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news you can trust I ** thursDAY 07 may 2020 I vol. 19, no 558

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LOLADE AKINMURELE bleak future without petrodollars is something Nigeria has been warned about for years, yet the day of reckoning has caught the government unprepared and

the coronavirus pandemic. The Finance Minister was blunt in expressing the hard economic realities facing the country as she rolled out a forecast of dismal economic indices for Nigeria at the dialogue session. First, the government expects GDP to contract by 3.5 percent

this year. That’s significant for two reasons. Not only is it going to mark the country’s biggest economic contraction since the 1980s, it’s the first time the Nigerian government is less optimistic about its economy than Continues on page 29

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In Nigeria as petrodollars fade, the chickens come home to roost FG, states in dire straits with oil revenues down 80% scampering for a way out against the odds. The times have rapidly changed for Africa’s largest oil producer facing a “double whammy”, as the minister of finance, Zainab Ahmed, put it during a dialogue session Tuesday, of tumbling oil prices and

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IOCs’ underreporting of gas flare cost Nigeria N521.9bn in 2019 DIPO OLADEHINDE

il companies in Nigeria are under-reporting the volume of gas they flare from oil fields to avoid paying the upgraded levy imposed, a development that has cost Nigeria over N521.9 billion last year. By day, gas flares in the Ebedei, Goi, Oloibiri, Bodo and other villages in the Niger Delta constantly burning flames atop large metal pipes up the skies like a thick fog are an eerie reminder of the waste and pollution associated with the oil industry in Nigeria. By night, locals say the flares are so bright in some places they fear it damages their eyes. Oil and gas companies operating in Nigeria flared 475.3 billion standard cubic feet (SCF) of gas in 2019, causing the country a loss of $1.7 billion, about N521.9 billion, according to data obtained from Gas Flare Tracker (GFT). GFT is a satellite-based technology, created by the Social Democracy Network (SDN) in 2013. It uses remote sensing to determine the amounts and volumes of gas flares in Nigeria. Continues on page 29

Inside

Sadique Abubakar (m), chief of air staff, with Nigeria Air Force Branch Chiefs and Nigerian Air Force’s new helicopter pilots, during their winging in Abuja.

Businesses count costs of coronavirus pandemic, work out relaunch plans P. 4

Financial stress looms for DisCos as collection losses now exceed 70% ISAAC ANYAOGU

lectricity distribution companies (DisCos) collect an estimated 60 percent of electricity billing, according to an operational report by the regulator, but the coronavirus pandemic has seen them collecting half of their regular collection, operators say. This means that DisCos are losing over 70 percent of their

market invoice. Yola DisCo is reportedly the worst hit, reporting collection losses of nearly 80 percent. “The DisCos are in a serious financial situation,” Chuks Nwani, a Lagos-based energy lawyer, said by phone. If the DisCos are under a financial strain, it trickles down to other players in the value chain including generation companies (GenCos), gas companies, the

Transmission Company of Nigeria (TCN) and the Market Operator. These operators will see a fall in their revenue because DisCos’ collections are used to pay everyone else. Worse still, the government may continue to subsidise the sector at a time it is cashstrapped and battling to contain the spread of the novel coronavirus in Nigeria. Nigeria’s electricity market is

grossly illiquid. The 11 DisCos recorded cumulative losses of N787 billion in their 2018 financials, a 10 percent increase from the previous year. But the DisCos have managed to keep the lights on – however abysmally – because the Federal Government is picking the tabs, having been forced to pay over N2 trillion in the form of various interventions to assuage a lack of market price for electricity and

inefficiency of operators. This has led to a situation where the power sector is privately owned but nationally financed. The Federal Government has eased a lockdown on economic activities imposed five weeks ago to halt the spread of the coronavirus, but many people who have hunkered down at home all this Continues on page 29

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news count costs of coronavirus Abuja, Kano, Lagos, others receive Businesses pandemic, work out relaunch plans 35,000 COVID-19 test kits from FMN STEPHEN ONYEKWELU

… As firm initiates importation of 25,000 additional test kits CALEB OJEWALE

s part of efforts to ramp up testing capacity for coronavirus across Nigeria, the Flour Mills of Nigeria Group (FMN) says it has distributed 35,000 testing kits to Abuja, Kano, Lagos and some other Nigerian states. With COVID-19 cases in the country now in the 3,000 range, and most lockdowns relaxed across the country, ramping up testing has become imperative in order to curtail the spread of the deadly virus. The distribution of kits which, according to a statement by the company, was done through the Nigeria

Centre for Disease Control (NCDC), was targeted at states mostly in need of the kits. Media reports had noted that the Presidential Task Force on COVID-19, while at the House of Representatives on Tuesday, said Kano State (which is one of the beneficiaries of the FMN testing kits) had become the epicentre of coronavirus in the North. It was also reported that the Lagos State government was battling with a shortage of reagents, while the Federal Capital Territory was said to be facing a shortage of test kits. Donations such as the one now done by FMN could offer a lifeline to these states where testing capacity is becoming

challenged. This is even as the company says it is in the process of importing additional 25,000 testing kits to bolster Nigeria’s capacity to contain the pandemic. Boye O lusanya, the Group’s chief operating officer, said in a statement issued on Wednesday that the distributed kits were part of the $1.5 million COVID-19 equipment and kits procured by FMN to assist Nigeria. He reiterated that the company had already ordered additional 25,000 test kits to beef up its distribution and to reach other states that had yet to be supported. According to a breakdown of distribution made available

to BusinessDay, the Federal Capital Territory (FCT) got 13,000 test kits delivered to NCDC’s National Reference Laboratory in Gaduwa and its Defence Reference Laboratory. A total of 10,000 kits were delivered to Lagos State: 3,000 to the Lagos University Teaching Hospital, 3,000 to 54Gene Research, 2,000 to the Nigerian Institute for Medical Research, and 2,000 to the Lagos Biobank Laboratory. In Kano, 5,000 kits were distributed to the Aminu Kano Teaching Hospital and the Bayero University Kano. The state was also supported with ‘Lab in A Box’, a kit that is used for rapid testing in remote locations.

Abdulahi Umar Ganduje (r), governor, Kano State, with Rabiu Gwarzo, board member, Flour Mills Nigeria, at the presentation of 5,000 COVID-19 test kits donated by Flour Mills of Nigeria to Kano State.

Many Nigerian airlines face collapse amid COVID-19 losses, says Sirika … AS FG extends ban on flights by 4 weeks

Babban Gona launches givefood.ng to provide Banks’ deposits jump 13% in Q1 as businesses hoard cash amid pandemic 50m meals to poor, vulnerable Nigerians … tier-one lenders’ deposits hit N16trn Josephine Okojie ENDURANCE OKAFOR

igeria’s big banks received a combined N16.22 trillion from customers through deposits across various account types in the first quarter of 2020 as business activities almost came to a halt due to the coronavirus pandemic. Thetotaldepositcollectedby thetier-onelendersinthereview quarterwas12.72percentabove the N14.39 trillion recorded in the comparable quarter of 2019. “In Q1, majority of our trading partners, particularly for imports, implemented severe lockdown measures which prevented the importation of raw materials and other items for resale,” Ayorinde Akinloye, research analyst at CSL Stockbrokers, said.

usinesses in the country are counting the costs of the coronavirus pandemic as they launch plans to reopen. The lockdown imposed across the country to curb the spread of the coronavirus virtually ground economic activities to a halt with only businesses in the healthcare and food sectors operating. From Small and Medium Enterprises (SMEs) to super oil majors, the novel coronavirus has led to revenue shortfalls and revision of capital expenditures. In the SME space, as businesses shut down due to the lockdown, some could barely pay workers for March and April salaries hang in a balance. This means many households had it rough during the lockdown. Ada Osakwe, chief executive officer of Nuli Food Limited, said on Channels TV’s Business Morning that although her business offered essential services and hence was allowed to operate during the lockdown, the supply chain was disrupted. “Our biggest challenge was logistics. Out of our 10 stores, we were able to operate only one. We man-

aged to pay March salaries but could afford only 20 percent of April payment to our workers. One salary missed means poverty for many,” Osakwe said during the programme on Wednesday which was monitored by BusinessDay. “We also offered foodstuffs to our workers to compensate for the loss of salaries,” she said. Nigeria’s 41.50 million SMEs account for 84 percent of jobs in the country, according to the Ministry of Industry, Trade and Investment. These small to medium businesses account for 48.5 percent of the gross domestic product as well as 7.27 percent of goods and services exported out of the country. The Central Bank of Nigeria has announced N50 billion credit facility to help SMEs restart their engines post-COVID-19 but some say they have not accessed it and are looking for alternatives. “We are talking to private equity firms and development finance institutions. SMEs need more of grants now not loans and the government has been slow to intervene. The government in Ghana was quick to intervene,” Osakwe said.

According to the Lagosbased analyst, the slowdown in business transactions “led to cash revenues remaining in the banking system since businesses could not transact”. Some of Nigeria’s most economically vibrant cities like Lagos, the country’s business hub, Ogun and FCT were put on lockdown for about five weeks to enable Africa’s largest economy to curtail the spread of the deadly coronavirus. Before the lockdown, though, businesses were adopting a wait-and-see attitude due to the economic uncertainty that came with the fast increase in the number of confirmed cases after the country reported its first case on February 27. Hence, companies left their cash in the banks untouched. www.businessday.ng

abban Gona, Nigeria’s largest maize aggregator has launched an online platform –givefood.ng to provide 50million meals to poor and vulnerable Nigerians across the country. Kola Masha, CEO of Babban Gona in an online webinar on ‘Scaling Through the Crisis,’ organised by BusinessDay said that the initiative was put in place to support millions of Nigerians struggling to feed owing to the economic fallout from the COVID-19pandemic. Masha said that the givefood.ng platform provides a technology-enabled logistics solution that helps individuals and organisations who want to make donations to support the poor and vulnerable people in

the country easily do so. “This is the vision for givefood.ng; for ordinary Nigerians to have access to a platform that can safely and securely deliver assistance to those that need it,” he said. He noted that the platform which is an initiative of Babban Gona is coalition of partners that have come together to address the challenge Nigerians are facing in a protracted period of economic fallout from the pandemic. He said the partners were inspired by their collective willingness to help their fellow citizens at a critical time like this. “When we have millions of vulnerable people that need help, we cannot rely on the contributions or interventions of others, we must all come together to support them,” Masha said.

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TONY AILEMEN, HARRISON EDEH, SOLOMON AYADO, JAMES KWEN (Abuja) & IFEOMA OKEKE (Lagos)

any Nigerian airlines face collapse on the back of huge economic losses due to the COVID-19 pandemic, Hadi Sirika, minister of aviation, said on Wednesday as government announced extension of the ban imposed on local and international flights by four weeks. President Muhammadu Buhari had approved the ban on flights to check the spread of coronavirus. Sirika said the Nigerian aviation sector is worst hit as COVID-19 ravages economies around the world. He put the monthly losses to the industry at around N17bn. “Certainly in civil aviation, we’re in very difficult moments like everyone else, but we are worst hit than any other sector. Some N17bn monthly is being lost by the airlines to COVID-19,” he said at the daily briefing of the Presidential Task Force on COVID-19 on Wednesday. “This is the situation of civil @Businessdayng

aviation. It is really a pathetic one and I can guarantee you that several airlines won’t come out of this, unfortunately,” he said. The concerns come as the Federal Government extended the ban on all flights for another four weeks. The ban extension was announced by Boss Mustapha, secretary to the government of the federation and chairman, Presidential Task Force on COVID-19. “Tomorrow (Thursday) marks the last day for the enforcement of the closure of Nigeria’s airspace to flights. We have assessed the situation in the aviation industry and have come to the conclusion that given the facts available to us and based on the advice of experts, the ban on all flights will be extended for an additional four weeks,” Mustapha said. Speaking on the extended flight ban, Sirika said government would give priority to air safety compliance measures, and training of cabin crew members as preparatory measure towards the resumption of flight operations within four weeks.

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Analysts fear Nigeria, Iraq are at brink of collapse

…can’t buy their way with near-zero interest loans Olusola Bello

R-L: Anthony Okungbowa, Edo State head of service; Jiang Xin Hwa, chief executive officer, New-Watson Doors Industry; Douglas Nwosa, admin manager of the firm, and Charles Uyiekpen, company liaison officer, during the presentation of relief materials by New-Watson Doors Industry to the state government, at the Government House, Benin City, yesterday.

PTF says impact of lockdown easing on Covid-19 numbers expected in 10-14 days MICHAEL ANI & BUNMI BAILEY

he Presidential Task Force (PTF) on Covid-19 says the real impact the recent relaxation of economic activities would have on Nigeria’s coronavirus figures is expected to manifest in 10 - 14 days’ time. Nasiru Sanni, the national coordinator of the task force agency, explained that the outcome on the numbers would determine whether or not to enact a stricter measure on compliance level or not. “We are monitoring closely the decision of the lockdown and the outcome we get in 10-14 days’ time will determine our recommendation to the president on whether or not stricter measures should be applied,” Sanni said. After five weeks of a complete lockdown of economic activities in order to contain the spread of the virus, President Muhammadu Buhari announced a gradual

… decries low level of compliance to social distancing easing of the lockdown, which commenced Monday, May 4th, in other to tame the effect of the pandemic on the economy the International Monetary Fund (IMF) says would contract by as much as 3.4 percent in 2020. So far, Nigeria has had about 3000 of its populace infected with the deadly virus, including over 481 recovered cases and about 98 deaths, with three of the country’s states being the most affected, Lagos, Kano and Abuja. Although there has been an increase in the numbers of the outbreak reported, the over 300 cases reported across the country since the easing are impact from those contracted about 2 weeks ago, Sanni noted. “Since the incubation period for the virus is 14 days, cases reported now are those that were contracted when the lockdown was still on,” Sanni said. The decision to ease the lock-

down came after various criticisms from economists who hold the view that with the high rate of poverty and unemployment as well as the high level of other diseases that has ravaged the continent aside the coronavirus pandemic, Nigeria and Africa at large, cannot cope with a continued lockdown. Their views stem from the fact that given the country’s already stretched finances, caused by the pandemic, the huge informal sector and country’s poor identity management system, which has stood as a setback in successfully channelling any form of palliative from the government to the less privileged in the society, 60 percent of those in the country population feed on what they earn daily hence a lockdown would be devastating to their livelihood. Charles Soludo, one time governor of the Central Bank and

Bayelsa assures NAF on operational licence, commencement flight … tasks LG PDP chairmen on unity, reconciliation

ayelsa State governor, Douye Diri, has restated his administration’s commitment to ensure commercial flight operations begin at the state airport in no distant time. Governor Diri gave the assurance during a courtesy visit of the Air Officer Commanding Mobility Command of the Nigerian Air Force, Yenagoa, Ibukun Omotayo, an air vice marshal, and his team to Government House, Yenagoa. The governor commended the command for making good use of the airport for its operations and promised to see what else can be added to facilitate its licensing and commencement of flight operations into the state capital. In a press release by his acting chief press secretary, Daniel Alabrah, the governor stressed the importance of security to his

administration coupled with the fact that the state is deltaic and riverine. He promised to work with the command to ensure its operations fully commence in the state. His words: “You talked about a regimental training base at Toru-Orua that is yet to take off. Once I get the details, I assure you that we will expedite action for that base to take off. Please communicate and liaise with the government for anything that will lead to establishing your base fully.” Speaking earlier, Omotayo congratulated the governor on behalf of the Chief of Air Staff, Air Marshal Sadiq Abubakar, on his assumption of office. The Air chief, who promised to ensure that the security architecture of the state was not compromised, said the Air Force www.businessday.ng

is ready to establish a base for regimental training in the state to support the one in Bauchi. In another development, Governor Diri charged chairmen of the local government chapters of the People’s Democratic Party (PDP) to reconcile aggrieved members and reposition the party for subsequent elections at the state and national levels. Diri, who gave the charge at the Chief DSP Alamieyeseigha Memorial Banquet Hall in Yenagoa during the inauguration of the chairmen, said it is their responsibility to sustain the growth of the party in their respective areas. He urged them to work with other relevant stakeholders for the success of the party, saying they should not discriminate but carry everyone along in the task of repositioning the party.

member of the Economic Advisory Team (EAC), noted in an article that a continued lockdown would affect the livelihoods of the majority of the population. He argued that with the livelihoods of people being threatened, it would hinder their ability to feed properly. When this happened, it would translate into weakening their immune system, which is the condition needed to fight the virus. Soludo, however, advocated a relaxation of the lockdown to ensure a balance between health and economy. But even though the easing came with various measures that must be adhered, including a compulsory wearing of facemask, social distancing, as well as constant washing of the hands, this has not been adhered by many, a development the PTF boss fears may escalate the system.

igeria and Iraq are the two most vulnerable members of OPEC that are badly affected by Coronavirus crisis, which has badly impacted the price of crude oil. This is because the two countries solely depend on oil to grow their economies. It is feared by analysts that the two countries might be at the brink of collapse if urgent steps are not taking. According to analysts at Rystad Energy, the global upheaval that has resulted from the oil price crash, upending the current fragile balance of power because key oil-producing countries, including Iraq and Nigeria can’t buy their way out of this crisis with near-zero-interest loans like the Saudis and Americans can. They say even with Brent at $25 (indeed, even when it fell below $20), the Saudis were throwing around cash at all kinds of investments, including COVID-sinking cruise lines. The American shale patch can bail itself out if it wishes to, even amid desperate talk of looming bankruptcies. But in Nigeria, where oil comprises about 9 percent of GDP and 90 percent of exports, and with a break-even price of around $57 a barrel and also a fiscal breakeven of around $100, the economy is in serious trouble. If the economy is in trouble, Rystad Energy analysts say the government is in even bigger trouble as roughly 20 million people are unemployed, and that is now expected to climb another 25 percent. It is enough to bring down a government, with the only lifeline now a $3.4-billion IMF emergency loan just approved. But making matters worse is the fact that no one even wants to touch Nigerian oil right now because there isn’t enough demand for it-even at $10 a barrel. And it’s

competing with overproduced US crude (light and low in sulphur). Already, the Federal Government on Tuesday revealed plans to cut the oil price benchmark for the current budget to $20 per barrel. The development would make it the second time it is slashing the oil benchmark for the 2020 budget. The sharp fall in the price of crude oil had earlier forced the government to slash the benchmark from $57 per barrel to $30. Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed the Federal Government’s intention to further slash the benchmark on Tuesday. Ahmed, who spoke during a web conference that focused on the impact of low oil prices on Nigeria’s economy, said: “We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel.” The decline in revenue following the sharp fall in the price of crude oil is already taking a toll on Nigeria’s economy and Ahmed had in March disclosed that the N10.59 trillion budget would be slashed by 15 percent. The minister, at the web conference, also said Nigeria’s oil and gas projects would be delivered later than originally planned as a result of upstream budget cuts. The Federal Government is planning to cut oil production to 1.7 million barrels per day from the 2.1 million barrels per day proposed in the 2020 budget. The planned production cut is to be made in line with an agreement reached by the Organisation of Petroleum Exporting Countries and its allies better known as OPEC+. In Iraq, the fragility will translate into a boon for the Islamic State first and foremost, while Iran and the United States grapple for control in this proxy war setting.

Minister lauds NIS’ drive for increased security, economic growth, transparency Innocent Odoh, Abuja

inister of Interior, Rauf Aregbesola, has lauded the efforts of the Nigerian Immigration Service (NIS) to improved security, economic growth and transparency in Nigeria in line with the developmental agenda of the President Muhammadu Buhari’s administration. Theministergavethiscommendation at a public presentation of the fourth edition of the NIS Annual Report(2019)sincethecommencement of this administration in 2016, a statement issued on Tuesday by thepublicrelationsofficeroftheNIS, Sunday James, said. The report is established on “three fundamental objectives, which are in tandem with the agenda of President Muhammadu Buhari‘s administration of Security (in terms of border management, irregular migration, interception and arrestofcross-bordercriminalsetc.), Economy (revenue generation and

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economic growth through effective service delivery from visa, Passport and residence Permits) and Transparency (openness in terms of presentation to the public),” he said. Aregbesola noted that NIS was taking the lead in changing the paradigm of how public sector should operate in Nigeria, not only in terms of publication of performance report but also as demonstrated in other forward-looking andcreativereformsthattheService had undertaken within the period under review. The minister added that all NIS Annual Reports were presented as a newmeansofassessment,improvement,planning,retrospection,studying and management that would engender greater transparency, better decision making and improved processes, the statement added. Hesaid2019wasayearofsignificant attainment for NIS. “Excellent progress was made on implementation of a number of reforms in the area of Border Management, Passport and Other Travel Documents, @Businessdayng

Visa, Migration Management, Human Resources and Infrastructure,” he said.He assured thatthe Ministry of Interior would continue to play its part in ensuring that all agencies under the supervision of the Ministry succeed in their respective mandates. Whilerecommendingthedocument to Nigerians, he encouraged all to go through it, as it is very significant with a lot of important data andinformationwhichareusefulfor nationalplanning,decisionmaking, research work, education and business development. Heexpressedhisgratitudetothe NIS for impressive achievements recorded in 2019 and urged them to do more to surpass this record in 2020. He also encouraged the Service to take advantage of the opportunities of new discoveries, creative ideas and adaptability presented by COVID-19 pandemic while urging Nigerianstostaysafeandobserveall guidelines provided by the National Centre for Disease Control (NCDC) to combat the pandemic.

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Technology now wants our dinner and will change our diet The Public Sphere

CHIDO NWAKANMA

echnological determinism has converged with disease and economic meltdown to pose an existential threat to jobs in Nigerian banking. It would be short-sighted, however, to focus only on the financial services sector as the employment issues in the banking arena plays out. The consequences of this convergence will hit every sector. It is the technology effect. I wrote about it last year. Technology has had our breakfast and lunch, now it wants our dinner and will force a change of diet on everyone. The Bankers’ Committee on Sunday 3 May 2020 saved the jobs of about five hundred workers in Access Bank and thousands in other banks. The Committee ordered a suspension of the planned downsizing and rationalisations in the banking arm of the finance industry. It was just-in-time. Central Bank of Nigeria spokesman Isaac Okorafor announced the decision. The Bankers Committee declared,

“To help minimise and mitigate the negative impact of the COVID-19 pandemic on families and livelihoods, no bank in Nigeria shall retrench or lay-off any staff of any cadre (including fulltime and part-time). The Bankers’ Committee decision had the imprimatur of the regulator written all over it. It was a timely decision to ward off the contagion effect. Other banks would have followed the lead of Access Bank. The federal government also needed to make a case for job retention during this period. On both counts, the Bankers’ Committee did well. Yet, those saved by the Central Bank’s bell now should be finalising their exit plans. While COVID-19 is the immediate fall guy for the rationalisations in the banking sector, the real culprits are the new raft of apps and programmes under the banner of fintech and the decline in the economy. Most banks paid attention only to oil and gas as well as the power sectors. Well, those sectors are now the poster boys for bad loans! Fintech is the real challenge, and it goes beyond Nigerian banks. A report in the Financial Times in 2016 captured the effects on US and Canadian banks. “Growth of fintech forecast to spur almost 2 million banking job cuts”, the 30 March 2016 report stated. It added, “European and US banks will slash staff over next decade, says Citibank report”. Fintech? “Fintech is a portmanteau of the terms “finance” and “technology” and refers to any business that uses technology to enhance or automate financial services and processes. The

term is a broad and rapidly growing industry serving both consumers and businesses”, according to the definition by builtin.com. The many fintech companies in Nigeria are nimbler and pose a considerable threat to the older banks. The FT report noted “The catalyst for the job cuts is twofold. One factor is the new technologies that enable banks to do more online and less in branches. The other is the financial imperative for banks to be leaner as they deal with an onslaught of new competition in their most profitable niches. Citi’s research found that lending stood out as a key battleground, accounting for 46 percent of the $19 billion in private funding that flowed into fintech during the past six years. The next biggest was payments, accounting for 23 percent of the investment in fintech.” A similar scenario has played out in Nigeria. Banks are losing out on lending to SMEs and small borrowers. They ignored the area initially, and it appeared like good riddance to the irritation of small borrowers until the fintech firms and small lenders starting achieving scale. Suddenly, the small sums have added up and now represent a threat. I wrote in “Technology ate our breakfast and is coming for our lunch” (BusinessDay, 28 December 2018) that technology is the culprit in the 23 percent unemployment figure the National Bureau of Statistics captured for Nigeria in its 2018 report. Technology has eaten the breakfast and lunch of the worker in many places. It is changing the nature of work and the role of humans. Many certain jobs of the past are disappearing

‘

While COVID-19 is the immediate fall guy for the rationalisations in the banking sector, the real culprits are the new raft of apps and programmes under the banner of fintech and the decline in the economy

Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

Almajaris: System solutions to a systemic problem (1)

was in shock and tears as I watched the repatriations of the Almajaris from one state to another in the north following the decisions of the Northern Governors’ Forum (NGF). It was sad to see the children and the future of Nigeria who are without the required mental capacity to decide for themselves being deported or repatriated in their own country. The Northern Governors decided to curb the spread of the COVID-19 by returning the children to their states of origin and unite them with their families. Why this decision is reasonable given the war against coronavirus, there are, however, many questions demanding answers. Are these children (estimated to be 9.5million or 72% of the nation’s out of school students according to 2014 UNICEF report) not supposed to be with their parents due to their age in the first place? Are they not to be provided for and educated under parental care if Nigeria is to achieve Sustainable Development Goals (SDGs)? Many comments have been made on the need to ban the Almajaris system which has obviously outlived its purpose and is now banditry and Boko Haram human production factory. The Almajaris is part of the failed policies in Nigeria, contributing to the whole, as noted in my article: judging the parts by the whole. I have been requested to write on Judging the whole by the parts in responses to that article. That will come as demanded by Yomi and Isiaka, two of my readers. As someone who has led a revolution in education through the Positive Growth Africa with the gathering of over 5000 students and 200 school teachers in a conference (using my books, the students’ fortress and the teachers’ fortress), I will approach the menace of the Almajaris system from the education and the SDGs’ perspectives. I believe in the unity of Nigeria, which is negotiable. It is a myth to assume a country without a fair and equitable system that caters for her people will remain

one and united forever. The failure to address inequality, religion and ethnic superiority has led to the demise of countries around the world and Nigeria cannot be an exemption. Yugoslavia, Sudan, and the Soviet Union are examples to mention a few. The unfortunate thing about Almajaris is the injustice against the children which is above injustice in power, positions and resources sharing (some notable examples are in the administration of the VAT system, power entitlement mentality and the jumbo pay of the political office holders) as entrenched by the structural and institutional voids in Nigeria. Therefore, as a Nigerian, I am going to give solutions with an attitude of ‘we are in it together’. Whatever affects the poor will affect the rich in one way of the other. For example, COVID-19 is an equal-opportunity pandemic that affects the wealthy, weak, powerful, and powerless citizens. The rich want the poor to stay at home during lockdown to avert the spread of the virus and return the economy to guarantee their wealth. The poor do not want the lockdown because of the hunger virus, which is more killing than the coronavirus. If the poor children tagged as Almajaris are not taken care of, they would live in the same society with the governors, senators and the billionaires’ children with Harvard education but who will pay for the sins of their parents with the insecurity and lack of peace from the banditry and armed robbery activities of the majority. I will, therefore, at least in my imagination be a Shehu Ibin Babs, the special adviser to the NGFs on education presenting his solutions on the Almajaris system for the prevention of the future pandemic from the Almajaris children if no action is taken. Dear NGF members, I want to appreciate your presence at this online meeting. The ravaging pandemic has forced us to embraced change and forcefully avert travelling to Kebbi for this conference. The pandemic has brought a permanent shift in our lives, the way we gov-

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ern, and lead will also change. This includes how we empower ourselves to contribute to Nigeria now and in the future. Without taking your time, I am honoured to present some simple home-made solutions to the current Almajaris system as exposed by your decisions to repatriate our children to their states of origin. So far, Kano has repatriated 1,500, Nasarawa sent over 788 home and many others. The first concern is the plans of some states in the south-west to copy our repatriation policy. Seyi Makinde in Oyo state is planning to send our children to their home states. A group in Zamfara quoted Section 41 of the constitution against the plan action of Seyi Makinde. I will come to how we should handle our social and ethnical groups later. Firstly, we as governors should not see the problems of Almajaris as a mountain that cannot be climbed. As a leadership coach before my position as your adviser on education, I have been training leaders and teachers. I know solving problems is the fastest way to gain leadership. Your predecessors have not solved the current issue not for lack of will but for failure to use the system approach. I will, therefore, be making my suggestions from the system’s perspectives. The problem of Almajaris is not without good news as efforts of the past leaders can be leverage on. You will notice I have not referred to your decision to repatriate your children on the streets as a ban on the Almajaris system. This is because it is not yet banned until we didn’t see them on the roads after coronavirus and only if you can go beyond what your predecessors did. Musa Kwankwaso’s committee report as brilliant as it was is in the dungeon since 2012. Goodluck Jonathan spent N15billion for building 165 Almajaris’s schools. These facilities are idle because our children returned to the streets. There are fund and provisions of the Universal Basic Education to help states to educate these children. Are we utilising the

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before our very eyes. It cuts across many industries and occupations. More significantly, I noted that “The confluence of Big Data, connectivity and artificial intelligence”, as described by Israeli Prime Minister Benjamin Netanyahu is propelling positive developments in innovation, productivity and workforce numbers in many nations of the world. Our lack of the framework for any of that means that it is causing the opposite here.” I want to play the optimist in hoping that the Central Bank of Nigeria has a more solid plan for the unemployment challenge in the banking sector than the mere stop-gap it has announced. CBN ought to have a robust plan because it set the stage in 2007 for what has happened in 2020 with its futuristic Payment Systems Vision 2020 (PSV 2020). CBN read the auguries well and pointed the industry to developments in electronics payments. It should then have plans that answer the question of what will happen to those the banks will lay off this year or next? To where would they go? Artificial intelligence, big data and now COVID-19 demand that we respond with innovation, productivity and workforce numbers. Technology and COVID-19 mean that we should all prepare to change our diets. It means creating new jobs. Can we do so and when?

Positive Growth with Babs Babs OlugbemI UBE fund for the children or not? I will give three analogies before stating the solutions using the system approach. Your excellencies, you have not banned or solved the Almajaris time-bound the problem until they are not on the streets, including those of the roads in the other parts of Nigeria. Those in Lagos, Ibadan, Enugu and in states outside the northern region as destitute begging on the streets are our creation. They are the output of the Almajaris system but in an expatriate form within Nigeria. The first analogy is on what you can do as the government. I emphasised this in my article titled Kano versus Dubai-the difference where I posited that our problem is not religion. Dubai was more a desert than Kano, read the same Quran most of us is reading. In terms of development, Dubai is miles apart from Kano. The difference is simple, leadership. Also, to prepare you for the sacrifice ahead of the big problem in Nigeria, I wrote on the revolution Nigeria need now. There is a lot you can do as leaders of the states in Nigeria. It will, however, takes a different approach. If you do as your successors did, you won’t get different results. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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COVID-19 & global high wire politics… Coro: KITA & by-fire-by force strategies

ik MUO

olitics is ideally about the acquisition and application of power for the public good. Over the years, people have converted it into the acquisition of power for personal and parochial interest. The fact that we are still receiving dividends from Abacha-Investments, 22 years after his death attests to this. We also have organisational politics, which is perceived mostly in the negative, even though there are some inherent positives in it. “Political” is a derivative from politics, which is about everything that applies to politics. Of late, the term “political” has been reconfigured to mean any views and actions by an interested party. So, if I defend the intere of Ndi Igbo, ASUU, the Catholic Church or Anambra state, the first interpretation is that I am being political, and that is even if what I have said and done is as obvious as 1+1=2! Everything in Nigeria is dressed in the political garb, even though at times, some of them are done jocularly. Last week, there was a post in the ubiquitous and tyrannical social media that even in the COVID cases, South East is marginalised. This is because, as in almost everything, it had the least of active cases. As at the date of that post, (29/4/20) the spread was SW-965; NW-191; NC/FCT:174; NE:137; SS,57; SE-8. When I asked why South West/ Lagos took the first position instead of South West/Katsina, I was told to just “wait and see” and following developments in Kano, I am already seeing. So, I decided to look at various strange and weird happenings in the coro front from a political prism. But as I as preparing a background to the study, I found that there is also a coro-politics in the global arena and that is how decided to take it from there first. I will start from the elephant in the room; no, the bull in the china shop, which is what America has become since the onset of Trumpocracy (Democracy as defined and practiced by Trump). As the entire world is being decapacitated by Coro, Trump believed it was the best time to incapacitate WHO, which is the Commander in Chief of the anti-COVID forces, by strangulating it financially. This action, which Andrew Gawthorpe of The Guardian (15/4/20) describes as an “extraordinary act of moral abdication and international vandalism”, undertaken because of “self-destructive nationalism”, was all about China, the greatest frenemy of the US. He accused WHO of being pro-China, putting political correctness above life -saving measures and being a piper who

is playing the tunes dictated by another person other than the sponsor (US being the biggest WHO funder. It is all about Sino-US multipartite war. Even within the US, the same politics was at play. Democrat Senator Leah describes Trumps action as “cutting off ammunition to an ally as the enemy closes in”. The House Oversight Committee, sees the anti-WHO utterances by Trump as reflecting an “astonishing level of hypocrisy”. Meanwhile, Trump had declared that Coro was a strategy by China to scuttle his re-election campaign and his party is designing their entire political campaign around China. What can be more political than this? And this is despite the warning and advise of the WHO DG that the world should “quarantine the politicisation of COVID-19” because using the pandemic to score political points will only result in “many more body bags” But it is not just the US. China is also making efforts to score diplomatic point, by arguing “we beat the US” in this one! Earlier on (26/3/20), Kashish Parapiani of the Observer Research Foundation, zeroed in on the Trumpian politicisation of the whole pandemics as a boost for his re-election campaign, exploiting it as an “opportunity to actualise the ‘America First’ agenda vis-à-vis China, Mexico and Iran”. In 2016, Trump capitalised on the business and blue-collar displeasure against globalisation, from which China “over-benefitted” and now, he also wants to use the China Virus as an opportunity to build his campaign once more around China. He also continues to tighten the noose against Mexico (with only 2271 deaths as against the US, the global epicentre) through his suspicious border control measures, as well as against Iran, by more sanctions, which have adversely affected Iranian management of the pandemics. All these are aimed at boosting his Ameirco-Centric policies, building on existing socioeconomic anxieties and promotion of his re-election. Meanwhile, Abraham Weintraub, Brazilian Minister of Education joined the fray, saying that the COVID-19 was a part of Chinese plan for world domination, a view that got China outraged to the extent of demanding official explanation from Brazil. Yohanes Sulaimanan, an Indonarsian academic and political analyst unequivocally sees Indonesia as an example of how politics, personal rivalries, and social media, dominated by partisan buzzers have cause havoc in the COVID-19 crisis management. While other governments were issuing travelling advisories, Indonesian Government was promoting its tourism, to which it committed Rp72 billion, ($4.77 million) just to pay “influencers”. So, while others were closing and barricading their doors, President Widodo (of the Indonesian Democratic Party of Struggle) widely opened his own doors, advertised this openness and downplayed the rampaging COVID crises. This was because “the issue is heavily politicised as opposition politicians and

ambitious individuals are seen as having seized the opportunity to score political points against the government”. Thus, while Governor Anie Basweden of Jakarta (Independent /opposition) was speaking and acting against Coro, pro-Widodo elements sought to undermine his efforts, which they interpreted as a strategy to boost his chance for re-election in 2022 and running for president in 2024 by undermining the public’s trust towards Jokowi. So, it is COVID; it is also politics. But there is some sense in the madness because everything is being done strategically. Next week, if Oga-Coro agrees, we shall x-ray the political dynamics of Coro management in Nigeria. Other matters: KITA, by-fire-byforce and the management of Covidity: One of the things for which we remember Buhari’s first coming was WAI. It was a militarised process of FORCING people to be disciplined. We all learnt, or we pretended to have learnt, how to queue. I believe it was good for us but we had no choice. Queuing appeared to have become an inseparable part of our lives. However as soon as GMB was kicked out by his friends (I am sure he would have muttered “Et tu, Brute?”), the practice died irretrievably. It died because it was not ingrained into our culture; it was punishment-based. A few years ago, Nigeria introduced the cashless policy. It was a wonderful policy, beneficial to all the stakeholders. But again, its implementation was punishment based: Nigerians were and are punished for depositing, withdrawing and spending their money. Not much was said about the benefits of going cashless. And so, people obey, not because they want to obey but because they are coerced to obey! And this is in an environment where our Vice President was sharing trader-monie cash to traders while the “Ministeress” of Disaster Management, was sharing raw cash to the lucky few the other day. And they did not maintain any distance; social or physical! Now, we are here again. As a prelude to “gradual easing” of internecine lockdown, the PTF issued the following guidelines and “enforceable actions”: Mandatory use of facemasks, provision of handwashing facilities, and temperature checks; prohibition of interstate travels and public gathering of more than 20. Those who violate the directive on facemask, curfew and interstate travel or crowd size as well as institutions that fail to comply SHALL be prosecuted. Orders! Threats! By fire by force! That is what Herzberg termed KITA (Kick in the ass) strategy, an approach based on the Theory X paradigm that people need to be forced to do what they ought to do (Herzberg, (1968). One more time, how do you motivate employees. Harvard Business Review 6 (1), 53-61). I declare once more that people are never FORCED to change because people convinced against their wills are of the same opinion still (Dale Carnegie/ Samuel Butler). The war against

‘

So, it is COVID; it is also politics. But there is some sense in the madness because everything is being done strategically. Next week, if Oga-Coro agrees, we shall x-ray the political dynamics of Coro management in Nigeria

COVID-19 is all about social change; it is about attitudinal and behavioural change. Washing of hands, physical distance, and new coughing and sneezing methods, are behavioural issues that cannot be commanded. People should be persuaded and convinced with provable doses of WIIIFM (What is in it for me). When people are convinced about the benefits of these behaviours, they undertake them because it is in their own best interest. If people were persuaded as to why they should stay at home, they would not have shared spaces with goats and allowed themselves to be containerised just to break the travel ban or stormed the banks in such intimidating numbers on the first day of the easing. It is also this order-from-above attitude that has boldened security men who have killed and brutalised many in the name of enforcement, including an ordinary security man who killed somebody over facemask at Onitsha the other day! Already, the PTF is bemoaning the failure of its easing strategy: no physical distancing, no face masks, and poor spatial arrangement in busses. It should be expected. And on top of this by-fireby-force strategy, they would just stay in the comfort of their homes and situation room and issue orders, without minding the affordability of some elements of these orders. They should learn from the Professor-Governor of Cross River State, who ordered the wearing of facemasks, and provided the facemasks to everybody arguing “I cannot, at this difficult moment when you are asking people to stay at home, also task them to put on masks at a cost. We as a government have to find a way to reduce the burden on the people. One more time, KITA does not work with human beings. Persuasion, involving inducement and WIIIFM, is the way out. I have made this argument in the case of cashless policy, which involves massive behavioural change and that argument still holds (See: Ik Muo (2019). Strategic Options for Nigeria’s Cashless Policy. Journal of Research in Management & Development,17(1), June). Our people say that ending up in the mat is usually preceded by negotiation and persuasion. We have known-what, know-how and know-why. We are humans because we ask WHY. The greatest factor in human motivation is knownwhy. When people understand the WHY, they become willing participants in the process. People MUST be told persuasively WHY they must do some of these strange things. It is indeed strange to order me not to embrace my ‘wife’ (includes every woman married in my kindred) if I met her in the market square and not to shake hands with my classmate when we meet at church. Those in charge must humbly come down from their high horses and explain WHY, including the resulting benefits. Then, we take it from there. I have spoken. Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

From the blogs

COVID-19 UN criteria for sovereignty

he United Nations should adopt what I call the COVID-19 criteria as a basis for recognising a nation as an independent and sovereign state going forward. To be recognised as a sovereign nation you must have a gross domestic product (GDP) that is at least 50 times the size of your population. For instance, a country of 200 million people should at the very least have a GDP of $1 trillion

A nation should be able to meet at least 70 percent of its food needs through domestic production A nation must be self-sufficient when it comes to the production of health and medical equipment A nation must be self-sufficient when it comes to the production of pharmaceutical drugs

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A nation should have the capacity to stockpile at least six months’ worth of food supplies in case of an emergency A nation should have foreign reserves that are at least half the size of its GDP A nation must be able to produce the necessary equipment required to defend itself and provide security Every nation must spend at least a quarter

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Ayo Akinfe of its annual budget on education and training Every nation must have a tax-to-GDP ratio of no less than 25 percent Every nation’s budget must be at least one tenth of its GDP. For instance, a nation with a GDP of $1 trillion should have an annual budget of at least $100 billion

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The farcical call for debt forgiveness CHRISTOPHER AKOR

ast week I discussed Nigeria’s debt trap and how difficult it would be for the country to service its debt obligations in the face of declining crude oil prices and the global Coronavirus pandemic. Expectedly, Nigeria has applied for and received $3.4 billion in emergency financing assistance under the Rapid Financing Instrument of the International Monetary Fund (IMF) – the first time in its history. Of course, to secure the funding, the government made a host of promises and commitments; to end fuel, foreign exchange and electricity subsidies, improve non-oil revenue generation, resolve the shackling debt sustainability challenge of the country and above all, improve public sector transparency. These were, in effect, all the conditionalities often given by the IMF to enable Nigeria secure its loans and for which both Nigerians and its leaders have always balked at. It remains to be seen how the government will fulfil these promises and reform its extremely opaque public accountability system. But the important takeaway is that Nigeria now has its back against the wall and has no other option than to take the IMF loan. To underscore this point, the Nigerian President on Monday, in a meeting with leaders of the Non-Aligned Movement, called on the international finan-

cial institutions to outrightly cancel debt obligations of member states to enable them deal with the challenges brought by the Covid-19 pandemic. That call appears to be directed at multilateral agencies such as the World Bank Group and the African Development Bank (accounting for $10.1 billion of Nigeria’s external debt), multilateral lenders such as Beijing-based ExportImport Bank of China (with loans of $3.2 billion), the French Development Agency (AFD), Japan International Cooperation Agency (JICA), The Exim Bank of India and Germany’s KFW. However, Nigeria’s highest debt is owed to commercial lenders (Eurobond holders) who account for $10.86 billion (about 40 percent) of Nigeria’s total $27 billion external debt. As a BusinessDay analysis on Tuesday shows, debt cancellation will be a tough sell for a number of reasons: even multilateral agencies such as the World Bank Group and ADB mainly operate as commercial entities with shareholders. With the shareholders also facing the effects of the pandemic, it does not appear they have an appetite for taking a hit by going on a debt-cancellation spree. Nigeria just like other African countries complaining about the effects of Covid-19 are all shareholders of the African Development Bank. They wouldn’t want to take a hit either. Even the World Bank that is expected to lead the way is balking at the idea. The most they have offered is debt relief for a couple of months. Neither are multilateral lenders such as China. The country has received a deluge of requests and applications for debt relief and cancellations from countries included in the “Belt and Road Initiative.” But the Financial Times recently quoted an official of the China

Development Bank as saying that “the BRI loans are not foreign aid. We need to at least recoup principal and a moderate interest”. While admitting that they might consider extending loans and giving interest relief, the official insisted that “...in general our loans are issued according to market principles.” Commercial lenders, who basically aggregated people’s investments, can also neither cancel the debts nor offer debt relief. To be able to do that, they will have to find a way to get all the investors in their funds – including individuals with personal savings and pension funds – to agree to a debt cancellation or relief – which we know is practically impossible. Even if other countries were to secure debt relief and even cancellation by multilateral agencies, Nigeria may not benefit from the package as it has not shown it could turn any debt relief to a sustainable advantage. In 2005, after years of campaigns and struggles, former President Obasanjo and his Finance Minister, Ngozi Okonjo-Iweala, were able to secure a debt relief worth $18 billion and a total debt stock reduction of $30 billion. Nigeria was then expected to channel all its available resources into building a sustainable economy and ensure it is not entangled with unsustainable debt again. Fifteen years down the line, the country is even worse off, saddled with a huge unsustainable debt stock of over $80 billion. Incidentally, when the government was on a borrowing spree, patronising commercial lenders with high interest rates, and with no obvious plans for the loans or repayments, we kept warning the government to beware or at the very least approach multilateral agencies for concessionary loans at one per-

‘ Even if other countries were to secure debt relief and even cancellation by multilateral agencies, Nigeria may not benefit from the package as it has not shown it could turn any debt relief to a sustainable advantage

cent or less interest rate. But we were dismissed as economic illiterates. Now that our predictions have come true, we are now running helter skelter seeking for help where there is none and offering to undertake the same reforms we had balked at for decades. Correction and apology Two weeks ago in my piece “Abba Kyari and the Narcissism of our middle class”, I narrated the story of a friend on a federal government scholarship, which the government abruptly stopped funding, and their struggle to get the government to honour the agreement they reached. I narrated how greatly the scholarship recipients suffered as a result of the stoppage of their scholarship. I also directly attacked my friend for eventually meeting Abba Kyari, the late Chief of Staff of the President, who facilitated his payment to the exclusion of others in the scheme. I have since gotten additional information that indeed, all the scholarship recipients were paid. In fact, I later got to realise that in an October 22, 2019 twitter chat I had with him, he confirmed to me that the government had “paid their outstanding tuition in July”, a conversation I totally missed while compiling our correspondence for the purpose of the article. I wholeheartedly apologise for the omission and the insinuation that he sold out his comrades in the struggle. He has however declined my offer to him to write his own side of the story as he does not want to relieve the horror of their struggle with the government which led to a two year delay in his PhD studies and the withdrawal of many others. I hope one day when they are sufficiently healed, they will tell the story of the fiasco that was the PRESSID scholarship.

Turning the COVID-19 tragedy into an opportunity for a new Nigeria

couple weeks ago, the Central Bank of Nigeria published a policy communication document authored by its Governor on COVID-19 pandemic response titled: Turning the COVID-19 tragedy into an opportunity for a New Nigeria. The Governor’s writing seemed to express alarm at the supposed lack of multilateralism in responding to the COVID-19 pandemic, which he linked to the temporary bans imposed on export of certain essential COVID-19 response materials and agricultural commodities by different world leaders. Citing decisions made by Germany, France, India, United States, Russia and Vietnam, he argued that the measures were taken to protect their own people and economies without regard to the spill over effects on the rest of the world. I think that it is untrue that measures taken by other leaders were taken without regard to its impact elsewhere. Without running the risk of being perceived as anti-multilateralism, I would like to say that it is for a reason that passengers on an airplane are advised to secure their oxygen masks first during depressurisation before attempting to help others. The fact is that COVID-19 is a shocker and a fast-evolving and as yet uncontained disease with a still unclear scale of impact. Some countries may want to conduct an inventory of their resources vis-a-vis the COVID-19 challenge they are facing before deciding on the scale of multilateral effort they want to engage in. China has been able to reach out to a lot of countries particularly in Africa, including Nigeria, with support especially personal protective equipment (PPE) because of her competitive advantage in manufacturing such supplies at huge scale, and also possibly because it has contained the spread of the virus within its territories and therefore can have the clarity of vision to look outwards.

It is also important to highlight that it is not time to accept all hands of multilateralism just because Nigeria has found herself in difficult times. Had Nigeria implemented different developmental and economic policies, some of which the Governor mentioned he initiated on assuming office, we would not be having a panic attack now, and having concern about what Germany, France, India, Russia, Vietnam or the US are doing at the moment. We would probably be talking about supporting at least other West African countries with PPEs and maybe food relief, but unfortunately, we don’t have enough to use ourselves, neither do we have clear leadership on the COVID-19 mitigation strategies undertaken in the different states. We are exposed, naked and in dire need for interventions. While I admit that some of the policies the Governor had proposed that the Central Bank would pursue in response to the COVID-19 pandemic in Nigeria were commendable, however, they are not robust enough to respond to the urgent socioeconomic challenges he highlighted in his policy statement. For instance, no long-term policy priority was proposed. Only immediate, short term and medium-term interventions of between 0-3 years (when the present administration will serve out its term) were offered. While the Governor acknowledged the incredible role that Nigerians are playing around the world in driving innovations in every field of life, and equally echoed the urgency with which Nigeria must create an environment that empowers Nigerians to thrive within Nigeria, his policy proposal failed to vote a single Naira to improve funding of Nigeria’s universities and research institutions. His policy merely promised to look at efforts to drive innovations in our tertiary institutions and other spaces. The economies that we look up to today rode

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on the back and climbed on the shoulders of their educational and research institutions in particular. For instance, the Republic of Korea in 1971 established the Korea Development Institute (KDI) as a policy oriented research institute devoted to supporting South Korea’s aspiration of making an “economic leap-forward” and till date KDI has been leading in the “scientification of policymaking,” setting South Korea’s long term national agenda and policy directions based on rigorous analysis. With respect to sectors that will receive financial intervention, the main concern is how efficient the implementation will be – as Nigeria’s problems are not largely lack of policies but their implementation. For instance, one of the interventions proposed by the Governor for households and micro, small and medium enterprises (MSMEs) is already facing its first implementation roadblock. CBN have had to issue a disclaimer that it does not charge fees for accessing /processing the 50 billion Targeted Credit Facility (TCF) COVID-19 Pandemic Stimulus Package, following allegations that applicants were asked to make payments. Based on industry experience, bigger challenges and roadblocks await big businesses that may want to access CBN’s COVID-19 financial interventions if the CBN and financial institutions that will help disburse these facilities do not remove the lengthy, highly frustrating, expensive bureaucratic and administrative bottlenecks that normally get in the way even for very qualified, responsible and credible businesses. Simply put, CBN’s new interventions cannot be served through old, problematic structures and mechanisms. A system change - transformation is needed to deliver quick and effective results that are required in a COVID-19 pandemic era. Regarding other sectoral priorities highlighted by the CBN policy document such as boosting

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Akachukwu Okafor job creation, household incomes and economic growth through housing development, mortgage finance and institutional capacity, I will advise the CBN to put its interventions in these sectors on hold and direct its resources to supporting Nigeria’s government to conduct a comprehensive National Census. It is unacceptable for the government to continue to plan and implement interventions for Nigerians without data or with at best, 14-year-old data. It is wasteful, unpatriotic and un-visionary to continue to do so. I believe the CBN Governor and his team may need to go back to the drawing board to reevaluate these policy decisions it has taken, and consider making strategic targeted investments into Nigeria’s educational, research institutions, innovation systems and social institutions, and also adopt new sets of result-oriented policy approaches to achieve the transformative change that he envisions for Nigeria in the policy statement. Solving Post-COVID-19 pandemic socioeconomic and environmental challenges will require more than throwing money into old, failed, dysfunctional, ineffective, inefficient systems, it will require a total system change/ transformation; and the earlier government and her institutions realise this, the better for Nigeria. Okafor Akachukwu a Mandela Washington Fellow (Public Management, University of Maine) and Principal Partner at Change Partners International. aka@ changepartnersintl.com

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Thursday 07 May 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun

Mutuality essential in Nigeria-China relations

editor Patrick Atuanya

It is essential to ensure that no party, damages the tenor of the relationship

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

hina has featured prominently in Nigerian news for the wrong reasons as the country battles the coronavirus and its consequences. If it is not for assaulting our citizens in Chinese cities, it would be for illegal mining of minerals. Given our long history of growing trade relations, it is necessary now to change the narrative of NigeriaChina relations. “In the face of major public health crises and infectious diseases, the international community should stand in solidarity and work together, not resort to mutual accusation or demand retribution and accountability. As we recall, there has never been any precedence of the latter”, according to Sun Xiaoxing, Press Secretary at the Embassy of the People’s Republic of China to Nigeria. “Currently, China is standing together with Nigeria in the global fight against COVID-19. Our people are joining hands to overcome current difficulties. Xiaoxing added: “Attacking and discrediting other countries will not save the time and lives lost. At this critical moment, we urge that

some Nigerian legal practitioners will do more things to enhance mutual trust and help epidemic prevention and control in both countries, rather than dancing to the tune of a certain country to hype up the situation.” The Abuja press statement was a response to news reports that a coalition of Nigerian lawyers had proclaimed they would sue the Chinese for damages amounting to $200m because of the coronavirus disease and the distress it caused Nigeria and Nigerians. Nigerians are peeved at the Chinese for “attacking and discrediting” our citizens in their cities even after they had managed to tackle the COVID-19 threat in Wuhan. They pushed Nigerians out of their residences, whether it be a home or hotel, and on to the streets. They did so to other Africans in a vain effort to spin a new narrative that blames Africans as origins of the We commend the pushback by the Nigerian Consul in Guangdong. He frontally took on the Director of a Chinese team physically assaulting Nigerians and stopped the measure. Speaker of the House of Representatives Femi Gbajabiamila also invited and spoke to the Chinese Ambassador

to Nigeria affirming that our country would not tolerate maltreatment of her citizens. Nigeria’s Foreign Minister Geoffrey Onyeama then took on the Chinese over the matter of the treatment of Nigerians in Guanzhou city of Guangdong District. Onyeama told Chinese Ambassador Zhou Pingjian in his office in Abuja that video images of Nigerians thrown into the streets of Chinese cities or any such overt racism directed against Nigerians was “unacceptable” to the country. “We saw images of Nigerians in the streets with their possessions, and this was, of course, extremely distressing for us at home,” he said. The Chinese have responded in the finest traditions of diplomacy to all these. Their Foreign Ministry in a statement claimed continuous briefing of the Nigerian embassy in China on the tests and containment measures in Guangzhou. It asserted, “Frankly, the percentage of Nigerian nationals affected by the virus in Guangzhou is disproportionately high”. Of what do we speak here? The Chinese say “As of 23 April, altogether 138, 700 residents of Guangzhou including 5, 503 African nationals

(3.97 percent) have been tested since 5 April. Among them, 185 tested positive with 164 (88.5 percent) asymptomatic cases.” The statement carefully avoided mentioning the number of Nigerian cases, but the Chinese later claimed Nigerians accounted for 72 positive cases of the 185. If Africans account for only 3.9 percent of those tested in Guangzhou, only racism will account for profiling such an insignificant contribution to the toll. Nor should Nigerians receive negative statements such as “disproportionately high” percentage contribution. The conclusion by Sun Siaoxing does not cohere with the facts. Significantly, both Nigeria and China recognise the imperative of friendship in our relationship that started formally in 1972. Trade relations currently favour China. China has shown good faith in diplomatic and economic ties with Nigeria, becoming a favoured trade partner. It is essential to ensure that no party, by actions or statements, damages the tenor of the relationship. In particular, the Chinese must ensure a more favourable perception of their country by Nigerian citizens. It does not look good currently.

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Thursday 07 May 2020

BUSINESS DAY

RESEARCH&INSIGHT A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

In association with briu@businessday.ng

08098710024

COVID-19: Time to revive Nigeria’s diversification and industrialisation strategies tactics, including tariffs, import quotas, and subsidized government loans. Countries implementing this theory attempt to shore up production channels for each stage of a product’s development. Under these arrangements, Nigeria chose to promote domestic production of manufactured goods that were hitherto imported.

ISAAC ESOWE

ata on the number of confirmed cases of coronavirus coded COVID-19 in Nigeria is getting scarier as the days morph into weeks. It should be recalled that the first index case in Nigeria occurred on February 27th, 2020. As at the March 30th 2020, when the government announced the first cessation of movement, the number of confirmed cases stood at 131 infected individuals, less than five weeks down the line, the number of confirmed cases has risen unprecedently to 2,558 confirmed cases, according to data extracted from the Nigeria Centre for Disease Control (NCDC). With the ease of movement in Lagos cum the frightening increase in number, it would not be out of place to predict an alarming increase in the number of infected individuals, going forward. The Nigerian government must begin to devise a workable plan to weather the impact this will further have on the economy at large considering the resultant impact of this crisis on the Nigerian economy and its impact on the prices of crude oil. Nigeria must take hold of the opportunity of the crisis to undertake long-awaited reforms of the economy. Someone who is well acquainted with the Nigerian economy can attest to the fact that the issues of industrialisation and economic diversification are two peas in a pod. Why economic diversification matters Economic diversification is the process of shifting an economy away from a single income source toward multiple sources from a growing range of sectors and markets. Traditionally, it

Source: NCDC, BRIU

has been applied as a strategy to encourage positive economic growth and development. In the context of climate change adaptation, it takes on new relevance as a strategy to diversify away from vulnerable products, markets, and jobs toward income sources that are low-emission and more climate-resilient. Economic diversification is a key element of economic development in which a country moves to a more diverse production and trade structure. A lack of economic diversification is often associated with increased vulnerability to external shocks that can undermine prospects for longer-term economic growth. The world’s poorest countries, many of which are often small or geographically remote, landlocked and/or heavily dependent on primary agriculture or minerals, tend to have the most concentrated economic structures. This creates challenges in terms of exposure to sector-specific shocks, such as weather-related events in agri-

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culture or sudden price shocks for minerals. In 2016, the Nigerian Economic Society (NES) tagged its conference along the line of economic diversification and industrialisation in a bid to alter the government’s focus. Economists and policymakers alike have both called for the government to shift its focus from crude oil and diversify the Nigerian economy. However, evidence from BusinessDay Research & Intelligence Unit (BRIU) analysis shows that not much has changed in the last 10 years in terms of economic diversification. Amongst the uncertainties thrown up by the coronavirus pandemic, Nigeria government must encourage the diversification of the Nigerian economy. It is the only viable way to sail through the current environment of global economic uncertainty with the volatility of oil prices. It will also be recalled again that after more than 58 years

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of independence, the government has introduced several policies thrust geared towards industrialising and diversification the economy. Some of these policies formed the focal point of Nigeria’s National Development Plans. Among these policies include the import Substitution Industrialisation (ISI) and Export Promotion Industrialisation (EPI) Strategy. ISI is a theory of economics typically adhered to by developing countries or emergingmarket nations that seek to decrease their dependence on developed countries. The theory targets the protection and incubation of newly formed domestic industries to fully develop sectors so that the goods produced are competitive with imported goods. Under ISI theory, this process makes local economies, and their nations, self-sufficient. The primary goal of the implemented substitution industrialization theory is to protect, strengthen and grow local industries using a variety of

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Why did ISI fail? Among the reasons for the failure of this policy is that the government did not show enough political will to support the industries with access to funds. And again, rather than building indigenous manufacturing industries that produced made in Nigeria products more funds were invested into the creation of assembling plants. Efficient and adequate provisions of infrastructure such as transportation, water supply, electricity supply and telecommunications are what give impetus to industrialisation. The quantity and quality of available infrastructure affect production cost, thereby impacting the profitability of businesses. Unfortunately, the above-mentioned variables remain a major constrain in a bid to industrialise the nation. “One of the several challenges that have militated against Nigeria’s development efforts has been the lack of capacity to build a development-oriented nationstate that serves the interest of its people. Indeed, such capacity cannot be built without political will. There has to be a total shift from the immense power the political class currently wields over Nigeria’s national wealth for their aggrandizements, to a focus on achieving broad-based industrialization for the benefit of the entire nation”. Precious Kassey Garba, former Chief Economic Adviser to President noted in one of his speeches.

Thursday 07 May, 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Market capitalisation

NSE All Share Index

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

967.99 987.17

261.54

120.35

376.46

205.63

1,596.19

1,017.37

871.45

271.57

121.88

371.12

209.13

1,628.47

1,012.59

879.28

3.83

1.27

Week open (24-4–20)

22,599.38

N11.778 trillion

1,942.21

921.16

761.08

Week close (30-4–20)

23,021.01

N11.997 trillion

2,010.15

923.62

761.08

Percentage change (WoW) Percentage change (YTD)

1.87 -14.24

3.50 -5.01

-0.85 -19.81

0.00 0.00

1.98 -16.19

-23.90

-3.13

-1.42 -37.40

NSE Lotus II

1.70

2.02

-20.34

-11.24

NSE Ind. Goods Index

-0.47 -5.86

NSE Pension Index

1.27 -16.58

Covid-19 impacts on IPO ecosystem Iheanyi Nwachukwu

he combined effects of Covid-19 and the oil price fall succeeded in putting an effective end to IPO activity in first-quarter

(Q1). As it became clear that the global market conditions were becoming more volatile, a number of IPO processes that were in train were put on the back burner. “Covid-19 has had a pervasive impact on the IPO ecosystem, from financial markets to the real underlying economic fundamentals in Q1 2020. “We see the impact on market volatility, equity indices and valuations continuing for the foreseeable future, with a recovery not practical until Covid-19 is under control. “For the short term we expect

most market activity to be focused on fund raising by existing issuers”, said Scott McCubbin, EY UKI IPO Leader. Market uncertainties triggered by the Covid-19 pandemic have thwarted some companies plans to attempt at going public. The firm had hired advisers to resurrect plans for a stock-market listing in London and Lagos. In Nigeria, investors will still need to wait for Initial Public Offering (IPO) of Nigerian fintech giant, Interswitch. The pandemic has clouded its reality in the medium term. JPMorgan Chase & Co., Citigroup Inc. and Standard Bank Group Limited are among the firms working on an initial public offering, which may value the financial technology company at $1.3 billion to $1.5 billion. Recently, global economic activities remain depressed until the pandemic is under control and governments start to release some of the restrictions. Even then it will be a significant

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time before activity returns to anything like normal and the very earliest market watchers can expect activity is the second half of the year — assuming the virus is brought under control rapidly. The first quarter had promising two months followed by the market closing abruptly. Globally, there were 230 IPOs raising proceeds of $28billion in the first quarter of 2020. This is a 9percent increase in deal numbers and a 85percent increase in proceeds compared to Q1 2019, reflecting the continuation of global IPO momentum that built up in the second half of 2019. As in Q1 2019, the technology, healthcare and industrials sectors were the most prolific producers of IPOs in the first quarter of 2020, together accounting for 115 IPOs (50percent of global IPOs by deal numbers) and raising $15.6billion altogether (56percent of global proceeds). By proceeds, industrials

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was the strongest sector with $6.3billion raised (22percent of global proceeds). E&Y recent report (IPO Eye Q1, 2020) noted that covid-19 brought London IPOs to a halt. “Following the election which returned a government with a clear mandate, the listing momentum that grew globally in late 2019 carried through to London in the first two months of 2020 and the London Stock Exchange witnessed five IPOs which raised some £615million in aggregate. “However, the combined effects of COVID-19 and the oil price fall put an effective end to IPO activity before what should have been the busiest month of the quarter for listings.”, the report noted. “London once again demonstrated its depth of capital as it held its position as the number one listing location in Europe in terms of funds raised in the quarter, accounting for more than half of the total proceeds raised across Europe. All of the IPO

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activity in the quarter was conducted by domestic issuers”, it noted further. The Main Market saw three IPOs which raised a combined £441million while the Alternative Investment Market saw two admissions in the quarter raising £174million. On a combined basis deal numbers are the same as Q1 2019 and proceeds are 28percent up compared to prior year even though new listing activity effectively ceased at the end of February. The largest IPO in the period was Calisen plc, an owner and manager of energy infrastructure assets, which raised £337million. The largest fundraising on AIM was Inspecs Group plc which raised £94million. Both issuers were private equity backed companies and between them raised some 70percent of the funds raised in the quarter. In addition, in early March, FRP Advisory Group plc raised £80million, continuing a trend of professional services providers listing on the markets.

Thursday 07 May, 2020

BUSINESS DAY

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Investor’s Square

United Capital Investment Views

Equity market rebounds 8.1% in April

he equities market appreciated 1.9percent week-onweek (w/w) to close the month of April at 23,021points, rebounding 8.1 percent month on month (m/m) after tumbling by 20.9percent in March. Accordingly, year-todate (YtD) returns improved to -14.2percent. In terms of market activity, the average value of stocks traded during the 4-days of trading declined by 11.5percent w/w to N2.5billion while volumes traded increased by 5.8percent w/w to 252.9million units. Analysing the sectoral performance, three of the five sectors we track ended the week in the green zone. The Banking sector (+3.8percent) led the way, driven by gains in ZENITH (+1.8percent), GUARANTY (+8.8percent) and FBNH (+5.8percent). This was followed closely by the Oil and Gas sector (+1.7percent) thanks to price appreciation in ARDOVA (+20.9percent) and OANDO (+7.8percent). The Insurance sector (+1.3percent) was supported by upticks in AIICO (+3.6percent) and LASACO (+12.5percent). Contrariwise, the Consumer Goods (-1.4percent) - dragged by losses

supply cut deal and the influx of more quarterly earnings will drive sentiments amid increasing number of countries weighing the need to unlock economic activities as the debate around health and economic wellbeing gets louder. Money Market: A successful week at the primary market Last week, the overall liquidity in the financial system rebounded as naira inflows during the week outweighed outflows. Notably, inflows were in the form of partial CRR credit (as the CBN refunded part of the c. N1.5trillion it had earlier debited from banks), b ond coup on payments (N153.7billion), OMO maturity (N30.4billiin) and FGN Treasury Bills maturity (N131.5billion). Meanwhile, outflows were in the form of NTB (N131.5billion) and OMO (N100billion) sales. Also, despite the early improvement in liquidity at the interbank window, we noted a few banks still opted for the funds from the CBN’s Standing Lending Facility (SLF) window. In all, average interbank funding rates -open buy back (OBB) and overnight (OVN) rates crashed to 2.5percent at the end of the week (closed at 20.7percent the week before).

in UNILEVER (-4.6percent) and NB (-13.04percent) - and the Industrial Goods (-0.5percent) index – due to BUACEMENT (-1.2percent), ended the week in the red territory. The previous week was particularly characterized by the influx of Q1-2020 earnings. Notably, SEPLAT recorded a monumental N34.6billion loss in the first quarter of the year. In the Banking sector, while the impact of the oil market crash has not significantly impacted their earnings, we saw a spike in impairment charges across board. Meanwhile, MTNN reported 16.7percent surge in revenue while PAT rose by 5.6percent. This week, the implementation of OPEC+

The CBN had a successful week at the primary money market. Notably, the apex bank, on behalf of the FGN, successfully rolled over all maturing FGN treasury bills at a relatively low interest rate. Also, the monetary authority issued OMO bills worth 3.3x the offered amount (N30billion), at a relatively low interest rate. The level demand at both auctions were strong: FGN Treasury Bills (Total Bid to Cover: 2.0x) and OMO (Total Bid to Cover: 6.6x). Relative to the last auction, average NTB stop rate declined by 16bps to 2.7percent (91-day: 1.9percent; 182-day: 2.5percent and 364day: 3.8percent; previously 1.9percent, 2.7percent, and 4percent respectively). Similarly, the stop rate on the only OMO

bill on offer (334-day) decline to 12.64percent (previously 12.71percent). Elsewhere, sentiments were muted at the secondary market as market participants focused their attention on the new bills available at the primary market. Consequently, average NTB and OMO yields was down 1 basis point (bps) and 3bps w/w to 2.7percent and 9.9percent respectively. This week, we expect interbank rates to track higher at the start of the week as the CBN commences wholesale FX funding sales to banks. Also, on the back of the sparse nature of inflows expected, OMO maturity ((N18.5billionn), we envisage a marginal uptick in yields at the secondary market. Bond Market : IMF approves Nigeria’s request for $3.4billion loan During the prior week, the International Monetary Fund (IMF) approved Nigeria’s request for $3.4billion emergency loan via the Rapid Financing Instrument (RFI) program. According to the Minister of Finance, the facility has a repayment moratorium of 3.25 years, a repayment period of 5 years and an interest rate of 1percent. Elsewhere, the Senate approved the FG’s request to revise its initial plan (in the approved 2020 budget) to borrow N850billion from external sources to domestic sources. This is as the market dynamics for new issuances at the international market remain unfavourable relative to the local market. Sentiments at the domestic secondary bond market was bullish as investors scrambled for bonds following coupon payment. Thus, the average bond yield declined 30bps w/w to end the week at 10.2percent. Similarly, the global crude oil price recovery witnessed during week, partly rekindled investors interest for Nigeria’s Eurobond. Specifically, the average yield on FGN Eurobond decline by 61bps w/w to close at 12.13percent. Meanwhile, average yield at the corporate Eurobond segment trended higher, up 46bps w/w to close at 14.2percent. This week, we expect crude oil prices to firm higher as OPEC+ members commence production cut. This should partly encourage foreign investors to cherry pick Nigeria’s Eurobonds. Also, the gradual return of FX liquidity might further boost local participation at the Eurobond market.

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

Economy and Market

Still on Lafarge Africa’s N500m intervention fund in response to Covid-19 Iheanyi Nwachukwu

n response to the Covid-19 pandemic, Lafarge Africa has deployed a N500million intervention fund to provide medical infrastructure, food and essential medications to its host communities. Lafarge Africa Plc, a leading Sub-Saharan Africa building materials company is a subsidiary of LafargeHolcim, a world leader in building materials. Listed on the Nigerian Stock Exchange, Lafarge Africa is actively participating in the urbanisation and economic growth of Nigeria, the largest economy in Africa. During its first phase of the intervention launched on April 6, 2020, the company converted two of its facilities in Sagamu and Ashaka to be used as isolation centres, and also provided infrastructure support such as generators, ambulances and critical personal protection equipment (PPE) for health professionals and its host states. In the second phase of the intervention, Lafarge distributed food and medical supplies to its host communities targeting 60,000 beneficiaries across 10,000 families. Elenda Giwa-Amu, NonExecutive Director, Lafarge Africa Plc said: “Our operations are built on the key pillars

of sustainability and health and safety. We are therefore mobilising resources at our disposal at this time to offer succour to Nigerians just as we are collaborating with government agencies at all levels to build enduring structures to end the pandemic”. While presenting the relief materials to residents in Lagos Island East Local Government Area of Lagos State, the Country Chief Executive Officer of Lafarge Africa Plc, Khaled El Dokani remarked: “At Lafarge Africa, we are deeply committed to our host communities and we are happy to work with them to improve lives through our presence and active citizenship. As a member of LafargeHolcim, the world’s leading building materials and cement maker that operates in over 70 countries, we operate as a ke y e c o n o m i c p l ay e r through our activities in the local communities”. He continued, “Prior to the outbreak of the pandemic, we maintained health facilities in our host community in Ashaka. Today, we have a fully equipped isolation centre in Ashaka and Sagamu to support the state Government’s efforts to curb the pandemic. We are now making a further contribution to the health and resilience of all our host communities by donating essential food items and critical medicines to make

it easier for people to survive during this pandemic as the Nigerian economy gradually rebounds”. As a committed corporate citizen that has manufactured cement and supplied innovative building materials for over 60 years in Nigeria, the company is supporting the efforts of the Federal, State and Local Governments to fight COVID-19 in Nigeria. It will be recalled that Governor Muhammadu Inuwa Yahaya of Gombe State had recently commended Ashaka Cement, a subsidiary of Lafarge Africa, for donating a fully equipped isolation facility and other items to complement the state government’s effort in containing the spread of the COVID-19 pandemic in the state. Speaking through his Deputy, Manassah Daniel Jatau, at the handing over of fully equipped isolation centre and other items, he noted that the Ashaka Cement Plc has demonstrated an exemplary corporate social responsibility role that will impact on humanity for years to come. This is just as Deputy Governor of Ogun State, Noimot Salako Oyedele acknowledged the contributions of Lafarge to nation building. She commended the company during the formal hand-over of 2 units of modern ambulances, a fully equipped isolation centre in Sagamu, personal protective equipment (PPEs) e.t.c to support the medical efforts in Ogun State.

L-R: Xavier Kennedy, Mfamosing Plant manager, Lafarge Africa Plc, presenting relief package to a beneficiary of the Lafarge Africa national N500m relief programme in Mfamosing, Cross River State.

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Thursday 07 May 2020

BUSINESS DAY

Markets + Finance

‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

MTN Nigeria’s stock is bright spot amid the gloom …Records highest ROAE among Nigerian companies

‘

BALA AUGIE

With the already strong mobile phone penetration and growing broadband take-up among households, we expect the industry to report stronger growth in 2020 as revenue from data usage and voice calls are expected to spike

‘

TN Nigeria Communications Plc is a good defensive stock amid the gloom caused by the coronavirus pandemics that is ravaging the economy and causing severe gyrations in the equities market. A defensive stock is hot cake because its revenue and profits are less sensitive to the well-being of the overall economy. While the coronavirus pandemic has damped the outlook of s e ctors from banking to consumer goods to hospitality, analysts expect better numbers from MTN Nigeria in the months ahead as data usage will surge among populace because Nigerians were forced to stay at home so as to prevent the spread of the virus. MTN Nigeria has been recording double digit growth at the top (sales) and bottom line (Profit) since it listed its shares on the bourse two years ago, magnifying shareholders earnings by way of share

appreciation and bumper dividend. The telecommunications giant delivered another breath taking performance in the first quarter of year, as it continues to deepen data penetration with the further roll out of 4G sites. For the first three months through March 2019, revenue increased by 16.70 percent to N329.17 billion from N282.11 billion the previous year. The growth in revenue was drive by 58.90 percent and 34.04 percent increase in Data and value added service to N74 billion and N11.38 billion in March 2020

from N46.56 billion and N8.49 billion the previous year . MTN Nigeria continues to increase its market share as it added 4.20 subscribers to its network, representing a 6.50 percent increase from last year. The telecoms giant has controlled costs while its products are adding impetus to sales as operating profit otherwise known as earnings before interest and tax (EBIT) increased by 18.60 percent to N111.29 billion in the period under review from N93.86 billion as at March 2019. Profit before tax followed

the same growth trajectory as it 8.91 percent to N76.30 billion in the period under review from N70.09 billion the previous year. MTN Nigeria can pay the interest on outstanding debt as interest coverage ratio stood at 2.73 times earnings. A figure above 1.50 means a firm is not beset by rising or mounting obligation, and a situation paves the way for robust risk. The company generates more money from its operations per Naira as operating cash flow margins otherwise known as cash margin increased to 46.70 percent in March 2020 from 43.83 percent the previous year. The company has the ammunitions to weather the headwinds and pay future dividend and meet debt obligations as free cashflow stood at N146.59 billion in the period under review as against N91.98 billion as at March 2019 Investors pay attention to the free cash-flow because it shows them the extent to which a firm has the financial impetus to settle outstanding debt, fund future expansion plans and pay future dividend. Also, cash generated

from operating activities increased by 25.43 percent to N153.74 billion as at March 2018 from N122.67 billion the previous year; net cash generated from operations stood at N128.62 billion as at March 2020 from a negative position of N25.05 billion the previous year. MTN Nigeria has utilized the resources of shareholders in generating higher profit as annualized return on average equity (ROAE) increased to 120.20 percent in the period under review as against 106.50 percent as at March 2019. The company’s share price closed at N120 as at 2:00 pm Lagos, valuing it at N2.44 trillion. It has shareholders fund of N195.70 billion as at Ma4ch 2020, while retained profit has hit N117.68 billion in the same period. Telecommunications companies in Africa’s largest economy are taking advantage of the country’s growing young population to broadband subscriptions. Recent data on key industry fundamentals published by the Nigerian Communications Commission (NCC) showed that the total

BD MARKETS + FINANCE Analysts: BALA AUGIE www.businessday.ng

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number of broadband subscriptions grew 1.8 percent m/m percent and 19.0 percent year on year (y/y) to 73.5 million. Furthermore, Broadband penetration expanded to 38.49 percent in January 2020 from 37.80 percent in December 2019 and 32.34 percent in Jan 2019. In a related development, the Nigerian bureau of statistics published data on active voice subscriptions within the country for fourth quarter (Q4) 2019 which showed a sturdy 6.9 percent (y/y) increase to 184.7 million subscriptions from 172.8 million subscriptions in Q4 2018. “Accordingly, with the already strong mobile phone penetration and growing broadband take-up among households, we expect the industry to report stronger growth in 2020 as revenue from data usage and voice calls are expected to spike,” said Analysts at United Capital Research Limited. “Notably, this presents retail investors the opportunity to tap into these gains by investing in some of the industry players that are listed on the Nigerian Stock Exchange,” said the analysts.

Thursday 07 May 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 06 May 2020

Top Gainers/Losers as at Wednesday 06 May 2020 LOSERS

GAINERS Company

Opening

Closing

Change

Company

Opening

Closing

Change

N30

N33

CILEASING

N4.7

-0.3

N20.9

N22.9

UACN

N7.2

N6.95

-0.25

N21

N22.95

1.95

INTBREW

N4.9

-0.1

N0.32

N0.31

-0.01

N12.8

CAP GUARANTY

GUINNESS

N17.5

N18.95

1.45

UNIONDAC

ARDOVA

N12.7

N13.95

1.25

DANGSUGAR

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

24,143.37 7,384.00 426,641,520.00 4.102

Global market indicators FTSE 100 Index 5,853.76GBP +4.34+0.07%

Nikkei 225 19,619.35JPY -574.34-2.84%

S&P 500 Index 2,870.47USD +2.03+0.07%

Deutsche Boerse AG German Stock Index DAX 10,606.20EUR -123.26-1.15%

Generic 1st ‘DM’ Future 23,771.00USD +10.00+0.04%

Shanghai Stock Exchange Composite Index 2,878.14CNY +18.06+0.63%

12.582

Notore’s half-year loss rises to N5.79bn Stories by Iheanyi Nwachukwu

otore Chemical Industries plc, one of Nigeria’s leading agribusiness companies, has posted loss after tax (LAT) of N5.79billion in the year ended March 31, 2020, a huge increase from N1.94billion loss it recorded in the corresponding period of 2019. The company’s results submitted to the Nigerian Stock Exchange shows. Also in the first quarter (Q1) to March 31, it reported N4.37billion loss as against N1.84billion profit as at March 31, 2019. In H1 2020, its revenue printed at N13.12 billion against N12.68billion in H1 2019. In Q1 2020 the company report-

ed revenue decline of N4.93billion as against N8.36billion in Q1 2019. Onajite Okoloko, group managing director/CEO, in a statement by the company, said, “The modest growth in revenue is attributable to some improvements in plant reliability derived from the ongoing TAM programme, which has begun to impact positively on plant operations and resulting in some marginal increases in production volume during the period. “Operating expenses increased by 29 percent to N10.43 billion during the period from N8.05 billion for the corresponding period of 2019H1 due mainly to a combination of increases in production activities, plant repair, and maintenance expenses and the impact of naira devaluation. Operating

Onajite Okoloko, group managing director/CEO, Notore Chemical Industries plc

income for the period was N2.67 billion, a decrease of 42 percent as compared to N4.63 billion in 2019H1.”

Nigeria stocks rise for a third day ...Investors gain additional N174bn

igeria’s stocks rose for a third day on Wednesday May 6 after the gradual easing of lockdown in the country’s major cities (Lagos, Abuja and Ogun State) amid ravaging Covid-19. Market watchers had in the absence of negative news capable of weakening investors’ confidence expected Wednesday’s bullish performance on the Nigerian Stock Exchange (NSE).

The NSE All Share Index (ASI) and market cap increased to 24,143.37 points and N12.582trillion respectively as against preceding trading day lows of 23,809.31 points and N12.408trillion. Investors gained about N174billion at the close of trading session. The market’s year-to-date (YtD) negative returns stood lower at -10.05percent. Nigerian Breweries Plc which gained N3 or 10percent, CAP Plc (N2 or 9.57percent),

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GTBank Plc (N1.95 or 9.29percent), Guinness Nigeria Plc (N1.45 or 8.29percent) and Flour Mills Nigeria Plc (N1.25 or N6.33percent) topped investors stock picks on Wednesday’s remote trading session. Though, amid push to reopen the economy, investors still weigh mixed corporate earnings in first quarter (Q1) against dismal economic data and outlook. Price of crude oil (Nigeria’s forex earning major source) reached $30.42 as at 2:30pm on Wednesday. In 7,384 deals, stock dealers exchanged 426.641million units valued at N4.102billion. FBN Holdings Plc, Zenith Bank Plc, Access Bank Plc, GTBank Plc, Sterling Bank Plc were actively traded stocks on the Bourse. “As we ease these lockdowns there remains the risk that of course you then have to tighten up the controls,” Andrew Wilson, chairman of global fixed income at Goldman Sachs Asset Management said on Bloomberg TV.

According to Okoloko, while the coronavirus (COVID-19) pandemic and the attendant meas-

ures/restrictions put in place by various governments aimed at halting the further spread of the virus have had a negative impact on businesses globally, the impact of the pandemic on the fertilizer market and Notore in particular, remains minimal, as it operates in the “essential goods” industry. The Nigerian fertilizer demand is quite robust and is expected to continue to grow considering the Federal Government’s strong and decisive policy focus on agriculture as one of the keys to unlock the diversification of the Nigerian economy. The domestic fertilizer market is yet to reach its full potential as the consumption of fertilizer per hectare of arable land in Nigeria is still far below the 200kg per hectare recommended by Food & Agriculture Organization (FAO),” the state-

ment noted. Noting that the strategic TAM programme would propel its plant to meet and sustain its nameplate capacity of 500,000MT per annum, the company said, “The TAM programme once completed at the end of Q4 2020 as anticipated, is expected to improve significantly the Plant’s reliability and production output to meet and sustain its 500,000MT per annum design nameplate capacity. Achieving this level of production output will not only lead to significant improvements in the Group and Company cash flows from operations, but also significant increases in revenues annually, thereby returning the Company to profitability post the TAM programme.”

Transcorp Group unveils new strategic vision for Nigeria’s largest listed conglomerate

hareholders of Transnational Corporation of Nigeria Plc (Transcorp) have congratulated the Board and management of the company for the resilient performance achieved in 2019, despite the challenging environment. Transcorp held its 14th Annual General Meeting (AGM) online, due to the Covid19 pandemic, a corporate first in Nigeria. Shareholders participated in the meeting through proxies and a total of 129 proxies representing holders of 21,450,062,121 ordinary shares of the company voted on the resolutions proposed by the directors to the shareholders. The President/Group CEO of Transcorp, Owen Omogiafo set out her strategic ambition, whilst also committing to safeguard shareholder interests by ensuring improved dividends. Shareholders welcomed

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the diversifie d earnings p rov i d e d by t h e G ro u p. Transcorp is Nigeria’s leading listed conglomerate, the largest power generator in Nigeria, operator of sub-Saharan Africa’s largest hotel and a growing natural resources player. Omogiafo who was recently appointed as the Group CEO with a team of subsidiary CEOs, stated that the new management team is dedicated to delivering and exceeding the strategic objectives of the Company, rooted in its founding vision and expressed in its corporate purpose of ‘Improving Lives, Transforming Nigeria’. She went on to say “in Hospitality, we will deepen and expand our market share by deploying an asset light strategy, leveraging best in class technology and continuously drive the highest service standards. In Power, we target co mpl et i ng the o ng oi ng transaction for the 100% acquisition of another power plant in the gas rich Niger Delta @Businessdayng

Region of Nigeria – Afam Genco, this year. “This will enhance our play in the power space, with increased generation capacity, revenue and profitability. Our drive to diversify our energy mix will also continue, with a focus on renewable energy and off grid solutions. We w ill continue to monitor developments in the oil and gas space, while making the best decisions in the interest of the company and its shareholders regarding the development of our oil and gas asset, OPL 281. Working with the MD/ CEO of Transcorp Hotels Plc, Dupe Olusola and the MD/CEO, Transcorp Power Ltd, Chris Ezeafulukwe, and all our highly committed staff and partners, we are well positioned as a group to continue to deliver great value for our shareholders”.

Thursday 07 May 2020

BUSINESS DAY

Garden City Business Digest NDDC permanent hqrs project seems to move faster under interim CEOs, especially under female MDs Ignatius Chukwu

ould it be true that it is under female interim managing directors that the most abandoned project in the Niger Delta, the multi-billion naira headquarters of the Niger Delta Development Commission (NDDC) moves to any new level of completion? Could it also be true that it is the female CEOs that strive to return to the mandate and master plan of the NDDC? The assertion in the oil region is that the moment a full time MD takes over, the project which started decades ago under the Oil Mineral Producing Areas Development Commission (OMPADEC), would get huge lip-service. By the time that CEO leaves office, the project would witness huge payouts, contract reviews, but little or no percentage increase in completion steps, insiders stated last weekend. Could this be why the project which started at a couple of billions of naira has to N16Bn during Nsima Ekere or far more now under Pondei/Akpabio? Yet, it seems to be the pressing under the regimes of recent female CEOs (from

Ibim to Nunieh) that acted as managing directors that whatever shift upward in completion took place, except the present interim management committee (IMC) that is seen to continue with the hunger to complete it. Christy Atako (PhD), a one time director of public affairs of the Commission, was the first female to be made acting MD at the Commission. The drive and determination of female MDs seemed to spark when Ibim Semenitari was appointed in December 2015 by President Muhammadu Buhari. Ibim was seen to bring her acute transparency, huge administrative and managerial sagacity to bear on how things ought to be done at the Commission. Having numerously investigated and reported the affairs of the Commission as a journalist, editor, and publisher, as well as having served as member of the Rivers State executive council, Ibim seemed to push for an audit to strengthen the path it should go, and return to the original mandate. It was felt at that point that the politicians that were preferred to govern the Commission over the years had redefined the mandate of the Commission.

Joi Nunieh

It was Ibim that rescued small contractors’ debts (under N10m) by verifying and paying them without them needing to come and lobby for payment. This is said to bring ovation in the region as alerts rang out here and there. She told newsmen then that there was no point holding small suppliers hostage for years. Next, she ensured that contractors were not judged for payment on party lines but on work done and readiness to go back to site. This worked wonders and won hearts to this day, sources monitoring

the activities of the Commission hinted newsmen. It was Ibim that also introduced digital system of running the Commission for the purpose of accountability such that every contract would be registered online with location, stage of completion, and payment update. She told newsmen then that the purpose was to make indigenes the custodians of every project so they could call a contractor to order. She said secrecy was what contractors and politicians used to perpetrate evil. She initiated almost 300

emergency repair projects across the oil region that helped long-neglected roads such as the Calabar-Itu Road to spring back to life and restore the economies of surrounding areas such as the stone and quarry business in Cross River. She and other female MDs are said to have done battle with Abuja to stop cash demands. This aspect is said to be dicey and most complicated. It later understood that expecting a woman, mother and wife to risk imprisonment for moving sums to top leaders was unacceptable. Most striking was Ibim’s resolve that the NDDC should go away from perpetual payment of rent for offices in the states and the head office, a practice that is said to be fraught with fraud; in fact a cash-cow. This is how she completed the Rivers State office of the Commission nearby in the GRA 2 and commissioned it. She got lands across the states to start other ones before she was removed for the permanent CEO to take over. On the permanent headquarters project, it was gathered that a review was to be done and one plan was for a credible construction firm to start afresh and complete it

with an a small amount including original cost, while another proposition was for the former contractor to complete it with even less. When the permanent MD came, it was gathered that a third option emerged that gave the contract to a politician outside the two previous propositions on the table and at an outrageous cost. When Akwagaga Enyia came as acting MD in 2019, she launched a task to get the project completed and even wanted to move her office there. She introduced prompt payment too. The building moved fast. What led to her removal will be another story, inside sources said. When she left and Joi Nunieh came, she was said to introduce even more fire on transparency and determination to complete the project. She is even said to have accumulated over N200Bn cash for the Commission before her sudden and bizarre removal that seemed to shock the world. What is important at the moment, however, is the determination of her successor to complete the project. The transparency, strictness and application of the funds Nunieh left behind is said to be another matter which many groups said they are fighting over.

Oby’s strokes on NDDC, says by go home order to some staff, 20 years of siege is over Port Harcourt by Boat

IGNATIUS CHUKWU

ublisher and fiery investigative journalist, Oby Ndukwe, a chief in Abia State in her full rights, is known for her deep contacts in sensitive places. Once in a while, she would pull off a big exclusive that shakes the earth. This week, Oby makes a contribution to this column with her treatise on the Niger Delta Development Commission (NDDC), a commission where people say no amount is too small to disappear. Read her…. Finally, sanity coming to the most violated, plundered, pressed, squeezed, ravaged and raped institution East of the Niger- Niger Delta Development Commission, NDDC. 19 years siege on the Commission is over as the Interim Management Committee led by Prof. B Pondei and backed by the supervising Minister, Godswill Akpabio dare to tread where others failed! For the first time, the real tormentors and looting experts at the Nddc from the defunct OMPADEC have been axed.

Since the President approved a Forensic Audit of the bleeding Commission, all hell has been let loose as Senior Civil Servants have been massively transferred out of the Dappa Biriye Building, Headquarters of the Commission. The last straw was the conspiracy by a serving Director in charge of procurement who in cahoots with some National Assembly Members decided to award a contract for the supply of COVID-19 equipment to the nine states under the NDDC. The letter which was unauthorized by the Management alleged that the contract had been awarded to a company called SIGNORA to the tune of N5 billion. And when the Management found out, they canceled and sought to investigate those behind it. The senior staff involved in the illicit award letter quickly played a fast one by making the said letter public, in a bid to indict and cause public opprobrium against the IMC and the Minister of the Niger Delta Affairs, Godswill Akpabio. A game of wits you may say. Of course the scandal trended in the social media space. Not deterred though rattled by the public outcry against the IMC and the Minister, the Management, yesterday after a meeting, took a stern decision to punish all those who were part of the sleaze and the plot to further cast aspersions on the integrity of the Commission. They were ordered to go on compulsory leave, from where, they would be retired. It is no longer news that these sets of civil servants have held the Commission hostage with fake and inflated contracts, fraudulent payments and padding of emergency jobs which they award to their companies through some of their cronies and other youth organizations.

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They have consistently blackmailed every politician appointed into submission, to either do their bidding or be petitioned out. Every document in the Commission is photocopied and transmitted to certain “Youths” who are on their payroll to carry out the nefarious activities of holding press conferences and petition writing to EFCC and ICPC. This group of public servants claims to run things in the Commission and have ways of covering their tracks. Yes they have been there for too long! They aid and abet the politicians assigned to manage the affairs of the Commission. With a huge financial war chest, they can prosecute any media war against any management who would not suit their purpose. Unknown to many, this set of senior staff flaunts their wealth unhindered. They own

Oby Ndukwe

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porsche hotels and houses all over and even overseas. The latest trend in the media and sponsored attacks on the present Management was catalyzed by the audacity of Akpabio and the IMC to transfer over 50 of them that have held the Commission and the Niger Delta region hostage for almost 20 years. The decision by the President for a forensic audit over six months ago is another reason for the heightened media attacks and trial of the Management. For the 19-year period under probe, the PDP held sway for 15 years under President Obasanjo, Yaradua and Jonathan, while the APC under President Buhari has been in charge for 4 years. Presently, the two Committees on NDDC at the National Assembly are headed by PDP members who were alleged to have paid their ways into those committees. They have been at logger heads with every management appointed by Buhari to head the Commission, contrary to the easy passage of budgets and approvals in the past when their party held sway. Surprisingly, the NASS is controlled by the ruling APC, yet, it is easier for a camel to pass through the eye of a needle than for the APC controlled Management of the Commission to have easy access to funds for the development of the region. Who is then responsible for this mess? Is it an orchestrated plot by some people to frustrate the development of the oil producing states which have been the pillar of the Nigerian economy? The intrigues and power play behind the scene will shock many as details of those involved will be unveiled soon.

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Thursday 07 May 2020

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Investment slowdown to hike oil prices, cause undersupply of five million bpd olusola Bello

he Covid-19 pandemic will leave not only shortt e r m, bu t a l s o long-term scars on the oil market, says Rystad Energy. It stated further that even though the world is currently facing what is arguably the largest oil glut ever recorded, the tables will turn dramatically in coming years. The lack of activity and investments currently planned by cost-conscious E&P firms, combined with an inevitable rebound in global oil demand, is set to cause a supply deficit of around 5 million barrels per day (bpd) in 2025, Rystad Energy calculates, with prices seen topping $68 per barrel to balance the market. Already Nigeria has asked her operating partners to cut

their operational cost by 40 percent and they have started operating that as most of their vendors doing one business have been duly informed about this development. Rystad Energy in its base case scenario, said global demand for liquids in 2025

will reach around 105 million bpd. Before the Covid-19 pandemic, it stated that it had expected supply to slightly exceed demand. However, due to the steep curtailment of investments and activity that the current crisis has brought this year,

it now estimates that the down cycle in the upstream industry will remove about 6 million bpd from production forecasts for 2025. To fill this gap, Rystad Energy believes that some of the core OPEC countries, like Saudi Arabia, Iraq and

COVID 19: How to sustain NNPC, oil and gas health facilities olusola Bello

he sustainability of the infrastructure being put in place by the oil and gas industry across six geopolitical zones in the country should be a major concern to Nigerians. It would be better if a solid arrangement is put in place so that maintenance of t these facilities are not inhibited in any way in future. It is also important that credible sources of funding the management and maintenance of these world class projects are spelt out and firmly put in place. Given our penchant for negligence of government properties and infrastructure, it would be great disservice to humanity if after a few years some of these facilities are left in a state of dilapidations just as edifice like the Federal Secretariat in Ikoyi, Lagos, is currently, and also some power sector assets in recent past. The greatest disservice that would happen to humanity in respect of these infrastructure would be that the health facilities are handed over to the governments either federal or states. The states of our teaching hosOlusola Bello, Team lead,

pital are testimonies of how incompetent our governments are when it comes to handling these kind of things. They often starved of the much needed funds to do the needful. Another problem that may lead to the failure of the projects is that if the siting of the projects is not based technically sound judgements. If political consideration rather than the social and health benefits of the people becomes the major factor for it to be sited in a particular place, then, the objectives of the promoters of the projects would be defeated. The oil and gas industry led by the Nigeria National Petroleum Corporation (NNPC) led Oil & Gas Industry Intervention Initiative on COVID-19 which promised to build world class health facilities in the six geopolitical zones of the country has started with the ground breaking ceremony for a 200 bed permanent Emergency and Infectious Diseases Hospital for the South-South Region in Yenagoa, Bayelsa State, begin last weekend According to NNPC Group General Manager, Group Public Affairs Division, Kennie Obateru, the event flagged–off the plan

Graphics: Joel Samson.

by the intervention group to deliver lasting medical infrastructure across the six-geopolitical zones in the Country. Timipre Sylva, Minister of State for Petroleum Resources who spoke at the event affirmed that the project was part of the Nigerian Oil Industry Coalition initiative led by the NNPC to support the nation’s efforts to tackle the COVID-19 pandemic. He reiterated that the oil Industry was contributing about N21billion worth of support provided through internal procurement processes of contributing companies. Sylva said that Bayelsa State was considered a suitable site for the project given its pioneering role in the history of Oil and Gas in the country and its current contribution of about 40 percent to onshore crude oil output. The Group Managing Director of NNPC, Mele Kyari, who spoke through the corporation’s Group General Manager, National Petroleum Investment Management Services (NAPIMS), who is also the coordinator of the initiative in the Petroleum Industry, Bala Wunti, disclosed that the corporation was working with its Joint Venture partners across

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the Upstream, Midstream and Downstream sectors to support the Health Sector. He said that the NNPCled intervention had allocated the N21billion-worth of support from the various International Oil Companies, Indigenous operators with Joint Venture stakes across the oil sector. He explained that the infectious diseases hospital to be sited on a 1,586 square metre-space would serve as zonal isolation centre for COVID-19 and would serve as a referral hospital for communicable diseases after the COVID-19 pandemic. Lorenzo Fiorillo, managing director, Nigeria Agip Oil Company (NAOC) stated that the outbreak of COVID-19 disease had put a lot of strain on healthcare systems and personnel globally. Fiorillo who spoke through Macwon Jitubo, Head of Community Relations, (NAOC,) said that the company remained sympathetic to help navigate the threat posed by COVID-19 pandemic, which he explained, had resulted in millions of deaths worldwide. He said the project being delivered in Bayelsa State would engender a valuable medical asset to the South South region of the Country.

UAE, will be able to ramp up production. In total these countries might fill 3 million to 4 million bpd of this gap. The remaining shortfall will most likely be filled with volumes from US tight oil. To achieve this, prices may move above its current base case, which currently stands at an average price of $68 per barrel in 2025. “The current low oil price has tightened the mediumterm supply and demand balance considerably. Despite high growth in tight oil, oil production outside the OPEC Middle East countries is expected to stay flat over the next five years. As demand is expected to recover, the core OPEC counties will need to increase their supply significantly or the market will face even higher prices than our base-case forecast,” says Rystad Energy Head of Upstream Research Espen Erlingsen.

Oilserv donates medical, food supplies to cushion effect of COVID19 Olusola Bello

ilser v Group of Companies has supplied medical supplies and food items in support of government and communities as the country battles rising waves of coronavirus infection. The supplies include personal protective equipment (PPE), devices for rapid medical tests, and other medical supplies to the Presidential Task Force on COVID-19; It is also supplying communities across the country with tons of foodstuff to help families cope with the pains of lockdowns imposed by government to break the chain of infection. Food item delivered by the sponsor Sir Emeka Okwuosa Foundation includes about 3500 bags of rice and 8000 yam tubers to a number of communities in Rivers, Abia and Anambra States. The Oilserv Group and Sir Emeka Okwuosa Foundation declared that it became necessary to rise in support of the government and the Nigerian National Petroleum Corporation (NNPC) in the collective effort to contain the spread of Coronavirus disease and also reduce the impact

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Global E&P activity is poised to fall dramatically this year as upstream companies try to cope with the challenging market conditions, resulting in conventional project sanctioning activity falling to a 40-year low and tight oil investments dropping by almost 50 percent this year. The impact of the lower activity levels varies depending on the supply segment. For tight oil (including NGL) the impact on production is rather immediate, and we have reduced our 2020 forecast by close to 1.9 million bpd. The organization also stated that the dramatic reduction in new tight oil wells will also have a long-term impact, as fewer wells will be available for production. “For 2025 our total tight oil production forecast is revised to 18 million bpd, or 2.7 million bpd lower than our pre-crisis estimate.”

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on Nigerians. The medical supplies worth over N70 million ordered for NNPC include 6000 disposable snout masks, 1500 hand gloves, 80 cartons of face shields and 4000 disposable protective suits. The total intervention package from Oilserv Group valued at over N100 million. The company had already made some in the collective contribution by the Petroleum Technology Association of Nigeria (PETAN) under the guidance of the Nigerian Content Development and Monitoring Board (NCDMB). Director of the Sir Emeka Okwuosa foundation, Azuka Okwuosa, said the group believes in the power of humanity to solve any challenge, adding that the belief is deeply rooted in commitment to impact lives positively and to support the government at this difficult time. He pointed out that the new coronavirus disease has delivered devastating impact around the world, disrupting lives and livelihoods. Other digital medical tools include 1200 infrared thermometers, 250 facial and temperature monitors, and 2500 COVID 19 rapid test kits with capacity for 15 minutes result.

Thursday 07 May 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Africa will surprise the world – Ayuli Jemide In this edition, the Vice Chairman of the Nigerian Bar Association Section on Business Law (NBA-SBL) and Lead Solicitor at Details Commercial Solicitors, AYULI JEMIDE, speaks with BusinessDay Law Editor, THEODORA KIO-LAWSON about COVID-19 and the implications for Africa, economic stimulus across the world, developments in Nigeria’s justice sector, the recent virtual hearing by the Lagos State judiciary, as well as the changing face of legal practice in Nigeria.

Excerpts… et’s start with the relaxation of the lockdown by the federal government. Why has your firm chosen to fully operate remotely even after the lockdown was relaxed? Detail Commercial Solicitors takes responsibility for its staff and must act responsibly towards them at all times. We will therefore continue to work remotely until we can see from the graphs (new cases, daily deaths etc) that the curve is being flattened. All the countries who have opened up gradually have done so on the basis of monitoring the graphs so this is best practice. Nigeria’s graph is currently spiraling, so we are far from flattening the curve. Our staff commute and are exposed everyday, so theyare at risk. Interestingly, before COVID19 Detail already worked remotely every Friday since January 2020. So we already set up the infrastructure for remote work before COVID19 and are comfortable in that mode. •Some have said Africa is in danger of becoming the epicentre of the virus, do you agree with this or do you think we’re handling it fairly well? If not, what can we do different? Africa will surprise the world and it is already beginning to happen. If you see what is happening in South Africa, where the level of testing competes with countries in the world; or Senegal where local test kits have been developed; or Madagascar where they have flattened the curve by developing a local herbal cure. This remedy has worked despite WHO not approving it. Note also that most of Africa has a young population so the deaths will be less since they are not that vulnerable. If you take Nigeria, where we have had a lot of recoveries, you will note that majority of the patients were below the age of 50. •In line with current realities, the Attorney General and Minister for Justice recently rolled out plans for how the justice sector should function post covid-19. He proposed the use of digital platforms such as

skype, zoom and having courts that are fully ICT-compliant, particularly with facilities to fast-track the process of taking evidence from witnesses. Do you think this will hasten the long-awaited reform the judiciary needs to get to the next level? It is my sincere hope and desire a new culture of technology pervades the judiciary. Many trials are ongoing online in other parts of the world so Nigeria needs to latch on. I think the Federal Attorney General from all I have heard about him is well poised to see this through and we should all support him. Interestingly, the Lagos State Judiciary has recently delivered its first virtual judgment so this is laudable. •That said, some legal practitioners have come out to fault the move by the AGF saying his plans are outside his authority, and remains the business of the Chief Justice of Nigeria (CJN), the National Judicial Council (NJC) and the heads of courts. Is this a fair argument and if not, what sort of interventions or adjustments should the AGF and indeed the judiciary be making at this time? Lawyers are gifted at being intelligent yet pedantic. I think we should focus on where the bus is going to as opposed to who is driving the bus. And I think the destination of this bus as stated by the AGF is a great aspiration. In any case, the CJN and NJC can speak for themselves if they feel their powers are being usurped. •In response to the outbreak of COVID-19 disease, Nigeria’s Emergency Economic Stimulus Bill, 2020 seeks to provide tem-

“

Lawyers are gifted at being intelligent yet pedantic

Commentary on the Federal

INSIDE Government’s Plans for Fuel Subsidy

Ayuli Jemide

porary relief on corporate tax liability among other fiscal and monetary palliatives to alleviate the sufferings of citizens in the wake of an economic crisis. However, some business analysts and legal experts seem to think that there are quite a few grey areas with the Bill. What are your thoughts? An economic stimulus bill is a laudable initiative. The key thing to note is that it has intrinsic limitations, in the sense that government cannot legislate on private contracts but can only offer incentives. So for example the bill proposes a tax rebate for companies who don’t retrench staff in this period. Any company will do the cost benefit analysis and could decide that a retrench-

COVID-19 Pandemic: Implications for Loan Agreements in Nigeria

ment serves their financial goals better than a tax rebate. Also note that, employers whose businesses are partly or wholly regulated by the Petroleum Profits Tax Act are also excluded from tax rebate under the Bill. Unfortunately those companies regulated by Petroleum profit tax Act are also hit by the crash in oil prices so we hope a different kind of palliative would apply to them. The Bill proposes for a deferral on all payment of mortgage obligations on residential mortgages obtained by individual contributors to the National Housing Fund be deferred for a period of One hundred and eighty (180) days subject to a majority vote of the National Assembly. This is good

“

Interestingly, the Lagos State Judiciary has recently delivered its first virtual judgment so this is laudable but note that majority of home financing is from commercial banks and this is excluded. •Given our history as a nation, how practicable is a law of this nature and what are the intricacies of implementing such an emergency law? Emergency laws are standard all over the world. As with every law the key is not enforcement, it is citizens buy-in. When VAIDS was introduced a few years ago it was voluntary but a lot of people thought it made sense and so they obeyed. We can only wait and see how citizens react. •The United States’ Senate recently passed a $2 trillion economic stimulus plan and various other countries have done same. Do you think the monetary and fiscal palliatives offered in Nigeria’s Economic stimulus is quantifiable? If so, can you attempt an estimate? The sums set aside as government palliatives are publicly knowledge. Unfortunately what is not public knowledge in this age of Freedom of Information is the disbursement criteria, the level of disbursement and the beneficiaries. The direct benefits include the provision of N1 trillion in loans to boost local manufacturing and production across critical sectors. When this disbursements are made it behooves government to publicize the sectors, the beneficiaries and then monitor how this has succeeded as an economic stimulus. Most of the palliatives are indirect - tax rebates for example - that can only be quantified as they are applied for. •In the face of this global pandemic, how do you think the Continues on page 21

The quest to digitalize proceedings in Nigerian courts: clarifying the optics – Part 1

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Thursday 07 May 2020

BUSINESS DAY

POWERPERSPECTIVE with AYODELE ONI

LegalBusiness

Commentary on the Federal Government’s Plans for Fuel Subsidy

T Proem:

he Group Managing Director of the Nigerian National Petroleum Commission (“NNPC”), Mr Mele Kolo Kyari recently announced the end to the subsidy currently applicable to the price of Premium Motor Spirit (“PMS” also known in Nigeria as Petrol or Fuel) (more commonly known as Fuel Subsidy). This announcement follows the decision of the Federal Government of Nigeria (“FGN”) to reduce the pump price of petrol from N145 to between N123.50 and N125, following the steep drop in oil prices due to the prevailing low demand for oil, owing to a global economic shutdown occasion by the coronavirus (“COVID-19”) pandemic. Fuel Subsidy has historically been a divisive issue in Nigeria, with statistics showing that Nigeria spent at least N10trillion on Fuel subsidy between the years 2006 and 2018. In the midst of reports that Nigeria projected to spend circa N750.81billion on petrol subsidy in 2020, many have argued that Fuel Subsidy in Nigeria is a subsidy which benefits only the rich and the funds spent on petrol subsidy would be more appropriately applied to fixing Nigeria’s huge infrastructure deficit, as well as providing funding for medium, small and medium scale enterprises in Nigeria to benefit a wider spectrum of the society. Many stakeholders consider that the crash in global oil prices, leading to the low cost of petrol make this an appropriate time to consider the removal of fuel subsidy and this no doubt played a factor in prompting Mr Mele Kolo Kyari’s declarations. This article will analyze the measures currently being implemented by the FGN in relation to the subsidy regime in Nigeria and what they indicate about its long-term plans for the regulation of the price of petrol. Petrol Subsidy prior to the Crash in Global Oil Prices A subsidy can be defined as a discount provided by a government to ensure the availability of essential goods and services to the public at affordable prices. In essence, the fuel subsidy regime operated by the FGN was a means by which the FGN capped the price of petrol at a price determined to be affordable for the majority of the populace regardless of the prevailing market forces. In practical terms, the petrol subsidy is calculated as the difference between the Expected Open Market Price (“EOMP”) and the approved retail price of petrol, both of which are determined by the Petroleum Products Pricing Regulatory Agency (“PPRA”) in line with set policies. The EOMP is determined as the sum of landing costs of petrol and a distribution margin. In simple terms, it is composed of the cost of production (that is the cost of purchasing refined petrol and importing same into the country) and an expected profit margin per litre of petrol. The PPRA determines the approved retail price of petrol (the “pump price”) derived from a consideration of the EOMP vis-à-vis prevailing economic conditions and the FGN pays the difference between the EOMP and the pump price as

Fuel Subsidy to the petrol marketers to ensure that petrol is sold to the public at the approved retail price without incurring losses for the marketers. Petrol Subsidy After the Crash in Global Oil Prices The analysis above lays down the foundation for understanding the methodology behind the Fuel Subsidy regime in Nigeria. Being that Nigeria relies heavily on the importation of petroleum products into Nigeria, the global price of oil determines the landing cost of petrol and has a corollary effect on the EOMP and the cost of subsidy, as the EOMP will determine the amount, if applicable, of subsidy to be paid on the petrol to attain the pump price. Presently, the COVID-19 pandemic has caused a significant slowdown in global economies as countries fight, through impositions of partial or total lockdowns, to stem the spread of the disease. This has, in turn, led to a reduction in the global demand for crude oil, causing a significant crash in the price of oil from circa US$60 in January 2020 to less than US$20 in April. This has, consequently caused a reduction in the landing cost of petroleum products, with reports showing that the landing cost of petrol fell to as low as N64.32 per liter at March 19, 2020 from reported landing costs of N123.88 per liter in February 27, 2020. Accordingly, the drop in the landing cost of petrol has resulted in the EMOP falling below the pump price of petrol, thus dispensing with the need for subsidy. As a result, the PPRA in a press statement dated March 18, 2020 announced a new regime for petrol pricing, effective from March 19, 2020 which set the pump price for petrol at N125 per liter from the previous N145. The PPRA also stated that subsequently, it would monitor trends in market www.businessday.ng

fundamentals and stipulate monthly EOMP at the beginning of each month commencing from April 1, 2020. In line with its policy statements in its press release of March 18, 2020, the PPRA issued another press release on April 1, 2020 setting the price band for the pump price of petrol between a lower band of N123.50 and an upper band of N125.00. In our view, the FGN’s actions serve as an indication of its intention to transition toward liberalization of the price of petrol, where the price of petrol is determined by prevailing market forces with limited government regulation. The FGN has taken the first step in this direction, by ensuring that the pump price of petrol, not just the EOMP, is reflective of the changes in the market factors which determine the price. The FGN’s stance however indicates that this transition to price liberalization will be a gradual one, commencing with price modulation by the PPRA, as indicated in the press releases referenced above. The PPRA would, therefore, retain the responsibility of setting policies to determine the price of petrol through monthly guidelines on the approved price range of petrol having regard to the ongoing economic situation. It is believed that this transitionary period is to enable marketers exhaust their pre-existing stock of petrol accumulated prior to the change in the pricing regime. The eventual aim with price liberalization is to develop a free market system where oil marketing companies are entitled to set the prices of their products themselves without being subject to prices or price ranges fixed by the PPRA. The FGN’s implementation of the new pricing regime is also aimed at ending the Nigerian National Petroleum Commission’s monopoly on the importation of petroleum prod-

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ucts into Nigeria. In the PPRA’s press release, it stated its expectations that the new price regime would stimulate investment in the downstream sector and encourage the resumption of importation of petroleum products by oil marketing companies, with consequential positive impacts on the economy. it is believed that the transitional price modulation period is expected to provide the necessary time and stimulation for this to occur, before the implementation of full price liberalization. It is also worthy of note that with the liberalization of price, competition law can come into place to protect the interests of consumers, in line with the Federal Competition and Consumer Protection Act. The Federal Competition and Consumer Protection Com (“FCCPC”) would therefore monitor the activities of oil marketers to prevent collusion between oil marketers to drive up the price of petrol, especially in situations such as the present situation where the global price of crude oil is low, and the FCCPC would, within its powers under the FCCPC Act, investigate complaints from consumers on any breach of the provisions of the FCCPC Act and impose sanctions on any defaulting oil marketers. These reforms to the petroleum sector, if implemented in line with the projections herein, will have a positive impact on economic development. It is hoped that the when full price liberalization is implemented, oil marketers will be free to adjust the prices of petrol in inland areas to reflect the extra transportation costs, which would render the Petroleum Equalisation Fund (“PEF”) obsolete thus further reducing government expenditure. The funds saved on these adjustments can be allocated towards critical but underfunded areas including Nigeria’s healthcare system and the improving infrastructure, measures which will be of the benefit for the masses in Nigeria. Economic development will also be boosted if the FGN follows through with plans to increase Nigeria’s refining capacity and boost domestic production of petrol. Recent reports have shown the NNPC’s plans to shut down Nigeria’s four refineries for major repairs and to subsequently enter into Operations and Maintenance contracts with private companies for the operation, management and maintenance of the country’s refineries. It is expected that the selected private companies will have the requisite capacity to operate and maintain the refineries which have historically operated well below capacity. In conclusion, it is hoped that the FGN’s decision to review the pricing regime for petrol is an indication of its intention to finally end fuel subsidy and liberalize petroleum pricing. It is also hoped that the FGN will compliment the removal of fuel subsidy with improving Nigeria’s refining capacity and applying funds saved from the fuel subsidy to critical and underfunded areas, in order to promote economic development. Ayodele Oni (ayodele.oni@ bloomfield-law.com), a commercial lawyer, specializes in international energy (oil, gas & power) investment law. @Businessdayng

Africa will surprise the world... Continuesd frompage 20 current realities would impact local businesses and the ‘ease of doing business’ in Nigeria? One of the key problems with doing business in Nigeria, is that Nigerians have a culture of face to face meetings. People fly to Abuja or Lagos just to have a one hour conversation that could have been done virtually. Post COVID a lot of people will be more disposed to virtual meetings and this will apply to government agencies as well. This will surely be a positive development for ease of doing business. On the back of this I think government systems will begin to look to electronic filings and responses as we have in Dubai. The systems will begin to operate in such a way where you don’t need to see anybody at a ministry to get a permit. This will increase speed and also check indolence because IT will show your pending files every week. I also think that courts will start virtual hearings and filings. I saw a recent release by the Attorney General of the Federation that is indicative of this possibility. •As a lawyer and a business owner in the COVID-19 era? This pandemic has taught us to harness all our assets and restructure our businesses. As a person I have come to realize over the last two months that I did not work effectively and even worked harder remotely than sitting in the office. I also realized that as a firm we engaged each other more than we did when people were running all over the place having face to face meetings. My new normal is a conversion into a virtual CEO - living in Zoom meeting rooms and building Teams on Microsoft Teams. My new normal is learning how to live in the cloud and generate income from cloud based activities. I think lawyers are lucky that a lot of what we do can be virtual unlike those in, say construction for example. • Th e N B A- S B L r e c e n t l y launched its Business Law Competency Framework, which as we understand, aims to set minimum standards for business lawyers across the country. What is the plan for its implementation? And how soon would we begin to measure its impact? Plans for implementation include getting law firms to start using it. This is ongoing. The feedback will come over the months post implementation by the law firms. •What is your ‘Top Five’ daily habits in this ‘pandemic era’? 1. Daily Exercise 2. Find Alone Time 3. Find Laughter 4. Catch up with corona virus stats and news online - Lagos and major cities on worldometer. 5. Update To Do list

Thursday 07 May 2020

BUSINESS DAY

BUSINESSOF LAW

COVID-19 Pandemic: Implications for Loan Agreements in Nigeria DR KUBI UDOFIA

he well-intentioned measures adopted to contain the spread of COVID-19 are sending businesses into a tailspin. The International Monetary Fund has described the great lockdown as “a crisis like no other” and the “worst economic fallout since the Great Depression” of the 1930s. Similarly, the International Labour Organisation has described the outbreak as “the most severe crisis” since World War II. Lockdowns have caused commercial activities to plummet, resulting in free fall of revenues. Businesses are facing cash flow crunch which will impair performance of obligations in financing agreements. This discourse examines the implications of the current crisis on loan agreements. In particular, it examines how the crisis will impact on some notable terms in loan agreements. Material Adverse Change Loan agreements often contain provisions enabling a lender to call a default and demand early repayment if a borrower suffers material adverse change (“MAC”) to its business, operations, property, condition, prospects or ability to perform its obligations. In Grupo Hotelero Urvasco S.A. v Carey Value Added S.L. [2013] EWHC 1039, Blair J. stated that: (a) ability to invoke a MAC clause is dependent on its wording which will be interpreted in accordance with the principles of contractual interpretation; (b) the burden of proof is on the lender; (c) a change in a borrower’s financial condition will be determined by reference to its financial information covering the relevant period and will not cover a borrower’s prospects or general economic/market changes; (c) a lender cannot enforce a MAC clause based on circumstances it was aware of when entering the agreement; (d) a change in financial condition must significantly affect the borrower’s ability to perform its (payment) obligations; and (f) a change must not be transitory. Whether the COVID-19 crisis will trigger a MAC clause will depend on the phrasing of the MAC clause and the specific circumstances of the borrower. A lender must show that the COVID-19 crisis has caused a sustained adverse change in the borrower’s financial condition which impairs the borrower’s ability to repay the loan. Lenders seeking to invoke MAC causes must proceed with caution to avoid incurring liability for repudiatory breach. In Weisfelner v Blavatnik, 567 B.R. 55(Bankr S.D.N.Y 2017), a New York Court awarded $7.2million against the lender for breach of contract to approve a $750million pre-insolvency draw request. Contrary to the true construction of the MAC clause, the lender had wrongfully invoked the clause and called a draw stop due to the borrower’s insolvency. Frustration of purpose Generally, loan agreements do not contain force majeure clauses. A contract would be frustrated where performance has become impossible or the contract would only be performed in a significantly different manner to that envisaged. In Jacob

v Afaha (2012) LPELR-7854(CA) at 10C-E, the Court of Appeal stated that “the doctrine of frustration is applicable in all categories of contracts”. This pronouncement should be viewed as a general rule which, of course, is subject to exceptions. It is difficult to envision circumstances where a loan agreement would be frustrated. The fact that the COVID-19 pandemic has given rise to extremely challenging financial and economic conditions (not previously envisaged) would not suffice. In Lewis v UBA Plc (2016) LPELR-40661(SC), the appellant argued that the termination of his employment by UBA (which rendered him jobless) frustrated the enforcement of personal loans which he owed UBA. Odili JCA held at that “mere hardship, inconvenience or other unexpected turn of events which have created difficulties though not contemplated cannot constitute frustration to release the appellant” from his payment obligation. Besides, it is settled that a contract is not frustrated merely because performance has become more difficult or expensive: Nwaolisah v Nwabufoh (2011) LPELR2115(SC). Representations and Warranties Representations and warranties in loan agreements may be static and considered as being true and correct on the agreement’s effective day. They may be continuing or repeated and the borrower has to ensure that the representations remain true and correct at all relevant times e.g. during drawdowns or utilization. The impact of the pandemic on businesses may cause representations which were hitherto true and correct to become untrue or incorrect. Borrowers must exercise caution when repeating representations for the purpose of utilization to ensure they do not inadvertently make misrepresentations. Financial Covenants Financial covenants are early warning systems which enable lenders to monitor borrowers’ financial health. Notable financial covenants include leverage ratio, cash flow coverage ratio, interest coverage ratio etc. Agreements may provide for these covenants to be tested periodically, e.g. on a quarterly basis. The calculation period would be strategically important in the present circumstance given that a long calculation period may give a borrower breathing space to sort out short term difficulties. Financial covenants often have cure periods. Accordingly, a breach by the borrower would only amount to an event of default if the breach is not remedied within the cure period. Given the damage inflicted on businesses by the pandemic, the short cure periods may not be useful to borrowers. www.businessday.ng

Cross Default Cross default clauses provide early warning systems to lenders. A borrower’s breach of one loan agreement may trigger a breach of another loan agreement. Accordingly, borrowers with multiple credit facilities with cross default clauses must be cautious as a breach of one may have a domino effect resulting in cross defaults in others. Cessation of business Loan agreements may make the cessation of all or a material part of the borrower’s business an event of default. Interestingly, the agreements do not often specify the period of cessation which may amount to a default. Many businesses across Nigeria have been shut in compliance with the directives of the Federal and State governments. Ordinarily, these should not trigger the clause given that the clause contemplates permanent cessation and not merely an involuntary and transitory closure due to health and safety reasons. Negotiation with creditors The commonest advice being given to borrowers in this challenging climate is to promptly engage lenders. Ironically, such engagement may constitute an event of default under some loan agreements. Loan agreements may provide that negotiations with other lenders/creditors with a view to restructuring loans constitutes an insolvency event amounting to an event of default. This provision serves as early warning system to lenders. Borrowers need to meticulously examine the scope of this clause in their loan agreements before engaging lenders in relation to other loans. CBN’s Regulatory Forbearance and Lessons from other Jurisdictions The Central Bank of Nigeria (CBN) has granted regulatory forbearance to banks to explore temporary and time-limited restructuring of the tenor and loan terms for businesses affected by the COVID-19 pandemic. Banks which defy CBN’s “advisory” and force for defaults should be wary of potential reputational issues. In contrast to CBN’s approach, Governments/Central Banks in some countries have imposed moratorium on loan repayments. The Governments/Central Banks in Albania, Bulgaria Czech, Egypt, Kosovo, Montenegro, Philippines, Romania and Serbia have imposed moratorium on repayment of loans. Slovenia’s Parliament has passed an emergency law requiring banks to allow a 12-month moratorium on payment of loans falling due after 12 March 2020. Hungary’s Government has passed a Decree for payment moratorium between 19 March 2020 and 31 December 2020. DrUdofiapracticesfromLagos,Nigeria. Mail to: info@kubiudofia.com

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LegalBusiness

LEGAL MARKET OUTLOOK

Why turning virtual engagements into ‘paid work’ is proving difficult for law firms

he immediate future for most businesses is fraught with uncertainty as the world grapples with the economic turmoil and other disruptions caused by the Covid-19 virus. Law firms are not exempt from this. Many of the law firms that we spoke to, indicated that before the crisis, they were on course to meet their projections for the year. They had positioned to increase or in some cases match their revenue for last year. But now, those projections are expected to take a significant hit, as they expect all collections to slow down. Ninety per cent of the lawyers we spoke to indicated that they had been unable to make collections since the lockdown began. A partner in a mid-sized law firm, told the LBU that he expected litigation practice groups to be especially hard hit due to court closures and trial delays nationwide. Although the plan recently rolled out by the Honorable Attorney General of the Federation and Minister of Justice, Abubakar Malami, SAN are a step in the right direction, they will take some time to implement. The Oil and Gas practice group is another area of legal practice that is expected to be hard hit, following the crash in oil prices. As many energy companies experience a drastic reduction in share price, suspend projects and slash capex, firms that service such companies will naturally see a significant decline in demand for services and even in payment of outstanding bills. Whilst it is generally expected that mergers and acquisitions (M & A) practices will also experience significant decline in demand in the short term due to a halt in many deals, a recent analysis by Hogan Lovells suggest that unlike the previous recession, this time there is “a lot of capital on the sidelines waiting to jump in”. Hogan Lovells suggests that the economic disruption caused by COVID-19 in many industries could lead to “a significant uptick in M & A activities in the distressed space”. They however indicate, that this is unlikely to occur until the pandemic is brought under control. This view was also shared by many of the lawyers we spoke to. Although many lawyers project that the economy is unlikely to rebound until a vaccine has been found with dire consequences for the

legal industry, some are of the view that Covid-19 has also opened many opportunities which lawyers can take advantage of in the short term. A senior partner in one of Nigeria’s leading firm’s indicated during a recent webinar that many firms were beginning to get enquiries about estate planning and that it might be a practice area worth exploring in the immediate term by law firms. He further stated that because of the resort to various technology platforms by many businesses during the lockdown period and its aftermath, issues pertaining to intellectual property might begin to arise and there might be immediate opportunities for lawyers in the intellectual property law space. Unfortunately, though many law firms say they are even busier than ever with clients seeking counsel across a number of novel areas; turning such engagements into paid work or longer-term engagements at this time is proving difficult. Even where the work is billable, most firms seem resigned to the fact that lawyers will not be at the top of the list for clients to pay in the months ahead. This therefore appears to be the time for firms to invest in client relationships, hunker down and conserve cash to see them through the period and offer clients discounts to encourage payment now rather than later. Whilst it is not clear how long the pandemic will last or how severe the economic fallout will be, there will be some winners at the end of the day. The question is, are you positioned to be one of them? Legal Market Outlook is an exclusive publication of BusinessDay Legal Business Unit (LBU). Mails to: legalbusiness@businessday.ng

LEGAL SOUNDBITESFROM THE WEB

t is one thing to be elevated as a Senior Advocate of Nigeria (SAN). It is entirely another to have a sustainable business model. That one has the rank of Senior Advocate of Nigeria (Also Known as the ‘Silk’) does not necessarily mean he has a functional business model. The rank is seen as an opportunity to improve your networks and net worth, which is why you find that most of the people who take the silk can hardly run a proper

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business. Again, we live in a country where the mentality is: “Me first and me alone”. This again impacts the way law offices are run. You’d find that half the law offices in Nigeria today will go under immediately the founders are gone. I know a lawyer who was called in 1985. He had a flourishing practice but as soon as he took seriously ill, his clients left one after the other because he built the system around himself. So, if a firm doesn’t pay or treat its workers well, there’s no need to lay a curse, what goes around comes around. As a junior lawyer, take advantage of the learning opportunity you have, develop yourself and seek better opportunities elsewhere afterwards. Opportunities are hard to find but so are good lawyers too.” -@JOE Mailt to: legalbusiness@businessday.ng

Thursday 07 May 2020

BUSINESS DAY

LEGALINSIGHT

LegalBusiness

The quest to digitalize proceedings in Nigerian courts: Clarifying the optics – Part 1 AYODELE AKENROYE, PH.D.

to hear cases through remote hearings as from May 4th, 2020. Equally, some States’ Attorney Generals accelerated plans to have their judiciaries move to electronic hearing and electronic filings. On the opposing end, the Chief Judge of the Federal High Court issued a directive that Federal High Court Judges should not utilize technology such as Zoom and Skype for Business to administer justice until the National Judicial Council has implemented a uniform approach on remote hearing and the use of technology in court proceedings. This is the first in a series of articles for BusinessDay Nigeria, where I will provide evidence-based best practices that stakeholders in the Nigerian justice system can adapt as they move along in building a robust infrastructure for the digitalization of proceedings in Nigerian courts. My

thought in this contribution is that now is the time to adopt technology to deliver justice, but it should not be done at a lightning speed. In moving to a digitalized environment, stakeholders in the justice system should be thoughtful about the implementation, adopt a systematic process, do not operationalize the process in silos as it is currently been done, and should only move select cases to virtual formats to avoid creating chaos in the system and further exacerbate the current access to justice problems. No doubt, moving to a remote hearing by teleconference has several important benefits, but it also triggers new risks that must be carefully managed for the project to be successful. Truth be told, implementing change in the Nigerian justice system, which over the years has been stubbornly resistant to change, is difficult. Adding technology to the

talization of court proceedings which requires the use of digitally-based communication channels, as opposed to physical courthouses, as the new fora for delivering justice, a question that should be topmost on their mind is “how can we digitalize a court system which balances access to justice, cost to litigants, the cost to the justice system, fully functional and relatively easy to use?” The failure to consider this question by the stakeholders could lead to a missed opportunity to make systemic changes and effectively deliver justice in normal and extraordinary circumstances. COVID-19 has provided an opportunity for Nigerian judges, lawyers and litigants to adopt a modernized system of electronic filing and remote hearings as means of resolving disputes effectively and efficiently. However, this fundamental reform will only be successful if all the stakeholders act co-operatively and flexibly. Any attempt to focus more on the speed of implementation at the expense of a carefully calibrated implementation strategy could result in the quick death of a noble idea. BIO: Dr. Ayodele Akenroye is a Board Member (Immigration Judge), Immigration and Refugee Board of Canada/Government of Canada, formerly a Visiting Professional, Office of the Prosecutor, International Criminal Court, The Hague, Netherlands. He was a Research Fellow with the International Anti-Corruption Academy, Laxenberg, Austria and was a Consultant to Nigeria’s Independent Corrupt Practices Commission, Abuja, Nigeria. He earned his Ph.D. in International Criminal Law from McGill University, Faculty of Law, Montreal, Canada. He is called to the bar in Nigeria, Manitoba (Canada) and Ontario (Canada).

THE BAR REFORMER

PHOTO FILE

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The Judge, Justice Mojisola Dada of the Ikeja High Court Lagos State Attorney General, Moyosore Onigbanjo, SAN giving her verdict against Olalekan Hameed - sentencing him observing proceedings live from his office. to death by hanging. The Judge, Justice Mojisola Dada of the Ikeja High Court giving her verdict against Olalekan Hameed sentencing him to death by hanging.

My Dear Colleagues, As we go out on account of the partial relaxation of the lockdown in some parts of the country, let us not forget to adhere to social distancing rules and other precautionary measures laid down by the NCDC. The virus is still here with us and it is only by being careful that we can reduce the spread. If you must go out, please stay safe

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n a series of articles, Dr. Ayodele Akenroye closely examines the issues that arise in the drive to digitalize proceedings in Nigeria Courts at a time when they have become especially relevant in light of the COVID-19 pandemic. To curb the spread of COVID-19, the Nigerian government implemented a lock-down and recommended physical distancing, which made it very difficult for courts to hold in-person hearings and administer justice. In response, on March 23, 2020, the Chief Justice of Nigeria issued a letter addressed to all Heads of Court at the Federal and State levels instructing them to suspend all court sittings, except in cases that are urgent, essential or time-bound, for two weeks. In a follow-up letter dated April 8th, 2020, the Chief Justice extended the suspension of court proceedings indefinitely, except for cases that are urgent, essential or time-bound. Due to the indefinite suspension of court proceedings, and growing caseload in courts all over the country, there has been a huge clamour by stakeholders and interest groups such as the Justice Reform Project and some States’ Attorneys General that the Nigerian judiciary should utilize technology to conduct court proceedings and open back the courts. In response to the clamour, several judges, in silos, began to utilize technology to resolve disputes or deliver judgements. For instance, the Chief Judge of Borno State conducted a virtual hearing and the Chief Judge of Lagos State Judiciary issued a practice direction that Judges in the States are

mix has the possibility of alienating many from the project. It is therefore imperative that relevant stakeholders in the Nigerian justice system proceed at a pace commensurate with the state of available technology in Nigeria, funds and pay close attention to the capacity to roll out training for all the participants such as judges, lawyers and litigants. The path to modernizing the justice system in Nigeria is filled with hurdles and the most obvious is the substantial cost involved in digitalizing court proceedings, particularly when it is an open secret that the judiciary is the least funded among the three arms of government. Leveraging technology effectively and building a robust infrastructure from the ground up will require increased allocation of funds to the judiciary and actively nipping corruption in the bud. Great care must be taken that in digitalizing court proceedings, it should not be too complicated that the relevant parties (judges, lawyers and litigants) are not able to quickly figure out how to use them. Closely related to this is the challenge of getting lawyers to learn electronic processes and adopt remote hearing as their preferred mode of litigating. Any attempt to move en masse to remote hearings will have the unintended consequence of prejudicing clients’ interest who might have retained lawyers who are not computer literate, or not familiar with electronic processes and remote hearing and this will, in turn, overburden the system and exacerbate access to justice for those that needs it the most. As the relevant stakeholders in Nigeria continue to push for the digi-

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Thursday 07 May 2020

BUSINESS DAY

BUSINESS TRAVEL

Airlines record severe air cargo capacity crunch in March 2020 Stories by IFEOMA OKEKE

he International Air Transport Association (IATA) released data for March air cargo performance demonstrating a severe capacity shortfall. Global demand, measured in cargo tonne kilometers (CTKs), fell by 15.2 percent in March compared to the previous year (-15.8 percent for international markets). Global capacity, measured in available cargo tonne kilometers (ACTKs), shrank by 22.7 percent in March compared to the previous year (-24.6 percent for international markets). International markets account for 87 percent of air cargo. Belly capacity for international air cargo shrank by 43.7 percent in March compared to the previous year. This was partially offset by a 6.2 percent increase in capacity through expanded use of freighter aircraft, including the use of idle passenger aircraft for all-cargo operations. “At present, we don’t have enough capacity to meet the remaining demand for air cargo. Volumes fell by over 15 percent in March compared to the previous year. But capacity plummeted by almost 23 percent. The gap must be addressed quickly because vital supplies must get to where they are needed most. “For example, there is a doubling of demand for pharmaceutical shipments that are critical to this crisis. With most of the passenger fleet sitting idle, airlines are doing their best to meet demand by adding freighter services, including adapting passenger

aircraft to all-cargo activity. But mounting these special operations continues to face bureaucratic hurdles. Governments must cut the red tape needed to approve special flights and ensure safe and efficient facilitation of crew,” Alexandre de Juniac, IATA’s Director General and CEO said. There are still too many examples of delays in getting charter permits issued, a lack of exemptions on COVID-19 testing for air cargo crew, and inadequate ground infrastructure to/from and within airport environments. Air cargo needs to move efficiently throughout the entire supply chain to be effective. IATA urges governments to cut the paperwork for charter operations, exempt cargo crew from quarantine rules that apply to the general population and ensure there is adequate staff and facilities to process cargo efficiently. Slow recovery While there is an immediate capacity shortage, the collapsing economy is expected to further depress overall cargo volumes. Short-term analysis shows that global manufacturing

activity continued to contract in March as governmentimposed lockdowns caused widespread disruptions. Following the sharp decline in February – which exceeded that of the global financial crisis – the global manufacturing Purchasing Managers’ Index (PMI) rose slightly in March but remained in contractionary territory. This improvement was due to the stabilization of the China PMI; excluding the China outcome, the global index fell to its lowest level since May 2009. Looking at the prospects for the rest of 2020, the World Trade Organization forecast gives little indication of a quick recovery. The optimistic scenario is for a 13 percent fall in trade in 2020, while the pessimistic scenario sees a 32 percent fall in trade in 2020. This will deeply impact air cargo’s prospects. One area of demand, however, is growing sharply. Pharmaceutical shipments are tracking at double previousyear volumes. This excludes shipments of medical equipment. “The capacity crunch will, unfortunately, be a temporary

problem. The recession will likely hit air cargo at least as severely as it does the rest of the economy. To keep the supply chain moving to meet what demand might exist, airlines must be financially viable. The need for financial relief for airlines by whatever means possible remains urgent,” de Juniac said. Regional performance Airlines Asia-Pacific airlines saw demand for international air cargo fall by 15.9 percent in March 2020, compared to the year-earlier period. Seasonally adjusted cargo demand fell by 3.0 percent compared to February 2020, to levels last seen in the third quarter of 2013. International capacity decreased 27.8 percent. North American carriers reported a decline in international demand of 13.3 percent annually in March which was more than double the pace of decline in February (-6.1 percent). Cargo volumes on the Europe-North America trade lane were affected the most (down 22 percent year-onyear) in March. International capacity decreased 19 percent. European carriers reported

an 18.8 percent annual drop in international cargo volumes in March, much sharper than the outcome for February (-5.2 percent). Intra-Europe demand declined by 32.6 percent year-onyear due to widespread shutdowns in the manufacturing sector across the region. The larger Europe-North America and Europe-Asia markets also recorded substantial declines this month. International capacity decreased 27.6 percent. Middle Eastern carriers reported a decline of 14.1 percent year-on-year following growth of 4.3 percent in February. Among all routes to/from the Middle East, the sizeable Europe and Asia trade lanes recorded falls in the order of 20 percent in March, while the smaller Africa market saw a decline of around 30 percent. International capacity decreased 20.4 percent. Latin American carriers posted the sharpest fall—a 19.3 percent year-on-year decline in international demand. This was a significant deterioration compared to February (-0.5 percent). Declines were widespread but most severe for Central-South America with volumes down around 35 percent year-on-year. International capacity decreased 37.6 percent. African airlines were less affected by disruptions in March. They saw year-on-year growth in international CTKs fall by 1.2 percent following the positive annual outcomes in January and February. The Africa-Asia market was the only trade lane which continued to post growth in March, with volumes up almost 10 percent year-on-year. International capacity decreased 8.2 percent.

COVID-19: NAMA cautions staff on safety procedures as FG relaxes lockdown

head of the partial relaxation of the Covid-19 lockdown which commenced on Monday, staff of the Nigerian Airspace Management Agency (NAMA) have been tasked to ensure full compliance with the directives and safety guidelines by the Federal Government and the Nigeria Centre for Disease Control (NCDC) on COVID-.19 preventive measures, including social distancing, regular washing of and/ or sanitizing of hands and wearing of face mask. Fola Akinkuotu, managing director of NAMA, who stated this in a message to staff of the agency noted that “while the health and wellbeing of workers is of utmost importance to management, a lot needs to be done by staff themselves to ensure they remain safe in the face of the Covid-19 pandemic which is still very much in our midst.” He assured workers that the agency had put in place procedures and measures that would guarantee their safety in the work place, stressing that “the battle against Covid-19 is a collective one and we must all join hands with the Federal Government to triumph at the end of the day.”

IATA / UPU warn of air capacity shortage

he International Air Transport Association (IATA), and the Universal Postal Union (UPU) have warned that air capacity for postal services is insufficient and urged governments to do more to support the movement of mail by air during the COVID-19 crisis. Owing to the drastic 95 percent reduction in passenger flights, which are typically used to transport mail, and a 25-30 percent increase in demand for e-commerce as customers and businesses resort to online purchasing in response to social distancing

restrictions, postal administrations are facing a challenge in sending and delivering international mail, in particular, cross-continental mail. IATA and UPU are calling

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on governments to facilitate the flexibility that airlines need to meet this critical demand by removing border blockages to ensure trade flows continue, avoiding un-

necessary regulations and fast tracking the issuance of permits for chartered operations. Additionally, ensuring adequately trained staff are available to process and clear the mail upon arrival is essential. IATA and UPU are also working to support posts’ use of cargo flights in addition to commercial passenger flights by providing information on the airlines and cargo carrier status, available new alternative routes and best practices. “Airlines have been required to cut passenger services in the fight to stop the

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spread of COVID-19. So, it’s vital that everything is done to support the smooth movement of mail which is an important component of society,” Alexandre de Juniac, IATA’s Director General and CEO said. “Posts are trusted partners in the delivery of goods, vital medical supplies and essential information on the pandemic. The cancellation of more than 4.5 million passenger flights – the primary means of transporting post - has meant that capacity is scarce, costs more and takes @Businessdayng

longer. Action needs to be swiftly taken to address the shortfall in air cargo capacity and to keep the mail moving,” UPU director general Bishar Hussein said. G20 governments, at their recent emergency meetings, committed to “minimize disruptions to trade and global supply chains and identified the need to prioritize keeping air logistics networks open and functioning efficiently. Posts and airlines are cooperating to meet this priority by ensuring that reliable operations continue throughout the pandemic.

Thursday 07 May 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Work is life ONUWA LUCKY JOSEPH

onday, 4th of May, 2020, folks trooped out like ants to resume work. Most of this enthusiastic throng had been in forced hibernation owing to the lockdown imposed by the Federal Government; an idea arrived at to help stem the tide of the hideous Corona Virus pandemic. Social media, as expected, was alight with images of traffic congestion in Lagos that began well before 6am. Not many listened to the well meaning counsel passed round that people should take it easy and not be in a rush to resume. Some had suggested a two week self imposed lockdown so that the early ‘adopters’ of the freedom march would have become compelled to being more circumspect before the wiser and more cautious ones begin to venture out. It would seem, going from the images we saw, that the vast majority of Nigerians are fully done with the lockdown and are most eager to move on with their lives. This should not be viewed as a willful act of defiance by people heedless of the danger or threat to their lives that Covid 19 poses. Rather it’s an affirmation of their humanity that they would not be cowed so badly by a mere disease that they lose the desire for making a life or living. That’s the human spirit. And Nigerians, like the rest of earnest humanity, would rather dare the hive than miss out on the honey. This should not give government any ill feelings. It should rather awaken them to the potential of a workforce that is striving under one of the most inclement business environ-

ments anywhere in the world to make something of themselves. Long deprived of support, the Nigerian worker has made a habit of bootstrapping their way to significance. Not so true the designation by President Buhari, of young Nigerians as lazy youth. There are lazy Nigerian young people, to be sure, but the vast majority of them are doing their best to find their way around in a most inhospitable environment. My position on the matter of get rich quick young Nigerians is that that is the example they can see. The moralization and preachments from government and public officials do not in any way align with what they see. And so, from very early on, their mind is made up as to what path to toe. Not for them, never, the unending misery that is the lot of a lot of their elders. No! That said, however, a lot more Nigerians would rather tread the path of hard work and honesty to enable them live the life they crave. Unfortunately, the environment tends to force them,

now and again, away from the straight and narrow, into the dark alleys, where under the table deals are the norm. But that’s all an aside. We were talking about the primacy of work. Why would people, aware of the danger, still step out for their daily bread? Well, simple answer, there’s no daily bread until there’s a stepping out.

Covid 19 Corporate Donations update • WAPCO protects health workers from COVID-19 risks by donating thousands of Personal Protective Equipment (PPE) to doctors and workers in Ogun and Lagos states. • The Lebanese Community donated an ambulance, 1,848 cartons of Aquafina water, 105 cartons of sanitizers, 350 cartons of noodles, 100 cartons of 1kg rice, 120 cartons of margarine, 1,000 cartons of Supreme noodles, 1667 cartons of biscuits, 300 cartons of chips, soya oil, 1,000 cartons of Semovita and 1,000 cartons of spaghetti among many other items. Faysal El Khalil, the chairman, Lebanese Community in Lagos, noted that the donation was a token of appreciation to their country of choice, Nigeria, which has accepted them as citizens and provided many members of the Lebanese community opportunities that have helped them build a good and bright future for themselves and their grandchildren. www.businessday.ng

Faysal El Khalil, Chairman, Lebanese Community in Nigeria

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Especially in Nigeria, where, to be fair some state governments have made some effort to provide palliatives, but for the vast majority, there are no shock absorbers. There is no welfare system that gives citizens a sense of some access to the pie. Except for those who make it to government and who then go on to corner as much of the national cake as possible, leaving their countrymen hungry and starving. Ironically, Workers Day in Lagos, FCT, Ogun and other states happened under the lockdown regime. But even as government ‘needlessly’ declared a Public Holiday, most workers were itching to return to the fields of play, to those places where their daily bread duly made their arduous and long way from imagination to manifestation. Those places are everywhere and anywhere. They are at the bus stops, hotels, one room office, under the bridge, in the market, by the roadside, in air-conditioned offices, in the plazas, factories, farms, hospitals, schools, government secretariats, etc. Work is how the world works. It’s instructive to see that some countries, Sweden being a prime example, refused to buy into the @Businessdayng

lockdown mindset, preferring rather to leave its citizens to use their good judgment based on the information made available to them. Of note is that they have not registered as many casualties as countries that put their citizens on semi strict quarantine. Everywhere, people just want to be allowed, even if not strictly to work, at least to be allowed time out of the lockdown cage. I saw on Monday, folks acting like it was their first day in Abuja, driving round their old haunts even if they weren’t going inside. Sidon for house don tire dem! And even as we say all of this, we must strive to abide by the regulations around Covid 19, which if followed, gives us a greater chance of seeing off the demonic virus before it does more damage: • Wash your hands every chance you get. Nope, scratch that. Wash your hands with soap and water for at least 20 seconds and at least once every other hour. • Disinfect your work space as often as possible everyday • Wear your face mask. Nonnegotiable. Government says it will arrest you if you don’t. Your fellow citizens should do government a favour and arrest you and hand you over to the law if you fail to don your face mask. Anyone not wearing their face mask is a danger to society. Full stop. • Social distancing is critical although it’s far from instinctual. Maintain distance. Don’t do the hug and handshake with all your month lost acquaintances and friends. Give them some space. But be only as wildly cordial as possible from your safe distance. • Move around with your sanitizer. After you touch naira notes, use it. After you touch the railing, use it. After you touch the door handle, use it. Just use it. And don’t touch your face, eyes or nose, unless you first use the sanitizer. Yeah? Let’s make work work. We all need to work, to put food on the table, to have money for our old folks who can no longer do the work that we are now privileged to do, to give our progeny a leg up in, to sock it to naysayers who thought us incapable of rising above the station they had consigned us to. We got to work. And we got to work to help our country’s profile. Oil absorbs an insignificant few of us. It’s the other things, those places we are currently engaged in that can help Nigeria diversify her revenue earnings. Be it Entertainment, Education, IT, Banking, Agriculture, etc. Let’s make this freedom to work, work!

Thursday 07 May 2020

BUSINESS DAY

Corporate Social Impact

Nestlé Nigeria Donates N700 million towards COVID-19 Relief ONUWA LUCKY JOSEPH

he major reason millions protested and even resisted the lockdown as mandated by the Federal Government is traceable to their inability to access food and beverages, basic necessities without which their very survival is not guaranteed. Little wonder, the term hunger virus started trending alongside corona virus. So it’s a good thing that one of the corporates coming to the rescue is Nestle Nigeria, a company ‘committed to improving livelihoods in its communities’. It is in this commitment capacity that Nestlé Nigeria has contributed over N700 million (seven hundred million naira) to support the COVID-19 response efforts in Nigeria. This donation includes nutritious food and

L-R: Yinka Olajide, Nestle Institution & Alternative Trade Channes Manager, Oska Seyi Aiyeleso, CEO Ekiti Fountain Holdings, Olumuyiwa Ogunmilade, Chairman, Ekiti Inland Revenue Service, Titi Folahan, Nestlé Regional Sales Manager, Ekiti State, and Bayo Fadenipo, Nestlé L-R: Ibukun Ipinmoye, Fcatory Manager, Nestle Flowergate Factory, and Noimot Salako-Oyedele, Deputy Governor, Ogun State. Institution & Alternative Trade Channels Manager.

beverage products worth N450 million targeted to reach more than 600,000 vulnerable people who are most impacted by the crisis. Additionally, the company has also donated N250 million in cash towards the procurement of medical supplies and personal

protection equipment for the COVID-19 response. Nestlé is supporting the COVID-19 response efforts led by the Presidential Task force, working alongside other private sector partners in the Coalition Against COVID-19 (CACOVID).

“We are joining forces with government to do everything we can to help those in need through both financial means and product donations in these unprecedented times where our communities need our support more than ever,” said Mr. Mauricio Alarcon, MD/

CEO Nestlé Nigeria. “We are donating nutritious food and beverages to reach more than 600,000 vulnerable families who are the most impacted by the crisis. We are also making a financial donation towards the procurement of medical supplies including personal protection equipment to enhance the health and safety of the medical teams and volunteers on the frontlines of the fight against the corona virus.” Mr. Alarcon reiterated that Nestlé Nigeria will, in line with its purpose of enhancing quality of life and contributing to a healthier future, continue to play its essential role of ensuring the uninterrupted availability of food and beverage products which are critical for the sustenance and well-being of millions of Nigerian families who rely on the company to help feed their families every day.

The grim business side of COVID 19 in the workplace ONUWA LUCKY JOSEPH

et’s not do any waffling here. There will be lay-offs in the corporate sector. Plenty. With an economy that was barely tottering along, now almost ground to a halt with the Covid 19 occasioned lockdown, it won’t be pretty when company managements begin their show of bare knuckles. It won’t be funny. Like Fela says. “There will be sorrows, tears and blood, them regular trade mark”. It’s the regular trade mark of capitalism to shed the flotsam and jetsam whenever there’s business turbulence. Many business titans made their name from weight shedding and downsizing (or right sizing as some prefer to call it). Some of the great names that are spoken of in awe in the MBA pantheons and idolized by upcoming business people made their names as ‘sackers’. They threw away what they considered excess baggage, got the business healthy and then grew it much bigger than they met it. Some of those names are the mainstay of business school folklore: the late Lee Iacocca of Chrysler, the late Jack Welch of GE and turnaround specialist, the late Albert J (Chainsaw) Dunlap. Whenever there was a problem, first they saw was the excess baggage. And more often than not, shedding it helped the business rebound. But it left emotional scars on men and women who had committed their very existence to building those businesses, only to be told, and without ceremony, that they were surplus to requirement. So the ‘lean and mean’ machine is most likely going to be how managements tilt in many corporates, going forward. Right or wrong can be debated ad infini-

Lee Iacocca

Jack Welch

Herbert-Wigwe

tum. But debate it, we must, even if minds are made up on the matter already. The Access Bank MD gave the whole world a sampling of how his mind is working with regards to the business he runs and the people who run it with him. His rather blasé comments about 75% of staff losing their job must have left many quaking in their squishy wellingtons. Yes, it’s a rainy season that doesn’t promise cats and dogs in the jobs department. Only the dark clouds growing darker and the growling of thunder soon to announce the layoffs impending. Regrettably, it’s difficult to take sides. The responsible thing every business must do is a proper audit of their current financial standing and the long and hard think pertaining how to make a success of the herculean management challenge of surviving typhoon Covid 19. Will they lay huddled in their corporate office even when it’s smack in the path of the storm? Will they ship out before the gale makes a sweep-out of everything in its path? Or would they apply whatever it takes, orthodox or arcane science, to divert the path of

the storm and stay whole even as others structures are leveled? The answer will not be an easy one to arrive at. And it’s a question being asked worldwide. Of Fortune 500 companies as well as startups that started out full of hope and eagerly looking to make a killing in 2020. Some of them had poached well placed staff from other places to help shore up their position in the shortest possible time. What they see now is a crumbling of dreams. But it’s the way things work. Business and individual success stories are replete with incarnations and reincarnations a la the Phoenix. They’re strong, they flourish, they fail, they get some shot in the arm or butt, they resurrect to fly high again. Of course, middling companies don’t experience this peculiar trajectory. They fail, they die. And thence comes the work of the turnaround management. It’s a fancy moniker full of foreboding for those whose lives they tinker with. Sometimes there’s no science to who is affected. Sometimes, the HR honcho who does the compilation ends up being

shown the door him/herself. The ultimate karma. What the world wants is not just for businesses that survive one season of turbulence. Actually, Nigerian business ought to be considered weatherproof by now, having survived a long line of turbulences. But the Covid 19 turbulence is a new one. And a very bad one. We had never had to stay indoors and away from work one month plus, and have our oil not sell in the marketplace as there were no buyers for it, and when it sold, to sell for the price of detritus rather than the crude oil that it is. Seeing as business must be plotted beyond the travails of today, we implore that managements in whose hands the lives of many dangle, should treat this time with every sense of responsibility. It’s not a time to play the vindictive or whimsical god. Let actions be guided by long term corporate objectives that factor in staff welfare and wellbeing as critical elements of those objectives. There should be no casual toss overboard. And where the toss has to happen, let there be life jackets

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@Businessdayng

provided. How a staff’s story ends may not impact on the business, but it will impact on the staff. And the staff is an integral part of the story of the company. Okay, that sounds a lot like some emotional humbug, but it shouldn’t to management that’s conscious of cynical appraisal by staff post survival. It’s somewhat like the story of Nigeria. The people get tossed overboard everyday because the national cake can’t go round. But the fat cats who have cornered the cake never fail to appeal to the people’s sense of sacrifice. Yeah, we sacrifice so they can get fat! Tell that to the night flying birds of their not-on-themap villages! On the other hand, business sustainability does entail sacrifice. And this comes, sometimes, unfortunately, in the form of layoffs and job losses. If companies must do that, they need to be pragmatic about it and get on with the business. But the knee jerk approach of cutting staff as the only way to keeping a company in business is a lazy fat cat approach that only seeks to dispense with the many who share the spoil with management. Management forgets that without these folks, the spoil would be much smaller in the first place. Nice thing that the CBN and the Bankers Committee have come out to suspend layoffs in the banking industry. Not many other businesses/industries have the luxury of such an intervention mechanism to come to their aid. And even for the banks, layoffs still will happen. It’s just a postponement of the evil day…. (Kindly send feedback to 08023314782 / csrmomentum@gmail.com)

Thursday 7 May 2020

BUSINESS DAY

news

Committee on Aviation condemns FG’s use of foreign airlines to evacuate Nigerians overseas

COVID-19: FG grants 2 months licence fee waiver to broadcast stations

… as 265 Nigerians to land in Lagos on Wednesday in first batch of evacuation

IFEOMA OKEKE & Innocent Odoh, Abuja

ouse Committee on Aviation has condemned the decision by the Federal Government to engage the services of foreign airlines to evacuate Nigerians abroad when there are three Nigerian carriers that have the capacity to do so. This was disclosed by Nnolim Nnaji, chairman of the Committee, who called on the government to revert to capable indigenous operators to carry out the evacuation exercise. Nnaji frowned at the engagement of foreign airlines like Ethiopian Airlines, British Airways and Emirates to airlift stranded Nigerians from Dubai, London and America by the Foreign Affairs Ministry and the Presidential Task Force, (PTF) on COVID-19. The lawmaker called for the immediate cancellation of the

contracts and the reversal to the capable domestic operators, noting that America and Britain recently evacuated their citizens from Nigerian without the use of other countries’ carriers. “The action of those responsible for this action is not only a disservice to the local airlines which have done their best to provide patriotic service to Nigerians but equally detrimental to our national pride and dignity,” Nnaji stressed, urging the Aviation Minister to revoke the landing rights already granted the three airlines. According to a schedule released by the Foreign Affairs Ministry the first batch of evacuees of 265 from Dubai would arrive Nigeria Wednesday, May 6,2020, another 300aretoarrivefromLondononFriday May 10 on British Airways and on Monday, 11th May Ethiopian Airline will airlift those coming from United States of America. Nnaji, who represents Nkanu East/West Federal Constituency in theFederalHouseofRepresentatives,

strongly believed that there were capable Nigerian operators with long haul aircraft that could handle theoperationsthatshouldhavebeen engaged by the Task Force. According to Nnaji, “I am aware that Air Peace has three Boeing 777, Max Air has four Boeing 747 and Azman recently acquired Airbus A340-600 series which can be deployed for these charters. Air Peace apart from the operations it did to evacuate Nigerians from South Africa during the xenophobic attacks last year has handled two special charters this COVID 19 period to China for medical evacuation and to Israel to evacuate Israeli National out of Nigeria and Max Air has been operating in Hajj without hitches. “Why can’t we for once begin to believe in ourselves, why must we look outside for everything? I was thinking that the lessons of this prevailing pandemic would make us change our ways of doing things. Nigerians must demand explanations for this action of the

PTF,” the House Committee chairman on Aviation said. However, the Federal Government at about 3pm Wednesday received about 265 Nigerians at the Murtala Mohammed International Airport, Lagos. The Nigerians came in Emirates flight from Dubai, United Arab Emirates (UAE) as part of the measures to evacuate them from different parts of the world following the rampaging Covid-19. This is the first batch of the evacuation, the government, through the minister of Foreign Affairs, Geoffrey Onyeama, on Monday, said would involve airlifting of Nigerians from other countries such as United States, United Kingdom (UK), China, South Africa, France, India and a host of others. The minister said nearly 4,000 Nigerians had indicated interest to come back home, adding that the government despite its constraints would try to bring as much Nigerians within the limits of available resources.

Godsgift Onyedinefu, Abuja he Federal Government has granted a two-month licence fee waiver for terrestrial broadcast stations in Nigeria to cushion the effects of the Coronavirus disease (COVID-19) pandemic in the industry. Minister of Information and Culture, Lai Mohammed, announced this on Tuesday during a meeting with members of the Broadcasting Organisations of Nigeria (BON). The minister also informed that government had decided to set up a committee of industry stakeholders to look into and advise it on the best way to mitigate the effect of the pandemic on the industry. Mohammed noted that the entire Creative Industry, which also covers the Broadcast Industry, had been affected by the pandemic that had inflicted extensive damage on the economy of nations across the world. “We have therefore decided that instead of addressing these problems piecemeal, we should do so holistically for a more positive outcome”, he said. He stressed that the Cre-

ative Industry was a very critical sector of the nation’s economy and a major plank of the economic diversification policy of this administration. It creates the highest number of jobs after agriculture, especially for the youth. “Therefore, there is no doubt that we need a collective and government-supported approach in dealing with the immediate, short and long term palliatives and initiatives for the industry, in order to mitigate the effect of the pandemic on the sector,” he said. Sa’a Ibrahim, chairman, BON, however called on government, especially state governments to as a matter of urgency provide adequate funding for the running of the state owned media houses at this time, to save the sector from imminent collapse arising from declining revenue. Ibrahim urged government to grant one-year moratorium in the payment of Annual Operating License fee payable to the NBC, approve tax rebates for the broadcast stations and provide guarantees or comforts to de-risk the loans the Broadcast Industry requires to enable Independent Private Broadcasters to access credit facilities.

Convert seized, unoccupied houses to Covid-19 isolation centres, HDAN tells FG CHUKA UROKO

L-R: Babatunde Awodiji, vice president, finance, Change Africa Foundation; Kola Lawal, vice president, event management, Change Africa Foundation; Olamide Olabisi, president, Change Africa Foundation; Modupe Adebambo, proprietress, Lekki Motherless Babies Home, and Posi Lawore, vice president, projects, Change Africa Foundation, when they extended relief materials to orphanage homes.

Troubles ahead as Rivers directs traditional rulers to ensure closure of hotels, markets in their domains Ignatius Chukwu

anger looms ahead in Rivers State as traditional rulers and local council chairmen have received order from Governor Nyesom Wike of Rivers State to enforce the total lockdown that includes closure of hotels, shops, markets, and loading bays. The governor said during a broadcast on Monday that any hotel or taxi found in operation should be impounded and auctioned. The auctioning order has sent fears down the spines of the publicastheorderistobeenforced by task forces populated by young men that are dreaded in the state. Many business operators fear the order could make the boys to take the laws into their hands, as no legal processes may be followed anymore in selling off a hotel or someone’s taxi cab.

To give teeth to the order, the governor summoned all traditional rulers and local council chairmen on Tuesday after which he directed them to act as enforcers of the new order. The traditional rulers and council bosses are known to control the youths in the various communities who would definitely be the enforcement armies. They have been ordered to enforce the closure of markets, hotels and beer parlours across the state. Addressing them, Governor Wike said, “Set up your own task force in your respective domains and implement the closure of markets, hotels and beer parlours. “This Task Force is strictly for COVID-19. The State Government will support all traditional rulers to carry out these responsibilities,” and appealed to the www.businessday.ng

traditional rulers to work with his administration to check the transmission of coronavirus. The governor also called on local council bosses to ensure that they supported the monarchs to deliver on the directive. On the almajiris, the governor said: “When they started relocating the almajiris in the North, the Federal Government said nothing. Immediately they heard that we have relocated some almajiris, they came up with the declaration that it is against the inter-state movement. Why this double standard?” The governor noted that his administration had continued to work on the state’s borders to ensure that they remained closed, and charged local council chairmen to take more stringent measures to stop the influx of persons.

He warned that from Thursday any shop that opens in Obio/ Akpor or Port Harcourt Local Government Area, the building would be demolished. On the closure of markets, he said the State Food Purchasing Committee headed by the Secretary to the state government would purchase all the foodstuffs and distribute them to the people. “We will buy off all the foods in the markets and distribute to our people. All you need is to liaise with the office of the Secretary to the Rivers State Government and we will buy and distribute. No Market should be open anywhere in the state,” he said. Commenting on the compulsory use of face masks, he said he would use politicians and traditional rulers as examples.

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housing sector advocacy group has told the Federal Government to convert all seized and unoccupied houses to coronavirus isolation and treatment centres, especially in Abuja and Lagos, where so many people have been infected by the deadly virus That action, according to the group known as Housing Development Advocacy Network (HDAN), is urgent now that the government is finding it difficult to cope with accommodation issues for all of the confirmed cases. The group is worried that the Federal Ministry of Health and other stakeholders in the management of COVID-19 are helplessly pleading to Nigerians to donate their houses to serve as isolation centres when there are countless unoccupied houses scattered all over the country. In the highbrow neighbourhoods of Abuja and Lagos including Asokoro, Garki, Ikoyi, Victoria Island, etc, there are many well finished, unoccupied houses most of which are linked to persons with unexplained wealth, especially politically exposed persons. “One of the effective ways of tackling this pandemic is for the government to make available more facilities for the isolation and treatment of infected persons,” Festus Adebayo, the president of the group said on Monday. Adebayo, whose views were contained in a statement obtained by BusinessDay in Lagos, noted, “our health sector is overwhelmed by dearth of facilities needed to fight this pandemic. So instead of allowing @Businessdayng

these empty buildings to waste, government can temporarily convert them to isolation and treatment centres.” The president noted further that the Federal Government, through its anti-corruption agency, the EFCC, has seized a number of buildings belonging to corrupt officials in major cities of the country who are being investigated or prosecuted for looting public funds. Also, there are countless numbers of buildings abandoned or vacant in most of these cities – especially Abuja and Lagos – usually because they are acquired through illicit means or owned by corrupt officials who already have too many. These buildings, he advised, could become important facilities for fighting covid-19 in Nigeria. He lamented that the number of confirmed cases of infected persons was spiking by the day, noting that as at May 6, Nigeria has recorded a total 0f 2,950 confirmed cases, 481 recoveries and 98 deaths, with more to be announced as days go and as on-going test results emerge. ‘’Before things get out of hands, the Federal Government should grant access to these unclaimed houses and make the work easier for our health workers,’’ he said. Adebayo encouraged real estate developers to participate in the efforts being made towards containing the pandemic successfully by assisting the government with information about buildings that can be made available for such exercises and those that can be temporarily donated willingly by their owners.

Thursday 7 May 2020

BUSINESS DAY

news

FX market opens with naira losing N0.25k Hope Moses-Ashike

he foreign exchange market opened on Wednesday morning with an indicative rate of N385.08k to the dollar, which represents a N0.25k loss to naira when compare d to N384.83k opened on Tuesday at the Investors and Exporters (I&E) forex window.

The market clos e d on Tuesday with maira losing N1.40k as the dollar was quoted at N385.40k from N384.00 traded on Monday at the Investors and Exporters (I&E) forex window. At the black market, dollar traded at N435 in some areas of Lagos, but black market FX rate showed dollar trading at N430 on Wednesday.

Passage of Infectious disease bill unlawful without Nigerians input - civil society ...seeks special court for emergency cases during epidemic Iniobong Iwok

uwal Rafsajani, Nigeria’s representative at Transparency International (TI), disclosed that part of the contentious Infectious Disease Bill (IDB) was unconstitutional and against Nigerians interest, saying it passage without the input of stakeholders would make it illegal. The bill, sponsored by speaker of the House of Representatives, Femi Gbajabiamila and two others, is intended to repeal the Nigeria quarantine law and was last Tuesday hurriedly passed for first and second reading, and subsequently referred to the Committee of the House, bypassing the usual public hearing before final passage. The move had generated debates on the intention behind the speedy move. However, on resumption of plenary on Tuesday, the House speaker said the bill would be put forward to a public hearing where stakeholders’ contribution would be sorted. But speaking in a television programme monitored Tuesday night, Rafsanjani said the bill was

sensitive and important and would be appreciated better by Nigerians if they make input. “It is important that Nigerians make input into that legislation. Part of that bill is unconstitutional and against Nigerians interest that is why it is important to put the bill to public scrutiny,” Rafsanjani said. The TI boss said though there was gap in the current framework being used in the fight of Covid-19 in the country, while urging the National Assembly to be more proactive in their oversight function in monitoring the disbursement of the Covid-19 palliatives and funds. According to Rafsanjani, “There is the need to allow Nigerians who have the knowledge and capacity a chance so that they can give recommendation that would input to make the bill a better one. It would also make the bill have acceptance and legitimacy among Nigerians. “Though there is gap in the current framework being used to fight the Covid-19, but there is need for the National Assembly to use their oversight power in the management of the Covid-19 palliatives for the benefit of the country,” he said.

Givefood.ng donates 10,000 meals in first 24 hours TEMITAYO AYETOTO

ivefood.ng is proud to announce a donation milestone which saw the coalition of the convener, partners and sponsors distribute 10,000 meals in the first 24 hours of the launch. This puts the initiative well on track to exceed its target of providing 1 million meals a week to those most in need as the government continues to work hard to contain the spread of COVID-19 in the country. Givefood.ng is an emergency food relief platform that is raising funding to provide 1 million meals a week to those in need across Lagos, with plans to expand to other parts of Nigeria, through the generous support of coalition partners. The initiative leverages technology and existing food supply chains to dramatically scale the great work of grassroots level community and religious organisations. Since this crisis began, volunteer organisations have

been doing a great job supporting those in desperate need during these challenging times. Scaling these efforts is critical in order to move the dial as it relates to hunger alleviation. “We are excited by the overwhelming support we have received from Nigerians home and abroad. We would never have been able to achieve this great feat without them,” said Kola Masha, CEO of Babban Gona and founder of the coalition. “As we all follow the guidelines set by health and government specialists and work towards continuing to deliver a strong coordinated response in the fight against COVID-19, I would like to encourage all well-meaning Nigerians to join us to protect our bigger family as we give food to those in need. We cannot afford to leave them to the vices of restricted movement, especially as their source of income has been greatly impacted by these restrictions,” Masha said. www.businessday.ng

L-R: Abubakar Dikko, leader, Oko Baba, Lagos State; Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), and Taiwo Ebenezer, chairman, South West zone, ABCON, during the ABCON distribution of relief material to vulnerable in Ebute Metta, Lagos, yesterday. Pic by Olawale Amoo

Covid-19: Lagos may reinforce lockdown to stem community transmission Joshua Bassey

... as concern grows over non adherence to easing guidelines

Although the state on Tuesday alone discharged 60 patients from its various isolation centres, there is, however, growing concern within the government where to keep increasing number of infected cases if the spike continues at the rate being seen. Existing isolation centres are being overstretched, forcing the state government to move some patients to undisclosed private facilities for treatment, the source who craved anonymity confirmed to BusinessDay. It was gathered that the state COVID-19 committee, with Governor Babajide SanwoOlu as the chief incident commander, is disturbed by the non-adherence to the protocols and guidelines on the gradual relaxation of the lockdown as witnessed on Monday and Tuesday. The guidelines announced

here are indications that the Lagos State government may reinforce lockdown on the state to stem rapid community transmission of COVID-19 pandemic. A source close to the State House, told BusinessDay early Wednesday morning that the government was ‘very worried’ by the number of cases still being recorded and there was fear that the easing of the lockdown could aggravate the situation. Daily statistics from the Nigeria Centre for Disease Control (NCDC) show that between Monday, May 4 and Tuesday, May 5, a total of 80 new infections had been recorded in Lagos. About 37 cases were confirmed on Monday while on Tuesday, additional 43 were reported.

FCMB holds virtual AGM as shareholders commend performance, approve dividend BALA AUGIE

hareholders of FCMB Group plc have again applauded the financial institution for its resilience, dynamism and impressive performance recorded last year despite the challenging operating environment. The shareholders, who gave the commendation at the seventhAnnual General Meeting (AGM) of the Group on April 28, 2020, at its corporate head office in Lagos, also unanimously approved the payment of a cash dividend of 14 kobo per ordinary share, which translates to N2.77 billion, for the year ended December 31, 2019. The AGM was held by proxy, following the outbreak of the COVID-19 (novel coronavirus) pandemic, and streamed live via www.fcmb.com/AGM to shareholders of the financial institution who were unable to physically attend due to the lockdown imposed by the Government. The decision to hold the AGM by proxy was to avoid unnecessary physical contact among attendees and in line with the social distancing

protocol to avoid the spread of the pandemic. The meeting was previously scheduled before COVID-19 hit Nigeria. FCMB Group is a holding company divided along three business groups; Commercial and Retail Banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Corporate & Investment Banking (the Corporate Banking Division of the Bank, FCMB Capital Markets Limited and CSL Stockbrokers Limited) as well as Asset & Wealth Management (FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited). Chairman of FCMB Group, Oladipupo Jadesimi, along with the Group Chief Executive, Ladi Balogun, Company Secretary/ General Counsel, Funmi Adedibu, a Director, Olusegun Odubogun, Chief Operating Officer of the Group, Peter Obaseki, representatives of the Central Bank of Nigeria, Securities and Exchange Commission as well as leaders of shareholder Associations, were present at the meeting.

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by the government for the phased easing of the lockdown were that the residents must wear face masks in public places, avoid overcrowding, limit carriage capacities of commercial vehicles to 60 percent, banks should open more branches to customers, offices should open between 9am and 3pm and operate at 60 percent of their staff strength, provision of hand-washing and sanitizers at entrances to all offices, among others. But it was a bundle of confusion on Monday, May 4, when what was supposed to be a controlled relaxation of the lockdown began, as residents and commercial bus operators spurned the face masks and the social and physical distancing protocols. Commercial drivers operated with overload vehicles with some of the passengers wearing

no face masks. There was also no provision in the buses for hand sanitizers as directed by the state government. The situation was no different in markets, as buyers and sellers practically trampled on one another with many having no nose masks. Perhaps the worse scenarios were in the banks as thousands of customers thronged bank premises for different transactions, forcing security personnel at the banks to physical engaged anxious and disgruntled customers. The situation was made worse by the fact that banks refused to open all their branches, leaving customers to concentrate on a few of the branches opened. Many Lagosians are not e-banking compliant and still prefer the physical contact with bank personnel for their transactions.

COVID-19: BDCs donate relief materials to 2000 families Hope Moses-Ashike

ssociation of Bureaux De Change Operators of Nigeria (ABCON) has donated essential food items to 2000 families across the six geopolitical zones as its contribution to mitigate the impact of the COVID-19 pandemic on households. Furthermore, the Association has donated N10 million to the private sector-led Coalition Against COVID-19 (CACOVID) Relief Fund, spearheaded by the Central Bank of Nigeria (CBN). Aminu Gwadabe, ABCON president, disclosed this while speaking at the donation of essential food items to the Destitute Home in Yaba, Lagos State. He said while the COVID-19 pandemic had impacted severely on the economy and the livelihood of millions of people across the world, it was also an opportunity to demonstrate love and support to the poor and vulnerable members of the society. He said ABCON, in this regard and as a socially responsible organisation, decided to focus its support on the poorest of the poor in the society, stressing that this prompted the donation of essential food items @Businessdayng

...supports CACOVID with N10m

to over 2000 families representing the poorest of the poor families in the country. “Today in Lagos we are donating food items to over 200 families through the Destitute Home, Yaba, and Lagos. The items include bags of rice, cartons of noodles and macaroni. “Similar donations were made by the ABCON zonal executives in Abuja, Kano, Kano State, Awka in Anambra State, Benin, Edo State, and Maduguri in Borno State.” In addition to the support to these families, Gwadabe disclosed that ABCON had joined other private sector organisations to support the going efforts of the federal government to curb the spread of the coronavirus. “In this the Association has donated N10 million to the CBN inspired CACOVID Relief Fund,” he said. “We have also taken measures to protect BDC operators and their customers from the coronavirus. For this purpose ABCON has distributed over 20,000 face masks, hand sanitizers and infra-red thermometers to over 5,000 BDC members in all our cash disbursement centres across the country.”

Thursday 07 May 2020

BUSINESS DAY

news In Nigeria as petrodollars fade, the... Continued from page 1

ers have been hard hit leading to fall in demand,” Osibodu said in a recent webinar organised by PwC Nigeria. Analysts say it is time for the regulator to redesign the electricity market so that the energy sector can become an enabler for the economy. This can be done by recapitalising the DisCos to allow the involvement of GenCos, state governments and banks in the ownership of DisCos. There is also need to fix governance at the public and private aspects of the power sector and the regulator needs to be proactive in fixing the market, said Eyo Ekpo, director, New Frontiers Limited and a former commissioner, Nigerian Electricity Regulatory Commission (NERC). Osibodu said that DisCos are trying to ramp collection through the application of more technology tools in their collection. But without fully metering customers, such efforts provide little relief.

DisCos have only metered 60 percent of their customers six years after privatisation. The absence of governance and functional electricity market has shut out the power sector from access to private equity funds, including the pension funds. A functional market allows operators to generate returns on their investments but Nigeria’s electricity market does not even guarantee recovery of invested funds. Experts say the government should stop selling power as social service and the regulator must ensure that operators play by market rules and respect contracts. Osibodu said that DisCos are trying to ramp collection through the application of more technology tools in their collection. But without fully metering customers, such efforts provide little relief. DisCos have only metered 60 percent of their customers six years after privatisation.

independent economists and the likes of the International Monetary Fund (IMF). Though still in the same ball park as the IMF’s forecast, the government’s growth outlook is actually worse than the Fund’s 3.4 percent estimate. Another staggering statistic that emerged from the government’s stables was that oil earnings were now projected to decline by a staggering 90 percent. The government also estimates net oil & gas revenue available for Federation Account Allocation Committee (FAAC) distribution will fall by 80 percent to N1.1 trillion from the previous estimate of N5.5 trillion. Again, the government’s outlook is much worse than the IMF’s forecast that oil revenues will decline by 48.6 percent or $26.5 billion this year, down from $54.5 billion in 2019, according to the IMF. Nigeria started this year projecting it would sell oil at $57 a barrel, then it revised that down to $30 a barrel, and now $20 per barrel. Importantly, oil production is also now projected at 1.7mbpd (vs. 2.18mbpd previously indicated). Analysts say this is perhaps the most conservative oil production estimate in years. For Nigeria, the chicken has come home to roost,” a former senior government official told BusinessDay. “We had always known a time like this will come, the handwriting was always on the wall. But we didn’t do the right things. I hope this unprecedented crisis finally serves as the trigger to get our acts together,” the person said. Nigeria’s plight is playing out across the world: from Venezuela to Iraq and

while GFT recorded 475bscf as gas flared for the same year. “Arguably, this disparity may be because the oil companies could have been under-reporting their gas flare volumes, as the increase in fines from the new gas flare regulation may have significantly impacted their bottom lines,” said Charles Majomi, an energy consultant and managing director, Trajan Energy Ltd. Justice Derefaka, programme manager at NGFCP, acknowledged that there is a tendency that flaring is systematically underreported based on report from IOCs, although he also clarified the conversion factors used by GFT may overstate flare volumes.

“It may not be surprising that satellite data may include flaring of both associated and non-associated gas from gas processing plants including refinery flares and illegal refineries in the estimates,” Derefaka told BusinessDay. To solve the issue of data discrepancies, Derefaka, who is also the technical adviser on gas and policy implementation to minister of state for petroleum resources, said key provisions in the new regulatory law require mandatory reporting, access to gas flare data and penalty for providing inaccurate or incomplete flare gas data. Nigeria is a signatory to the Global Gas Flaring Partnership (GGFR) principles for

global flare-out by 2030 whilst committing to a national flareout target by year 2020. Less than three months ago, the Department of Petroleum Resources (DPR) announced it has shortlisted 200 companies from over 800 that expressed interest to develop 45 gas flare sites across the country. Gas flaring in Nigeria has been a perturbing problem since the commercial exploration of crude oil started in the country. This comes despite Yakubu Gowon, the then military head of state, as far back as 1969 ordering that within five years of set-up, a company must cease flaring. The flares emit poisonous chemicals that make people

Ahmad Lawan (l), Senate president, having a discussion with his deputy Ovie Omo-Agege (m), and Peter Nwaoboshi (r), during plenary session at the National Assembly, Abuja.

Financial stress looms for DisCos as... Continued from page 1

while are prioritising their basic needs over settling electricity bill. Under normal circumstances, many customers reluctantly settle their bills due to the threat of disconnection, but with the hardship from the lockdown, it is now worse. Inquiries show that DisCos are ramping up efforts to improve collections. “I received a call two days ago from an agent of Ikeja Electric,” said a customer who simply identified himself as Dare. “She was courteous and politely reminded me of my outstanding electricity bill. The problem is, I don’t money.” The bulk of collections received by DisCos are from customers on prepaid meters. However, Abdullahi Abdullazeez, spokesman of Kaduna DisCo, told BusinessDay recently that they were also witnessing increased cases of meter by-pass and so they were ramping

monitoring. Nwani said the Nigerian Bulk Electricity Trading Company (NBET) and the market operator would need to factor this fall in revenue arising from the pandemic when they make a request for debt settlement. With the increasing impact of rising foreign exchange on operating cost, as well as anticipated gas shortage (as the bulk of the commodity used in energy generation is associated gas which will fall as low oil prices drive down demand and production), the pandemic will leave the sector in worse shape. Funke Osibodu, CEO of Benin Electricity Distribution Company, said DisCos have seen supply disruption, rising cost due to exchange rate volatility and loss of revenue due to the coronavirus. “Our costs have gone up but revenue has gone down, as our industrial and commercial custom-

IOCs’ under-reporting of gas flare cost ... Continued from page 1

The 475.3 billion SCF of gas flared in 2019 represents an equivalent of 25.2 million tonnes of carbon dioxide (C02) emissions and is capable of generating 47,500 gigawatts of electricity per hour. Interestingly, from 2013 when the GFT was deployed to 2017, the flare volumes declared by both the GFT and the oil and gas companies in the records of state-owned Nigeria National Petroleum Corporation (NNPC) were almost perfectly aligned. However, when a new gas flare regulation was introduced in 2018, with an

increase in gas flare penalty from $.0.03 to as much as $ 2.00 per million standard cubic feet of gas flared (MMSCF), there has been a sizeable and growing disparity in the volumes of gas flare reported. According to the NNPC’s data, in 2018, Nigeria flared 282bcf of gas which makes about 10 percent of the total gas produced. On the other hand, GFT reported 472.4bcf of gas for the same year. Also, according to Nigerian Gas Flare Commercialisation Programme (NGFCP), Nigeria flared 325bscf of associated gas in 2019, representing 11 percent of gas produced in the country, www.businessday.ng

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Iran, petrostates that are grappling with the same bleak future – one where their prized commodity is worth much less than it was, and where private companies often still want their cut. While headline Brentcrude futures have rallied sharply in the past few weeks, rising above $30 a barrel on Tuesday, a glut of Nigerian oil is fetching about $10 less than that. It’s a level that means fiscal revenue for the continent’s biggest economy has collapsed. That has several implications for Nigeria which depends on oil revenues to fund half of its budget and to earn a sizeable chunk of its foreign exchange. Most of its states also depend on federal allocations to pay their bills from worker salaries to infrastructure projects. “It’s now dawned on everyone across the country how severe this threat is,” said Andrew Nevin, a partner and chief economist for Nigeria at PricewaterhouseCoopers LLP. “There is a possibility that at least for three to five years, there’s going to be no revenue flowing to the government from oil.” Another rising concern in Nigeria, according to analysts quoted in a Bloomberg report, is that a period of economic distress could lead to a return of social unrest that dogged the country as recently as 2016. The Niger Delta, at the heart of Nigeria’s crude production, has suffered bouts of militancy and violence for years, with oil facilities targeted by people claiming they were unfairly treated by the government and big oil companies. Nigeria’s worst outcome would be that its prices stay low and production is reduced by renewed unrest. sick and damage the farming and fishing industries. At the same time. they cause acid rain, cancer and a host of respiratory problems. Nigeria is the sixth-largest gas flaring country in the world, and the second-largest in Africa after Algeria, according to the World Bank’s Global Gas Flaring Reduction Partnership (GGFR). Recently, the government has made several efforts to curtail gas flaring, including introducing policies and legislative measures such as the NGFCP, which seeks to eliminate gas flaring through technically and commercially sustainable gas utilisation projects and ensures value and wealth creation.

Thursday 07 May 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Brussels warns coronavirus crisis threatens eurozone’s stability

Bloc faces worst recession in its history as report calls for pan-European recovery plan SAM FLEMING AND MEHREEN KHAN

he coronavirus crisis threatens the stability of the eurozone and risks exacerbating economic and social divisions within the EU, the European Commission has warned, as it forecast a collapse in economic output this year. The commission’s spring forecast, published on Wednesday, predicted that under “benign assumptions” EU output will fall 7.4 per cent this year, the steepest slump in the bloc’s history, with a rebound of only 6.1 per cent in 2021. The EU is heading for an €850bn shortfall of investment in 2020 and 2021 compared with the position outlined in its autumn forecast, Wednesday’s update showed. The commission renewed its call for a pan-European “recovery plan” to help compensate for diverging fiscal firepower between member states. This could include a mechanism to address imbalances in the amount of public support that is being funnelled to companies in different parts of the region, said Paolo Gentiloni, the EU’s economics commissioner. While some economies — including Germany — are expected to see relatively quick rebounds in activity, the commission expects others to struggle to regain growth due to permanently depressed levels of investment and hits to industries such as tourism. In the absence of a co-ordinated effort by member states, the crisis risks leading to “severe distortions within the single market and to entrenched economic, financial and social divergences between euro area member

states that could ultimately threaten the stability of the economic and monetary union”, the report said. Greece, Italy and Spain are on course for the steepest falls in gross domestic product this year, all tumbling more than 9 per cent according to the commission. France is also hard-hit, with a contraction of 8.2 per cent, while Germany suffers less, with a fall of 6.5 per cent in output followed by a rebound of 5.9 per cent the following year. Poland is set to suffer the smallest decline in activity, according to the outlook, with output falling 4.3 per cent, before rebounding 4.1 per cent. The commission also published forecasts for a number of non-EU countries, including the UK, which it said was on

course for an 8.3 per cent decline in GDP, followed by a 6 per cent increase in 2021. Overall, next year’s rebound could leave the European economy about 3 per cent below the level implied by the EU’s autumn forecast. But the outcome could be even worse: for example, another surge in infections could reduce GDP by an additional 3 percentage points, the commission said. “The danger of a deeper and more protracted recession is very real,” it added. “The point forecasts presented in this document should therefore be understood as just one among several possible scenarios.” The commission is seeking to overhaul plans for its upcoming seven-year budget to front-load spending aimed

at restoring growth, while raising debt in markets to fund an EU recovery instrument. Brussels is concerned about the vastly different levels of government support to businesses in the bloc; larger richer member states are able to pump billions of state aid into ailing companies, while smaller cash-strapped economies have fewer resources. Germany accounted for half of state aid approved by the commission during the coronavirus crisis so far, according to Brussels’ data. Mr Gentiloni said this had created “a risk of hurting the level playing field in the single market”. “We are discussing the possibility of an intervention also on equities, and on what kind of companies [to help]. This could be a

good tool to rebalance the risks of these imbalances,” he added. Among the key points of contention in the recovery plan is the balance between grants and loans handed out by the commission. Northern member states have said they are uncomfortable with the idea of the commission borrowing money in the markets and then handing this to member states as non-repayable loans. Mr Gentiloni said that, while grants would indeed be important for the worst-affected sectors and regions, loans could be of help depending on their maturity. A two-year loan was very different from a 40-year loan, he observed. The projections came as a series of new data releases illustrated the scale of the crisis facing the eurozone economy. Eurozone retail sales contracted at the fastest pace on record in March as non-essential shops closed across the bloc in an attempt to limit the spread of coronavirus. The volume of retail sales dropped an unprecedented 11.2 per cent compared with the previous month, according to Eurostat data. Meanwhile, service sector executives in Italy and Spain reported a record downturn in activity. Purchasing managers’ indices covering the eurozone’s third and fourth largest economies tumbled last month to the lowest level on record, signalling a rate of contraction that far exceeds that recorded during recent recessions, including the global financial crisis. And German factory orders suffered a record monthly decline of 15.6 per cent in March, as the disease froze the activities of many businesses and consumers worldwide.

US weighs matching anti-China rhetoric with economic action As relations deteriorate over virus, Washington looks to curb supply chains and investment flows JAMES POLITI

ashingtonisweighing up more aggressive economic measures against China amid rising anger over Beijing’s handling of the pandemic, threatening the commercial truce reached less than four months ago. As the disease swept across the US killing tens of thousands of people and devastating the economy, US president Donald Trump accused China of covering up its coronavirus outbreak and failing to prevent its spread around the world. The White House and Capitol Hill are now looking to match the anti-Beijing rhetoric with steps to curb supply chains and investment flows, according to public remarks by administration officials, congressional aides, and industry lobbyists in Washington. However, it is unclear how far they are willing to go, given fears of inflicting more damage to the US economy. “US-China tension was an issue before Covid-19 for sure, but Covid-19 has acted as an accelerator,” said Stephanie Segal, a former US Treasury official and senior fellow at the Center for Strategic and International Studies.

“You could have foreseen a scenario where there was a recognition that the pandemic requires multilateral co-operation and co-ordination. Instead, it has devolved where both sides are blaming the other for the state of the world,” she said. The deterioration in US-China relations has been particularly jarring given the trade truce reached in January by Mr Trump and China’s president Xi Jinping, which ended almost two years of tariff threats between the world’s largest economies. While limited in its scope, the agreement raised hopes that it could deliver some stability to the economic relationship until after November’s US presidential election. But Mr Trump is now warning China that Washington could ditch the agreement if Beijing fails to follow through on its planned purchases of American goods, reviving the threat of higher tariffs on Chinese imports. “If they don’t buy, we’ll terminate the deal. Very simple,” the US president said during a Fox News town hall meeting on Sunday night. For Mr Trump, there is a pressing political rationale for reverting to a tough stance towards China: his reelection bid is less than six months www.businessday.ng

away, and Joe Biden, his presumptive Democratic challenger, has attacked him for playing down the threat of the virus while praising Mr Xi’s leadership in the final stages of the trade talks. The White House has already taken some economic steps that will unnerve Beijing. It has tightened export controls curbing semiconductor sales to China, opened the door for the government pension fund to stop investing in some Chinese companies and moved to limit imports of electrical equipment used in the US power grid. With hawkish, anti-China sentiment growing on Capitol Hill, the concern particularly in the business community, is that the crackdown could harden further, slashing trade and investment flows between the two countries and deepening the US and global recessions. US officials have ruled out radical steps such as cancelling Treasury debtrelated payments to China. However, potentially disruptive proposals to reduce the US’s dependence on Chinese supply chains, particularly in the technology and healthcare sectors, are back on the radar, along with the possibility of a new tariff flare-up. “In this politically charged environment, it’s easy to play the blame game,

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but we should not pursue solutions that would undercut our own economic recovery and at a time when we need the two governments to have a functional and pragmatic relationship,” said Myron Brilliant, head of international affairs at the US Chamber of Commerce. “The most immediate challenge for the two countries is to work together to combat the virus and restore global growth,” he added. In Congress, the desire to confront China has been accompanied by anxiety that the country could emerge as an even stronger strategic and economic rival following the pandemic. Some lawmakers are hoping that some measures could be considered alongside a new round of fiscal stimulus, which is expected to make its way through Congress this month. “There’s huge appetite to legislate on China,” said one Republican congressional aide. “The pandemic has put China on the map, and a lot of people have been talking about how do we hold China accountable,” the aide said. Steven Mnuchin, the US Treasury secretary, on Monday told Fox Business that Mr Trump was “reviewing all these issues very very carefully”, when asked about new ways to clamp down on US pension fund investments in @Businessdayng

China that could benefit companies tied to the military. In Congress, there is also a push to ensure that Chinese companies listed on American exchanges abide more strictly to US accounting standards. The Treasury secretary said he expected China to meet its obligations under the trade pact but also warned Beijing against reneging. “I have every reason to expect that they honour this agreement. And if they don’t, there would be very significant consequences in the relationship and in the global economy as to how people would do business with them,” he said. Matthew Pottinger, the US deputy national security adviser, offered a more veiled critique of Beijing on Monday as he delivered remarks to a University of Virginia symposium. Praising the May 4 anti-imperialist protests in China more than a century ago, Mr Pottinger suggested China could benefit from “a little less nationalism and a little more populism”. Washington was not interested in “punitive measures” against the country, but a “reciprocal and fair relationship”. “Not one in which the US allows ourselves to be taken advantage of in the hope that somehow China will just automatically liberalise,” he said.

Thursday 07 May 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Coronavirus threatens 10bn hit to football transfer market Player values tumble as Europe’s top teams prepare to cut spending after pandemic weakens revenues MURAD AHMED

p to €10bn will be wiped off the value of European football players due to the coronavirus pandemic, as some of the sport’s biggest clubs warn that plummeting revenues mean less cash will be spent on star signings. According to analysis by the consultancy KPMG, the growing financial crisis at teams across Europe has resulted in a steep drop in the value of footballers as clubs prepare to cut transfer spending this year. The cost of acquiring players has steadily increased in recent years across the biggest leagues, such as England’s Premier League, Spain’s La Liga and Germany’s Bundesliga. With matches suspended due Covid-19, clubs across the continent are facing steep losses of income and seeking to cut costs. “I cannot help feeling that speculation around transfers of individual players for hundreds of millions of pounds this summer seems to ignore the realities that face the sport,” said Ed Woodward, executive vice-

chairman of Manchester United, England’s wealthiest club, during a recent supporters’ forum, suggesting expectations should be tempered. KPMG analysis shows that the value of some players regularly cited as potential targets for big clubs, such as Borussia Dortmund’s Jadon Sancho and Tottenham Hotspur’s Harry Kane, have fallen as much as 16

per cent to roughly €127m and £112m, respectively. Most leagues in Europe are targeting a return to action in the coming weeks once national lockdown measures are eased, playing games in empty stadiums to protect lucrative broadcasting rights. However, football authorities in France, the Netherlands and Scotland have cancelled their seasons

altogether. The summer transfer window — a three-month period when teams can acquire players — was due to open on July 1. Fifa, international football’s governing body, wants player contracts due to expire before this date to be extended until domestic seasons are over and it says the summer window should be pushed back until August.

Last summer, clubs in Europe’s “big five” leagues in England, Germany, Spain, Italy and France, spent a record €5.5bn, according to Deloitte, up €900m compared with the same period in 2018. KPMG said that with far less money available to clubs, there will be a “decrease in both in the volume of transactions and in the transfer fees”. It estimates that, if domestic seasons can be completed “behind closed doors”, the value of players will fall by €6.6bn. If seasons across the continent are called off altogether, that figure will reach €10bn. The reduced value of footballers will lead to a depressed transfer market. But this could prove to be an opportunity for bigger clubs, if struggling teams are forced into a fire sale of their best players. Bigger sides could benefit by scooping up the best talent from smaller rivals at a cut price. KPMG said: “We will most likely witness a ‘buyer’s market’, in which a minority of clubs could exploit the difficult financial position of their counterparts, possibly getting players at a lower price than would have been possible up until last summer.”

KKR posts $4.2bn net loss as investment portfolio hit

One of the first large acquisitions to be agreed since coronavirus pandemic rocked global markets

MARK VANDEVELDE

KR recorded a net loss of $4.2bn in the first quarter as economic fallout from the coronavirus pandemic cut in half its carried interest pot, or share of profits for partners. Despite the tide of red ink, the buyout firm celebrated an 18 per cent quarterly gain on its $3bn global infrastructure fund, which offloaded its largest investment to Swedish rival EQT weeks before the crisis struck. The February sale of German broadband provider Deutsche Glasfaser locked in gains on that investment shortly before the global economic shutdown gutted portfolio valuations across the private capital sector. But the virus wrought destruction elsewhere in KKR’s portfolio, forcing the pioneering buyout firm to write down its private equity portfolio by 12 per cent in the first quarter. Among KKR’s most significant investments is Envision, a US medical staffing company that has hired restructuring advisers

to explore ways to reduce its big debt pile. “We can’t help but . . . express our gratitude for the sacrifices, efforts and professionalism exhibited by all essential workers, including the many who work for www.businessday.ng

our portfolio companies, standing on the front lines of the Covid-19 pandemic,” said co-chief executives Henry Kravis and George Roberts, in a joint statement. Coronavirus-related losses have decimated the portfolios of

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Wall Street’s biggest investment groups, potentially robbing them of performance income and casting uncertainty on the finances of public pension schemes that are among the sector’s biggest investors. KKR’s larger rival Blackstone last @Businessdayng

week reported investment losses of 22 per cent in its private equity business, partly as a consequence of its exposure to energy companies — a sector that KKR has largely shunned. At Apollo Global Management the damage struck even closer to home, with the group calculating that its partners and employees would have been on the hook to hand back $390m in performancerelated pay if its portfolio had been liquidated at the valuations recorded in late March. KKR calculated it would receive just over $1bn in carried interest from selling all of its assets at March valuations, down from nearly $2bn at the end of last year. However, much of the firm’s revenue takes the form of stable “management fees”, which are usually calculated as a percentage of the amount that clients have agreed to invest and remain constant even if they suffer losses because of economic headwinds or bad bets. KKR earned $332m in management fees in the first quarter, up from $292m in the same period last year.

Thursday 07 May 2020

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Investment slowdown to hike oil prices, cause undersupply of five million bpd olusola Bello

COVID 19: How to sustain NNPC, oil and gas health facilities olusola Bello

Graphics: Joel Samson.

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Oilserv donates medical, food supplies to cushion effect of COVID19 Olusola Bello

Email: energyreport@businessdayonline.com, Tel: +234-8023020011

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@Businessdayng

Thursday 07 May 2020

Retail &

BUSINESS DAY

consumer business Luxury

Malls

Companies

Deals

Spending Trends

COMPANY

Demand for Dettol, delivers record sales for Reckitt as condom sales take a hit OLUFIKAYO OWOEYE

.K-based, home care products maker, Reckitt Benckiser printed a record sales growth in the first quarter ended 31 march and predicted a stronger-thanexpected performance in 2020 as customers stocked up on Lysol disinfectants, Mucinex cough syrup and Dettol soap ahead of the coronavirus lockdowns. Reckitt’s net revenue rose 12.3 percent to 3.54 billion pounds in the three months ended March, beating analysts’ average estimate of 3.29 billion pounds. The growth was the biggest since the company was formed in 1999 through the merger of Reckitt & Colman and Dutch firm Benckiser.

However, Reckitt said Durex condoms and Scholl footcare treatments suffered

a modest decline as people stayed at home under lockdown.

Chief executive Laxman Narasimhan said while sales of condoms overall had

fallen, it had seen doubledigit growth of Durex online as customers changed their shopping habits during the pandemic.... According to the company, an “exceptional demand” led to huge sales growth in the first quarter of 2020 as customers stocked up on cleaning products, painkillers, and hand sanitizer. The boom in demand has come as the company had been battling intense competition in the health and hygiene industry. In February, Reckitt had announced plans to spend 2 billion pounds over the next three years to spur growth. The company’s boost in sales was much better than consumer goods giant Unilever first quarter result. The Dutch-giant saw sales virtually flat at the start of the year. It has however urged con-

sumers not to drink or inject their products as a remedy to fight the deadly Coronavirus. This warning is coming after U.S. President Donald Trump suggested that scientists should explore whether inserting ultraviolet light or disinfectant into the bodies of people infected with the disease caused by the novel coronavirus would help. The maker of Dettol issued the first warning, saying: “Under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route).” Clorox, maker of bleach, soon followed, calling it critical for consumers to understand the facts. “Bleach and other disinfectants are not suitable for consumption or injection under any circumstances,”

COMPANY

Nestle, Flour Mills buck the trend as industry brace for tough times

hen customers tighten their b e l t s, s a l e s of consumer goods firms are under pressure. And in most cases profit slumps while margins are beaten down. The coronvirus pandemic has forced a people to stay at home and non-essential shops to remain closed, a double whammy for an industry is beset by a myriad of challenges such as decrepit infrastructure, closure of borders, weak consumer spending, and unfavorable government regulations. On 29 March 2020, President Mohammadu Buhari announced a number of measures to curtail the spread of Covid-19 in Nigeria. Notably, the President announced a 14-day (2 weeks) shutdow n of economic and physical activities in two states (Lagos and Ogun States) as well as the Federal Capital Territory (Abuja).This was further extended by 14 days (2 Weeks) on Monday, 13

April 2020. Analysts at Chapel Hill Denham Limited in a recent report said that Nestle Nigeria Plc and Flour Mills of Nigeria plc will overcome the headwinds as consumers are spending more on foodwhich is largely driven by stockpiling. “Both companies have a diverse portfolio of brands

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that are considered as essential items by consumers,” said Abiola Gbemisola, team lead of the research. “Nestle Nigeria’s premium brand such as Maggi cube and cereals is the kitchen of every consumers, while Flour Mills’ have products that are making inroad into the Nigerian markets,” said Gbemisola.

With an operating cash flow of N49.94 billion as at December 2019, Nestle Nigeria has the financial strength to overcome the headwinds and funds future expansion plans. On the flip side, the restriction in human congregation in most parts of the country will affect the revenue and earnings of brewery

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companies such as Nigerian Breweries Plc (NB), Guinness Nigerian Plc (Guinness) and International Breweries Plc (Intbrew). This is because people can no longer go to bars or hotels as they used before the restrictions. Brewers are the problem child of the consumer goods sector as weak sales volume and stringent excise duties have deal great blow on bottom lines. For instance, International Breweries posted a loss of N9.13 to end 2019, as it is struggling with huge debts. Home care companies such as Unilever and PZ Cussons are not spared the hammer of the economic crisis because consumers are increasing budgetary allocations to food expenditure. Analysts fret that the disruption caused by the coronavirus pandemic couldtip the country into a recession unless government embarks on aggressive stimulus package that will help deflate the @Businessdayng

economy. The International Monetary Fund (IMF) has predicted a negative Gross Domestic Product (GDP) of 3.4 percent for the country. The Minister for Finance, Zanaib Ahmed, has already reduced the government’s projection of 2.10 million barrels a day of production to 1.70 million, and it working to Nigeria’s record $35 billion budget for 2020. Capitulating to pressure, the central bank devalued the official Naira rate to N360 to the dollar from N305. The rally in energy stocks led Wall Street higher as Brent crude breached $30 a barrel for the first time since mid-April. Brent added 10.7 per cent to trade at $30.12 a barrel, rebounding from a drop to less than $16 a barrel last month. West Texas Intermediate was up 16.7 per cent at $23.66 a barrel, setting the US marker on track for its fifth consecutive day of gains and leaving it up more than 80 per cent during the past week.

Thursday 07 May 2020

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Thursday 07 May 2020

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Nigeria’s economy is Africa’s largest, but in handling the Coronavirus pandemic, South Africa is showing who is the number one TITI OMOBUDE

When some years ago, Nigeria’s economy was resized via the reclassification of its GDP (rebasing) which catapulted it to the top in the continent, my friends in South Africa joked about it. Then one day, one them called me and said, “ok you guys want the label. Nigeria can have position of the largest economy in Africa, but we remain number one.” I was taken aback and asked, how? “Oh, we are the most advanced economy on the continent and there is no debate about that”, was the response I got.

have been to South Africa a number of times since then and on each visit, I am as a Nigerian journalist, reminded about the conversation with my friends. However, nothing has brought the immense superiority of the South African economy than the country’s handling of the current Coronavirus pandemic. The southern African country has used a combination of mass screening, targeted testing and a draconian lockdown to control the early stages of a coronavirus outbreak that threatened to overwhelm the country if left unchecked in its densely populated townships. In the past month President Cyril Ramaphosa’s government has mobilised 28,000 health workers to screen over 7m people, more than one in 10 South Africans. Known as active case finding, the use of community health workers to identify patients with symptoms draws heavily on South Africa’s extensive quality healthcare and its experience battling tuberculosis and HIV. It differs from the approach of most African and European governments that have relied on citizens coming forward for tests and then tracing their contacts. John Nkengasong, director of the Africa Centers for Disease Control and Prevention, has lauded South Africa’s aggressive strategy but has warned that Africa overall needs to test more. From the beginning South Africa brought in its private sector healthcare sector to the party and it is accountable for about half the number of total tests in that country. For lovers of data, South Africa has now increased its level of testing to more than 15,061 tests a day. As at Monday, South Africa had conducted 245,747 tests. Nigeria on the other hand has had less than 20,000 tests in all. All the while in South Africa, the number of positive tests has remained consistent at about 3 per cent, a sign that while infections are growing they are not outpacing

South African Covid-19 testing Sector

Total tested

Daily tests

Private 123,580

3,161

Public 122,167 11,900 Total 245,747 15,061 efforts to find them. “Incredible, that much testing for that return,” Michael Ryan, head of the World Health Organization’s emergency operations, said last month. Recently, the strategy faced a critical test. South Africa imposed one of the world’s strictest lockdowns before it had recorded a single death but is beginning a phased lifting of the most severe restrictions. The country has had more than 7,200 cases and 130 deaths, and in some townships testing is now picking up a faster spread of the virus. Tough measures, including a nightly curfew, remain in force, and public frustration is rising, particularly after allegations of police violence. “We have not nearly reached the peak of infections in South Africa,” Mr Ramaphosa said on Monday. “All the scientific models show that the infection rate will continue to rise at a much faster rate in the next few months.” The South African approach to date has relied heavily on an army of community health workers and a network of one the most advanced healthcare system in the world. Whereas other countries including Nigeria need to hire thou-

sands of people to conduct screening and contract tracing — the US would require at least 100,000 contact tracers at a cost of $3.6bn, according to one estimate — South Africa already had teams in place, detecting tuberculosis, a national killer, and bringing drugs to the millions of South Africans living with HIV. “We have been on the front lines for many years . . . we were there to fight HIV, we were there to educate communities about TB,” said Tshepo Matoko, secretary of the Gauteng Community Health Care Forum, a body representing workers. So far about three per cent of tests referred from community screening have come back positive, similar to the proportion of positive results among patients tested at health centres. That suggests the government’s community health workers have successfully identified many cases that might have otherwise slipped through the net. But although the screening programme has been extensive, wide variations exist in the approach and the number of tests administered in each of the nine provinces. The Western Cape, easily one of

Whereas other countries including Nigeria need to hire thousands of people to conduct screening and contract tracing — the US would require at least 100,000 contact tracers at a cost of $3.6bn, according to one estimate — South Africa already had teams in place

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From the beginning South Africa brought in its private sector healthcare sector to the party and today the private sector is accountable for about half the number of total tests carried out in that country the more affluent in the country, has tested a higher percentage of its population than other parts of the country and overtaken Gauteng, the most populous region, as the province with the most active infections. About six per cent of tests have returned a positive result in Western Cape, compared with the 3 per cent average nationally. For the tests administered in the province on Monday that figure jumped to 13 per cent. The province has detected an especially large rise in cases in the sprawling township of Khayelitsha, just outside Cape Town. The findings are “based on our active case-finding approach, where we purposely follow the ‘bush fires’ — the pockets of infections within communities — to ensure that every person who has been infected by Covid-19 is identified as quickly as possible,” said Alan Winde, the Western Cape premier.

Community screening cannot identify asymptomatic cases. But it can point to emerging clusters, and help later contact tracing to find asymptomatic carriers, health experts said. South Africa has also taken a different approach to contact tracing than many African and western countries, which are largely placing their faith in voluntary smartphone apps. Under lockdown regulations, subject to regular review by a former constitutional court judge, the state has the power to access data from mobile phone companies on the movements of possible coronavirus contacts. “The major difference in South Africa is that it is not an opt-in app, as it is in Singapore and Australia,” said Livia Dyer, a partner at Bowmans, a South African law firm. “It is reflective of the way mobile phones are used in this country,” she said, since the poorest citizens do not have smartphones. South African Covid-19 testing Mr Ramaphosa’s warning that South Africa is still early in its epidemic means it will have to keep up these screening, testing and tracing efforts for many months to come. His government has said that different forms of a lockdown could be in force for at least six months and public health experts have predicted a possible peak in the number of infections in September. That will add to the pressure on the thousands of community health workers on the front line who have battled for years to be recognised as permanent government employees and are now central to the state’s response, said Mr Matoko. “[The government] never saw the importance of these workers until . . . Covid-19,” he said.

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