doing nothing to address the issue. We have consistently made the point that when attacks on the media go unpunished, perpetrators are emboldened and journalists are silenced in many ways. Invariably, the public is denied vital information that they would ordinarily be able to obtain through the media and which might be critically important for decision-making on many different levels.” In the report, MRA made several recommendations to tackle the incidence of attacks on journalists targeting various stakeholders in the country including the Federal government; media owners and journalists unions/associations; media regulatory bodies; civil society organisations;

security, law enforcement and intelligence agencies; and the general public. The organization recommended that security, lawenforcement and intelligence agencies should train their personnel and agents on applicable human rights norms and standards as well as the vital role that the media play in society in ensuring good governance, among other things; carry out training and sensitization programmes for their personnel and agents on the rules of civic engagement; as well as investigate and prosecute cases of attacks against journalists and the media both to punish perpetrators and to send a message to would-be perpetrators that no attack against journalists and the media will go unpunished.

Report predicts ‘Digital Paradox’ for media industry in 2020 Daniel Obi

s technology continues to redefine media landscape also expected even in year 2020, latest research report predicts that marketers and media owners will be challenged to develop the skills, engagement models and measurement capabilities to meaningfully engage consumers in the crowded media landscape. Kantar’s global 2020 latest Media trends and predictions report said as Ad spends on social and tech platforms continues to grow; technology innovations will also enable a rebirth in real-world engagement. Kantar further predicts there will be a digital paradox; while new and evolving media channels will create opportunities, the deluge of digital touchpoints will make it more difficult to connect with consumers. Marketers will also need to

navigate the ‘data dilemma,’ meeting consumer demand for relevant, personalised content, without breaching trust and privacy. The report said “2020 will be an exciting year for marketers. “Increased advertising and content possibilities, along with the data generated, create a plethora of opportunities for marketers and media owners”. With new opportunities though come new challenges. “Emerging foundational technologies could transform media usage, and other industry shifts, such as the demise of third-party cookies, will force marketers to evolve how they

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measure audiences across screens and wider campaign effectiveness. “Other channels, like influencer marketing and the newer audio channels, will face a make-or-break moment; their credibility could be at risk unless they evolve and live up to their promise. Marketers will need to improve their understanding of how different touchpoints effectively work for their brands – online and off” said Jane Ostler, Global Head of Media Effectiveness, Kantar in the report. Kantar’s 2020 Media Trends and Predictions fall into three major themes: The technology

trends transforming the media landscape; the spaces that brands can credibly occupy; and the context and catalysts for change. Under technology trends, it predicts that 5G will get real and the marketing industry will be one of the key beneficiaries of the 5G era, enabling far greater capabilities to reach and engage with consumers but taking advantage of the 5G opportunity will require a significant transformation from marketers. “New players will see the battle of the streaming platforms heat up, but an increasingly cluttered market will drive subscription fatigue among consumers”. Looking at spaces that brands can credibly occupy, the reports said brands will balance their digital presence with more real-world experiences, meaning “we could see a slowdown in the pace of digital advertising growth. “Taking the lead from consumers, brands will become more radical in 2020.

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Advertising practice needs to undergo change to cope with postdigital age, says advertiser

resident of the Association of Advertising Agencies of Nigeria (AAAN), Ikechi Odibo, has declared that advertising practice needs to undergo a change to cope with the demands of post-digital age. Odibo made the declaration recently in a paper he presented in Abuja at the National Advertising Conference organised by the Advertising Practitioners Council of Nigeria (APCON) in conjunction with other sectoral bodies. According to the AAAN President, practitioners need to acquire new business mindsets and approaches, which he said are crucial to the business in a rapidly evolving business landscape. He noted that the evolution has been marked by the emergence of e-commerce, with television advertising transferred to digital platforms such as Youtube, Instagram advertising taking the place of print advertising and with celebrity endorsements mutating into influencer marketing.

This process, he said, is still treated by practitioners as requiring just a few changes when wholesale changes are required. “We congratulate ourselves a lot for adapting things that have been done before, making minimal changes and feeling like we understand the modern world. However we cannot force-fit old templates to new expectations, new objectives and expect to be regarded as relevant, strategic and indispensable by the clients,” he said. He noted that in a fastchanging business environment, clients seek up-to-themoment partners, who are ahead in terms of proffering understanding, thought leadership and fresh solutions to their marketing problems. We need to accurately understand and embrace our digital reality, continuously broaden our perspectives and take creative responsibility without waiting for marching orders from clients,” Odibo stated.

Forum advocates understanding, engagement of ‘millennials’ in workplace for optimal performance Daniel Obi

any organisations are today struggling with changing culture in workplace since the millennial generation – individuals born about mid 1980s to 2000s –started entering the workforce, but a forum on Employee Innovation and Workplace Millennial strongly advised organisations for proper engagement and understanding of the millennial to achieve productivity. Today, some of the millennial generation don’t want to be employees but partners in the business while some are not constrained by the 30 days working attitude of Generation X who are too invested in the system. The forum which stimulated conversation on the millennial who appreciate self-management, self-determination and work-life balanced environment was how to get the best out of them in the workplace. The forum which held in Lagos recently under the aegis of the Employee Marketplace Initiative was a gathering of top corporate leaders. The convener, Nduneche Ezurike, a Marketing Communication Specialist and Head of Brand Communication in one of Nigeria’s commercial banks presented @Businessdayng

his research on Workplace Millennials and Enterprise Innovation. At the forum, the business leaders noted that proper understanding and engagement of the millennials and taking advantage of their digital knowledge in the workplace will engender innovation and impact on business growth. Participants at the forum noted the existing inter-generational gap in the workplace and believed that proper integration of Generation X with the millennials will equally ensure productivity. To build a deeper relationship and much more harmonious environment in a workplace, Nduneche in his presentation strongly advocated for mentoring which is critical in the workplace. He said for organisations to mediate and moderate the inter-generational gap, there should be reverse mentoring module. “Reverse mentoring speaks about the younger ones that are digitally savvy supporting the older ones and at the same time learning from them”. On further steps to enable workplace innovation and business growth, he suggested for ‘innovation tournaments’ which brings teams together. “Employees are formed into teams according to their level of interest and they challenge themselves to produce things of interest and when they do that they are celebrated”.

Tuesday 07 January 2020

BUSINESS DAY

Branding Rush for Africa by global players among factors to shape 2020 – Kwame Senou Kwame Senou is the Senior Vice President at Opinion and Public. He says the firm is positioned to deliver tailored marketing services in Francophone Africa to organizations based outside its borders but interested in doing business within the region. In this interview, Senou regrets that Africans don’t know much about the continent as they know destinations in Europe. According to him, the firm is working on platforms for the business community of West and Central Africa, whatever the language, businesses can dialogue with their peers and governments to promote cross border trade and investment. Excerpts Could you assess the business landscape in 2019? 019 was a stressful year for businesses. The uncertainty of USA-China trade war, Brexit and a strong dollar, led to a slowdown. In Africa, the electoral year in Nigeria, and the recent border-related tensions really affected businesses. But we also saw the expansion of industrial capacities, the strong growth of many economies in ECOWAS, the relatively stable oil prices that favored oil-linked economies without stressing other economies further. The challenges posed to businesses in 2019 were mainly related to the state of the economy. The digital disruption is also showing a significant impact. While some analysts predicted a recession year, businesses were nevertheless able to resist and sustain through innovation, especially in the digital space. It is common to complain but considering the external factors in 2019, I think businesses performed well in controlling the possible damages. What do you think are the factors that will shape 2020? The early signs of 2020 suggest optimism globally. The factors that will shape 2020 for me includes the rush for Africa, where I see more investment from competing global players like USA, China, Europe, Russia and Turkey. The increasing use of technology and data will require more talents and more knowledge services. The misfortune of some startups might drive some businesses to reduce pace and enhance their current model. 2020 will mark the beginning of a new decade. It is usually a milestone used by companies to launch new strategic initiatives, opening doors to partnerships. There will be an increase of strategic alliances. Many companies that expanded in the previous decade will focus on their big hubs and subcontract the other markets. It is a way of keeping their geographic reach without risk. In West Africa, we have seen a wave of people going back to basics to benefit from the debate happening around local content and manufacturing our products. The need for local value creation will be there as a factor. But all these won’t happen without businesses understanding that they are the ones to train their employees and not a formal education system. African companies and individuals hardly trade and engage in tourism among themselves despite the huge potential across the region, what bottlenecks account for this?

Kwame Senou

People blame lack of connecting infrastructure, but it is not true. You don’t just make infrastructures to be waiting for people to come and visit, especially when everything is a priority from education to health and security. The real problem is much simpler, we don’t know much about each other as we know of the global destinations we fantasize about like the US, Paris, Dubai or Thailand. The first job to be done is to increase the awareness of our tourist attractions to one another. There’s some strong public relations work that African countries must do; targeting themselves to achieve the level of attractiveness required to fund a trip. I

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We don’t know much about each other as we know of the global destinations we fantasize about like the US, Paris, Dubai or Thailand. The first job to be done is to increase the awareness of our tourist attractions to one another

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met a Nigerian billionaire in Abidjan in 2018 and he told me that it was his first time ever then. I know a couple of wealthy individuals in Cotonou that swear they will never come to Lagos or Nairobi because it is too dangerous. If you add the artificial language barrier that were built in our minds, I believe promoting and educating ourselves about our destinations is the thing. Nigeria just lifted the visa requirement for all Africans, this is a good move and an occasion to promote the country’s multiple attractions. Nollywood movies now on Netflix and Canal+ (the French paid TV) has made audiences in Francophone to have strong attractions for the Nigerian lifestyle depicted in these contents. How can Nigerian organizations and businesses who know little about Francophone African countries penetrate the markets? Learning from previous experiences of expansion into Francophone, I think Nigerian organizations need to get a good understanding of the local context and the agility that comes in such a situation of differences. Though the needs are the same, the values are not. So, to address them, there’s a need of paradigm shift. And the best way to do this is to execute a 2-step process: [1] attract francophone talents in Nigeria and then [2] send them back to execute. Let’s say you are planning to expand, recruit francophone people, get them to work with you in Nigeria, learn and understand your culture, learn from them. It is a critical step.

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We have observed that poor internal decisions, due to cultural illiteracy were the root causes of some of the previous expansion failures. Nigeria has closed its land borders for some time now, what are the implications of this on trading in W/Africa? There’s an extensive coverage of this subject both in local medias and international. Many institutions have concluded that it will harm the ECOWAS partnership, increase poverty and create tensions and distrust between the neighboring countries. The negotiations are happening at a very high level, I hope each country will make the necessary sacrifices to allow this situation to come to an end quickly. Is single currency possible across W/Africa, what are the advantages of disadvantages? I think the question should be how strong we want it. Euro was possible in a complex Europe. It should be possible in West Africa. My concern is that I don’t believe in the reasoning behind it. The same way, the Ecowas passport didn’t change the trips between our countries. We need to build regional businesses that make the use of a single currency obvious rather than betting on the currency to deliver the regional trade objectives. The good thing with this project is that if it happens, it will push more enforcement of the regional policies to ensure we reach the performance targets set. Recent developments however suggest that it will be postponed again, with the CFA transforming into ECO without the Anglophone countries. This type of uncertainty will make many to lose faith in the process especially in the business community that always portrays governments and regional institutions as too slow. My point is since we have chosen to go for a single currency, we should make it happen very fast and to allow entrepreneurs plan and enjoy the expected benefits. How can governments across W/ Africa promote policies to enhance business across the region? Governments should bridge the Francophone-Anglophone divide by enabling the creation of regional bonding institutions like schools and universities, research centers, media and arts companies. The free flow of capital should be accelerated by policies leading to a regional stock exchange or similar mechanisms. Governments should unleash opportunities to attract and promote capital within the region. Allowing it to flow to and from Francophone @Businessdayng

countries will lead to co-prosperity. But this can’t really happen without infrastructure development. Businesses thrive with good infrastructure. And inter-regional trade cannot be boosted with uneven levels of infrastructure. Connecting infrastructure is much needed, and we must be ambitious. Let’s dream of speed train from Lagos to Abidjan, or 10-lanes expressway from Dakar to Lagos. Business policies should be protected from regime change. We cannot make long term gains if each new government changes the rules of the game. Consistency and security in the rules will reduce risks and build confidence among investors in the region. And again, privileges for the nationals should be extended to all the citizens of the ECOWAS. One more thing: I believe that security in the region will never be the same again with the threat of violent extremism, the rise of inter-community conflicts fueled by discourse of hatred, the rise of inequalities, and the increasing restriction of democratic space in some countries. Clean businesses cannot flourish durably in a climate of hatred, suspicion, crime, broken judicial system, weak security forces and inefficient and unreliable public institutions. How is your organization positioned to fill gaps and engender cross border transaction? Our firm’s strategy is built around 3 pillars; a diverse and Englishspeaking team, a large coverage of the Francophone Africa region with our main office in Abidjan, Ivory Coast and strategic alliances with companies with similarities in all major hubs: Nigeria, South Africa, Kenya and Morocco. This is to ensure we are best positioned to deliver tailored marketing services in Francophone Africa to organizations based outside our borders but interested in doing business within the region. Initially we served international clients with multi-country focus, but we have had companies from within the region requesting our support in neighboring countries for various requests. Firms like us, capable of delivering in the entire region is difficult to find. We really pride ourselves in uniting the region. Being foremost a full service public relations firm, we have recently done acquisitions to broaden our services from market research to market launch. We are currently working on platforms for the business community of West and Central Africa, whatever the language, businesses can dialogue with their peers and governments to promote cross border trade and investment.

Tuesday 07 January 2020

BUSINESS DAY

New Year, New You! The boom in executive coaching Having a coach was once a sign of weakness in business. But now it is like an athlete using a trainer Emma Jacobs

ew Year is a busy time for Catherine Devitt. “People are thinking, ‘What next?’” she says. Grappling with such existential questions is a fundamental part of her working life, though she is not a religious minister. For the first week in January is when the chief executive of Meyler Campbell, a London-based executive coaching group, receives a surge in the number of inquiries from people requesting a coach. After all, she says, the festive period is not just a chance to make merry but a rare opportunity to reflect on work, away from the distractions of meetings, bulging inboxes and the constant hum of chatter in openplan offices. The role of an executive coach is to help a client achieve professional and personal ambitions by honing their performance. Unlike a mentor, the relationship should be one of equals and involve regular meetings, either in person or by Skype. Until only a few years ago, it might have been seen by many in the business world as a sign of weakness to be assisted by a coach — an indication that an executive had many challenges that needed to be overcome. But these days, it often indicates a serious corporate player, someone who is valued by their employer — much in the way an elite athlete is honed and sharpened by a personal trainer. Michelle Walder, chief executive of TXG, which organises coaches for multinationals, says the perception of executive coaching has changed dramatically. “Coaching used to be remedial, then it was kudos,” she says. “Now [it’s] a pragmatic tool.” The new year’s boost swells a business which has transformed over the last two decades from a quirky sideshow into a multibilliondollar industry, one that draws on the culture of self-help and selfimprovement that pervades the corporate world. According to the International Coach Federation, which started in 1990 to establish standards for the industry, the US spent $2.35bn on coaching in 2017 (the last year it compiled figures). In western Europe the figure was $898m. Its membership has grown from 22,135 members in 2013 to 33,739 at the end of 2018. While some individuals find their own coaches, large employers hire coaches to develop top leadership teams and embed coaching into learning and development programmes. The boom in coaches has produced the growth of middlemen like TXG and Praesta that match coaches with blue-chip companies. Most business schools too, offer coaching. Carsten Schermuly, professor of business psychology at SRH Berlin

University of Applied Sciences, says: “In the beginning if someone said you need coaching [you would] think, ‘Oh God, I’m going to be fired.’” Yet some chief executives credit coaches for a role in their success. Eric Schmidt, the former Google CEO, co-wrote a book (Trillion Dollar Coach) about the late Bill Campbell, who advised Silicon Valley leaders, for giving him insights on his performance because “the one thing people are never good at is seeing themselves as others see them”. Brad Feld, a US entrepreneur and venture capitalist at the Foundry Group, describes the role of a coach to developing an athlete as “similar to the role of a coach in the development of a business leader or entrepreneur”. He hails his own coach, Jerry Colonna, sometimes dubbed the “CEO whisperer” as “simply the best in the world”. Coaching is a broad church — executive and business coaches exist alongside happiness coaches and “wantologists” (who, unsurprisingly, help clients identify wants). It is not regulated and has no barriers to entry. In theory, a sacked executive could start touting for coaching work the next day. So how did business become addicted to coaching, which is rooted in sports, therapy and positive psychology and has no standardised measure for return on investment? Business coaching’s birth is partly a product of the slow demise of the company man, in which an employee could rely on one employer to see them through his working life (for in the postwar period, it was typically men). Today, the advice of a coach might be sought to help workers navigate several complex organisations. As longevity and rising pension ages increase working lives, so workers will also change careers multiple times, perhaps seeking the advice of a coach to help do so. At the same time, an almost religious mysticism has evolved about work, so that its function is no longer just to provide money but purpose www.businessday.ng

and passion. A small self-help publishing industry caters to this demand, for example, Shawn Achor’s Happiness Advantage: The Seven Principles of Positive Psychology That Fuel Success and Performance at Work, or Angela Duckworth’s The Power of Passion and Perseverance. Erik De Haan, director of the Ashridge Centre for Coaching, says the industry has filled some of the gap created by these changes in society. “Work in the past would be more predictable. In private life, there was support from religion, in particular, to help people come to terms with the harshness of their lot. That has fallen away.” Existential questions about the meaning of work set in earlier than in previous generations, he says. “Lots of people choose a profession and have questions about that in their 20s.” To meet that need, inevitably, an industry of quarter-life crisis coaches has sprung up to deal with young professionals’ worries about their careers. The surge in executive coaching is also a result of the change in organisations, which have shifted from command-and-control management to flatter hierarchies, demanding greater entrepreneurialism, innovation and autonomy from its workers. Tony Aponte who was coached ahead of becoming an audit partner at EY, a professional services firm, says that in large organisations it can be “hard to decipher how to achieve your goals”. Coaches promise to help develop increasingly-important soft skills such as leadership, teamwork and networking. Bob Sutton, professor of organisational psychology at Stanford, observes that the higher people move up the organisation, the less likely they will be told the truth. Senior executives will tell you “how much funnier they’ve got and how much better looking,” he quips. Coaching does not come cheap.

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The average session in the US costs $231 per hour, according to the ICF, though this varies according to experience. Those with 10 years under their belts charged on average $330 per hour, while those with less than a year’s experience charged $120. In western Europe, the ICF says an hour’s coaching costs $288. Though for the most sought-after coaches, costs can be significantly higher. However, Prof Schermuly says coaching has shown itself to be effective. Studies show coaching “improves the health of people, wellbeing and work satisfaction, performance and self-regulation”. Mr de Haan says randomised control tests showed that 85 per cent of coachees were better off than those in the control group — not just in their own view, but also in the opinion of their line managers. “Most clients will do well out of coaching and better than if they hadn’t taken coaching,” he says. “Those with high resilience and self-efficacy — self-motivation — benefit the most.” He also found that coaching has a “small but significant calming, balancing and responsibility-enhancing effect on personality”. Raj Tugnait, chief executive of Fresh Direct Group, a food business, has found coaches to be invaluable and adds that friends who might have been expected to be helpful tend to give “very general advice”. Mr Aponte agrees: “I wouldn’t want to burden my family with all this. Friends and family tell you what you want to hear.” His coach, Dawn Pons, says that she tells clients: “My role is to make you feel a bit uncomfortable, to make you feel challenged and enlightened. It’s not my job to be a polite friend. That might happen, but I am meant to challenge you.” In an industry with sometimes vague objectives and standards, however, the difference in quality can be dramatic. Sally Bonneywell, a senior executive coach who previously set up GlaxoSmithKline’s Coaching Centre of Excellence, says: @Businessdayng

“There are some fabulous coaches and there are unfortunately people who go on a weekend course and think they are an executive coach.” As with therapy, 40 per cent of coaching’s effectiveness comes from the person’s willingness to change, says Adrian Furnham, professor of psychology at UCL. Sometimes a client is not ready to be coached, says Ms Pons. “It’s not a deficiency but timing. They have to be open and vulnerable and willing to develop greater self-awareness. Some people aren’t up for that.” It might be that work issues conceal mental health problems, says Prof Schermuly, citing examples of coaches misdiagnosing depression as burnout. Coaches can also abuse their power. “This can happen,” says Prof Schermuly, when the “coach is a narcissist or when [they try] to make a lot of money with a client”, for example, by ramping up the number of coaching sessions they might need. It can be difficult for a coach to challenge a senior executive on whom they rely for income. Coaches, Ms Bonneywell says, walk a “knifeedge” between “telling the truth and being fired”. Inexperienced coaches, she says, might be “tempted to placate the client and not challenge them in a sufficiently robust way”. Coaches have to get over that. “Otherwise it’s a nice chat.” She adds, “when people get very senior you might be the only person to tell the truth”. Anger and disbelief are not uncommon. “Sometimes it touches a nerve. You have to be able to take it and defuse it.” John Blakey, founder of the Trusted Executive Foundation, says that the work of being a coach can be intense. “If you describe the job to people, they think it’s great, just shooting the breeze with people over coffee. It can be difficult to work with people who are powerful.” Prof Schermuly says that coaches can end up emotionally exhausted, be afraid of the client, feel guilty that they are not doing enough for their clients — sometimes they may become angered or bored by them. While at the high end, coaches can earn high sums, many do not work regularly as coaches. According to Prof Schermuly in one study he found that only one-third of German business coaches’ yearly income was coaching, the rest was training and organisational consulting. “That can create problems for coaching. If you only do it once a month, then you don’t get the experience.” It might also mean that coaches quit. One anonymous coachee says: “Three sessions in to a 10-session coaching course, my coach disappeared completely. No phone call, not even an email. When I tried to make the next appointment, he just wasn’t there. I subsequently discovered he’d gone back to his previous career as a senior manager.”

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Tuesday 07 January 2020

BUSINESS DAY

Political climate influences students’ choice of business school European business schools’ efforts to attract international students pay off Ian Wylie

Geethu Mattam was offered a place on a Toronto MBA course but went to HEC Paris instead after she was refused a study permit.

Research suggests business schools in the US are losing out to such perceptions. A recent survey by GMAC, the body that administers the GMAT business school entry exam, found that a growing number of Asia-Pacific candidates were opting to stay in their home country or region, while internationally minded candidates sent fewer applications to the US. Among non-US citizens who previously considered the US but did not plan to apply, factors they said affected their decision included the ability to obtain a job in the US (50 per cent of candidates), the ability to obtain a student visa (48 per cent), the political environment (47 per cent),

safety and security concerns (37 per cent), and concerns about racism and discrimination (34 per cent). In October, US business school deans wrote to President Donald Trump to ask that he consider removing “per-country” visa caps and reform the H-1B visa programme for graduate-level jobs, creating a “heartland” visa that encourages more immigration to US regions that need highly educated employees. In contrast, most MBA programmes in Europe received more applications last year, with the percentage of international business school candidates who planned to apply to a European course increasing from 63 per cent in 2017

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I heard multiple stories of students returning to India without jobs, even though they graduated from top US schools

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uropean business schools have long welcomed student cohorts that are diverse and highly international. Yet with populist parties, nationalist leaders and inward-looking policies on the rise in many parts of the world — including Europe — seemingly hostile studentvisa and work permit regimes can deter even the keenest potential candidates. Geethu Mattam worked as an analyst with Goldman Sachs in Bangalore before applying for MBA programmes at business schools in the US, Canada and France. She made the “wait list” at NYU Stern, but says she did not pursue the admission process “because of multiple stories . . . of students returning to India without jobs, even though they graduated from top schools in the US”. She heard that “due to the policies adopted by the current administration, many companies were unwilling to sponsor visas for internationals, and with such high fees compared to that of Canada and Europe, the risk was too high for me”. Mattam accepted an offer from Rotman School of Management in Toronto, but her study permit application was rejected twice. She was eventually accepted at HEC Paris and joined the September intake “without any hassle”. She received her French visa in less than 10 days and had no qualms about the welcome she would receive beyond the requirement of French fluency for most jobs there. Mattam has joined a highly international MBA cohort at HEC Paris, with 93 per cent of students coming from outside France. Marketing director Benoît Banchereau says student visas and work permits are undeniably drivers in international student decisions. “The perception of being a welcoming country also plays a big role here,” he says. “The last election and the popularity of President Emmanuel Macron abroad are among the different aspects that can make a country attractive and open to the world.”

to 69 per cent in the first half of 2019. Almost two-thirds of candidates who chose Europe as their preferred destination said the improved chances of an international career were a factor. Brexit seems to be having less impact than expected on candidates’ perceptions. Three-quarters of British MBA programmes reported that international applications either grew or held steady compared with last year. Pascal Michels, MBA admissions director at Iese in Barcelona, says his school has seen a surge of applications from Latin America in the past three years. “It’s hard to rule out the influence of the US political climate,” he says. “On the other hand, it’s now a well-established fact that Brexit neither hurts our UK competitors, nor helps continental schools much in this market. Political and economic factors don’t necessarily work in lockstep. “Roughly speaking, I’d say that visa regimes are more permissive in Europe than in the US, which makes the region attractive for international candidates. On the other hand, language requirements can add to the complexity of shifting geography, depending on company size and sector.”

European countries that make concerted efforts to attract international students are reaping rewards, says Jamie Wright, a Europe-focused adviser with admissions consultancy Accepted. The Campus France campaign promotes study in the country, while Germany has met its international student recruitment target four years early. “It’s not a surprise to see their international student numbers are so strong as they’re very publicly saying we want international students studying here,” she says. “It’ll be interesting to see how UK student numbers are affected now that the government has announced the introduction of the two-year poststudy work visa. “Visas, work permits, and politics have always played a role in where candidates decide to study, and it would be naive to say a divided Europe, and many countries seemingly looking inward, haven’t changed perceptions and the way candidates view Europe.” Students want to study in an environment where they feel welcomed and comfortable, Wright adds, or “they’ll consider where they want to be spending their valuable time and money”.

between individualised self-development and the goals of an organisation: a senior executive’s ambitions might not be the same as their team’s. A coachee might end up wanting to leave the company — good for the client but bad for the employer that paid for the sessions. Carol Braddick, an executive coach, says that coaches can help a client find internal opportunities, and if they do decide to leave, help them do so in a way that benefits the employer and the executive. Coaches can also be used by organisations, says Mr Blakey, “as a surrogate for effective leadership”. In

other words, the leader focuses on matters of business and outsources feedback and professional development to a coach. Ms Bonneywell agrees. “If line managers aren’t doing their job correctly, and not developing their reports, they say ‘lets get a coach’. Sometimes it’s line management or performance management that isn’t sufficient.” “Organisations with a genuine coaching culture are few and far between,” says Ms Walder. “They might mean they are managing people better. Coaching [as a term] is diluted and misused.”

New Year, New You! The boom in executive... Continued from page 20 Konstantin Korotov, professor of organisational behaviour at the European School of Management and Technology, says there have been reports of a much darker side, which includes the coach acting as the employer’s mouthpiece, psychological abuse or even a coach encouraging dependency on them. “People have the right not to want to change,” he says. “But they have to be ready to live with the consequences — and the coach may need to help them evaluate

the cost of changing versus not changing.” In some cases, companies use coaches to try to change an individual’s conduct, rather than examining the broader corporate culture. One female executive describes being assigned a coach by her employer to temper her perceived aggression. In her own eyes, it was institutional sexism that deemed her ambition and direct manner a problem to be fixed, whereas the same traits in her male peers were seen favourably. Ms Devitt says: “An organisation [might not] recognise that it needs to change and www.businessday.ng

blames the messenger. That’s not as common as it used to be but not uncommon.” Andrea Kramer, co-author of It’s Not You, It’s the Workplace, says in those organisations that are predominantly led by men, “coaches will focus on getting their clients to incorporate these organisational norms as part of their clients’ normal expectations”. The company, she says, will want the coach to “help women learn how to not ‘rock the boat’ or how to not stand out for criticism, as a complainer or difficult employee”. There is a tricky balance to strike

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@Businessdayng

Tuesday 07 January 2020

BUSINESS DAY

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Why education sector in this decade requires inspired leadership KELECHI EWUZIE

he nation’s institutions of higher learning, especially the universities, have consistently been undermined by several government policies, a development which has stalled their developmental capacities in research, science and technology, entrepreneurial competence, management and the production of quality students. One of the major fall-outs of this development is that the nation’s citadels of learning hardly get a mention when top-notch universities across the globe are ranked, and a good number of graduates stand little or no chance in the labour market To this end, worried education-sector watchers have stressed that there is a need for the nation’s tertiary institutions to fashion out ways through which they can meaningfully impart intellectual skills to their products, if they must hold their own in today’s increasingly demanding world. Adimeke Ejiofor, an education psychologist, observed that the quality, effectiveness and relevance of the university

Gbenga Oyebode, Board Chairman, Teach For Nigeria; Wendy Kopp, CEO, Teach For All; Folawe Omikunle, CEO, Teach For Nigeria; Vongai Nyahunzi, Regional Head, Teach For All, Africa Region; Alero Ayida-Otobo, Board Member, Teach For Nigeria and Ayo Olajiga, Board Member, Teach For Nigeria at a recent courtesy visit to the governor of Ogun State Dapo Abiodun in Abeokuta recently

system are directly linked to the ability of people, society and institutions to develop. Ejiofor further informed that with the technological and communication revolutions, universities catalyse scientific and technological change by training a labour force suited to new conditions of production and management. Analysts opine that univer-

sities in Nigeria continue to struggle in their quest to attain top 100 rankling globally in the last three decades is because of their rigid approach to learning. They added that the global knowledge economy and society is based on information processing, which is what universities are primarily all about, but sadly note that most universities in the country

have not keyed into this global trend Ejiofor therefore urged the various citadels of learning in Nigeria to develop systems through which they can function maximally in their core areas of competence. To him, “In the current global knowledge economy, which are knowledge production and technological innovation are the most im-

portant productive forces,” noting that without some level of a national research system comprising universities, no country can participate in the global knowledge economy. Ademola Ogunde, an education consultant, feels the same way. He explained that the in the march towards global relevance, Nigerian universities have to tackle hu-

man development first since the mind is the most important resource of all. Ogunde further disclosed that universities have a major role to play in producing a quality labour force - which depends on quality education spurned by educators who have been trained by quality universities. He observed that government can build schools and provide laptops, but if there are no quality teachers, there can be no quality education. This situation, he advised, requires good working conditions and pay, including respect for lecturers “which starts with being well trained at the university level.” In mapping how Nigerian universities can go about meeting global standards, Ogunde opined that there need not be differences between public and private universities in terms of efficiency and quality, noting that both types of institutions stand a good chance of being very qualitative. “What matters is how flexible, efficient and competitive a university is, so its management is critical. Also essential is that the university serves the public interest; you can be in the public interest and be private. But if you are not in the public interest, then you become a business, “ he said.

Varsity don lauds private sector investment to promote entrepreneurial skills among youths KELECHI EWUZIE

he Deputy ViceChancellor, Research, Innovation, and Strategic Partnerships, University of Ibadan, Olanike Adeyemo says investment by private sector in entrepreneurship would enhance the potential of the teeming Nigerian students and help prepare them for life outside the school environment. Adeyemo lauded Nigerian Bottling Company Limited (NBC), for taking the lead in promoting entrepreneurship among Nigerian youths through its Youth Empowered Initiative. The university don made this known during the 2-day Youth Empowered Workshop in University of Ibadan, Oyo State sponsored by NBC where over 700 undergraduates were

exposed to Entrepreneurship, Life and Networking skills to prepare them to start their own businesses or for meaningful employment. Adeyemo commended the company for creating such a novel initiative to assist the students and urged partici-

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pants to take advantage of the unique opportunity by applying themselves to further learning throughout the duration of the workshop. In her opening remarks, Ifeoma Okoye, Sustainability and Community Affairs Manager, Nigerian Bottling

Company (NBC) Limited, described the initiative as one of the channels that NBC employs to empower young Nigerians to succeed in life. Okoye stated that the campus version of the Youth Empowered Initiative is tailored to help undergraduates achieve

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their career or lifelong ambitions by providing guidance, support and mentorship as they transit from school into meaningful employment or self-employment. The modules covered in the intensive 2-day training range from project and time management to business planning, negotiation, financial literacy skills, communication and sales skills. Also speaking during the two-day workshop, Afis Oladosu, Dean, Faculty of Arts, University of Ibadan, expressed a profound appreciation to Nigerian Bottling Company for choosing University of Ibadan for the workshop. He described the initiative as a very commendable one as it has a great chance of helping the students discover themselves and be creative in their approach to learning. He also urged the students to make @Businessdayng

good use of the opportunity noting that he is convinced it would have great impact in their lives. Okoye further says NBC took the decision to introduce the campus version of the Youth Empowered Programme to undergraduates in order to bridge the gap some intending programme participants faced in accessing the 3-day version of trainings which held in various states across the country. “We noticed that most of the students in tertiary institutions found it difficult to attend the live workshops being held across different states. Now, we are bringing this programme to their doorsteps. We are optimistic that this would mark a life-changing experience for them given that it would enable them learn new things outside the school’s curricula.”, Okoye said.

Tuesday 07 January 2020

BUSINESS DAY

EDUCATION

Quality assurance mechanism top educationists demand for 2020 KELECHI EWUZIE

s Nigeria enters into a new decade, stakeholders in the education sec-

tor have advocated that Nigeria Education Institutions at all levels should be encouraged and supported to develop strong internal quality assurance mechanism to drive the sector

process. They observe that across the global, countries that thrive in all sectors of their economy did embrace education as their bed rock, adding that a nation is a

good as the kind of education system it operates. Experts posit that there is external quality assurance mechanism in Nigeria focused towards assisting Tertiary Institutions in Nigeria

(L-R) Esther Agbenla, Executive Assistant to the Executive Director, Junior Achievers Nigeria; Charles Omoera, Chief Executive, Stanbic IBTC Trustees Limited; Adedeji Fuhad and Akerele Smilore, students of Canterbury International School, winners of MoneyBee competition; Seyi Egbarin, Head, Institutional Trust and Loan Agency and Raji Rahman at the certificate presentation to the winners of the MoneyBee Financial Literacy Competition recently.

‘ICT boosts professional learning acquisition, global influence’ SIKIRAT SHEHU, Ilorin

rofessor of Educational Technology, University of Ilorin, Samuel Onasanya says that the use of ICT is the bedrock for the survival and development of any nation in a rapidly changing global environment. He, however, advocated for the use of multi-media and internet for intellectual purpose, saying that the use of interactive multi-media and hypermedia instructions encourages individualistic teaching and learning. Onasanya, stated this in his paper presented at the 185th Inaugural Lecture of the University entitled: “From the Slate Boards to the Webb: Paradigm shift in Educational Resources Deployment”. According to him, the E-learning is now widely hailed and synonymously associated with more effective and efficient learning outcomes. He added that research has shown that developed

and evaluated virtual labouratory packages for Physics and Biology respectively is adequate and effective for the teaching and learning of selected concepts in physics and Biology. The University don, therefore urged students to explore the opportunities offered by the virtual Physics and Biology labouratory packages for revision purpose as well as for individualised learning experiment. “Investigations shown that multimedia can help in sports for facilitating the speedy acquisition of professional motor skills and experiences via monitoring of various styles and techniques,” he said. Onasanys, observed that despite the numerous advantages of using the social media by students, there are perceived side effects of using it, such that can lead to isolation and addiction that may significantly affects productivity. Others includes interpersonal and personal behavior of youths, health and psychological disorderliness www.businessday.ng

from addiction to social media and internet, and video games and so on. The inaugural lecturer warned that internet experience via pornographic sites has negative effects on the Nigerian undergraduates as it can lead to abortions, infections of the sexually transmitted diseases and complications as well as sexual promiscuity, among others. T h e P ro f e s s o r, w h o teaches in the Faculty of Education noted that investigations on the influence of access to internet on the sexual health of some undergraduates in Nigerian universities indicates the acts that lead to unplanned pregnancies. Onasanya, therefore advised the government and non-governmental organisations to endeavour to procure adequate digital learning tools and technologies at all levels of Nigeria’s educational system. This, he said, would help the country to compete favourably academically with their counterparts globally.

to meet Global standards. Ontonti Nduka, former President Nigeria Academy of Education was quoted to have said that quality assurance is an indispensable process for achieving the national goals in education which will in turn lead to the production of qualitative human capital for sustainable national development. Nduka was clear when he asserts that building blocks for solid foundation of quality assurance at the territory level of education are laid at the basic and secondary education levels. The university don observed that the efforts aimed at strengthening quality assurance mechanism in Nigeria Education should include, parading in shift from inspection monitoring and evaluation to quality assurance. Another challenge militating against quality assurance is corrupt practices in the education sector. Poor funding and in adequate infrastructures also work

against the goal of quality assurance. The politicisation of appointments of chief Executive Officers of Educational institutions and escalation and erosion of academic culture in tertiary instituting are also serious factors militating against quality assurance in education. According to him, “Introduction of school based management committee (SBMC).Whole school development planning (WSDP) and whole school Education (WSE) and introduction of institutional accreditation along with programmed accreditation at the universal level are also expedient in the quest for quality control. He however called on Government to expedite action on the legislative frame work for the proposed national commission for quality assurance as this would go a long way towards the harmonising and improving quality assurance at the different levels of education sector.

Red Star Express commits to supporting education

ed Star Foundation, the Social Corporate Responsibility arm of Red Star Express Plc, has committed itself to supporting education through scholarship award grants. Not less than twelve (12) students were awarded with scholarships as part of its annual Scholarship Scheme, with mentors appointed to properly guide the scholars. This was carried out recently in Lagos recently. The sole purpose of the scholarship scheme is to encourage and support education. Hence, the continuous contribution towards this task on annual basis. Sola Obabori, a representative from Red Star express while speaking at the event stated that education was a focus area of the foundation which is reflected in the Scholarship scheme. According to Obabori, “The whole initiative of the Red Star Foundation in undertaking this task is to support the growth of education in the country. As an organisation, we believe in improving the lives of those

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who cannot pay for high quality education” he stated. In his remarks, Tonye Preghafi, the divisional managing director, Red Star Support Services Limited & Chairman, Board of Trustees, Red Star Foundation, opines that the appointment of mentors who will serve as guides for the scholars as they look to maintain a high level of educational excellence. “In order to improve the educational standards in the country, mentors have been selected to ensure the wards are well guided. To ensure continuity of scholarship, students must demonstrate continuous academic excellence throughout the duration of the scholarship and show exemplary character and integrity,” he emphasized”, Preghafi said. The students who received scholarships at the event were as follows: Morankinyo Eniola, (Unity Senior High School), Ochella Victoria Faith, Okonofua Jude, Lawal Suliat (Ikeja Senior Grammar School), Ajigboteso Joseph, Adeboye Opeyemi, Akanni Deborah @Businessdayng

(Mafoluku Senior Grammar School), Arilesere Modinat, Anal Nathaniel (Bolade Senior Grammar School), Akanni Olamide Abigail, Onuorah Stella Chinaza (Ewutuntun Senior Grammar School) and Lawal Kehinde Fahezoh (Oshodi Comprehensive Senior High School). At the recently concluded 16th edition of the event, some senior executives of the company were present, alongside the Parents, guardians, and staff of the schools of the awardees. Red Star Express is a licensee of FedEx (Federal Express), and one of the most reputable companies in the Nigeria logistics industry. Incorporated in October 1992, the company provides a portfolio of logistics solution which includes domestic and international deliveries, freight forwarding, integrated warehousing and haulage services, information and document management, eCommerce order fulfillment services. Red Star became an Associate of TNT following the acquisition of TNT by FedEx in 2016.

Tuesday 07 January 2020

BUSINESS DAY

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Tuesday 07 January 2020

BUSINESS DAY

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Auditor-General’s report reveals rots in Oil companies account, Petroleum institution DIPO OLADEHINDE

recent report from the Auditor General of the Federation’s office has revealed ruts in Federal University of Petroleum Resources, Warri and huge bad debts of N146 million in six selected oil and gas firms, a development that means huge revenue loss for Africa’s biggest oil-producing country. The Auditor General’s office has the fundamental function to protect public interest by performing a detailed and objective examination of public accounts and also scrutinising ministries, departments and agencies’ expenses. The Auditor-General’s said a contract worth N830 million for the Construction of Building, Procurement of Laboratory Equipment and Capacity Building/Staff training among others at Federal University of Petroleum Resources, Warri was misapplied. “These payments show that the purpose for which the fund was appropriated for was not achieved; as the sum of N830 million meant for various projects was used for other activities not included in the Needs Assessment,” Ayeni said. The university management responded that out of the N416million was used as

Auditor-General of the Federation, Anthony Ayine

a 20 percent counterpart fund to Shoreline Development International Limited for a Public-Private-Partnership (PPP) Agreement/Project which the University plans to recover. However, evidence and reports on the progress of this partnership were not attached to their response to the Auditor general’s office. The University said the remaining balance of N414 million

was borrowed to augment staff salary shortfalls few years ago with letters to government agencies appealing for support during the period of salary shortfalls that necessitated the borrowings provided. “However, there was no evidence to show that these salary loans were repaid back to the Fund and used for what it was specifically appropriated for,” Ayeni said.

Nigeria’s auditor general recommended that due to unsatisfactory evidence that does not confirm the Public-PrivatePartnership effect and the commencement of repayment of the borrowed funds; the ViceChancellor is required to recover the total funds of N830million and refund back to Treasury with evidence forwarded to his Office for confirmation. The report also said a contract of N190 million for the construction and furnishing of workshop and laboratory revealed irregularities in payment as no evidence was established that a formal request was made by the contractor for the price variation and there was no formal approval given by the original Tender Board that awarded the contract. Also, a total sum of N413 million appropriated and approved for the Procurement of Laboratory Equipment (N13 million) and Staff Residential Complex (N400 million) under the Special Presidential Needs Assessment Phases I & II was yet to be awarded out despite the release of the total funds to execute both projects. “The Vice-Chancellor is required to explain the non-execution of projects on which payments were duly made,” Ayeni said in the report. The total sum of N990 million was approved for the Construc-

tion and Furnishing of a 3-story, 4-floor structure Student Residential Building Complex, with reference number and completion period of 48 weeks; however the project was filled with many irregularities. “These irregularities are an indication of weak internal control and wastage of public funds. The Vice-Chancellor is required to account in details the utilization of N1 billion with relevant approval attestations; otherwise, the total sum should be recovered and evidence of recovery forwarded to my office for verification, Ayeni recommended. According to the report, the six oil and gas firms include Mid Western, NewCross, Shoreline, Express, Cavendish and Allied Energy have debts of N146 billion which are becoming bad and doubtful. Audit Fieldwork conducted in 2018 revealed Mid Western has the highest debt with an outstanding balance of N83 million as at 31 August 2018 followed by Allied Energy with a total debt of N34.6 million, while Shoreline, Express, Cavendish and NewCross recorded N23.7 million, N3.6 million, N2.6 million and N1.2 million respectively Anthony Ayine, Auditor-General of the Federation, said the development will lead to “Loss of revenue to the government as a result of bad debts.”

With electricity tariff increase, NERC toughens DisCos obligations ISAAC ANYAOGU

igeria’s eleven electricity distribution companies have long clamoured for tariffs that can guarantee commercial returns and the regulator, the Nigerian Electricity Regulatory Commission (NERC) has removed a cap on retail cost of electricity but has placed even sterner conditions for operators to benefit from it. On December 31, 2019, the Commission published a review of the Multi Year Tariff Order 2015 which guides the pricing template for electricity in Nigeria. According to section 17 of the MYTO -2015 order, tariff should be reviewed twice every year measured against variables such as inflation rate, gas prices and foreign exchange rate and generation capacity. According to the tariff, Abuja Electricity Distribution Company (AEDC) residential customers R3 that formally paid N27.20 per unit will now pay N47.09 while Ikeja

Electricity Distribution Company (IKEDC) customers, the R3 category currently paying N26.50 per unit will now pay N36.92 per unit. Other customer classes will see between 35 percent and 40 percent increase in tariff this year. However, this tariff increase while appreciable, does not represent cost reflective tariff. According to the Commission, the Federal Government’s updated Power Sector Recovery Program does not

envisage an immediate increase in end-user tariffs until April 1, 2020 and a transition to full cost reflectivity by end of 2021. In the interim, NERC said the Federal Government, has committed to fund the revenue gap arising from the difference between cost reflective tariffs determined by the Commission and the actual end-user tariffs payable by customers but all DisCos are obligated to settle their market invoices in full as adjusted to netted off by applicable tariff shortfall. Currently, DisCos remit far less than they collect. “The level of collection efficiency during

the quarter under review indicates that as much as N3.09 out of every ₦10 worth of energy sold during the second quarter of 2019 still remained uncollected as and when due,” NERC said in its 2019 second quarter report released in December 2019. The Commission further said, “Similarly, during the second quarter of 2019, out of the total invoice of N180.08billion issued to the eleven (11) DisCos for energy received from NBET and for service charge by MO, the sum of N55.10billion of the total invoice was settled, representing 30.60% remittance performance.” It is not clear how these DisCos will now settle their market invoices as well as all Federal Government intervention from the Financing plan of the PSRP for funding tariff shortfall and 100 percent invoice of the market operators. According to the order, the minimum market remittance by each DisCo is determined after deducting the revenue deficit

arising from tariff shortfall from the aggregate NBET and MO market invoices. They shall then be availed the opportunity to earn their revenue requirement only upon fully meeting 100 percent settlement of MO invoices and full settlement of 49 percent of NBET’s monthly invoices. DisCos currently settle around 30 percent of NBET market invoices. The new order also attempts to tackle the problems of grid collapse and load rejection by DisCos. NBET will henceforth invoice each DisCo for capacity charge and energy based on its load allocation and metered energy. Where it is established that TCN is unable to deliver a DisCos’s load allocation (e.g through grid collapse) TCN shall be liable to pay for the associated capacity charge and where a DisCo fails to take the entire load allocation due to constraints in its own network, the DisCo shall be liable to pay the capacity charge as allocated in its vesting contract.

Tuesday 07 January 2020

BUSINESS DAY

ENERGY INTELLIGENCE Inside details of Lekoil’s $184m loan for Ogo field drilling in OPL 310 DIPO OLADEHINDE

ondon-listed player Lekoil has provided inside details concerning its newly secured $184million loan funding from the sovereign wealth fund of Qatar for the appraisal drilling and initial development programme activities on the Ogo field within OPL 310. According to details of the contract seen by BusinessDay, the loan will be disbursed in five tranches over eleven months period, with the first drawdown intended to occur in February 2020. The tranching of the drawdown of funds under the terms of the Facility is expected to enable LEKOIL to meet the costs commitments under the envisioned work programme as and when they arise. Lekoil said the loan have a tenure of seven years from the date of first disbursement which was secured with the shares and assets of Lekoil and Mayfair Assets and Trust Limited. “This includes a moratorium on both the interest and principal repayments commencing from the date of the loan until six months after the commencement of commercial sale of production from the field,” Lekoil said. Lekoil said the repayment of the principal and interest will occur subsequently, in equal instalments, on a semi-annual basis while also noting that the loan is not secured against any other assets or interests of the Company, including its interest in the pro-

Lekan Akinyanmi

ducing Otakikpo marginal field. “The annual interest rate payable on amounts drawn under the loan is 3.72 per cent; with an upfront fee of 2.75 percent which is payable upon drawdown of the Facility,” Lekoil said. Lekoil said a Debt Service Reserve Account will be established twelve months after the end of the moratorium period with a one-off amount equal to six months of debt service standing to its credit. “The loan is subject to event of default clauses, and a provision

that the employment of the Company’s CEO cannot be terminated without good cause during the term of the Facility,” Lekoil said. The loan was arranged by Seawave Invest Limited (Seawave), an independent consultancy firm specialising in cross-border transactions with an exclusive focus on Africa. “After deducting the commission payable to Seawave by LEKOIL for arranging the loan, and the upfront fee payable by LEKOIL to the QIA as set out above, the net

proceeds of the Loan available to Lekoil are approximately $174.3 million,” Lekoil said. As a condition to the provision of the loan, Lekan Akinyanmi, LEKOIL’s Chief Executive Officer (CEO), will pledge his full holding of 39,138,601 ordinary shares in the Company as part of the security package for the Facility. Akinyanmi will be compensated with a one-time fee in an amount equal to $1,840,000 which shall be set off against the existing director loan made by the Company to the CEO in December 2014 of $1,704,000. If the pledged shares are foreclosed upon, the Company shall issue to the CEO, such number of new ordinary shares of nominal value $0.00005 each in the capital of the Company as is equal to the number of the pledged shares. In connection with securing the loan, Akinyanmi will also be granted an award of up to 30,000,000 new ordinary shares in the Company to be issued at nil cost and allotted in five equal instalments if, and when the Company’s ordinary share price reaches the following hurdles: 20 pence, 25 pence, 30 pence, 35 pence and 40 pence per share respectively. Each of these share price hurdles must be satisfied by the seventh anniversary of the date of grant of the Award Shares (being today) and each share price hurdle must have been met for a minimum period of 30 consecutive dealing days.

NLNG Train 7 FID shows Nigeria’s commitment to gas revolution - FG ISAAC ANYAOGU

he minister of state for Petroleum Resources Timipre Sylva has said the final investment decision taken on NLNG Train 7 is a significant milestone which reinforces the government’s commitment to the acceleration of the gas revolution. On June 28, 2017, the Federal Government approved National Gas Policy which clearly articulates the policy goals, strategies, and implementation plan of the Federal Government of Nigeria to reposition Nigeria as an attractive gas based industrialised nation through the prioritization of local gas demand requirements. The document also indicates that access to infrastructure, a clearly articulated pricing path and institutional capacity strengthening are required to make gas function as a major driver of the economy. “As you may recall, the Hon Minister of State for Petroleum

Resources has declared year 2020 as the year of gas. So our Gas focus for Nigeria is on track,” says Justice Derefaka, technical adviser, Gas Business & Policy Implementation to the Minister of State for Petroleum Resources and Program Manager, Nigerian Gas Flare Commercialization Programme (NGFCP). Derefaka says Train 7 means growth for the Nigerian oil and gas industry as it will ensure guaranteed gas supply in the upstream sector which will open up new development opportunities in the industry. “As a nation, we have been looking to expand export markets for our more than 200 Tcf of proven gas reserves in a bid to cut reliance on oil revenue already hit by a drop in global prices. “So for me, taking FID for train 7 will help our aspiration in line with the National Gas Policy for Nigeria to become one of the world’s most important LNG gas hubs and help to leverage our abundant associated gas rewww.businessday.ng

sources as well as further reducing the gas that would otherwise have been flared. “We are all elated as this is a good way to end the year because Train 7 is the centerpiece of a growth agenda for the Federal Government,” Derefaka said. In terms of kick off of the project, it is expected to start up in 2024, and will lead to increase in Nigeria’s LNG output capacity by 35% from current levels of 22.5 million mt per year to over 30 million mt per year. The expansion project is expected to lead to local production of an additional 7.6 million mt per year of which 4.2 million mt will from one new liquefaction train (Train 7), and 3.4 million mt will come from the debottlenecking of existing trains. From an investor point of view, the taking of this FID is an indication that there is renewed hope and confidence of international investors, particularly those Nigeria has been doing business with

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over the years. And the ministry is putting up a robust investor friendly initiatives to attract more investors into the Nigerian gas sector, Derefaka said. In terms of revenue drive, the train 7 project is expected to generate $20 billion in net revenue for the government and create 10,000 direct jobs during construction phase and 40,000 indirect jobs. “In terms of next step for the NLNG, I’d say we have a marching from Mr. President to begin to look at taking concrete steps for train 12 because the window of opportunity is there. “In terms of local content, The Project will also support the development of local engineering and fabrication capacity. “This expansion will ensure that Nigeria, with its significant gas reserves (202 tcf of proven gas reserves, 9th in the world) remains a top, reliable and preferred supplier of LNG in the emerging energy world,” Derefaka said. @Businessdayng

How Iran could disrupt oil market in response to US killing of its general

ould conflict in the Middle East disrupt global oil supplies? That risk is back in focus after a US strike in Baghdad killed Qasem Soleimani, a top Iranian general. Tehran has promised to retaliate, and one place is particularly vulnerable: the Strait of Hormuz, off Iran’s southern coast. The channel, which is only 21 miles wide at its narrowest point, is the only way to move oil from the Persian Gulf to the world’s oceans. Last year, attacks on two ships — one carrying oil and the other transporting a cargo of chemicals — in the nearby Gulf of Oman caused a temporary surge in oil prices. Analysts at the Eurasia Group said Iran’s response to the killing of Soleimani is likely to include attempts to disrupt shipping in the Persian Gulf. “Iran will also likely resume harassment of commercial shipping in the Gulf and may launch military exercises to temporarily disrupt shipping,” the analysts said in a research note. If the Strait of Hormuz were to be closed because of the threat of ongoing attacks, it would be a huge blow to the world’s economy. The Strait of Hormuz, which links the Gulf of Oman and the Persian Gulf, “is the world’s most important choke point,” according to the US Energy Information Administration. The shipping channels in the passage that can handle supertankers are only two miles wide heading in and out of the Gulf, forcing ships to pass through Iranian and Omani territorial waters. The amount of oil that passes through the channel is staggering, with roughly 80% of the crude it handles destined for Asia. The global economy could not function without those supplies. About 22.5 million barrels of oil a day passed through the Strait of Hormuz on average between the start of 2018 and June last year, according to energy analytics firm Vortexa. That’s roughly 24% of daily global oil production over that period, and nearly 30% of oil moving over the world’s oceans. To put that in context, the amount of oil passing through the Strait of Hormuz is roughly double the entire oil production of the United States — even accounting for the recent boom in US output

Tuesday 07 January 2020

BUSINESS DAY

OFFGRID BUSINESS

Costa Rica offers lessons from using renewables to tackle climate change impacts DIPO OLADEHINDE

aced with a population that has sent carbon emissions soaring and stretched power supplies to breaking point, oil-rich Nigeria is turning to renewable energy in tackling climate change, success stories from Costa Rica is a template Nigeria states can learn from. Africa’s most populous country needs more than 10 times its current electricity output to generate supply for its 198 million people, nearly half of whom have no access at all, to achieve this the government must find an efficient way to bring power to rural communities and also help clean up a country with some of the world’s worst urban pollution rates. One nation that inspires hope for the future is Costa Rica in Central America. With a population of 4.9 million, slightly less than Adamawa State, this country generates 99 per cent of its power from renewable energy, largely from hydroelectricity, wind and geothermal energy.

This supplies 1.5 million Costa Rican homes and about a quarter of a million businesses, with enough surplus energy to export to other countries. After decades of deforestation, the country’s forest cover has been increased to 53 per cent of the total land area and more regeneration of forests is planned.

Renewable energy’s share of German power mix rose to 46% last year - study

enewable energy’s share of Germany’s overall power supply mix rose by 5.4 percentage points last year to 46%, data from Europe’s biggest statefunded research and development service showed. Europe’s biggest economy is aiming for renewables to provide 65% of its power mix by 2030. It says it will abandon nuclear energy by 2022 and is devising plans for an orderly long-term exit from coal. Out of last year’s total power production of 515.6 terawatt hours (TWh), solar, wind, biomass and hydroelectric generation together produced 237.4 TWh, according to data from the Fraunhofer organization of applied science. Green power output was up 7% year-on-year, and increased its share of total production from 40.6% in 2018 and 38.2% in 2017, helped by ongoing capacity expansion. Coal burning accounted for 150.9 TWh last year, a 29% share of the overall market, down from 38% in 2018. Electricity generation from fossil fuels has dropped as green power is given priority entrance to Germany’s grid system, and as power demand has declined due to mild weather and ongoing efficiency drives. The cost of mandatory carbon emissions allowances covering

coal-to-power output has also risen by 57% to 24.8 euros a ton. Last year wind power, both onshare and offshore, produced 127.2 TWh, taking a 24.6% share of the total mix. That was up 15.7% year-on-year, overtaking domestically mined brown coal - which yielded 102.2 TWh, or 19.7% of the total - as the biggest single power source. Solar panels produced 46.5 TWh, 1.7% more than a year earlier, to give solar a 9% market share. Biomass producers generated 44.4 TWh or 8.5% of the market, while hydropower plants produced 19.2 TWh, or 3.8%. Green power skeptics say higher output reflects favorable weather patterns and does not fully prove the sector’s contribution to secure energy supplies. In the conventional energy mix, plants run on imported hard coal generated 48.7 TWh or 9.4% of the total, gas-to-power generation amounted to 54.1 TWh or 10.5% of the market, and nuclear energy 71.1 TWh, or 13.8% of the mix. A small remainder came from oil and waste burning. Germany was a net exporter of 30 TWh of power in 2019, sharply down from a surplus of 48 TWh a year earlier as neighbors used low gas prices to boost generation, the institute said.

On New Year’s Day, Costa Rica’s National Grid announced that, for the first time, the amount of zero-carbon power generated was more than from fossil fuels for a full 12 months, making it the cleanest year on record for power generation. This was achieved with a combination of wind farms,

solar and nuclear energy, as well as energy imported by subsea interconnectors from neighbouring countries. This variety of power supplies added up to 48.5 per cent of Britain’s electricity in 2019, compared with 43 per cent generated by fossil fuels. The remaining 8.5 per cent of power was generated

by biomass. However, transport in Costa Rica remains a big problem. There are plans to improve public transport and make all buses, taxis and trains electric, with sales of all new light vehicles non-polluting by 2050. In recognition of these achievements and goals for the future, Costa Rica was named UN Champion of the Earth last year. Of course, it could be argued that Costa Rica’s efforts to combat climate change have little impact because it is a small nation and well endowed with natural resources. Yet its pointing to other countries like Nigeria ways to achieve cleaner energy. Nigeria is endowed with huge energy resources, yet it perennially suffers energy poverty. Also, the reliance on fossil fuel to meet Nigeria’s energy need has been attended with many problems such as physical deterioration of energy transmission and distribution facilities, inadequate metering system, inadequate generation capacity, deforestation, desertification, erosion and a host of other environmental problems.

Solar energy prospects getting dimmer

olar energy installation has lost momentum in the last two years as the appetite for the cleaner electricity fell in the face of fast-expanding electricity connections in off-grid areas by public agencies. Installation of solar energy system dropped 19 percent year-onyear to 43.25 megawatt last year, according to the Sustainable & Renewable Energy Development Authority (Sreda). This was the second straight year that the solar energy drive slowed down since the installation by various agencies reached its peak of 57.75 MW in 2017. It was mainly because of expansion of solar home system in offgird areas at that time, said Sreda Chairman Md Helal Uddin said. “As the entire Bangladesh is coming under hundred percent electrification, nothing is going to remain off-gird,” he added. The expansion of solar home systems, now standing at around 60 lakh, is hitting the brakes as demand waned for increased electricity connection as the government strives to ensure electricity for all by March 2021. Now more than 95 percent of the population has access to electricity and electricity connection has grown 39 percent to 3.60 crore since June 2017. Nearly 60 lakh new consumers received power connection in the

ANALYSTS: Isaac Anyaogu (Team Lead), Stephen Onyekwelu, Dipo Oladehinde

last one and a half years, according to the Power Division and the finance ministry. The adoption of renewable energy has slowed in Bangladesh at a time when many other countries are increasingly turning to solar and wind energy to move to cleaner energy on the back of technological innovations and favourable government policies. The decade-long trend of strong growth in renewable energy capacity continued in 2018 with global additions of 171 gigawatts (GW), according to the International Renewable Energy Agency (IRENA). The annual increase of 7.9 percent was bolstered by new additions from solar and wind energy, which accounted for 84 percent of the growth. Because of the expansion of the electricity grid, solar home system and solar mini-grid are being closed as people get electricity at lower prices than what they got from mini-grids, Helal said. “We are now taking various measures to scale up renewable energy generation.” One of the steps is to encourage people to set up solar energy on rooftops of industries and buildings and enable operators of the rooftop solar system to supply excess electricity to national grid at certain tariffs. Industrial rooftops hold huge

potential in Bangladesh and using rooftops of factories 1,000 MW of electricity can easily be generated, said Mahmood Malik, executive director and chief executive of Infrastructure Development Company, earlier in September. Other initiatives of the Sreda include establishment of floating solar power plants and solarbased irrigation pumps to increase renewable energy generation. “As a result, total renewable energy generation is increasing,” Helal said. Solar energy is the biggest source of clean energy in Bangladesh with 22,787 MW of power generation capacity. Total installed capacity of solar energy stood at 372 MW last year, Sreda data showed. The government has set a target to produce 10 percent of electricity from renewable sources by 2020. Including solar, combined installed renewable energy capacity is nearly 3 percent of the total power generation capacity. A higher number of solar panels were installed in on-grid areas compared to off-grid areas in the last two years, Sreda data showed. Many people in rural areas are still installing solar home systems to cut electricity bills, said Dipal Barua, president of the Bangladesh Solar and Renewable Energy Association. “This will increase because of rising electricity tariff.”

But given the ongoing internaFeedback: 07037817378, 08137433034, 08135447789 tional tension and the risk of price

email: isaac.anyaogu@businessday.ng, stephen.onyekwelu@businessdayonline.com, oladehinde.oladipo@businessdayonline.com

Tuesday 07 January 2020

BUSINESS DAY

INTERVIEW

‘Factories will shut down, jobs lost if ethanol is barred from FX market’ OSARO OMOGIADE is the managing director of Nosak Distilleries Limited. In this interview with ODINAKA ANUDU, Omogiade says the company has invested hugely in the Nigerian economy, with the latest being the ongoing backward integration project in Edo State. Tell us about Nosak Distilleries osak Distilleries is one of the subsidiaries of Nosak Group, a joint venture between Nigerian and Spanish investors who provided the technical expertise, particularly at the onset of the project with a 90/10 percent respective shareholding split. It was incorporated in January 2001 to manufacture ethanol and allied products and the first plant was commissioned in 2002 to produce food-grade ethanol. Ethanol is second to water as a major solvent. It is used by paint manufacturers, soap and perfume makers, pharmaceutical companies, manufacturers of alcoholic drinks and beverages. Ethanol is very important as a raw material for several vital products and for the economy.

if we cannot get raw materials for our factories, the inevitable consequence is that people will lose their jobs and it will affect other manufacturers who use ethanol as part of their raw materials.

How do you source your raw materials? We source our raw materials from agricultural products. The basic thing about ethanol is that it is a product of fermentation. You can start from starchy materials and you can also start from sugar and molasses. If you want to produce ethanol, you can start from sugar, molasses, sorghum, cassava, potato, among others. The basic point is that the food-grade ethanol must come from agricultural sources. When Nosak first started business several years ago, it started with the importation of finished (refined ethanol) products. But it got to a stage when we had to improve on the value chain. We did not have to continue importation of these products, but to start adding more value. That was the reason we set up this facility. So, we import the raw or crude ethanol for the purpose of refining to get the food-grade ethanol. Ethanol produced from fermentation has a lot of by-products like fusel oil, acetic acid, esters, methanol, aldehydes ketones, among others, that are not fit for human consumption. If they must be consumed, all of these impurities have to be removed— similar to crude oil. No one puts crude oil in their vehicle. What you do is to refine it, then you break it into various fractions and have the PMS, AGO and the kerosene. It is the same thing with ethanol. You have the crude ethanol, but at that stage, it is not fit for consumption because of the associated impurities which must be removed to have the superfine or neutral ethanol. That is when you consider it fit for use for pharmaceuticals, alcoholic beverages and perfumes. No one wants to use a perfume that has a background odour. So, the ethanol you use in perfume must be superfine. If the ethanol is not purified, it carries a background odour, which is not good for use.

Who are your biggest customers? Our biggest customers are those making alcoholic drinks, wines and spirits, cosmetics, perfumery, paint makers, pharmaceutical companies and other industrial users. What is your current production capacity? In terms of capacity, we have a combined installed capacity of 500,000 litres per day. When we started in 2001, we started with a capacity of about 100,000 litres per day. But currently we have three plants in Lagos and the three of them have a total installed capacity of 500,000 litres per day. Can you give us an estimate of the amount of investments Nosak Distilleries has made since it started in 2001? The investment has been quite huge, but it is cumulative. Even as we speak now, we are still investing. Conservatively, to put up a distillery, let’s just say a 100,000-litre per day capacity distillery, you need at least $20 million to $25 million. By the time you start adding storage tanks and other utilities, the cost will have been more. So, put that amount in three places and you will be looking at over $75 million. This is just being conservative. So, it is a huge investment. Tell us about your backward integration plans in Edo State. We have commenced the process of setting up a backward integration project. We are setting up a fully backwardly integrated plant in Edo State. Currently, we are working with some foreign experts in the engineering, equipment design, and fabrication. It is our hope that

the project will be completed in the next two years. The Central Bank of Nigeria (CBN) plans to classify ethanol as not eligible for foreign exchange. Is this favourable or harmful to your industry? The key question is, what is the current situation in the industry? The Federal Ministry of Industry, Trade and Investment, from its own statistics, says the annual requirement of ethanol in Nigeria is in the neighbourhood of 400 million litres per annum. Out of this, what is locally produced at the moment is between 7 and 10 percent. So, there is a huge gap. If you restrict the item from the foreign exchange market when the local capacity is just about 10 percent, how will the industry cope? If you restrict it from the foreign exchange market, you are indirectly encouraging smuggling because it is no longer available. But here is the idea, there is a plan. In the next two years, you can ask, how will the industry have fared in backward integration? In two years, you can review it. And you do that in another two years. We cannot just move from seven percent to full capacity. It is not magic but we can give ourselves time. The industry players want to set targets for themselves, which was why we met the Ministry of Industry, Trade and Investment to discuss the key issues in the sector. Let’s see how we can raise it to 30 or 35 percent, and raise it further in another two years to 60 to 65 percent. But you have to give us time. The major producers of ethanol in the world today such as Brazil still import. If the government goes ahead and implements the policy, people will struggle to get raw materials to produce. You can see the investment we have here. Imagine

But government might be proposing it to enable key players like you to look inwardly and invest in backward integration. So what is keeping the players away from investing in backward integration? The problem is the common challenge, which is funding. I just told you that setting up a fully backward integrated distillery requires about $30 million. That is about N10 billion. That is just for putting up a 100,000-litre plant. It may even be more than the estimate I have given so far. How many banks are willing to give you the money for a period of seven years and at a single-digit rate? I am not sure of any except intervention fund managers like the Bank of Industry (BOI). Even the BOI has its own challenges. These are some of the challenges we face. The various organisations are trying to see what they can do. I know the government is also playing great role to enable access to agric and industry loans, but the greatest challenge is funding. We also have some other issues. For instance, land is also a major challenge in terms of dealing with the communities. These can always be resolved, but it still poses a challenge. Have you been able to access any of the intervention funds? We are working with some banks and other intervention funding institutions. We are focused on the backward integration. Already, we are processing land acquisition rich in cassava cultivation. We have contracted experts who are working on the feasibility of the project. We want to get the best, so we hope that it will be completed in two and a half years. We are looking at cassava, and we are willing to organise farmers into out growers. Is Nosak ready for the upcoming African Continental Free Trade Agreement (AfCFTA)? Let me even take you from the point of the Group. The Group’s presence in the export free trade zone is an indication that we are ready. We have resumed export to neighbouring West African countries, commencing with Ghana. It is an expression of our readiness. We believe in living global because of the associated advantages. If you do export, you will hedge against the foreign exchange problems. Government is shifting attention to non-oil exports, and ours are all non-oil products. To that extent, it will help in the derivation of foreign

exchange for the company and the economy. Are you planning to expand your export frontiers? Yes of course. But if you must fly, you have to learn to walk. We have experimented with some neighbouring West African countries. After Ghana, we plan to go to other African countries. That has always been our roadmap to export to most African countries. We are also looking at other countries like Togo, Benin Republic, Cote d’Ivoire, Angola and Central African Republic. Those are the countries we are looking at, and we have the capacity to do so. That is the strategic direction of Nosak Distilleries. Beyond playing in the country, we want to extend our frontiers to African countries, especially with the coming of the African Continental Free Trade Area agreement. If you do not do that, you leave the market for foreigners. When you look at the players around, you will see that Nigeria is possibly the biggest in the whole of Africa. So everybody must be ready. Your industry is part of food/chemical industry. What peculiar challenges do you face, and what should be done to solve these problems? One of the major challenges is infrastructure. Most of our roads are not accessible. I am sure you spent more than three hours before accessing this place. In the same way, if we have products, goods and services to deliver, the turnaround time is longer than necessary. Where ordinarily you should spend two hours, you may end up spending 20 hours. Your customers sometimes may be unwilling to come because of the roads. Also, it adds to the cost. You spend more money on petrol or diesel as well as more time on the road. For a journey of two days, you spend one week. Infrastructure is a huge challenge. That is one area we need government intervention. Power is also a challenge. But when we set out, we said to ourselves, ‘The power situation in this country is not so good. If we depend on the national grid, we might not have it easy.’ So we invested in gas generators. As we speak, we have over 5,000KVA gas generators. Beyond that, we also invested in diesel generators of over 2,000KVA. It is very expensive, but we are able to plan our operations. We are able plan, even though it hurts the bottom-line. It improves customer confidence. It will not augur well for the business if we keep explaining to customers that there has not been electricity for the past one week. That is why we have invested in power. In most countries, our investments in power alone are big enough to start an SME business.

Tuesday 07 January 2020

BUSINESS DAY

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With a new decade comes new technologies; what to expect in 2020 Jumoke Akiyode-Lawanson

echnology today has sipped into every aspect of life. Not only is it rapidly changing the world, but also advancing towards making it a better place to live in. Constant development in technology has paved way to expand our outlook, leading to some ground breaking, life changing innovations. As we enter a new decade, the year 2020 promises to actualise more the the emerging technology that we have been introduced to in the last year or two. This is definitely the decade where big tech terms like cloud computing, nanotechnology, Fifth Generation (5G) communications, virtual reality, Artificial Intelligence (AI) and Robotics will be fully actualized and deployed to totally transform different sectors and economies. In fact, Nigeria’s minister of communications and digital economy, Isa Ali Pantami has promised that Nigeria will explore all these emerging technologies in quantifiable terms. Illustrating the benefits of deployment of and access to 5G, Pantami said with 5G, which was test run in Nigeria towards the end of 2019 by MTN, Nigeria’s largest telecommunications service provider, virtual surgery is possible in Nigeria. The last decade (2010-2020) saw efforts being made to deepen broadband penetration levels as we moved swiftly from 2G to 3G and the 4G. It is safe to call the last 10 years, the decade of the smartphone. Original equipment manufacturers (OEMS) focused on creating devices with imputed biometric recognition technologies, enhanced camera operations and several optimized features; making smartphones more indispensable in both our private and work lives. We also a large penetration of smart watches, mobile software ap-

plications and the rise of financial technology (fintechs). The first mobile banking app appeared in 2011 and today, we have digital banks that do not operate any other way but online. However, with all these, saw a rise in cybercrime activities globally. The last decade also ushered in a new wave of social media frenzy. Although platforms such as Facebook and Twitter existed before 2010, they became much more than friendly chat platforms and began to create job opportunities with the creation of millions of social media businesses. Today, there are over 25 million business profiles using Instagram world wide, up from 15 million in 2017, and over 90 million small businesses on Facebook. In fact, a new job category of ‘Social Media Influencer’ has been created for people with millions of followers on platforms like Snapchat, Instagram, Twitter and Facebook, and these people get paid to promote or market product to the millions of eyeballs on their social media pages. Now, to what we should expect to see in the new decade, according to global tech experts and enthusiasts. 5G: The fifth generation of cellular technology is expected to provide internet connections that are at least 40 times faster than 4G long

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term evolution (LTE). In this new decade, 5G is expected to improve the bandwidth, capacity and reliability of mobile broadband. By 2035, it is estimated that 5G will enable $2.3 trillion of global economic output. Artificial Intelligence: 2020 will see more creation of intelligent machines that work and act like humans. AI will be used in almost every business sector to reduce human intervention. It also has a major role to play in digital marketing and cyber security. Wireless power transfer: This is the transmission of electrical energy without using conducting wires as a medium. It uses electro magnetic induction. Over the years, this technology of wireless transmission has eliminated the use of cables and batteries, increasing the mobility, convenience and safety of an electronic device for all users. In 2020, we will see the use of more wireless chargers produced by companies like Google, Apple, Samsung and others, as research shows that wireless power transfer is expected to reach USD $16.3 billion by 2025, from USD 3.08 billion in 2017, with a 23.10 percent Compound Annual Growth Rate (CAGR). Augmented and Virtual Reality: Augmented reality (AR) is an enhanced watching of reality created

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by the use of technology to add digital information to an image. Virtual reality is the use of computer technology to created a simulated environment. In the future AR can be used for transitioning from PC base to stand alone mobile VR devices, mapping of real world to enable persistent AR mirror walls, eye tracking and facial expressions built in for natural communication. Cloud Computing: This is the process of using remote servers hosted on the internet to store, manage and process data. the new decade will see everything as a service (Xaas), Disaster recovery as a service (DRaaS), Communication as a service (CaaS), and Network as a service (NaaS), added to its platform as a service (PaaS), Software as a service (SaaS) and Infrastructure as a service (IaaS). Cloud computing will provide the digital infrastructure for smart cities. Robotic Process Automation (RPA): This is the process for automating anything and everything in business operation with the help of robots to reduce human intervention. This is an evolving technology that is expected to be mainstream in 2020. It is estimated that this year, 40 percent of large enterprises would have deployed RPA software. Internet of Things (IoT): This

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is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers and the ability to transfer data over a network without requiring human to human or human to computer interaction. IoT will be more beneficial to sectors such as health, with IoT devices and sensors collecting health data, health sensors for analytics, etc. The future of IoT has the potential to be limitless. Blockchain: 2020 will see more adoption of blockchain which is used to increase the transparency of cross border transactions, verify authenticity, securely track, validate and execute oil transactions and reduce settlement time. According to online reports, at least five countries will have a national crypto currency in 2020. Natural language processing and voice technology: NLP can understand the language, emotion and sentiment of what a person is writing or talking about. In this new decade, it will be used for email assistance (grammar or spell checks), AI chatbots sign language translators and predictive police work. NLP in healthcare and life sciences is projected to grow at a CAGR of 21.2 percent between 2018 and 2025.

Tuesday 07 January 2020

BUSINESS DAY

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

Presidency moves to criminalise acts of vandalism on telecom infrastructures Jumoke Akiyode-Lawanson

he federal government of Nigeria through the ministry of communications and digital economy has officially written to the Nigerian Police force, giving it authority to arrest and criminlise telecom infrastructure vandals across the country, hence forth. The letter dated 23, December 2019, stated that this was a directive from the president Muhammadu Buhari, who recognizes the importance of the protection of critical telecommunications infrastructure which are now known as critical national infrastructure (CNI) because of the important role they play in ensuring security and in the delivery of other essential services. “The Nigeria Police Force should provide security for telecommunications towers/sites, fibre optic cables, telecommunications switch stations, backup batteries and armoured cables,” Isa Ali Pantami, the minister of communications and digital economy said in the letter. Speaking to journalists at a briefing in Abuja last weekend, the

minister said that the Office of the National Security Adviser (ONSA) was vetting content of the proposed Executive Order on Critical National Infrastructure (CNI) Protection, one of the key demands of the Nigerian Communications Commission (NCC) to ensure a halt to rampant vandalism of telecommunications infrastructure.

Pantami said he is confident that President Buhari will sign the Executive Order soon, but that before then, infrastructure is protected, as the police authorities have been directed to locate key telecom facilities for surveillance. Still on telecommunications, the Minister stated, “I have written to all the governors in Nigeria on the

L-R: Mohammed Abubakar; managing director, Galaxy Backbone Limited, Ubale Maska; executive commissioner, technical services, Nigerian Communications Commission, Isa Pantami; minister of Communications and Digital Economy, Inuwa Abdullahi; director-general, National Information Technology Development Agency, and Abimbola Alale; managing director, Nigerian Communications Satellites Limited, during the 2020 maiden media parley by the ministry of communications and digital economy in Abuja recently.

Interswitch drives improved healthcare delivery through its eClat subsidiary ...partners Edo State government to assist with technology platform Jumoke Akiyode-Lawanson

nterswitch Limited, a technology-driven company focused on the digitisation of payments in Nigeria and other countries in Africa, has announced that eClat Healthcare Limited, an Interswitch Group company, has partnered with Edo State in its mission to improve healthcare delivery through technology and innovation. This announcement follows the recent launch of the state’s compulsory healthcare insurance scheme, under the direction of Edo State Governor Godwin Obaseki, recently. This is following the launch of the first phase of disbursement of the BHCPF (Basic Healthcare Provision Fund) to states through the National Health Insurance Scheme (NHIS). The scheme is geared towards delivering affordable and accessible healthcare services to residents state-wide. The initiative is managed under the Edo State Health Improvement Programme (Edo-HIP) setup to undertake the national government-led drive for Universal Health Coverage (UHC). Edo-HIP is a series of government-led interventions aimed at increasing access to efficient, effective and sustainable quality healthcare services with the central focus of improving the health status and wellbeing of citizens of Edo State. As technology continues to transform different sectors including the health sector, industry watchers say that eClat Healthcare which provides

need to comply with the National Economic Council (NEC) resolution on the Right of Way (RoW)”. “All the Governors had agreed to the harmonisation on the RoW charges and efforts are being made to ensure the policy is respected”. The RoW charges is the levy paid to state governments for the laying of optic fibre by telecoms operators.

a turn-key solution for healthcare delivery and helps to transform the quality of healthcare by providing modern, essential resource tools to care providers, increasing their efficiency, saving costs, empowering stakeholders and leading to improved patient outcome is the type of solution Nigeria needs to position itself as top choice for healthcare in Africa, and attract hundreds of billions of naira in medical tourism. eClat specializes in assisting healthcare service providers in planning, designing and operating their unique practices through the deployment of its bespoke healthcare technology platform, designed specifically for the healthcare environment in Africa. According to Interswitch, eClat is transforming the quality of healthcare by providing modern, essential resource tools to care providers and increasing their efficiency and saving costs. “eClat will utilise its flagship primary healthcare health management system, ‘eClinic’, to significantly enhance healthcare delivery for Edo State,” the company stated. Other key initiatives under the partnership include: Healthcare facility renovation, process optimization/ transformation, training & capacity building and health insurance. Already, eClat has been allocated a number of primary healthcare centres across the state to refurbish and manage. eClat will assist with the migration of existing medical records/data from paper form into electronic form (using eClat’s eClinic software); as well as upskill medical staff to enable www.businessday.ng

them effectively to deploy and manage the new solutions. eClat has also been mandated to drive enrolment and active participation of citizens in the health insurance programme. Mitchell Elegbe, founder and chief executive of Interswitch, said: “Following our recent acquisition of eClat Healthcare, we’re delighted to partner with Edo State to provide better healthcare services through its bespoke healthcare technology platform. Interswitch’s ambition is to use our innovative technology to modernise and improve efficiency in economic sectors such as healthcare, which are crucial for Africa’s social and economic development, as well as serve as catalyst in the activation of Nigeria HealthTech Industry over the next few decades.” Also commenting , Crusoe Osagie, the special assistant on media and communication strategy, to the Edo State Governor said; “The State Government has recorded a number of achievements in the health sector, which includes rehabilitation of primary healthcare centres in the 18 Local Government Areas (LGAs) of the state; enactment of the compulsory Health Insurance Law to reduce out-of-pocket expenses on healthcare and the repair and opening of the Edo Specialist Hospital.” Eclat’s flagship product, eClinic is used in more than 250 primary care centres across six states in Nigeria. It is also used in several private hospitals in Nigeria including Eko Hospital, First Cardiology Consultants and Solid Rock Hospital.

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The Minister also declared that since the 25th September 2019, no Subscriber Identification Module (SIM) card has be used in Nigeria without being properly registered. “You may buy a SIM card but you cannot activate it to use unless it has been properly registered, and NCC will provide biodata of any improperly-used SIM card to the police or other security agencies within 24 hours whenever it is required,” he said. Pantami was emphatic that the Federal Government’s directive to NCC to ensure that improperly registered SIM cards are blocked, demonstrated government’s commitment to further strengthen ongoing efforts at securing lives and property in the country. “Life is more important than material benefits of having many SIM cards in circulation, and in any case, blocking improperly registered SIM cards did not diminish the contribution of ICT to GDP,” he stressed, explaining to journalists that the Ministry was, in addition, auditing bulk spectrum allocation for validation and propriety. He noted that the exercise is not really an inquisition as earlier bandied by certain interests.

What the new Huawei Y9s has to offer

he HUAWEI Y9s equipped with an Ultra-wide angle 48MP AI Triple Camera to deliver outstanding photography is now available for sale in the Nigerian market and featured quite popularly on the Christmas gift list of so many gadget lovers. With the increase of dependence on modern technology, it’s no surprise that smartphones and various accessories top everyone’s wish lists, but here is why we think the HUAWEI Y9s became one the most valud gift items last Christmas. 1. Perfect for picture lovers; With a 48MP Triple AI Camera, is the ultimate go-to smartphone camera for people that can’t do without taking photos and recording videos to capture every moment at its best. Not only is taking pictures really easy, the results are so satisfying that you won’t need to take a second shot. The camera setup, consisting of a 48MP main camera, 8MP 120 degree Ultra-Wide camera and a 2MP Depth sensor, also uses powerful AI that recognizes what you are trying to take a picture of, making sure every shot is perfect. 2. A hidden pop up camera for the best selfies Want to take selfies, but notice something is missing? The HUAWEI Y9s has its powerful 16MP AI Selfie camera hidden in the top edge of @Businessdayng

the phone. Open your camera, switch on selfie mode and watch the little camera pop up automatically. Don’t be fooled by its size though, the 16MP AI Selfie Camera packs quite a punch. Capable of taking beautiful selfies, even in difficult lighting thanks to AI Backlit Imaging, this selfie camera punches well above its weight. 3. Stylish design that gets all the attention. With the front camera tucked away into the top edge, the HUAWEI Y9s enjoys no bezels or notches which means you can enjoy 6.59 inches of uninterrupted FHD+ display for watching movies, play games, browsing online shopping lists and doing a lot more. Thanks to maximized viewing ratio, your viewing experience is now more immersive, making sure you don’t miss even the tiniest details. 4. Powerful hardware for the all-day user Gamer, avid social media user or even just someone who depends on the smartphone all day, the HUAWEI Y9s is the perfect gift. Thanks to its powerful hardware like the Kirin 710F, EMUI 9.1 and GPU Turbo 3.0, performance levels are boosted without tasking the 4000 mAh battery. Additionally, you also get 6GB of RAM with 128GB of storage for all your photos, videos and more. If 128GB is not enough, then you can always expand to 512GB via a microSD card.

Tuesday 07 January 2020

BUSINESS DAY

property&lifestyle What Forbes wants real estate investors to do to succeed in 2020 ENDURANCE OKAFOR

or real estate investors to achieve desirable returns in 2020, they may have to follow Forbes’ recommendations, including use of technology, protection strategy, tax awareness and continuous learning as the way to go. According to Forbes Real Estate Council, investors can implement the four measures to up their competitive game and prepare themselves for even greater real estate investing success in 2020. “For real estate success in 2020 and beyond, the key steps investors should take are to go digital, get your legal house in order, prepare now for tax time and always seek out education opportunities. These will be the hallmarks of real estate investing success in 2020,” Heath Silverman, Stessa’s co-founder/ Chief Executive Officer and a member of Forbes Real Estate Council, said. Go digital and ditch paperwork There is no doubt that the digital revolution has improved people’s way of life in so many different ways, from social media to online shopping and vacation planning to the payment of bills. Real estate sector is also not left out as industry players are now buying and managing real estate investments through the use of technology. According to Silverman, ditching the paperwork and going digital was a gamechanger in his real estate

investing business, and “it can be in yours too.” Heading into 2020, the CEO recommended that industry players should set up the processes and systems so they can go almost entirely digital If real estate investors go digital, Forbes said they are likely to be exposed to the following benefits: reduction of physical storage space, bankencryption security to minimize the risk of document theft or loss, and preservation of historic documents such as year-end financial statements for tax purposes. Other benefits that may arise from real estate digitalisation as highlighted by Forbes would be: Efficient retrieval and information sharing with business partners, CPAs or attorneys 24/7 from anywhere in the world and all of the aforementioned according to the American business magazine will encourage low-cost of operation and will also promote a more friendly environment. According to Forbes, real estate digitalisation makes it as simple as taking out one’s smartphone and having the answers at fingertips. “I don’t know how many times I’ve been on-site at one of my properties, chatting with a property manager or vendor, at a bank or talking with a member of my team when I needed to reference a document,” Silverman said. Asset protection strategy For the New Jersey-based organisation, real estate investors who think it’s easier to ask for forgiveness than permission may be in for a

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rude awakening when they start getting into legal grey areas. Forbes said that real estate investors should know that following rules and regulations shouldn’t be viewed as an obstacle. “People who have been there, done that know that it is important to protect yourself, your assets and investors from a worstcase scenario,” it said. For real estate investors to get asset protection strategy in order, Forbes recommended that they protect themselves by

obtaining full coverage insurance for the property. Example of such insurance should include property damage and theft, fire and construction insurance, liability insurance that covers claims from tenants and their guests and loss of income with business interruption insurance coverage. It stated also that it is critical that an investor’s tenants should have renters’ insurance and can provide proof of coverage. “At the end of each year, I like to review cur-

rent insurance coverage to ensure that it’s still adequate — perhaps there have been changes to a building over the years. There may also be ways to reduce your costs if some coverage is no longer needed,” Silverman said. Prepare today for tax success tomorrow According to Forbes one of the main reasons investors channel their funds to real estate is for tax benefits, as such

Continues on page 32

How to increase real estate value in Nigeria

carcity or abundance in the economy answers to the law of supply and demand. It is that simple. A renowned real estate developer in Dubai recently advised a pause in the production of houses for, at least, 18 months as oversupply, which is not healthy for the market and the economy at large, is envisaged. “If this oversupply continues, it will be a disaster,” Hussain Sajwani, chairman of Damac Properties PJSC, said in an interview, adding, “the banking system will get affected and that’s something we can’t afford.” Oversupply is a kind of condition created when there is excess supply of a product relative to the demand, purchase power and purchase frequency of consumers. Oversupply occurs in real estate when the supply of real estate products far outweighs the demand for them by investors, aspiring homeowners or rent-seekers. A country or state that will harness its real wealth must be able to accurately determine the actual stock and def-

icit of all forms of its real estate per time. This enables proper planning and regularization of supply for profitability as well as for a continuously thriving economy. The nation of Dubai, in addition to great leadership, leveraged on true and accurate data of its real estate stock, its population and macroeconomics. It also ensured every aspect of its economy is thriving such that its real estate, in every form that it exists, will command the value it should command. Proper measurement and monitoring of all data stock is what made Hussain Sajwani’s suggestion, that production of houses be halted, possible at all. Given our peculiarity as a nation and our data challenges, the best a real estate developer can do per time, is to focus on a certain location for housing delivery after deep research (one that captures the need for a relevant product in a profitable quantity as well as the willingness, readiness and ability of off-takers or consumers to invest in the product) and thoughtful planning.

Affordable housing: Next investment frontier for big ticket developers

Estate Intels recently published a report stating that it is time for Nigeria’s REITs to ditch residential properties. The reason is simple. Residential REITs must have been the most profitable real estate investment option at some points based on previous researches. However, an oversupply without a corresponding level of demand has now made it unprofitable, probably because customer’s needs have evolved. This is bound to happen from time to time; a certain kind of real estate product will not be perpetually relevant to consumer need. What are the measures that can then be taken to curb this trend? First, the approach to creating real estate consumer products must be flexible and accurate datadriven. The question of how much ownership and rent the obvious economic situation or purchasing power of individuals can accommodate per time, in a given phase of an economic cycle, must constantly be answered correctly. Also, the government

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Talking Real Estate

With Oluwakemi Adeyemo should take the lead by taking stock to determine how much real estate ownership versus rent option is healthy over a given period of the cycle and make this data available. The government certainly can cater for some quota of intending real estate owners and rental needs in a certain location per time as has been the case but they must also determine the quota of ownership or rental properties that private investors or businesses can cater for. Equally important is the need to adopt a framework that allows real estate developers to do and grow their business based on the identified need gap of ownership or rent per time. This should, in no way, undermine the ambitions of investors or business people who can inject innovation, standard and structure into the process, beyond the

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status quo, provided they will enjoy long-term profitability from the venture. As much as the government and developers, through creativity, can suggest and introduce preference/specific real estate products, it will be a lot more effective when consumers, through an organized mechanism, can equally be allowed to make the demand for more or different products as their need evolves. This will encourage healthy competitiveness and transparent business processes among all stakeholders as well as increase the potential for the appreciation of real estate value in Nigeria. Oluwakemi Adeyemo, is a Real Wealth Creation Advisor with extensive experience in real estate wealth creation and investment optimization. She is the CEO of Futureperfect Limited. @Businessdayng

or a combination of reasons including state of the economy, response to popular demand, efficient use of capital, among others, affordable housing has become the next investment frontier for big ticket real estate investors and developers. It is becoming the next frontier in the campaign to reduce the deficit in the housing sector, and investors are embracing the new trend. The trend offers opportunities across all jurisdictions and investors are up- scaling their investment in that area. Affordable offerings like studio apartments, one bedroom and two bedroom flats near the city centre have continued to enjoy demand and there’s also a shift by some developers in favour of the category. Largely driven by developers’ response to the millennial market’s demands, blue-chip executives and expatriates are alsooptingforstudioapartments. Investorswhobuybiggerhouses forinvestmentpurposesarenow beingadvisedtopurchasemultiple studio apartments to sustain portfolio cash flow. Factorsinfluencingdemand for such affordable offerings like studio apartments amongst millennials are better space management,functionalityand cost of managing residential units. With high land costs, weak infrastructure and the absence of modern facilities continuing to hamper the growth of Nigeria’s industrial sector, experts say affordable housing in form of studio apartments and others are the ideal vehicle to build a sustainable and growing business because of the ability to serve more ‘clients’ in one location, along with achieving a higher per-square-foot rent than can be achieved in a single-family residence. The trend is receiving acceptance in places like Lagos, Abuja and Portharcourt with high cost of land, offering less competition and more economy of scale. Before now, many investors possessed a limiting belief that it wasdifficulttobuyanapartment complexandtheyneverentered the arena. However, this faulty thinking has been changing in the past few years, but many investors still hesitate to explore the possibilities of jumping into affordable housing. But with the lull in the sector occasioned by government macro-economic policy, over-supply in commercial and retail sectors as well as inappropriate supply in the residential sector, more investors are embracing it. Also,internationalrealestate advisor, Savills, puts the 2017 value for global real estate at $280.6trillion with the residential component accounting for $220.6trillion. Sub-Saharan Africa’s residential real estate market is estimated at $6.6trillion,unevenlydistributedacross its 1.12billion inhabitants.

Tuesday 07 January 2020

BUSINESS DAY

property&lifestyle Stakeholders’ expectations from FG, finance institutions on ways to lift real estate sector in 2020 CHUKA UROKO

hough the real estate sector ended 2019 in a negative growth territory, industry stakeholders are still optimistic that the sector could be lifted out of its present state if the right environment is created and the necessary things are done in the new year by power brokers in the sector. Among the power brokers in the sector are the federal government, Central Bank of Nigeria (CBN), Federal Mortgage Bank of Nigeria (FMBN), and Nigerian Mortgage Refinance Company (NMRC). According to the stakeholders, what the sector needs is the right environment and strong policies which the federal government has both the capacity and responsibility to provide. “The sector needs these two in order to attract both foreign and local investors,” said Adediji Adele, President, FIABCI-Nigeria. Arguably, finance is the greatest challenge of the real estate sector. Lack of it and banks refusal to lend are part

of the reasons for the sector’s slow growth and continuing recession. Illiquidity and high cost of funds in the mortgage market explain why many Nigerians can neither afford nor access housing finance to buy or build their own homes. They are also part of the reasons housing deficit is high in the country at an estimated 22 million units. “This is why the CBN, in its fiscal and monetary policies, should address issues of high interest rate on mortgage loans,” Johnson Chukwuma, a civil engineer, explained to BusinessDay on phone. Chukwuma added that CBN should in 2020 bring to fruition the mortgage interest drawback scheme and collaborate with the bankers committee towards deepening liquidity and opportunities derivable from affordable housing and mortgage provision. He said that the apex bank should broaden its its hand of fellowship and also extend the benefits it has accorded to commercial banks to other financial institutions, especially mortgage banks.

While acknowledging and commending the achievements of its management, the stakeholders said FMBN should do more, especially in the area of National Housing Fund (NHF) which will give more low income earning Nigerians access to affordable housing. The apex mortgage bank should enter into partnership with other public and private institutions in the housing sector to achieve common goals. FMBN should build on the present awareness campaigns on how to access and benefit from NHF. The pending NHF Act 2018 must involve the inputs of all stakeholders including advocacy groups just as all outstanding estate development loans must be recovered to enable the bank to provide more houses. The bank must sustain the rent-to-own and cooperative housing schemes that were recently introduced and also collaborate with bodies such as Family Homes Funds (FHF), NMRC, Shelter Afrique and others. Besides looking into its

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corporate governance issues, stakeholders also want NMRC to introduce technology and innovations into addressing Nigeria’s housing and land use laws while positioning mortgage banks and brokers for a futuristic, fast changing and customerfocused model of housing finance. They expect the mortgage refinancing company to do this through yet to be launched Mortgage Guarantee Scheme in partnership with the Central Bank and other stakeholders. The stakeholders also have their expectations from the federal ministry of works and housing. They expect the ministry to perfect the National Housing Programme

which is expected to deliver affordable housing to Nigerians across the country’s six geopolitical zones. They advise that rather than seeking to raise an infrastructure bond of N10 trillion to pay contractors, the government should facilitate the creation of an enabling environment for infrastructure and housing guarantees to thrive. This, according to them, will drive investment interest in infrastructure and housing from local and foreign Investors. Nigeria’s infrastructure has the potential to match returns with risk given the country’s growing population and the desire for better and improved infrastructure and housing

delivery. The stakeholders also advise that the Minister of Works and Housing, Babatunde Fashola, should stop making controversial statements that might plunge the housing and infrastructure markets into deeper uncertainty. “Challenging the World Bank on housing deficit figures or claiming that Nigerian roads are better than reported smacks of insincerity on the part of government and this will only lead to investors pricing our infrastructure investments with higher risk. You can’t lend money to a man whose words do not reflect the reality on ground,” said a stakeholder who did not want to be named.

Here’s why Nigeria’s growing Airbnb market lags peers, way forward What Forbes wants real estate investors to... ENDURANCE OKAFOR

igeria’s position as the largest economy in Africa is yet to rob off on the country’s Airbnb industry which has in the last five years lagged its peers in terms of market size. While South Africa, Morocco and Kenya are top on the ranking as the countries with the largest Airbnb markets in Africa, Nigeria is only able to occupy the fifth position, a recent report by Airbnb show. However, analysis of the 2019 data by the Californianbased company showed that Nigeria reported the fastest growth of 325percent over the past year with effective locations at Ibadan, Abuja and places in Lagos like Lekki County Apartments, Mixta Apartments, Urban Shelter Apartments, Lekki Gardens Apartments and many more as high yield accommodations. Checks by BusinessDay

revealed that the fear by Nigerians to use their debit cards to make online reservations, the lack of trust that the advertised apartments online will be the reality on the ground coupled with security challenges are some of the particular issues that are daunting the growth of Airbnb in Nigeria. According to Airbnb, the platform has continuously enjoyed rapid growth in Africa. The number of guests who use Airbnb annually in Africa more than doubled over the past year from 572,000 to 1.2 million. The figures show a 5th straight year of strong growth from a base of just 6,000 listings and 22,700 guests in 2012-2013. Originally called AirBed & Breakfast, Airbnb operates as an online marketplace, connecting travelers with local hosts. The platform enables people to list their available space and earn extra rental income. It enables travelers to lease or rent short-term lodg-

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ing including vacation rentals, apartment rentals, homestays, hotel beds or hotel rooms. Using Airbnb, travelers and tourists can save money and have a chance to interact with locals. Airbnb in Nigeria can be described using the already established e-hailing industry which has major players like Uber, Bolt and OCar. According to industry experts, it will be correct to call Airbnb the Uber of houses. “The same way people use their cars to sign up on Uber, Lyft or Taxify services to earn income, is the same way people rent out their houses for the short term using Airbnb. Uber has pioneered the aggregation of transportation at scale. Airbnb has also done the same in the hospitality sector,” William & Partners, Lagos-based real estate surveyors and valuers said. Airbnb has been operational in Nigeria since 2014 and has given rise to hybrid hotels where people build houses and don’t rent them out to tenants nor label them as hotels but rent them out completely on the Airbnb platform, thereby making more money and avoiding taxes. Meanwhile, before Uber became established and its relative success drowned most of the misgivings of Nigerians, there was a lot of scepticism at the idea of giving rides to total strangers. “It simply was unthinkable, but it eventually happened,” an industry player said.

Industry experts are optimistic that Airbnb in Nigeria will see the break of dawn if only measures are put in place to grow the young industry. According to William & Partners, the possibility of Airbnb catching on is high as long as the hosts provide their guests with great experiences. “It is up to us to get it right with professionalism and customer service,” it said. The Lagos-based real estate firm said there is a large market of international guests that use Airbnb. Thus, “focusing on that market will yield better results than targeting domestic clients who are hesitant to use their bank cards. As a host, one simply needs to provide a secure location and maintain good reviews and ratings to win the trust of new guests.” Founded on August 1st, 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk Airbnb started by hosting guests on air mattresses in their living room. The founders effectively turned their apartment into a bed and breakfast. They did this when all the hotels around them were fully booked before a popular conference. They sold four spots in their apartment, provided their guests with breakfast and showed them around the local neighborhood. Having received massive funding of $4.4 billion till December 2017, Airbnb is a part of the billion-dollar club with a valuation of $31 billion.

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Continued from page 31 it advised that as investors are digitizing their business, they should take the opportunity to get all their tax documents ready and organized for filing, whether on their own or with an accountant. “It’s never too early to begin preparing for tax season,” it said. On how real estate players can smooth their tax information-gathering process, Forbes recommended: Tracking income and expenses throughout the year by using digital tools, uploading and storing documents and receipts whenever they are received. Other measures include talking with their accountant about how they can take advantage of other tax strategies like pass-through deductions and casualty losses. Always learn Silverman believes that real estate education is a building block to the success of an investor. “We learn, we take action, we make mistakes and we adjust accordingly,” he stated. The CEO, therefore, recommended some of his favorite resources for learning to invest in real estate in 2020 and they included: Books on real estate written by experienced investors. Online seminars through blogs, videos and podcasts that are free and on-demand, were some sources highlighted by Silverman.” One of my favorite podcasts is Bigger Pockets, and there are various @Businessdayng

others to choose from and add to your list,” he said. With a housing deficit of more than 17 million units, the Nigerian real estate sector is faced with challenges ranging from the high cost of construction which makes it almost impossible for the country’s low-income earners to afford. According to industry sources, about 97 percent of lands in Lagos are unregistered, which makes it difficult for banks to validate claims to land or for land occupants to use their properties to create wealth. This is one of the reasons property market has liquidity issues. World Bank’s real estate data published in 2019 revealed that it takes 111 days to get a construction permit in Nigeria, whereas the same papers can be obtained in 155 and 170 days in South Africa and Ghana respectively. Also, the cost of obtaining the document in Nigeria is higher than that of Ghana and South Africa put together. It cost 27.5 percent of the warehouse value to acquire a construction permit in Nigeria whereas in Ghana and South Africa, they cost 4.6 percent and 2 percent respectively. “The major issues that continue to affect housing delivery in Nigeria, which also accounts for the wide demand-supply gap, include constraints related to the high cost of securing and registering secure land title,” said Nasir El Rufai, Kaduna State governor.

Tuesday 07 January 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

DAVID SHEPPARD, SIMEON KERR AND DANIEL SHANE

il prices surpassed $70 a barrel on Monday for the first time in more than three months as the US warned of increased threats to energy facilities in the Middle East, after the assassination of an Iranian general last week. Brent crude, the international benchmark, was up 2.1 per cent at $70.07 in early European trading, having risen as high as $70.74 in Asian trade. Brent has climbed more than 5 per cent since a US air strike killed Qassem Soleimani in Iraq on Friday. The latest gains followed a weekend of threats between Washington and Tehran, bringing the pair closer to conflict and raising tensions throughout the Middle East. C r u d e p re v i ou s l y t ra d e d above $70 a barrel in September after drone strikes, which the US blamed on Iran, temporarily knocked out half of Saudi Arabia’s oil production. Soleimani was the head of the Iranian Revolutionary Guard’s overseas forces and controlled the regime’s extensive influence across Lebanon, Iraq, Syria and Yemen. The US state department warned on Sunday there was an increased risk of attacks on oil facilities and other targets in Saudi Arabia, amid widespread expectations Iran would retaliate for the killing of Soleimani. Line chart of Price of Brent

Oil tops $70 a barrel as Middle East tensions rattle markets Crude climbs 5% after US assassination last week of Iranian commander Soleimani

The US has warned of increased threats to energy facilities in the Middle East © Bloomberg

crude per barrel ($) showing Middle East tensions drive oil higher Following the assassination, Iran said it would no longer abide by any of its commitments to the 2015 nuclear accord it signed with world powers. Shares in Saudi Aramco, the kingdom’s state oil company that made its public markets debut last month, eased 1 per cent on Monday and are now down more than 10 per cent from their peak, as the

growing threat to its facilities has overshadowed the impact of gains in the oil price. The price of West Texas Intermediate, the US crude oil marker, strengthened on Monday by 1.7 per cent to a high of $64.72, before easing to $63.85 by lunchtime in London. Oil prices will “likely rise much further if Iran retaliates, either by attacking Saudi oil facilities as it did in September, or attempting

to block the Strait of Hormuz, through which 20 per cent of global oil supply is transported”, said Michael Pearce, senior US economist at research group Capital Economics. Commercial shipping in the Gulf faces particular risks, the Norwegian Ship-owners Mutual War Risks Association, or DNK, said in a confidential intelligence report seen by the Financial Times. DNK, a major operator in the

marine war risk market, forecast a high probability of retaliation against US, Israeli and other USallied interests in the Middle East, and said US or associated vessels in the Strait of Hormuz — the narrow waterway off Iran through which roughly a fifth of the world’s oil supply passes each day — would be regarded as “high value targets”. But Goldman Sachs analysts say the risk premium currently baked into prices was already too high and that an “actual supply disruption” would now be necessary to keep prices at current levels. Still, with Middle East tensions rising, investors have continued to shift out of riskier assets and into haven assets. The price of gold for immediate delivery rose 1.3 per cent in early-European trading on Monday to $1,572 an ounce, the highest level since early 2013. Japan’s Topix equity index sank 1.4 per cent as the yen, also viewed as a haven asset, traded at a three-month high against the US dollar. The yield on US 10-year Treasuries was flat at 1.794, having dipped in Asian trade.

Carlos Ghosn reportedly escaped Tokyo on public bullet train

US debt investors seek protection against inflation

Questions remain over why former Nissan boss was not stopped from fleeing Japan

Tips in demand as Fed signals it is waiting for ‘persistent’ price rises

LEO LEWIS AND KANA INAGAKI

COLBY SMITH AND JENNIFER ABLAN

nvestors are piling in to US inflation-linked bonds, as the Federal Reserve embraces the idea of letting consumer price-rises run above target to avoid the sluggishness that has dogged much of Europe and Japan. In the minutes from December’s policy-setting meeting, Fed officials signalled a willingness to keep interest rates steady until there is a pick-up in inflation, which has remained below the central bank’s 2 per cent target despite a series of interest rate cuts in 2019. Fed chairman Jay Powell made a similar point at a press conference last month, stating that any tightening of policy would have to wait until there is “a significant move-up in inflation that’s also persistent”. Inflation is typically a trigger for investors to step back from standard government bonds. The interest payments on those bonds are fixed, so higher inflation eats away at the value they promise for the future. Now, bonds are not weakening, supported in part by the latest outbreak of geopolitical stress. But Treasury inflation-protected securities, or Tips, are climbing, reflecting

a thirst among fund managers for instruments that are indexed to inflation and that provide a hedge for times when inflation takes hold. Big investment firms including Pimco, BlackRock and Franklin Templeton are among those that have been snapping up the inflation-linked bonds. “The notion that inflation is gone is a heroic assumption,” said Sonal Desai, chief investment officer at Franklin Templeton Fixed Income Group. Tips offer value, she said, because market participants are “too sanguine” about price rises. The 10-year break-even inflation rate, a market measure of inflation expectations derived from Tips, now sits at 1.78 per cent, up from a low of 1.47 per cent in October. Meanwhile, the “fiveyear five-year” swap rate, which measures what five-year inflation expectations will be in five years’ time, hovers around 1.8 per cent. While still below the Fed’s target, both are higher than its favourite inflation gauge, core PCE, which dropped to 1.6 per cent last month on a year-over-year basis, having finished 2018 closer to 1.8 per cent. The index measures the prices paid by people for domestic purchases of goods and services, excluding the cost of food and energy. www.businessday.ng

arlos Ghosn’s escape from central Tokyo to Beirut by private jet started with a threehour ride on a public bullet train, according to Japanese media on Monday. The reports, carried by Nippon Television and TV Asahi, claimed that after walking out of his rented house the former Nissan chairman boarded at about 4.30pm the bullet train at Tokyo’s Shinagawa station, a vast railway hub about 6km from where he had been under house arrest since April 2019. If confirmed, Mr Ghosn’s use of Japan’s famous high-speed train would fill a big gap in the account of his escape. But it would raise new questions about how he was able to avoid attention riding on public transport. Mr Ghosn reportedly left the bullet train at Shin-Osaka station more than two hours later, at which point he travelled to a hotel by taxi. He fled on December 29 — one of the busiest days of the year for rail, road and air travel as hundreds of thousands of Japanese criss-cross the country to visit family for the extended new year holidays.

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Previous accounts of the escape, given to the Financial Times, suggested that he left Japan from the private jet terminal of Kansai International Airport at just after 11pm on December 29 on a flight that took him to Istanbul. The Tokyo District Public Prosecutors Office declined to comment. The revelations came as Japan’s justice minister on Monday said the country plans to toughen postbail surveillance measures and may introduce electronic tagging in the wake of Mr Ghosn’s escape last week. Masako Mori, justice minister, struggled when asked by media to explain why the former Nissan-Renault boss had not been ordered to wear a GPS tracking device while on bail in Tokyo, even though he was described as a flight risk and had offered to wear one. “We are currently reviewing our bail system. In light of recent escape incidents . . . we hope to accelerate our deliberations,” Ms Mori said. Ms Mori was also asked about one of the more intriguing elements of Mr Ghosn’s escape: the stage of the process when he is believed to have been hidden inside a large black packing case normally used for transporting @Businessdayng

audio equipment. According to a person familiar with the logistics of his escape, the use of the box was central to a scheme that allowed the fugitive to be smuggled on to the plane without passing any of the immigration controls at Kansai airport. While luggage is normally subject to both security and customs checks at airports, travellers using a private jet terminal often bypass security if the plane’s operator or pilot gives permission, according to airport security experts. But, they added, it was extremely rare that a large box such as the one believed to have contained Mr Ghosn would pass through customs checks without being opened. The Kansai airport customs branch declined to comment. There remain significant questions about Mr Ghosn’s disappearance. Yet Ms Mori fielded questions from just two Japanese media organisations in a short news conference where she largely declined to comment on details. At his first press conference of the year, Prime Minister Shinzo Abe did not face a single question regarding Mr Ghosn’s escape or the effect it might have on a case that has put the Japanese justice system under global scrutiny.

Tuesday 07 January 2020

BUSINESS DAY

NATIONAL NEWS

Campaign for shorter market hours gathers momentum in Europe Exchanges examine options after lobby groups argued for truncated trading day PHILIP STAFFORD

anks and fund managers across Europe are confident they are building the momentum to force the region’s stock exchanges to reduce their opening times. During the past few months traders have argued that the standard eight-and-a-half-hour days do nothing to help them easily buy and sell shares without affecting the market price. Such long hours are also bad for mental health and for work-life balances, they say. Now, exchanges and market participants are trying to figure out a compromise, keeping a smooth flow of trading through the global day while also giving finance professionals a less punishing workload. “ Times change, attitudes change,” said Graham Sorrell, head of European equity, currency and derivatives trading at State Street Global Advisors, a US fund manager. “It’s a small step on a longer journey the industry must take if it is to attract and retain talent which could otherwise seek opportunities in a different industry.” Europe’s trading hours — which overlap with sessions in Asia and North America — are among the longest in the world. Most exchanges are open from 8am until 4.30pm. Meanwhile, counterparts in New York conduct their business in two fewer hours. Many markets in Asia

take a break for lunch. A graphic with no description Supporters of changes in Europe say the hours no longer suit the rhythms of modern markets or of modern life. Equities traders regularly clock up 14-hour days and many argue the punishing schedule turns people away from the job, especially new graduates and mothers. In addition, the long days are often punctuated by spells of inactivity, especially in the morning. The push to shorten the day is gaining traction. “We have surveyed our members and they’re quite positive,” said Vincent Ingham, Brussels-based director of regulatory policy at the European Fund and Asset Management Association, which represents asset managers and hedge funds across Europe. “It’s a sensible proposal and one that merits further consideration.” K&K Global Consulting, a firm based outside London that runs the Alpha Trader Forum, an influential network of 900 senior traders in the asset management industry, said the idea had also won support from its members. The next stage is convincing the exchanges and agreeing a revision of hours. In December, the London Stock Exchange launched a formal consultation, while acknowledging there would have to be a co-ordinated approach by European exchange groups “in order for change to be effective”.

Saudi Aramco slumps 10% from peak on mounting Mideast jitters Drop in state oil group’s shares reflects weakness in Saudi financial markets ADAM SAMSON

audi Aramco shares have dropped more than 10 per cent from their peak as the Kingdom’s markets have been hit by growing jitters over the deteriorating situation in the Middle East following the US assassination of a top Iranian military commander. The state oil company’s shares fell 1 per cent on Monday following a 1.7 per cent fall on Sunday. The slump has left Aramco’s shares trading at 34.2 riyal, the lowest level since the group floated on Saudi Arabia’s stock bourse last month. Saudi Aramco shares popped as high at 38.7 riyal on December 12, its second day of trading, briefly giving the sprawling energy group a valuation above the $2tn mark that had been sought by Crown Prince Mohammed bin Salman. While the shares remain above the 32 riyal flotation price, they are off 12 per cent from their mid-December high. This gives the company a valuation of $1.8tn. Saudi Arabia’s markets have sustained a hit after a broad drop in emerging market asset trigged by the US assassination last week of Qassem Soleimani, an seniorranking Iranian general. Line chart of Riyal showing Saudi Aramco shares slip from peak The country’s Tadawul stock index has dropped 2.3 per cent since the start of the year. At the same time, Saudi Arabia’s international bonds have come under modest pressure while the cost to insure against a debt default has risen. The yield on a 10-year US dollardenominated bond issued last year

as risen 0.11 percentage points in the first few days of 2020, leaving it at 2.96 per cent, the highest level in a month. The five-year credit default swap spread — a measure of the perceived risk of holding Saudi debt — has risen to 62 basis points, a three-week high. Analysts are now closely watching to see whether Iran retaliates against the US move. Donald Trump has already warned Tehran that if it responds, the US will hit Iran “harder than they have ever been hit before”. Saudi Arabia is one of Iran’s major regional rivals and an ally of the US. Growing tensions between the US and Iran has brought the spectre of a potential attack on the country’s oil infrastructure back to the forefront. Tehran was blamed for a drone strike on Saudi Aramco in September that temporarily knocked half the Kingdom’s crude output. Charles Robertson, head of macro-strategy at EM specialist Renaissance Capital, said market participants were nervous over a potential Iranian strike on Saudi Arabia’s oil assets. “Iran hit Saudi Aramco refineries in 2019, and could do so again in 2020,” he said. “The markets are probably right to price in a few per cent off Saudi Aramco given the risk of another attack.” Still, Paul McNamara, an EMfocused fund manager at GAM in London, described the falls in Saudi markets as “mild”. He said the decline was less about specific fears over Saudi Arabia and more of a result of the broad drop across emerging markets.

Ursula von der Leyen, European Commission president, and Sahle-Work Zewde, Ethiopia’s president, meet in Addis Ababa © AFP via Getty Images

Europe needs a joined-up policy towards Africa The EU should encourage free trade with a continent-to-continent deal THE EDITORIAL BOARD

rsula von der Leyen’s first official trip as European Commission president was to Africa, specifically to the seat of the African Union in the Ethiopian capital of Addis Ababa. The symbolism has not gone unnoticed. Europe’s relations with Africa — still conducted through the prism of colonialism, aid and, more recently, illegal migration — are badly in need of a reset. While Europe has been looking backwards, however, others have looked to the future. China’s presence in Africa has been maligned, portrayed as neocolonialist, exploitative and devoid of conditionality, a policy Beijing dresses up as noninterference. There is some truth to this. But overall, if anything, Europe can learn from China’s pragmatism in treating Africa as an equal partner and a business opportunity — a stance that chimes with Africa’s stated goal of moving “beyond aid”. In 2019, the EU was supposed to renegotiate its comprehensive partnership with Africa, the so-called

Cotonou Agreement, a 20-year pact that expires this year. Talks have stalled. The AU is unhappy that discussions are being held in the context of the African, Caribbean and Pacific group, which excludes north Africa but includes island nations in the Caribbean and Pacific. Meanwhile, the practicalities of EUAfrica trade relations are regulated by a patchwork of a dozen or so overlapping arrangements with different African trade blocs. The AU wants a continent-tocontinent agreement. While this will obviously take time, it is a worthwhile ambition, one that should be much easier now that 54 countries are moving rapidly to enact the African Continental Free Trade Area, an agreement that removes 90 per cent of tariffs on intra-African trade. Yet despite this progress, AU negotiators sense resistance to the idea in Brussels. If that is true, Europe is missing a trick. Africa’s free trade area could catalyse intra-continental trade, which would give its economies greater ability to attract investment and move up the value chain. Europe should be enthusiastically em-

bracing this agenda. It is Africa’s best chance of breaking out of poverty. On a bilateral level both Germany and France have made efforts to think differently. Partly spurred by concerns over migration, Germany launched the so-called Marshall Plan with Africa in 2018, one of whose aims is to encourage more investment on the continent. Emmanuel Macron has also worked hard to recast Paris’ relations with Africa, agreeing to end the CFA franc regime in west Africa and broadening France’s engagement beyond francophone Africa. Soon to be outside the EU, the UK is seeking to reboot relations too, though its romantic notions about the role of the Commonwealth will gain little traction. Beyond trade, Europe needs a coherent African policy on security, immigration and climate change. On immigration, it should work to help countries deal with intraAfrican migration, which accounts for 80 per cent of all flows. As far as possible, it should work with the AU on peacekeeping missions to combat the very real threat of terrorism in the Horn and the Sahel.

Wall Street banks ramp up research into quantum finance Goldman Sachs, JPMorgan and Citigroup eye potentially revolutionary technology RICHARD WATERS

ome of Wall Street’s biggest banks have stepped up their research into quantum computing, signalling growing confidence that recent breakthroughs in the field have laid the foundation for the first practical applications of the revolutionary new computing technology. Paul Burchard, a senior researcher at Goldman Sachs, said the bank ramped up its five-yearold research effort last year after seeing hardware advances that suggested the technology was on the brink of a rapid acceleration. “We think there’s a possibility this becomes a critical technology,” Mr Burchard said. Banks such as JPMorgan Chase and Citigroup, which 18 months ago took its first small stake in a quantum computing company, echo that view. The potential for the technology to revolutionise activities like risk management and trading are so great that banks need to start learning how

to harness it now, said William Hartnett, a managing director at Citi. The banks’ research efforts centre on trying to design new types of algorithms capable of being run on quantum machines. The first of these involve a class of optimisation problems that take advantage of the probabilistic nature of quantum computing to analyse a large number of possible outcomes and pick the most desirable, rather than following the precise logic paths of traditional computers. The work has been focused on so-called Monte Carlo simulations, complex calculations that banks normally carry out daily to assess their overall risk positions. The same techniques are used in options pricing. Together, these calculations account for the bulk of the computing power currently used by JPMorgan Chase, said Ning Shen, managing director of quantum research. Besides boosting their computing resources, the banks hope quantum machines will greatly reduce the time it takes to analyse

complex risk positions, making it possible to adjust on the fly rather than relying on an overnight calculation. Being able to quote prices on complex financial products to customers in real time should also make it possible to “open up bigger markets”, said Mr Burchard. “In order to quote a price to a customer, we have to be able to see all the risks around a trade.” Mr Shen added: “If you can recalibrate your models fast, you can give better execution to clients.” The same technology could also make it possible to optimise the investment portfolios of wealthy clients on a case-by-case basis, he said. Further in the future, the banks also hope to use quantum computing to speed up the machine learning systems that lie at the heart of their push into artificial intelligence. That could make it possible to spot anomalies in markets more quickly, or identify opportunities that were not apparent at all before. However, that research has yet to begin and will require techniques that go well

Tuesday 07 January 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

NMC Health seeks to confirm cash levels after Muddy Waters attack Company outlines review in response to doubts raised by Carson Block’s short seller DANIEL THOMAS

review of the financial position of NMC Health following a short-seller attack last month will initially seek to confirm the level of cash on its balance sheet, the FTSE 100 healthcare operator said on Monday. NMC has been under scrutiny since Muddy Waters, the US-based short seller run by Carson Block, raised questions over its asset values, cash balance, profits and debt levels. In a detailed report in December, Muddy Waters said that the sums reported led to concerns about whether there were fraudulent asset values and the theft of company assets. NMC denied the allegations from Muddy Waters as “baseless and misleading” but committed to a review of its business to be carried out by a committee of independent non-executives. NMC, which owns and operates hospitals and clinics across the Middle East, said that an independent adviser would also be appointed to help oversee the review. On Monday, NMC said that the review would initially focus on confirming the amount of cash on its balance sheet as of December 15, with the rest of the work expected to be completed and published “well in advance” of the announcement of the company’s 2019 results. Last year it published its results in May. Shares in the group dropped more than 4 per cent on Monday morning, valuing the company at

about £3.5bn. Since the Muddy Waters report was published in December, NMC’s shares have lost about a third of their value. Muddy Waters had alleged that NMC’s cash balances showed “two red flags that indicate they could be materially overstated” in its 34-page report. NMC reported about $491m in cash, bank balances and bank deposits at the end of 2018. NMC’s interest income appeared too low for the cash balances, Muddy Waters alleged, while the cost of the company’s debt “does not seem justified by the reasons the company gives for carrying such high debt when it reports a large cash balance”. “In our experience, low interest income relative to reported cash balances is a significant indicator of overstated cash,” it said. Muddy Waters also said that NMC’s margins appeared “too good to be true” relative to UAE-focused peers, Mediclinic International and Aster DM Healthcare. NMC is a heavily shorted stock, although hedge funds have been reducing their positions against the company since the Muddy Waters attack last month. The company on Monday also named the independent non-executive directors of the review group: Jonathan Bomford, a former Ernst & Young partner; Tarek Alnabulsi and Salma Hareb, both regional investors; and Patrick Meade, the eighth Earl of Clanwilliam. Muddy Waters had raised questions over the independence of the non-executive directors at NMC.

Three technological trends that will shape the decade China will reinvent finance while computing power grows and genome sequencing becomes cheaper

JOHN THORNHILL

he new year has already brought a spate of eye-catching events. Expect this year’s headlines to be dominated by conflict in the Middle East, insurgency in Hong Kong, Brexit and the re-election (or not) of US president Donald Trump. Trends, on the other hand, tend to be slow, incremental and harder to grasp. But, as the historian Fernand Braudel argued, trends determine events. Here are three technological trends that I think will shape this decade. First, Chinese technology will reinvent finance. In the west, investors are excited about fintech, as finance and technology converge to deliver familiar services more efficiently. In China, it might be more accurate to describe the process as techfin: technology is completely redesigning finance from the smartphone user’s perspective. Call it late-mover advantage. The speed at which China has moved from a cash to a digital-payments economy is staggering: some $17tn of transactions were conducted online in 2017. China’s mobile payment volumes are more than 50 times those in the US.

That growth has been chiefly driven by two tech companies: Alibaba and Tencent. To facilitate payments on its ecommerce platform, Alibaba created an e-wallet, which fuelled the extraordinary growth of Alipay and temporarily created the world’s biggest money market fund. Rival Tencent developed its financial business, WeChat Pay, off the back of its messaging and gaming apps. It now has 900m users. Both companies still have room for growth in rural China. But perhaps the most enticing opportunities lie abroad. About 1.7bn people in the world remain unbanked. When they come online they will be looking for cheap, convenient, integrated digital financial services, such as China has pioneered. China has the chance to rewire 21st-century finance. The second trend is the growth of computing power. The limits of physics are now restricting the number of transistors that can be stuck on a silicon chip, threatening to break Moore’s law, which observes that processing power doubles every two years. That does not unduly worry the computer industry and should not degrade user experience — as long as engineers become more innovative in other ways. www.businessday.ng

Equinor pledges to slash greenhouse gas emissions in Norway Oil and gas group’s move decried by some environmentalists as ‘greenwashing’ RICHARD MILNE

quinor has pledged to cut its greenhouse gas emissions from Norwegian oil and gasfields by 40 per cent in the next decade as the state-controlled petroleum group positions itself as a survivor in the debate on potential stranded assets. The Norwegian oil and gas major said it would cut its emissions from production in Norway by 70 per cent by 2040 and to near zero by 2050 from its current level, which is equivalent to about 13m tonnes of carbon dioxide a year. But it gave no goals for reducing emissions from the use or burning of its oil and gas, which in 2018 amounted to the equivalent of about 314m tonnes of carbon dioxide, leading some environmentalists to claim the move was mere “greenwashing”. “We know we will need oil and gas for some time, but less so than we produce today. So for me it’s a question of which oil and gas. It’s about increasing competitiveness,” said Eldar Sætre, Equinor’s chief executive. Equinor’s new targets were disclosed a day before it opens the biggest new oilfield in the North Sea in de-

cades. The Johan Sverdrup field will be unveiled by Norway’s prime minister on Tuesday in a sign of its importance for the Scandinavian country, which could earn about $100bn in tax revenues from it over the next five decades. The emissions from the new field’s production are about 700g of carbon dioxide per barrel compared with a global average of 18kg, according to Equinor, because of its use of electricity from the mainland — which in Norway’s case means mostly hydroelectric power — rather than using gas-fired turbines on the platform. Mr Sætre said that by using mostly electrification — particularly of large existing fields — and investing NKr50bn over the next decade, Equinor could cut about 5m tonnes from its production emissions. He added that the investments would be profitable for the company because it would minimise the amount of carbon taxes and offsets it had to buy. Both Equinor and the Norwegian state are promoting oil from the Nordic country as some of the “greenest” in the world and argue that only the lowest-emitting producers should continue as demand for oil decreases in the coming decades. Equinor predicts that Norway’s oil and gas production will be

less than half its current levels by 2050. “I would prefer Johan Sverdrup oil and gas rather than from other fields,” added Mr Sætre. But environmentalists criticised the measures as window dressing. “This is more like a PR sham than real climate solutions,” said Silje Lundberg, head of the Norwegian Society for the Conservation of Nature. She added that to stay under the 1.5C maximum warming target envisioned in the Paris climate agreement, zero emissions were needed by 2050 but that fields such as Johan Sverdrup — with an estimated 50-year lifetime — meant that Equinor planned to produce oil and gas up to 2070 and beyond. “Today’s news is just another way to greenwash the company’s continued business strategy, which in reality is a bet against the Paris agreement,” she said. Equinor is increasingly investing in non-oil projects such as offshore wind, carbon storage and hydrogen production. Mr Sætre said the group would reveal its thinking on how to reduce so-called scope 3 emissions — those that occur when the oil is burnt or used — in February at its annual capital markets day.

Gold nears 7-year high as Iran tensions spark fresh market jitters Relations between Washington and Tehran soured further over the weekend PHILIP GEORGIADIS AND NEIL HUME

ine chart of Gold price ($ per troy ounce) showing Gold rises on Middle East tensions The price of gold rose to its highest level in nearly seven years on Monday as tension in the Middle East fuelled demand for safe places to warehouse cash. Investors moved into assets seen as havens as they awaited any Iranian response to the US killing of a senior Iranian commander, sending the Japanese yen higher and extending a sell-off in global stock markets. Gold rose as much as 2.3 per cent to $1,580 a troy ounce, its highest level since April 2013, boosting the share prices of producers in the UK and South Africa. Harmony Gold climbed 3 per cent, while London-listed Polyus International advanced 1 per cent. “Markets tend to overreact to geopolitics when trading is thin, as it has been during the post-holiday period,

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but investors are right to fret about what is happening in the Middle East,” said Natasha Kaneva, commodities analyst at JPMorgan. Crude oil prices hit a three-month high as they rose as much as 2 per cent to trade around $70 a barrel, their highest level since an attack on a Saudi oil facility last year. Brent has climbed more than 5 per cent since US air strikes on Friday. European and Asian equity markets fell, with the composite Stoxx Europe 600 down 0.9 per cent in morning trading. Japan’s Nikkei was the worst major performer as it fell 1.9 per cent after coming back online following the holiday season, its steepest one-day drop since early October. S&P 500 futures deepened their declines through the day, as they pointed to falls of 0.5 per cent when Wall Street opens. The Cboe’s volatility index, or Vix, rose 1.6 points to 15.66, but was still below its long term average of roughly 20. Relations between Washington @Businessdayng

and Tehran soured further over the weekend as Donald Trump warned Iran would be hit “harder than they have ever been hit before” if the country retaliates to the killing of Qassem Soleimani. In a series of increasingly bellicose tweets, the president said he would respond “perhaps in a disproportionate manner” if Iran hits American targets. “We’re left waiting to see if we get an aggressive response from Iran with the whole Middle East likely feeling vulnerable,” said Deutsche Bank strategist Jim Reid. Tehran said it would not abide by any of its commitments to the 2015 nuclear accord following the killing of its top commander, as hundreds of thousands of Iranians gathered in Iran’s holiest city to mourn Soleimani. President Donald Trump also threatened neighbouring Iraq with sanctions “like they’ve never seen before” if it expels American troops in retaliation for the assassination in Baghdad on Friday.

Tuesday 07 January 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 06 January 2020

Top Gainers/Losers as at Monday 06 January 2020 LOSERS

GAINERS Company

Opening

Closing

Change

DANGCEM

N142

N146

FLOURMILL

N19.75

N21

1.25

NASCON

N12.95

N13.95

GUARANTY

N30.1

N31

0.9

DANGSUGAR

N14.2

N15.05

0.85

Company

Opening

Closing

Change

SEPLAT

N592.1

N589.5

-2.6

MTNN

N109

N108

-1

UNILEVER

N20.7

N20

-0.7

N5.65

N5.1

-0.55

N5.7

-0.3

UBN

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

27,339.68 5,784.00 520,433,769.00 5.350

…NSE removes limit on stocks in Lotus Islamic Index Stories by Iheanyi Nwachukwu

L-R: Zainab Ahmed, minister of finance; Mary Uduk, acting director general, Securities and Exchange Commission and Abdulkadir Abbas, head, Securities and Investments Services SEC during the Send forth Ceremony of Mohammed Dikwa, the Outgoing permanent secretary, special duties, ministry of finance in Abuja.

biggest loss, from N592.1 to N589.5, losing N2.6 or 0.44percent followed by MTNN Plc which dipped from N109 to N108, losing N1 or 0.92percent. The value of listed stocks which opened year 2020 at N12.971 tr illion has risen to N13.198trillion as at Monday January 6. Likewise, the NSE All Share Index (ASI) which opened the year at 26,867.79 points has advanced remarkably to 27,339.68 points. Some analysts believe

that while investors continue to seek attractive markers on the Bourse, the market may witness mixed trading due to activities of profit takers. “ We e x p e c t m i x e d performance in the equities market, as investors are likely to take profit given the gains that occurred in the previous week”, according to Afrinvest research analysts in their recent note to investors. In a re l at e d ma rke t development, the Nigerian St o ck E xc ha ng e ( N S E ) in a recent note signed

FTSE 100 Index 7,575.25GBP -47.15-0.62%

Nikkei 225 23,204.86JPY -451.76-1.91

S&P 500 Index 3,233.93USD -0.92-0.03%

Deutsche Boerse AG German Stock Index DAX 13,136.23EUR -82.91-0.63%

Generic 1st ‘DM’ Future 28,547.00USD -55.00-0.19%

Shanghai Stock Exchange Composite Index 3,083.41CNY -0.38-0.01%

13.198

Five-day rally puts over N220bn in Nigeria stock investors’ pockets

igeria stocks investors have every reason to smile in the first five trading days into year 2020. Looking at the market’s position as at January 6, these investors are about N227billion richer than they were as at December 31, 2019. Nigerian equities market kicked-off the New Year on a bullish note, gaining on all trading days till date. At the close of trading on Monday, the market gained 1.38 percent which helped push the month-to-date (MtD) positive return further to 1.85percent. Some of analysts’ stock picks for the year 2020 were on demand at the Bourse on Monday where in 5,784 deals, equity dealers exchanged 520,433,769 units valued at N5.350billion. On the review trading day (Monday January 6, 2020) Dangote Cement Plc recorded the highest gain after its share price moved from N142 to N146, adding N4 or 2.82percent, followed by Flour Mills Plc which moved from N19.75 to N21, adding N1.25 or 6.33percent. S e p l at re c o rd e d t h e

Global market indicators

by Abimbola Babalola, chairman, Index Governance Committe e said it has updated the index rules for the NSE Lotus Islamic Index “and will remove the limit on the number of constituent stocks in the index commencing January 1, 2020.” “This will enable the NSE Lotus Islamic Index to be more representative of the investible universe of Shari’ah compliant stocks as the market expands”, the NSE said.

Forte, Oando, PZ exit NSE-30 in recently reviewed market indices

orte Oil Plc (Ardova Plc), Oando Plc, and PZ Industries Plc have exited the NSE 30 Index paving way for likes of Cement Company of Northern Nigeria Plc (CCNN Plc), FCMB Plc, and MTN Nigeria Plc. The NSE 30 tracks the top 30 companies in terms of market capitalisation and liquidity. The Nigerian Stock Exchange (NSE) disclosed this in its annual full year market index review which led to the entry and exit of major companies from several indices. It took effect on Wednesday January 2, 2020. The indices are the NSE 30, NSE Lotus Islamic, NSE Pension, Corporate Governance Index, Afrinvest Bank Value Index, Afrinvest Dividend Yield Index, Meristem Growth Index, Meristem Value Index. Also included are the five Sectoral Indices of The Exchange - NSE Banking, NSE Insurance, NSE Industrial, NSE Consumer Goods and NSE Oil & Gas. The indices were developed to allow investors to follow market movements and properly manage investment portfolios. Designed using the market capitalization methodology, the indices are rebalanced on a semiannual basis on the first business day in January and in July. 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 five sectoral indices with a base value of 1,000 points, designed to provide investable benchmarks to capture the performance of specific sectors.

The sectoral indices comprise the top 15 most capitalised and liquid companies in the Insurance and Consumer Goods sectors; the top ten most capitalized and liquid companies in the Banking and Industrial Goods sector; and the top seven most capitalised and liquid companies in the Oil & Gas sector. The Exchange in collaboration with issuers like Lotus Capital, Meristem Securities and Afrinvest also published co-branded indices. While the NSE Consumer Goods Index, NSE Banking Index, NSE Oil & Gas Index, and Afrinvest Bank Value Index saw no changes, the NSE Insurance Index is now made up of Cornerstone Insurance Plc, and Sunu Assurances Nigeria Plc, while Veritas Kapital Plc and Continental Insurance Plc exited. Notore Chemical Industries Plc has left the NSE Industrial Index for Premier Paints Plc. MTN Nigeria Plc has replaced Glaxo Smithkline Plc in the NSE Pension Index. Also, MTN Nigeria Plc and Forte Oil Plc have replaced Glaxo Smithkline Plc, CAP Plc and Presco Plc in the NSE Lotus Islamic Index. MTN Nigeria Plc also joined the Corporate Governance Index. Other changes were seen in the Afrinvest Div Yield Index where Conoil Plc, Dangote Cement and Vitafoam exited for NASCON, NEM Insurance and UACN Plc. Meristem Growth Index witnessed the exit of Cadbury Nigeria Plc, CAP Plc, Dangote Cement Plc, ETI Plc, May & Baker, UAC-Properties, Wapic Insurance Plc and Zenith Bank Plc.

Notore draws N13.32bn facility from Afrexim bank for Turn-Around Maintenance programme

otore Chemical Industries Plc has drawn down a N13.32 billion facility from the African Export-Import Bank (Afreximbank) for a TurnAround Maintenance (TAM) p ro g r a m m e t o a c h i e v e nameplate capacity of its plant in 2020. The Africa’s leading chemical and agroallied company disclosed this in its report for the financial year ended September 30,

2019. The company said the TAM would reduce downtime at the plant, boost production and increase revenue, adding that the facility drawn from A f re x i m b a n k w o u l d b e used for orders of critical components of its plant for the TAM to ensure optimal performance. According to the company, “Notore has commenced its TAM programme. The N13.32 billion facility granted by www.businessday.ng

Afreximbank has been drawn down and orders placed for critical components. The TAM programme is expected to be completed by financial year ended 2020. The completion of the TAM programme will ensure the Plant operates at its nameplate capacity resulting in a consistent and significant improvement in production numbers and revenue. “To the extent that Notore’s operating costs (N24.5 billion in FY 2019 and N24 billion in

FY 2018) are largely fixed, it is expected that a significant amount of the upside from the increase in revenue post TAM will flow to the bottom line.” The company said the F e d e r a l G o v e r n m e n t ’s policies were favourable for its business, and would boost its revenues when its new NPK blending plant comes on stream this year. “ The current Federal Government policies in the fertilizer space are quite

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f av o u r a b l e t o No t o re ’s business. Additionally, ongoing market demand for NPK and NPK specialty blends will boost the business’ revenues when Notore’s newly installed and commissioned 2,000 MTD NPK blending plant begins its inaugural production in FY 2020,” it noted. It added, “Consequently, Notore has begun gradual efforts to further diversify its revenue streams by selling specifically produced Notore @Businessdayng

seeds to farmers.” Notore said its greatest challenge to its profit after tax (PAT) remains its Net Finance Cost; adding that “and asides the TAM initiative which will be completed in FY 2020 to introduce reliability into Notore’s Plant, the Group is working on various other initiatives for FY 2020 to bring the company to profitability by considerably reducing its Finance Cost and improve its working capital.”

Tuesday 07 January 2020

BUSINESS DAY

news

IPAC tasks Sanwo-Olu on good governance Iniobong Iwok

he Inter-Party Advisory Council (IPAC) Lagos State chapter has advised Governor Babajide Sanwo-Olu to redouble his effort at fulfilling his campaign promises to Nigerians, while special priority should be given to improve infrastructure across the state in the New Year. In a statement Monday and signed by the state chairman, Ademola Tade, Ademola calls for the implementation and exploitation of blue economy/ railroadisation for effective intermodal transportation system across the state. Ademola further advised the government to consider free use of toll gates domiciled in some locations in the state for passenger vehicles with a view to prevent inflation and cost of services. According to the statement, “The chairman, Lagos state IPAC appreciates economic strides of the people that has made Lagos the bread basket of Nigeria and encourage citizens of Lagos state to be of good cheer and hope for

better service delivery as we enter the new year 2020. “Active and law abiding citizenry create enabling environment for servants of the people to deliver dividends of democracy. We therefore enjoin all citizens to be mindful of the sustainable waste management system, especially during this festive period, for a clean and friendly city. “As for the government that was elected to serve, they should redouble efforts to reduce the stress/ sufferings citizens go through on the highways by immediately creating enabling environment for introduction of more comfortable mass transit systems, fast track implementation and exploitation of our blue economy/railroadisation for effective intermodal transportation system. “We advise government to consider free use of the toll gates for passenger vehicles with a view to prevent inflation and cost of services. In conclusion we wish both citizens and government prosperous and peaceful year 2020.”

L-R: Adakole Jones Akpa, national chairman, Nigerian Legion Corps of Commissionaries; Abubakar Suleiman, chief executive officer, Sterling Bank; Ernest Akoteyon, assistant commandant general, Nigerian Legion, and Femi Durojaiye, chief compliance officer, Sterling Bank, during the working visit of the leadership of Nigerian Legion Corps of Commissionaries to Sterling Bank head office in Lagos.

NERC considers ‘back up plan’ for millions of unmetered customers to halt exploitation

Discos allay fears of Nigerians, say no tariff increase till April HARRISON EDEH, Abuja

ssociation of Nigerian Electricity Distribution Company (ANED) has in a clarification on Monday addressed concerns of Nigerians, saying there would be no tariff increase for electricity consumers till April. ANED’s response was against the backdrop of reports in some sections of the media that tariff for electricity supply had been increased by 200 percent. The clarification statement noted that the Nigerian Electricity Regulatory Commission (NERC) had published an Order on tariffs and Minimum remittance for January to June 2020. The tariff, ANED said, anticipates change in the current exchange rate between the United States and Nigeria alongside changes of inflation and gas prices. In the statement, Sunday Oduntan, the spokesperson

for the Discos categorically stated, “The tariff shall remain same as presently (I.e 2015 levels) until April 01, 2020 when there will be gradual pass on to the consumers until this is fully completed by the end of 2021. “In view of the foregoing, we state emphatically that there shall be no change or increase in the existing Electricity tariff until April 01 2020 when the new adjusted tariff shall begin to gradually reflect the dynamism of our macro-economy.” Meanwhile, ANED said the Discos were studying the modalities of the directive issued by the NERC on cashless payment for the customers. Recall, NERC had on December 31, 2019 directed the 11 distribution companies to transit to cashless payment platforms for the billing collection of industrial and commercial customers by January 31.

FIIRO union dissociates self from purported call for the suspension of acting DG

i t h re f e re n c e t o the media publication of a newspaper dated January 2, 2020, on the Ph.D Degree saga in FIIRO, a faction of the agency’s union (some members of Senior Staff Association (SSAUTHRIAI) FIIRO branch), whom the said publication claimed were behind the call for the suspension of the acting director-general of FIIRO, had been declared as false. According to the source, who pleaded anonymity, “The information in the script did not originate from the senior staff association, which was neither the opinion/resolution of the union executives nor an agreement by the general Congress. “It is a mere pursuit of personal interest by the writer of the published script which is a clear fact that some notable individuals who have vested

interest in the seat of FIIRO Chief Executive are bent on using media publications to rubbish and tarnish the image of Dr. C. C. Igwe, who has a vast knowledge and is capable of taking the institute to the next level where she wants to be.” Investigation conducted by concerned members of the institute shows that the incumbent chairman of senior staff association, FIIRO branch was on his own in the report he gave out. The executive members of Senior Staff Association, FIIRO branch herby use this platform to dissociate itself from the publication against FIIRO acting DG and also appeal to Minister of Science and Technology, ICPC and other notable government functionaries to ignore and disregard the report in the newspaper.

HARRISON EDEH, Abuja

he Nigerian Electricity Regulatory Commission (NERC) has confirmed plans to work out a mode of payment through which over 5 million unmetered customers could pay the appropriate cost for power without undue exploitation. The regulator says the measure is being considered in a bid to ensure electricity consumers are not exploited, and as a means of ensuring that the appropriate cost for power is paid by consumers. James Momoh, chairman of the Commission, gave the information on Monday in Abuja while fielding questions from newsmen at his first media interaction this year. “We would do everything within our powers to ensure that the Meter Asset Providers (MAP) meter unmetered electricity customers. However, if the MAP could not close the metering gap, we would explore other options called ‘capping,’

… denies upward review of tariff which would have a designated amount to charge customers by the Discos for unmetered customers,” Momoh said. The commission is constantly engaging power stakeholders to ensure that issues of technical losses and holistic management of power sector concerns are being adequately addressed, while noting that stakeholder engagement to promote innovation in metering is to be organised by the commission soon to engage more metering issues, he said. BusinessDay findings show that the MAP option adopted by NERC has been facing some challenges due largely to the high duty of about 25%, which was not initially factored in during engagement with stakeholders and prior to the commencement of MAP regulations in April 2018. Meanwhile, the regulator’s helmsman when prodded further on the possibility of enforcing licence withdrawals

from sanctioned Discos said he would not want to discuss that but noted that discussions were currently ongoing with the Discos on their remittances in a bid to address concerns of shortfalls and liquidity concerns hindering sectoral progress. “On the withdrawal of licence on the Discos, we had had a closure on that; nevertheless engagement is currently ongoing with the Discos in meeting their minimum remittances, and the public meeting we had with the two of the Discos and other related issues would be publicised in months’ time. He assured that the commission would continuously ensure that unmetered Nigerians would be metered. However, the NERC has officially denied the upward review in its Multi-Year Tariff (MYTO) dated December 31, 2019, Again, Momoh confirmed this on Monday, while noting

that there was no immediate tariff increase for customers. He stated that the order, which it reports went virile in both conventional and social media, was titled: “NERC in the matter of the December 2019 minor review Multi Year Tariff Order (MYTO) for Abuja Electricity Distribution Company plc,” in the case of the AEDC. According to the order, “the Federal Government’s updated Power Sector Recovery Programme does not envisage an immediate increase in end-user tariffs until 1st April 2020 and a transition to full cost reflectivity by end of 2021. “In the interim, the Federal Government has committed to fund the revenue gap arising from the difference between cost reflective tariffs determined by the commission and the actual end-user tariffs payable by customers. There is no immediate increase in tariff for customers.”

Ihedioha pledges to uphold judicial independence, swears in 9 judges

www.businessday.ng

mo State governor, Emeka Ihedioha,hasreassuredtheresolve of his administration to uphold the independence of the judiciary and abide to the rule of law, twin factors he identified as the only panacea to good governance. He made this commitment while speaking at the swearing in of nine judges, seven for the State High Court, two for the Customary Court of Appeal, held at Sam Mbakwe Expanded Executive Council Chambers, Government House, Owerri. The governor noted that the three arms of government must collaborate for good governance to thrive. “To ensure good governance, the three arms of government must coexist as separate organs of government independently, but collaboratively,” he reiterated. Ihedioha revealed that his administration had maintained

a symbiotic relationship with other arms of government, assuring that plans were in top gear to enhance the status of the judicial system in the state after several years of neglect. “We have reconstituted the Judicial Service Commission; renovation of Judges Quarters has begun. We have also ensured payment of salaries of Judges as at when due and provided official guards for them,” he said. He continued, “This administration achieved these feats within a short period of time, despite our financial constraints.” The governor revealed that, of the 33 judges recommended for appointment across the federation by the National Judicial Council (NJC), nine judges, the highest, were approved for Imo State. “The NJC approved nine Judges for Imo State which is

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the highest, trailed by Rivers State which got approval for four judges. “This is a testimony of our unwavering resolve to entrenching the tenets of rule of law in our State which can be achieved with an efficient and formidable judiciary,” he said. He recalled steps taken by his administration on assumption of office to boost the state judiciary, which led to the appointment of magistrates, inspectors of court, bailiffs and other judicial staff. While noting that these measures were taken to ensure an effective justice delivery system in the state, he advised the new Judges to discharge their duties fairly and ensure they do justice to all manner of people without fear or favour. Earlier in his remarks, the Chief Justice of Imo State, Justice Paschal Nnadi, said Governor @Businessdayng

Ihedioha has revitalized the Judiciary in the State, which has translated to numerous gains to the judicial system, including expedition of cases. He expressed gratitude to the Governor for rejuvenating the judiciary and assured that the judiciary in the State will continue to serve justice to all. Justice Ihuoma Grace Chukwunyere who spoke on behalf of the newly inaugurated Judges, assured that they will uphold the law at all times. The newly sworn in Judges of the State High Court included: Onyeka Vincent Iheanyichukwu; Leweanya Kechinyere A; Victoria Chinyere Isiguzo; Vivian O. B. Ekezie; Eze Nonye Eke; Ihuoma Grace Chukwunyere; Ibeawuchi Edith Chinyere. The Judges of the Customary Court of Appeal were: Obichere Ijeoma Josephine; Nze Ifeanyi Tennyson.

Tuesday 07 January 2020

BUSINESS DAY

news How security agencies hunt... Continued from page 1

member hitching a free

ride on a van conveying smuggled tomatoes, to posing as a representative of government sent from Abuja, and finally as a fruits dealer, uncovered a highly organised racket. Set up since late August, it involves the Nigeria Customs Service, Nigeria Immigration Service, Nigeria Police Force, and Nigerian Army. The linchpin of this operation that is fast becoming a syndicate is the Nigeria Agricultural Quarantine Service (NAQS). Less known, especially in urban centres, NAQS has given legitimacy to an extortion racket which, according to estimates, has seen helpless farmers, traders and villagers in just one local government area contributing up to N668 million ($1.85 million) in extortion within 100 days of the border closure. The border closure, according to President Muhammadu Buhari, was meant to revive agriculture and protect local farmersfromtheinfluxofforeign agricultural goods that always entered the country at lower price points. This border closure was supposed to end poverty and misery for local farmers. When Hameed Ali, comptroller-general of Nigeria Customs Service, asked Nigerians to “endure the pain” of border closure, it sounded like “gain” in the ears of farmers, but over the last three months, at least in some communities in Ogun State, there have been more pains than gains. In villages and small towns within 20 kilometres of Nigeria’s land borders, different law enforcement agencies have united to hunt a common prey – not rice smugglers, not those into illegal arms movement, but the millions of peasant farmers and traders who rely on agriculture for survival. This reporter visited Imeko, Iwoye-Ketu, Ilara, and Idofa, all rural communities clustered around Imeko-Afon Local Government Area of Ogun State. It was discovered that security agencies have abandoned chasing smugglers and, instead, are focusing on the slow moving targets. As farmers ride out of their farms on their old, wornout motorcycles struggling to maintain balance on roads that are more of holes than

Two of three “Quarantine Documents” used to coordinate extortions. When dropped at Olorunda, it becomes a voucher for some officers of the Customs Services to claim payment.

actual ground, they also have to keep an eye out for any of the several law enforcement agencies that have now turned them into meal tickets. The extortion is brazen, so much that farmers and traders are mandated to pay for a “government-issued document” which serves as a pass for them to get on the road with their farm produce. It, however, does not guarantee them a safe trip. Cooperating with the dozens of checkpoints is what guarantees arriving at their destination, not only with their goods intact, but also without being beaten by officers attached to any of the many agencies. The men, especially the young ones, are routinely beaten, while the women, particularly the elderly, have water poured on them. This, to the women, is “being lucky”. There are over 2,000 border communities located in 105 local government areas in 21 states of the federation, according to the Border Communities Development Agency (BCDA). When the magnitude of extortion taking place in just few border communities in Ogun State is multiplied across the country, the result is a likely wide scale corruption and abuse of power of epic proportions. “We have been reduced to chickens packed inside a wooden cage,” said Victoria Ogunleye, the Iyaloja of Imeko, when this reporter visited the community. (Commonly used in South West Nigeria, Iyaloja is the title given to a female market leader.) “Like pop-corn, they are just frying us as they please. The trouble is too much,” Ogunleye said. Her words, all translated from Yoruba language, are filled with so much emotion and anguish. Like other villagers, she sounds defeated,

The van of smuggled tomatoes this reporter followed www.businessday.ng

but what sets her apart is her refusal to be broken. These villagers have been told that tomato, pepper, yam, pineapple, lafun (a derivative of yam used for yam flour), along with dozens of other farm produce have been banned by the Federal Government from “entering Nigeria”, enforced in these areas to mean moving from the rural settlements to the cities such as Abeokuta and Lagos. According to the fictitious “list of banned food crops”, maize is said to be number 17, and like other crops, before these can be moved from the villages where storage facilities do not exist or even electricity to preserve them, the farmers have to pay through their nose along the battered, dusty roads leading to Abeokuta. In one of these rural communities, the Federal University of Agriculture, Abeokuta (FUNAAB) has its Centre for Community-Based Farming Scheme. In another, Odua Investment Company Limited owns a 10-hectare land for commercial tomato cultivation – all within Nigerian territory. According to law enforcement agencies in the area, however, every farm produce here is “foreign” and must be treated as smuggled items. For thousands of villagers in these isolated areas, there is no hope. Neither government nor their traditional rulers have come to their rescue, and they do not see any ray of sunshine coming to dispel the dark clouds of uncertainty they have endured for over 100 days. In Yoruba tradition, “Kings do not lie”, but one of the traditional rulers visited in the course of this investigation looked this reporter in the eyes and said what would later turn out to be a false statement. He had, in fact, set up

the committee coordinating extortion under his domain on behalf of the quarantine service and other security agencies. How it all began When word first filtered out around September that the border closure had become an avenue for extorting farmers and traders of agricultural produce in some rural communities, it seemed implausible. Several attempts to speak with people in the areas affected proved abortive. As this reporter would later find out, mobile networks are not so reliable in many of the communities. When Tosin Adeluyi, chairman of Imeko/Afon Local Government Area, was eventually contacted, his disposition was as though the cries of hundreds of thousands of residents under his administration were really nothing. This reporter would later be told that Tosin Adeluyi is the son of the traditional ruler of Ilara, the community where the worst form of extortion takes place under the supervision of a notorious smuggler. The first trip to the area began on an uneventful morning in November 2019. The journey to Abeokuta from Lagos was smooth, if one chose to ignore the deplorable road connecting both economically significant states from the Oshodi axis. From the Ayetoro Park around Lafenwa in Abeokuta where the journey to Imeko was to begin, passengers trickled in to fill the Toyota Sienna car. Originally meant to convey six passengers, the car would eventually carry nine on a journey to a part of Nigeria conveniently disconnected from the realities of the country. When the roads were good, this journey took 45 minutes, said a passenger who tried to strike a conversation. The passenger explained that with the bad roads, it would take one and a half hours on the average, but this particular trip took four hours and 15 minutes. The right rear tyre deflated twice, and on both occasions, the driver had to leave all passengers by the bush side, flag down a motorcycle and head to the closest settlement to have it fixed. Arriving at Imeko late in the afternoon, this reporter decided to head for the palace of the traditional ruler in the area, Oba Benjamin Alabi Oyeditan-Olanite, the

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Onimeko of Imeko. After a brief bargain with a commercial motorcyclist, we made our way out of the motor park located right beside the major market serving the community. As we approached what appeared to be a purpose-built palace painted in green and white, the motorcyclist continued to accelerate, prompting this reporter to ask if there was another king in town. The motorcyclist explained that the king preferred to stay in his private residence. This reporter arrived soon after and was ushered in to see the Onimeko after introductions were sought outside. As the king hardly spoke at first, one of the palace chiefs did the initial talking and motioned for the reporter to sit after performing the customary greetings by prostrating. This appeared to be a gaffe – sitting without the king’s permission. For the next 10 minutes, this reporter received a crash course in traditional etiquette. When his majesty finally got to the purpose of the visit, his submission was simple: Yes, there was extortion in the first two months following the border closure, but not anymore. He explained the situation had been brought under control and arrangements had been made to ensure security agencies no longer cooked up fictitious laws to extort the villagers. He spent more time instead lamenting on the abandonment his community, like other border communities, suffers. “We are treated like foreigners,” he said, preferring instead to highlight the many developmental needs within his domain. “Fair enough,” I thought as I departed the palace, making sure to observe every required etiquette to avoid being held down with another crash course. “The king has to be concerned about development.” Back at the motor park, and almost dejected the trip had been futile, this reporter struck a conversation with one of the drivers at the park, who said, “Well, the king may not be aware those things are still happening, why not enter the market and ask?” Even though it was not the market day and the stalls were empty, there were two people who could provide answers – the Iyaloja and Babaloja (the male version of Iyaloja). The two market leaders were not in the market on ar@Businessdayng

rival, and perhaps as the first stroke of two lucky events, both of them soon arrived together in Babaloja’s car. After exchanging pleasantries and briefing them on the purpose of the visit, Abdulateef Otolorin, the Babaloja of Imeko, who also introduces himself as a chief, was the first to speak. Like the king, he also said all was well, and that the extortions were a thing of the past. He went further to explain that as part of efforts to address the issue, a document was being provided by the Nigerian Agricultural Quarantine Service (NAQS), which farmers or traders moving agricultural goods would show at checkpoints. Made available to each person at the cost of N2,500 (in Imeko), this document was supposed to be a magic wand – wave it at security agents at any checkpoint and they would grant passage. All the while the Babaloja spoke, Ogunleye, the Iyaloja, an elderly lady with a small stature, had her mouth pouting as though she was trying hard to restrain herself from hissing out loud. “Things are far from ok,” she suddenly interjected. “In fact, there is trouble.” She made to continue explaining what else could be wrong since both the king the Babaloja has said all was well, it appeared the Babaloja slightly pinched her to keep quiet, and she did, but just momentarily. Phone numbers were exchanged soon after and as this reporter made to depart. “We have a lot to talk about,” said Ogunleye. This was the second stroke of luck for the day. Iyaloja would, in the course of subsequent meetings and conversations, exhibit courage, matched only by one other person in the course of this investigation, a man whose identity is concealed to avoid retribution. Returning to Lagos, there was only one lead – the mysterious document being issued by NAQS. The Iyaloja made good her promise when she called two days later expressing her frustrations, like those of other farmers and traders. They have quietly suffered extortion for over two months and have been unable to get help. Returning to experience the extortion firsthand As though a huge letter S were engraved on that side of

Continues on page 39

Tuesday 07 January 2020

BUSINESS DAY

news How security agencies hunt... Continued from page 38

the hill, two successive twists of dangerous turns welcome you toImeko,atypicalruralNigerian settlement, with no commercial activity save for every five days when it is the market day. Here, more than 90 percent of the residents rely on agriculture for survival, and every five days, throng the market with their farm produce to sell, and equally buy the things they need for personal and family use. Retuning to Imeko two weeks after the first visit, the first port of call this time was not the palace, but the market. It was a Sunday, and from the motor park, one could see onions laid on the floor by the roadside. The wooden tables that served as stalls were filled with goods, and meat sellers rolled up two knives against each other in their own corner of the market. This clearly was the market day, one that is observed every five days. As this reporter approached the main entrance of the market, a motorcyclist pulled to a stop and two women ran towards him. Both leapt forward to drag the basket of pepper he had in front. Similar scenes would later be seen, with many motorcycles having the baskets behind them. These motorcycle riders were farmers bringing their farm produce to the market, and those women were helping hands to the bigger traders who aggregated farm produce for onward shipment to the cities. Without the consistent movement of foodstuffs to Lagos and other cities by these women, food prices would surely go through the roof. “Buhari has said no farm produce should leave all the villages close to the borders. We are not allowed to move our tomatoes, yam, and other

A farmer conveys his harvested tomatoes on a motorcycle

crops,” said Timi (not real name), who later allowed this reporter to join him on a trip to Abeokuta with his tomato consignment. “Go and park, or you turn back!” he said, mimicking officers at different checkpoints. “Is the government not aware we farm here, or aren’t we supposed to eat?” These villagers have since late August been deceived by security agencies using the border closure to extort them and exploiting their ignorance to make them feel like outlaws. As many do not know better, they resort to appeals. “See these tomatoes. Do they look like something that came from the French territory?” a female trader asked pointing at her basket of tomatoes. French territory is a reference to neighbouring Benin Republic. Even when the red pulpy fruit, or vegetables, may not necessarily look different whether grown on Nigerian soil or Benin Republic, the farmers and traders that met this reporter were desperate to convince whoever asks that these agricultural goods, which are becoming a source of nightmare to them, are indeed produced on Nigerian soil. Racing through checkpoints with smuggled tomatoes

With the exception of rice and palm oil, literally everything else can easily enter Nigeria at the right price, this reporter discovered. Posing as an NYSC member, this reporter reached an agreement with Timi, the driver earlier mentioned, to follow his Ford Transit vehicle to Lagos with 172 large crates of tomatoes valued at N1.72 million. I was sandwiched between the driver and his conductor to the right and left. The entire back of the van was filled with baskets of tomatoes, with a smell that was anything but scintillating as the end product when it becomes soups. The journey, a little over three hours, was without

music. The 1990s model van had no functional radio, but the conversation with Timi and his conductor was more than enough entertainment, although more than half of all Timi had to say was curse after curse as we moved from one checkpoint to the next. “They are unable to impound rice and are now focusing on tomatoes and pineapples,” he said at one checkpoint, followed by yet another curse directed at the officers there. After 36 checkpoints and N75,900 paid in bribes, including N25,000 for a “quarantine document”, we arrived at the OGBC area of Abeokuta after three hours on the road for

Nigeria Agricultural Quarantine Service (NAQS) office in Imeko

UBA rightsizing set to boost productivity... Access, UBA, Seplat, Zenith, GTB, Dangote... Continued from page 1

per employee among the big banks, underscoring low

productivity at the expense of its shareholders. The pan-African lender, which currently boasts of workforce strength near 12,909, in 2018 generated a gross earning per head of N38.27m. The earnings per head was significantly lower than the performance of its big peers and a FUGAZ (First Bank, UBA, GTB, Access and Zenith) average of N77.98m, according to data compiled by BusinessDay. The bank also had a profit per employee of N6m which was lower than that generated by employees of its peers. FUGAZ average was N18.96m in the period. However, its management is taking necessary measures that would benefit both the business and its workforce in entirety by crashing grade levels from 16 to 12 and promoting 3,292 employees across various cadres with up to 170 percent salary increment.

The bank also effected an upward review of salaries of 1,735 additional junior staff, employed over 2,800 operations staff and 1,336 additional non-operations staff. Like is normal practice anywhere in the world, few employees that had underperformed after appraisal, some of who were close to retirement, were asked to resign. UBA said some of the affected staff would collect up to eight months’ salary plus PenCom contributions. “As a leading financial institution, we do not take issues relating to our staff lightly,” said Kennedy Uzoka, UBA’s group managing director/chief executive officer. “UBA recruits highly talented staff who perform at the best standards and deserve to be remunerated accordingly.” Uzoka said UBA is ever attentive to its employees as they turn the wheels which make the organisation successful for its customers and shareholders.

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

Continued from page 2

cently disclosed plans to buy back 10 percent (1.17 billion) of its shares in issue from shareholders. The aim of the share buyback which will be completed in 12 months is to improve the company’s return on equity (RoE). The share repurchase programme serves as a means for firms to return cash to their shareholders. It also impacts positively the per share profitability of the firm, most notably the Earnings Per Share (EPS) due to the reduction in issued shares. Vetiva Research analysts who asked investors to buy Seplat stocks, having set a target price of N1,188.65 against current price of N592.10, said they foresee further improvement in oil production in subsequent quarters as the firm continues its drive to revert oil output to pre-2019 levels. “Specifically, management announced that the company had drilled and completed three oil wells so far in 2019, with two additional oil wells

expected to be drilled before year end and completed in early 2020,” said Vetiva Research analysts. “That said, we expect oil output to come in at 1.9 million barrels in fourth-quarter (Q4) 2019, translating to an oil revenue of $114 million (+6 percent quarter-on-quarter (q/q), which subdues the effect of an anticipated weaker realised oil price of $60 per barrel, in thirdquarter (Q3) 2019 it was $62 per barrel,” the analysts said. Julius Berger made the stock picks with a target price of N32.52againstN19.90currently. “Given the strength of the company’s contract portfolio and the presence of the Presidential Infrastructure Development Fund (PIDF) which was created to ensure financing for construction projects, we forecast a strong year-on-year (y/y) topline growth in Q4,” Vetiva analysts added. Nigeria equity market had an excellent start to the new year as both market performance indices, the NSE-All Share Index (ASI) and market capitalisation, closed green in

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what should have been a onehour journey, minus the bus’ suboptimal state, of course. Timi was paid N1,000 for every basket, a total of N172,000 to move the consignment. He estimated N120,000 as costs to be incurred, leaving him with N52,000. This reporter witnessed 26 of these checkpoints between Imeko and Abeokuta, taking record of places and amounts paid. We parted ways in Abeokuta as the driver had to wait till 11pm to continue on the Lagos leg of the journey. On arrival in Lagos, he estimated roughly N85,000 was spent in total on bribes, N9,100 higher than what was spent to reach Abeokuta. The Lagos leg was ironically less challenging. With every checkpoint, security agencies nibbled away at this margin, and about half Timi’s entire pay was used to bribe different security agencies. His crime? He was carrying tomato which they claim is “no longer allowed into Nigeria”. Timi may have been driving smuggled tomatoes that day, but no single security agency cared about that. After all, his quarantine document clearly stated the consignment was of Nigerian origin, and so he was subjected to the same treatment any Nigerian producer would get. Customs officers and their co-travellers in the extortion racket have now grown even more confident. Odua Investment Company Limited owns a 10-hectare land in Imeko, which is meant for commercial tomato cultivation. The company until November enjoyed an immunity of sort from the extortion ordinary farmers have been subjected to. However, when this reporter met Zachariah Fatokun, the farm manager, he explained that two weeks prior to the meeting, they were warned to start preparing to pay along the road or

leave their tomatoes on the farm. To fulfil all righteousness, he said the company got the notorious quarantine document, provided to the company directly for free and without intermediaries like other farmers and traders. A week before the meeting with Fatokun, the security agencies made good their threat, delaying a van conveying the company’s freshly harvested tomatoes and vowing to ensure the entire shipment goes bad unless payment was made. The driver spent several hours at every checkpoint as he made frantic calls to his superiors who insisted no payment would be made. The company was to make another harvest the week of that meeting. Asked if they would eventually pay their way through, Fatokun was quick to interject, “We are preparing for whatever would happen because we are not going to pay.” This reporter would later find out that the tomato harvest never made it to Lagos, even though Fatokun said it was not out of fear of what would happen on the road. Government agencies react Vincent Isegbe, director general, NAQS, expressed shock when told of the role his agency was playing in this racket. He described what was happening as an abuse of office by whichever officers of his agency that may be involved. Isegbe told this reporter in a phone interview that he would fly down to Lagos from Abuja today (Tuesday) to personally investigate the alleged involvement of quarantine officers in this extortion of local farmers and traders. Joseph Attah, spokesperson of the Nigeria Customs Service (NCS), did not answer calls to his known number as at the time of filing in this report, neither did he respond to text messages.

all the four trading sessions. Consequently, the ASI climbed 2.1 percent weekon-week (w/w) to settle at 26,968.79 points. As such, year-to-date (YtD) return printed on the green at +0.5 percent while market capitalisation advanced N266.6 billion to N13 trillion. This was driven by early positioning by investors, mostly for regular dividend paying stocks, in anticipation of better fourth-quarter (Q4) 2019 earnings results as against the many unimpressive performances in thirdquarter (Q3) 2019. “In anticipation of the release of the full-year 2019 earnings result by many of market players in the coming weeks, we expect to see increased positioning by portfolio investors, supported by the declining yields on both fixed income instrument and fixed deposit account. As such, we expect the market to close positive next trading week,” said Lagos-based GTI Research in its outlook for the week ending January 10, 2020. Also in their outlook for 2020, research analysts at

United Capital plc said the continued auction of high yield OMO bills to Foreign Portfolio Investors (FPIs) may keep foreign interest in local equity market tepid “amid fears of a naira devaluation and confidence deficit in the economy”. “Again, FPIs are likely to continue their flight to safety by swapping/selling equities for low-risk OMO bills. Yet, our outlook for stocks in 2020 is anchored on developments in the domestic and global economy with monetary policy as the biggest factor to watch. From all indications, the only justification for an uptick in the equities market is the lower yield environment, supported by increased local currency liquidity,” United Capital analysts said. “However, this will not be enough to trigger a major rally in the absence of the demand from FPIs. Overall, our base case scenario, sees equities market return at +5.3 percent in 2020, driven by local demand for high-quality dividend-paying stocks and increased system liquidity,” they said.

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Tuesday 07 January 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 06 January 2020

Top Gainers/Losers as at Monday 06 January 2020 LOSERS

GAINERS Company

Opening

Closing

Change

DANGCEM

N142

N146

FLOURMILL

N19.75

N21

1.25

NASCON

N12.95

N13.95

GUARANTY

N30.1

N31

0.9

DANGSUGAR

N14.2

N15.05

0.85

Company

Opening

Closing

Change

SEPLAT

N592.1

N589.5

-2.6

MTNN

N109

N108

-1

UNILEVER

N20.7

N20

-0.7

N5.65

N5.1

-0.55

N5.7

-0.3

UBN

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

27,339.68 5,784.00 520,433,769.00 5.350

…NSE removes limit on stocks in Lotus Islamic Index Stories by Iheanyi Nwachukwu

FTSE 100 Index 7,575.25GBP -47.15-0.62%

Nikkei 225 23,204.86JPY -451.76-1.91

S&P 500 Index 3,233.93USD -0.92-0.03%

Deutsche Boerse AG German Stock Index DAX 13,136.23EUR -82.91-0.63%

Generic 1st ‘DM’ Future 28,547.00USD -55.00-0.19%

Shanghai Stock Exchange Composite Index 3,083.41CNY -0.38-0.01%

13.198

Five-day rally puts over N220bn in Nigeria stock investors’ pockets

Global market indicators

Forte, Oando, PZ exit NSE-30 in recently reviewed market indices

Notore draws N13.32bn facility from Afrexim bank for Turn-Around Maintenance programme

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Tuesday 07 January 2020

BUSINESS DAY

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Tuesday 07 January 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Monday 06 January 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 383,888.44 10.80 6.40 223 8,828,021 UNITED BANK FOR AFRICA PLC 275,305.34 8.05 7.33 531 62,657,269 ZENITH BANK PLC 627,929.88 20.00 3.90 1,011 97,112,159 1,765 168,597,449 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 249,472.28 6.95 5.30 395 26,390,793 395 26,390,793 2,160 194,988,242 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,198,287.41 108.00 -0.92 131 3,020,989 131 3,020,989 131 3,020,989 BUILDING MATERIALS DANGOTE CEMENT PLC 2,487,914.08 146.00 2.82 157 2,577,672 LAFARGE AFRICA PLC. 223,898.36 13.90 0.72 173 6,694,521 330 9,272,193 330 9,272,193 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 346,888.07 589.50 -0.44 12 1,141,059 12 1,141,059 12 1,141,059 2,633 208,422,483 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 11,473.56 4.30 - 4 59,332 4 59,332 4 59,332 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 4 59,332 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 3 1,871,909 OKOMU OIL PALM PLC. 53,895.92 56.50 - 17 96,049 PRESCO PLC 47,500.00 47.50 - 13 90,086 33 2,058,044 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,500.00 0.50 - 3 32,425 3 32,425 36 2,090,469 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 1,456.01 0.55 - 0 0 JOHN HOLT PLC. 217.92 0.56 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 42,273.91 1.04 -1.89 97 23,976,023 U A C N PLC. 26,651.99 9.25 2.78 77 2,512,112 174 26,488,135 174 26,488,135 BUILDING CONSTRUCTION ARBICO PLC. 521.24 3.51 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 26,268.00 19.90 - 17 50,689 ROADS NIG PLC. 165.00 6.60 - 0 0 17 50,689 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,598.40 1.00 - 8 215,670 8 215,670 25 266,359 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,438.02 0.95 - 8 74,355 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 65,821.00 30.05 - 29 94,957 INTERNATIONAL BREWERIES PLC. 79,941.52 9.30 -2.11 42 552,846 NIGERIAN BREW. PLC. 448,626.21 56.10 - 47 366,527 126 1,088,685 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 180,600.00 15.05 5.99 130 4,397,221 FLOUR MILLS NIG. PLC. 86,107.97 21.00 6.33 45 329,590 HONEYWELL FLOUR MILL PLC 8,009.50 1.01 1.00 20 1,484,890 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 2 10,000 NASCON ALLIED INDUSTRIES PLC 36,959.67 13.95 7.72 31 314,713 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 228 6,536,414 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,815.03 10.55 - 25 445,874 NESTLE NIGERIA PLC. 1,165,125.42 1,469.90 - 26 21,319 51 467,193 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,878.97 4.70 -3.19 62 1,646,994 62 1,646,994 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 20,249.43 5.10 -9.73 60 981,103 UNILEVER NIGERIA PLC. 114,900.11 20.00 -3.38 57 938,740 117 1,919,843 584 11,659,129 BANKING ECOBANK TRANSNATIONAL INCORPORATED 135,786.68 7.40 6.47 139 3,804,350 FIDELITY BANK PLC 64,613.80 2.23 7.21 173 21,416,058 GUARANTY TRUST BANK PLC. 912,366.56 31.00 2.99 300 19,032,474 JAIZ BANK PLC 20,035.69 0.68 4.62 37 3,897,985 STERLING BANK PLC. 58,732.45 2.04 2.51 295 20,213,074 UNION BANK NIG.PLC. 165,988.29 5.70 -5.00 104 2,505,263 UNITY BANK PLC 8,533.22 0.73 8.96 15 952,733 WEMA BANK PLC. 28,545.10 0.74 8.82 40 4,648,608 1,103 76,470,545 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,059.05 0.73 1.39 58 16,288,942 21,000.00 2.00 - 4 7,740 AXAMANSARD INSURANCE PLC CONSOLIDATED HALLMARK INSURANCE PLC 2,682.90 0.33 -8.33 2 130,200 CONTINENTAL REINSURANCE PLC 22,820.04 2.20 - 0 0 CORNERSTONE INSURANCE PLC 8,543.11 0.58 9.43 16 585,610 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 1,228.00 0.20 - 0 0 GUINEA INSURANCE PLC. INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,977.33 0.27 8.00 7 129,790 LAW UNION AND ROCK INS. PLC. 2,191.13 0.51 2.00 1 170,000 LINKAGE ASSURANCE PLC 3,840.00 0.48 - 1 75 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 -4.76 12 5,404,900 NEM INSURANCE PLC 12,778.82 2.42 - 7 83,725 NIGER INSURANCE PLC 1,547.90 0.20 -9.09 9 366,603 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 2 125,000 SOVEREIGN TRUST INSURANCE PLC 2,502.25 0.20 - 3 53,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 3,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 70,000,000 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 98,500 WAPIC INSURANCE PLC 4,817.79 0.36 2.86 67 7,344,386 192 100,791,471 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,629.63 1.15 - 5 460,100 5 460,100

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 1 1,400 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 1 1,400 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,000.00 4.50 5.88 55 916,427 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 -0.83 20 3,125,746 540.00 0.36 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 41,387.67 2.09 10.00 297 54,861,878 ROYAL EXCHANGE PLC. 1,697.97 0.33 - 3 61,005 STANBIC IBTC HOLDINGS PLC 420,198.69 40.00 - 14 100,510 UNITED CAPITAL PLC 15,120.00 2.52 5.00 74 4,188,657 463 63,254,223 1,764 240,977,739 HEALTHCARE PROVIDERS EKOCORP PLC. 2,119.05 4.25 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 -9.09 7 594,527 7 594,527 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 1 964 1 964 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,320.22 2.55 -5.56 81 3,270,076 GLAXO SMITHKLINE CONSUMER NIG. PLC. 6,278.35 5.25 - 62 827,315 MAY & BAKER NIGERIA PLC. 3,450.47 2.00 - 7 53,430 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 9 155,576 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 1 1,260 160 4,307,657 168 4,903,148 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 923.52 0.26 8.33 4 140,000 4 140,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,323.81 0.45 - 1 100 1 100 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 486.00 4.50 - 0 0 TRIPPLE GEE AND COMPANY PLC. 316.77 0.64 - 0 0 0 0 PROCESSING SYSTEMS CHAMS PLC 1,643.62 0.35 2.94 10 1,369,799 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 10 1,369,799 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 7 50,110 7 50,110 22 1,560,009 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 6 4,458 CAP PLC 16,765.00 23.95 - 25 34,252 CEMENT CO. OF NORTH.NIG. PLC 237,897.37 18.10 - 0 0 MEYER PLC. 286.87 0.54 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 31 38,710 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,342.56 1.33 - 7 64,850 7 64,850 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 27 102,715 GREIF NIGERIA PLC 388.02 9.10 - 0 0 27 102,715 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 65 206,275 CHEMICALS B.O.C. GASES PLC. 2,289.35 5.50 - 6 65,000 6 65,000 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 11,650,000 1 11,650,000 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 83.60 0.38 - 0 0 0 0 7 11,715,000 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 4.76 37 6,498,582 37 6,498,582 INTEGRATED OIL AND GAS SERVICES OANDO PLC 47,860.94 3.85 4.05 64 2,793,328 64 2,793,328 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 19 50,984 CONOIL PLC 13,185.09 19.00 2.15 41 154,305 ETERNA PLC. 4,694.92 3.60 - 9 16,396 FORTE OIL PLC. 23,444.66 18.00 - 20 40,381 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 8 2,568 TOTAL NIGERIA PLC. 37,652.97 110.90 - 25 19,858 122 284,492 223 9,576,402 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 1 4,000 1 4,000 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 3 69,000 TRANS-NATIONWIDE EXPRESS PLC. 431.34 0.92 - 0 0 3 69,000 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,328.25 1.12 - 1 15,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 2 1,020 37,241.98 4.90 - 2 10,000 TRANSCORP HOTELS PLC 5 26,020 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,320.00 0.36 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 871.74 1.13 - 9 93,018 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 560.83 1.30 - 5 1,052,304 14 1,145,322 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 745.97 0.45 - 2 28,300 2 28,300 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0

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CEO in focus

Tayo Odunsi: Championing growth in real estate data, research ENDURANCE OKAFOR

fter a good career spanning experience in a real estate services company, property development company, a mortgage bank and an investment bank, Tayo Odunsi, the CEO of Northcourt Real Estate established the data and research company with the aim to provide insightful statistics that can help industry players in making informed real estate decision. Being a chartered surveyor with almost two decades of professional real estate experience, Odunsi understands that data and research drive investment and financing decisions, hence Northcourt Real Estate. While there is rich and readily available data on equities, money market and fixed-income there is little or no data for real estate. He realised that the lack of sufficient data and good research documents for the Nigeria real estate market holds a niche that was untapped. After much thought and planning, in 2013, he left the well-paying investment bank job and founded Northcourt Real Estate with the aim of “reducing the opacity of the West African real estate market”. Nigeria’s real estate challenges border on slow economic growth, lack of liquidity, dampened purchasing power, and dearth of industry data. The property sector is one of the industries that are yet to fully recover from Nigeria’s 2016/2017 economic recession. The 2019 third-quarter report by the National Bureau of Statistics (NBS), placed the real estate growth at -2.31 percent for the period. Individual efforts at increasing the stock by way of developing more houses, coupled with talk shows offering insights into possible solutions have not helped to reduce the demandsupply gap or increase the ownership level. Despite its large-size population and the self-acclaimed biggest economy in Africa, Nigeria is crawling behind its peers in terms of homeownership level. Whereas homeownership level is 84 percent in Indonesia, 75 percent in Kenya and 56 percent in South Africa, it is only 25 percent in Nigeria with the largest population in Africa estimated at 200 million. Going by United Nations projection,

Tayo Odunsi, the CEO of Northcourt Real Estate

the country’s population will be as high as 400 million in 2050. One of the constrains of Nigeria’s property industry is the little or no data about the activities in the industry, no wonder it is referred to as an opaque sector, a good example is the data by NBS which only covers real estate services with the exception of other transactions of the industry. According to industry players the lack of sufficient data for the property sector makes it difficult for foreign investors to easily access the market despite its viability. The sector also records a lot of informal transactions making it difficult for the government to keep track of the sector’s performance. For example, the often-quoted housing deficit of 17 million units has remained unchanged for over a decade despite the fact that the average population growth rate of the country stands at about 3 percent per annum. With an undergraduate degree in estate management from the University of Lagos, MSc. real estate finance and investment degree from the Henley Business School, University of Reading, UK as well as an MBA from the Imperial College London, Odunsi plans to use the Northcourt Real Estate to bridge the data gap in Nigeria’s property industry.

Currently a doctoral degree candidate at the Henley Business School, University of Reading, UK, Odunsi is also a frequent conference speaker, property strategist and mentor to younger entrepreneurs and property professionals. His real estate Company, Northcourt offers property brokerage, facility management, property management, valuation and research and advisory services. Though offering a wide bouquet of services, the research component underpins everything the company does, and it is this component that has made the company one of the market leaders. The company’s’ profile began to emerge when Northcourt decided to offer a free report titled ‘The Nigeria Real Estate Market Outlook’, first published in 2014. The report received a lot of good reviews, Odunsi was in-

terviewed on TV and featured in most major newspapers and the report was relied upon by investors and developers. Six months later, Northcourt published the Nigeria Real Estate Market Half-Year Report and has kept publishing improved versions of each report every year. Over the past six years, Northcourt has built a real estate databank and research capacity that it claims is unmatched in West Africa. Northcourt started with just two staff in October 2013 operating only in Lagos. Today, the company has grown to over 40 team members in its’ Lagos, Abuja and Port Harcourt offices. Odunsi is supported by Ayo Ibaru, COO/director, Real Estate Advisory; Osagie Alfred, director, Real Estate Management; and Oyindamola Bamisile, head, Finance & Operations in leading the day-to-day operations of the company.

The often-quoted housing deficit of 17 million units has remained unchanged for over a decade despite the fact that the average population growth rate of the country stands at about 3 percent per annum

In 2016, 2017 and 2018 Northcourt won the Euromoney award for best real estate advisors in Nigeria. In 2017 and 2018, the company won the same award for all of Africa. The company has also won several other awards including the AFRECA award, and Odunsi being named one of Nigeria’s 30 most influential people in the Nigeria real estate market. Today, Northcourt advises and provides real estate research for pension funds, banks, fund managers, developers, investors and High Net worth Individuals on their real estate assets or projects in Nigeria and Ghana. In 2018, after identifying yet another problem in the property space, Tayo Odunsi undertook significant research and wrote a book on affordable housing, titled “Affordable: Thinking critically and differently about affordable housing”. The book received a lot of accolades as providing rare and workable insights for addressing the affordable housing problems in developing countries like Nigeria. Northcourt can be best described as a hybrid-type company, which has both for-profit and not-for-profit products. The company expends a lot of resources in mentoring the next generation of real estate professionals either directly or through events it hosts. Two of such events are the Estate Management Students Association (EMSA) Annual Debate and the “Why I love Real Estate” summit, which are both held in the University of Lagos. These events are aimed at exposing students to contemporary aspects and issues in real estate and especially giving them a taste and love for real estate research, which is the segment Northcourt focuses more. During the company’s 5th year Anniversary celebration on 4th October 2018, Odunsi said “We consider ourselves yet to have scratched the surface of our vision – increasing the transparency of Nigeria’s real estate market, and are in no doubts as to the enormity of the journey ahead of us. There are standards to raise, products to deliver and fresh perspectives to introduce.” When asked recently if this has changed just a year later, he said “Absolutely not, ask me in another 10 years”.

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